Virgin Media 2006 Annual Report Download - page 60

We paid cash interest of £327.1 million for the year ended December 31, 2006, and £216.8 million for the year ended
December 31, 2005. The increase in cash interest payments resulted from the effects of the new senior credit facility and senior bridge
facility in respect of the reverse acquisition of Telewest and the acquisition of Virgin Mobile, and changes in timing of interest
payments.
Loss on extinguishment of debt
For the year ended December 31, 2006, loss on extinguishment of debt was £32.8 million, and relates primarily to the write off of
deferred financing costs on the senior credit facility that was repaid upon completion of the refinancing of the reverse acquisition of
Telewest.
For the year ended December 31, 2005, loss on extinguishment of debt was £2.0 million, and related to the redemption of the
$100 million floating rate senior notes due 2012 on July 15, 2005.
Foreign currency transaction gains (losses)
For the year ended December 31, 2006, foreign currency transaction losses were £90.1 million as compared with gains of
£5.3 million for 2005. The foreign currency losses in the year ended December 31, 2006 were largely comprised of foreign exchange
losses of £70.8 million on U.S. dollar forward purchase contracts that were entered into to hedge the repayment of the U.S. dollar
denominated bridge facility. The repayment of $3.1 billion of this facility on June 19, 2006 resulted in an offsetting gain during the
period of £120.7 million that has been recorded as a component of equity. The foreign currency transaction gains in the year ended
December 31, 2005 include gains of £43.7 million on the forward rate contracts and collars taken out in December 2005 in connection
with £1.8 billion of the expected cash purchase price of Telewest offset by losses on the revaluation of foreign currency denominated
long term debt and related forward contracts. Our results of operations will continue to be affected by foreign exchange rate
fluctuations since £827.7 million of our indebtedness is denominated in U.S. dollars and £487.1 million is denominated in euros.
Gain from derivative instruments
The gain from derivative instruments of £1.3 million in the year ended December 31, 2006, mainly relates to favorable
movements in the fair value of sterling interest rate swaps.
Income tax benefit
For the year ended December 31, 2006, income tax benefit was £11.8 million as compared with income tax expense of
£18.8 million for the same period in 2005. The 2006 and 2005 (benefit)/expense is composed of (in millions):
2006 2005
U.S. state and local income tax £ — £ (1.3)
Foreign tax (2.7) —
Deferred U.S. income tax (8.6) 18.7
Alternative minimum tax (0.5) 1.4
Total £ (11.8) £ 18.8
In 2006, we received refunds of £1.3 million of the U.S. alternative minimum tax and £0.1 million of U.S. state and local tax. We
also paid £3.1 million of U.S. federal income tax in respect of pre−acquisition periods of Telewest. In addition, we paid £4.6 million
of U.K. tax expense in respect of pre−acquisition periods of Virgin Mobile. In 2005, we paid £2.2 million of the U.S. alternative
minimum tax.
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Source: VIRGIN MEDIA INVESTM, 10−K, March 01, 2007