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2008
Annual Report

Table of contents

  • Page 1
    2008 Annual Report

  • Page 2
    ... technology and create a dynamic digital economy. The next generation capabilities of Virgin Media's network mean we are uniquely positioned to lead and shape this debate. We are also redefining the mid-market TV experience with our advanced video-on-demand services. We are the only TV platform...

  • Page 3
    ..., New York (Address of principal executive office) (212) 906-8440 (Registrant's telephone number, including area code) Securities registered pursuant to Section 12(b) of the Act: Common Stock, par value $0.01 per share Series A Warrants to purchase shares of Common Stock NASDAQ Global Select Market...

  • Page 4
    ... Securities ...Selected Financial Data ...Management's Discussion and Analysis of Financial Condition and Results of Operations ...Quantitative and Qualitative Disclosures about Market Risk ...Financial Statements and Supplementary Data ...Changes in and Disagreements with Accountants on Accounting...

  • Page 5
    ... Media Investment Holdings Limited This annual report on Form 10-K (excepting financial statements responsive to Part IV, Item 15) covers both Virgin Media and VMIH, a company incorporated in England and Wales, with its registered office at 160 Great Portland Street, London W1W 5QA, United Kingdom...

  • Page 6
    ... our consolidated financial statements is U.K. pounds sterling. Note Concerning Historical Structure of the Company Virgin Media Inc. is a Delaware corporation and is publicly traded on the NASDAQ Global Select Market in the United States. Our historical structure is as follows: NTL Incorporated was...

  • Page 7
    ... statements of Virgin Media Inc. The merger combined the two largest U.K. cable operators. The total acquisition price was £3.5 billion, including £2.3 billion in cash, common stock valued at £1.1 billion and stock options and transaction costs. On July 4, 2006, we added a mobile phone offering...

  • Page 8
    ...our operating and other intermediate companies. Virgin Media Inc. (1) (2) Intermediate Holding Companies, including Virgin Media Holdings Inc. Virgin Media Finance PLC (3) Virgin Media Investment Holdings Limited (4) Virgin Media Limited (5) Virgin Mobile Holdings (UK) Limited (6) Telewest UK...

  • Page 9
    ... our digital subscriber line, or DSL, competitors. As a result, we provide our customers with a leading next generation broadband service and one of the most advanced TV on-demand services available in the U.K. market. Through ntl:Telewest Business, which also operates under the Virgin Media group...

  • Page 10
    ... We provide broadband internet, television and fixed line telephone services under the Virgin Media brand to residential customers in the U.K. Our services are distributed principally via our wholly-owned, cabled, local access communications network and are available to an addressable market of...

  • Page 11
    ...our market share by marketing the benefits of our high-speed broadband service to both existing and potential customers. As of December 31, 2008, we provided on-net broadband services to approximately 3.7 million subscribers. We also provide broadband internet services, via BT's local access network...

  • Page 12
    ... equipment, installation or additional subscription fees. The VOD service provides access to thousands of hours of premium movies, music videos, and TV programs and series on-demand. It appears within the electronic programming guide, and can be accessed and viewed at any time via the remote control...

  • Page 13
    ... usage-based billing. These packages include ''Talk Plans'' that enable customers to make unlimited local and national calls for a fixed monthly fee in addition to the standard line rental. As of December 31, 2008, we provided on-net telephone services to approximately 4.1 million residential...

  • Page 14
    ... market demand still exists for such services driven by the need to transport data away from BT exchanges, as well as for mobile operators requiring higher bandwidth connections from mobile masts as a result of growth in 3G and data services. Products and Services ntl:Telewest Business offers...

  • Page 15
    ... Ethernet networks that can be installed and scaled effectively, while offering performance that supports voice, video and converged services. A complete range of products from local area network extensions to managed wide area Ethernet networks are available, providing customers with high bandwidth...

  • Page 16
    ...October 2008, we launched a mobile broadband product which complements our fixed broadband offering. Consumer and Mobile Sales and Marketing We use a variety of sales channels to sell our broadband, television, and fixed line and mobile phone services to consumers, including telesales, customer care...

  • Page 17
    ... channels also generate distribution revenue based on either the number of customers subscribing to programming packages carried by the relevant platform operators or a fixed monthly fee. Virgin Media TV, sit-up and UKTV are also represented on Freeview, a U.K. free-to-air digital television service...

  • Page 18
    ...internet access, we make use of a high capacity, two-way, coaxial cable which has considerable bandwidth and is able to support a full portfolio of linear and on-demand TV services as well as high-speed broadband services. Second, we use short length twisted copper-pair to economically connect fixed...

  • Page 19
    ... have a competitive advantage in the U.K. residential market because we offer a wide range of communications services, including high-speed broadband internet, television, and fixed line telephone services using our advanced network, while many of our competitors must rely on BT's network to provide...

  • Page 20
    ... addition to the increasing competition and pricing pressure in the broadband market arising as LLU players look to gain the customer scale to make a return on their investment, there is the longer term threat of new access technology. 3G mobile technology, other wireless technologies such as Wi-Fi...

  • Page 21
    ... to fixed line telephone services. Mobile telephone services also contribute to the competitive price pressure in fixed line telephone services. There is also competition from companies offering voice over internet protocol, or VoIP, services using the customer's existing broadband connection. These...

  • Page 22
    ... fixed line telephone operators and resellers, and internet telephony providers in the U.K., including BT. See ''Competition-Cable Segment'' for more information on these competitors. Content Segment Virgin Media TV supplies basic television programming to the U.K. multi-channel television market...

  • Page 23
    Virgin Media TV's advertising sales department, IDS, competes with the sales departments of BSkyB, ITV, Channel 4 and Five. Consolidation in the advertising sales market could have an adverse effect on IDS's ability to sell advertising at attractive rates. sit-up sells a wide range of products, ...

  • Page 24
    ... another network provider; • a requirement to comply with a number of high-level obligations designed to address consumer harm associated with broadband migrations; • a requirement to ensure that any end-user can access a directory enquiry service; • a requirement to publish up-to-date price...

  • Page 25
    ... revenues from advertising, sponsorship, subscriptions and interactive services, with special rules applying to shopping channels. In October 2006, Ofcom commenced a review of the various ways and the terms on which operators of digital TV platforms in the U.K. (including ourselves) allow access to...

  • Page 26
    ... are subject to seasonal factors. For example, fixed line telephone usage revenue by customers and businesses tends to be slightly lower during summer holiday months. Our customer churn rates include persons who disconnect their service because of moves, resulting in a seasonal increase in our churn...

  • Page 27
    ... television, broadband internet, telephone and mobile phone services we provide to our residential customers, as well as the acquisition and branding of sports, movies and other premium television content and the sale of certain communications equipment, such as set top boxes and cable modems. For...

  • Page 28
    ... internet service providers and indirect telephone access operators that offer fixed line telephone and broadband internet services over BT's network. We will face increasing competition from mobile telephone network providers and new market entrants, including those providing mobile broadband...

  • Page 29
    ... and services, including faster broadband speeds; • install and maintain cable and equipment; and • finance maintenance and upgrades. Our covenants in our senior credit facility effectively restrict our use of cash. If these covenants affect our ability to replace network assets at the end of...

  • Page 30
    ... in our standards, controls, product offerings, level of customer service, procedures and policies that could negatively affect our ability to maintain relationships with customers, suppliers, employees and others with whom we have business dealings. The implementation of the plan will involve the...

  • Page 31
    ... some programming, including its Sky Sports channels and Sky Movie channels, which are the most popular premium subscription sports and film channels, respectively, available in the U.K. We buy BSkyB wholesale premium content on the basis of BSkyB's rate card terms and pricing, which can be changed...

  • Page 32
    ...predicted. The broadband internet, television, fixed line telephone and mobile telephone services sectors are characterized by rapid and significant changes in technology. Advances in current technologies, such as VoIP (over fixed and mobile technologies), mobile instant messaging, wireless fidelity...

  • Page 33
    ...distribution relationships, our revenue may decline. Regulatory change is an ongoing process in the markets in which we provide our services; changes in U.K. and EU regulations affecting the conduct of our business may have an adverse impact on our ability to set prices, enter new markets or control...

  • Page 34
    ..., such as changes relating to third party access to cable networks, the costs of interconnection with other networks or the prices of competing products and services, could adversely affect our ability to set prices, enter new markets or control our costs. In addition, our business and the industry...

  • Page 35
    ... and advertising revenue. BSkyB, our main competitor, is our largest customer for our programming. In early 2007, BSkyB used its dominant position in pay television to substantially reduce the fees it paid for our Virgin Media TV channels, although we entered into a new carriage agreement with BSkyB...

  • Page 36
    ... a material effect on our reported net earnings. We have limited capacity on our cable platform. Our analog television, digital television, broadband internet and video-on-demand services are transmitted through our core and access networks, which have limited capacity. We have plans in place to add...

  • Page 37
    ... for new services, our current capacity limitations may affect our ability to carry new channels as they are developed. As such, our digital television offering may not be as competitive, which could result in an increase in customer churn and a decrease in revenue. Risks Relating to Our Financial...

  • Page 38
    ... profitability could diminish our ability to sustain operations, meet financial covenants, obtain additional required funds and make required payments on present or future indebtedness. The covenants under our debt agreements place certain limitations on how we manage our business. The agreements...

  • Page 39
    ... and our competitors' earnings releases, announcements of technological innovations, changes in financial estimates by securities analysts, trading volume, currency and exchange rate fluctuations, market conditions in the industry and the general state of the securities markets and the market for...

  • Page 40
    ... In addition, the terms of our existing indebtedness limit the amount of dividends we can pay to stockholders from cash generated from operations if our debt leverage ratio is above certain levels. Sales of stock by stockholders in the company may decrease the price of the common stock. Based on SEC...

  • Page 41
    ... and other non-operational properties, as well as operating various cable television, telephone and telecommunications equipment housed in street cabinet enclosures situated on public and private sites. Currently 18 of our leased technical sites are not utilized, representing a rental expense...

  • Page 42
    ...common stock, although there is a much larger number of beneficial owners. Dividends We commenced the payment of regular quarterly dividends in June 2006. During the years ended December 31, 2007 and 2008, we paid the following dividends: Board Declaration Date Per Share Dividend Record Date Payment...

  • Page 43
    ...transaction that was accounted for as a reverse acquisition. The new holding company, Telewest Global, Inc., changed its name to NTL Incorporated on March 3, 2006. From March 6, 2006, share prices reflect the market price for that company, which was renamed Virgin Media Inc. on February 6, 2007. 41

  • Page 44
    ... a subsidiary of Telewest, which changed its name to NTL Incorporated. As this transaction was accounted for as a reverse acquisition, the financial statements included in this annual report for the period through March 3, 2006 are those of NTL, which is now known as Virgin Media Holdings Inc., and...

  • Page 45
    ... internet, television and fixed line telephone services from us. In addition, we provided mobile telephone service to 3.5 million pre-pay mobile customers and 0.6 million contract mobile customers over third party networks. Through ntl:Telewest Business, which also operates under the Virgin Media...

  • Page 46
    ... telephone services, cable television services and internet access; and • business-monthly fees and usage charges for inbound and outbound voice, data and internet services and charges for transmission, fiber and voice services provided to retail and wholesale customers over our national network...

  • Page 47
    ... as a reverse acquisition of Telewest using the purchase method. In connection with this transaction, Telewest changed its name to NTL Incorporated, and has since changed its name to Virgin Media Inc. The total purchase price was £3.5 billion, including cash of £2.3 billion, common stock valued at...

  • Page 48
    ... plan successfully and realize the anticipated benefits. Cable Segment In our Cable segment, residential customers account for the majority of our total revenue. The number of residential customers, the number and types of services that each customer uses and the prices we charge for these services...

  • Page 49
    .... Cable ARPU. Cable ARPU is a measure we use to evaluate how effectively we are realizing revenue from our residential cable customers on our network. We believe that our ''triple-play'' cable offering of television, broadband and fixed line telephone services is attractive to our existing customer...

  • Page 50
    ..., mainly from the U.S., and because there is a limited supply of content available and an increasing number of digital channels in the U.K., Virgin Media TV has experienced and may continue to experience an increase in the cost of its imported programming. Exchange rate movements have also resulted...

  • Page 51
    ...Virgin Media TV's revenue is directly affected by changes in the total spend on television advertising in the U.K., the viewing levels for its channels and the proportion of the U.K. advertising market represented by IDS. Critical Accounting Policies Our consolidated financial statements and related...

  • Page 52
    ... provisions of FASB Statement No. 51, Financial Reporting by Cable Television Companies, in relation to connection and activation fees for cable television, as well as fixed line telephone and broadband internet services, on the basis that we market and maintain a unified fiber network through which...

  • Page 53
    ... or benefit in the period in which they become known. Accordingly, the accounting estimates used to compute the provision for income taxes have and will change as new events occur, as more experience is acquired, as additional information is obtained and as our tax environment changes. Business...

  • Page 54
    ... not limited to: future expected cash flows from customer contracts and customer lists; the trademark's brand awareness and market position, as well as assumptions about the period of time the brand will continue to be used in the combined company's product portfolio and discount rates. Management...

  • Page 55
    ... decrease was primarily due to lower revenue in our Cable segment, driven by declining telephony usage and increased discounting due to increased competition, and lower Mobile segment revenue, mainly due to lower prepay revenue as a result of fewer customers. This reduction was partially offset by...

  • Page 56
    ... as a result of fewer employees, lower bad debt expense and a reduction in costs in relation to marketing and our rebrand to Virgin Media in 2007. The decrease was partially offset by increased professional charges. Restructuring and other charges For the year ended December 31, 2008, restructuring...

  • Page 57
    ... as a result of declining market multiples of comparable companies. The income approach valuations in respect of the Mobile reporting unit declined as a result of a combination of an increased discount rate, a reduced terminal value multiple and reduced long term cash flow estimates. As a result, we...

  • Page 58
    ... years ended December 31, 2008 and 2007 was largely comprised of our proportionate share of the income earned by UKTV, which was partially offset by the losses incurred by Setanta Sports News. See Segmental Results of Operations for the Years ended December 31, 2008 and 2007-Television Channel Joint...

  • Page 59
    ... Results of Operations for the Years Ended December 31, 2008 and 2007 A description of the products and services, as well as financial data, for each segment can be found in note 18 to the consolidated financial statements of Virgin Media Inc. The reportable segments disclosed in this annual report...

  • Page 60
    ... months ended December 31, 2007. The increase in Cable ARPU was due to selective price increases and successful up-selling and cross-selling to existing customers, partly offset by declining telephony usage and higher price discounting as discussed above. Our focus on acquiring new bundled customers...

  • Page 61
    ...revenue from business customers, as described above. Summary Cable Statistics Selected statistics for residential cable customers of Virgin Media, excluding customers off our network and Virgin Mobile customers, for the three months ended December 31, 2008 as well as the four prior quarters, are set...

  • Page 62
    ... some services for free or at a reduced rate in connection with promotional offers. The monthly cable average revenue per user, or Cable ARPU, is calculated on a quarterly basis by dividing total revenue generated from the provision of telephone, television and internet services to customers who...

  • Page 63
    ...connected directly through our cable network to Virgin Media National. Selected statistics for Virgin Media National products are set forth in the table below. December 31, 2008 Three months ended September 30, June 30, March 31, 2008 2008 2008 December 31, 2007 Opening RGUs: Telephone ...Broadband...

  • Page 64
    ... and to price more competitively in the growing mobile data usage market which should be more attractive for higher value customers. We also committed to purchasing our current core voice, text and handset data and mobile broadband data card services exclusively from our mobile network provider for...

  • Page 65
    ... value end of the prepay market. December 31, 2008 Three months ended September 30, June 30, March 31, 2008 2008 2008 December 31, 2007 Contract mobile customers(1): Opening contract mobile customers ...Net contract mobile customer additions ...Data cleanse(2) ...Closing contract mobile customers...

  • Page 66
    ... the business, management is reviewing the implications on the business model and considering the appropriate course of action to address these matters. On November 4, 2008, we signed a new carriage agreement with BSkyB for continued carriage of our Virgin Media TV channels on its satellite platform...

  • Page 67
    ... programming and which are carried on Virgin Media's cable platform and also satellite. Some channels are also available on Freeview. We account for our interest in UKTV under the equity method and recognized a share of net income of £18.7 million in both the years ended December 31, 2008 and 2007...

  • Page 68
    ... of Telewest and to the acquisition of Virgin Mobile and higher marketing costs in connection with the Virgin Media rebrand, partially offset by a reduction in our employee expenses as a result of our integration activities together with lower company bonus scheme payments, a reduction in our share...

  • Page 69
    ... 31, 2006. The increase in cash interest payments resulted from the additional borrowings following the reverse acquisition of Telewest and the acquisition of Virgin Mobile, and changes in the timing of interest payments. Loss on extinguishment of debt For the year ended December 31, 2007, loss on...

  • Page 70
    ... and restricted stock are anti-dilutive. Segmental Results of Operations for the Years Ended December 31, 2007 and 2006 A description of the products and services, as well as financial data, for each segment can be found in note 18 to Virgin Media's consolidated financial statements. The segment...

  • Page 71
    ..., 2007 from £42.82 for the three months ended December 31, 2006. The decrease in Cable ARPU was due to reduced telephony usage and higher price discounting as discussed above. The decline has been mitigated by our focus on acquiring new bundled customers and cross-selling and up-selling to existing...

  • Page 72
    ... for residential cable customers of Virgin Media, excluding customers off our network and Virgin Mobile customers, for the three months ended December 31, 2007 as well as the four prior quarters, are set forth in the table below. The total number of cable customers directly connected to our network...

  • Page 73
    ... both telephone and television service counts as two RGUs. RGUs may include subscribers receiving some services for free or at a reduced rate in connection with promotional offers. Data cleanse activity in the second quarter of 2007 did not result in a change in customer numbers but did result in...

  • Page 74
    ... £ (11.5) Our Mobile segment revenue was comprised of (in millions): 2007 (Actual) Year ended December 31, 2006 Increase/ (From Acquisition) (Decrease) Revenue: Service ...Equipment(1) ...Total revenue ...(1) Equipment revenue is stated net of discounts earned through service usage. £567.6 30...

  • Page 75
    ...Cable segment products and other direct channels with lower subscriber acquisition costs. Summary Mobile Statistics Selected statistics for Virgin Mobile are set forth in the table below. In the year ended December 31, 2007, the number of mobile customers decreased by a net 31,400. Contract customer...

  • Page 76
    ... by reduced subscription revenue in Virgin Media TV mainly as a result of a new satellite television carriage contract entered into at the end of 2006 which has lower pricing, partially offset by increased advertising revenues together with increased retail revenue from our sit-up channels. Content...

  • Page 77
    ... the same period in 2006. This increase resulted from the higher levels of borrowings and repayment of existing facilities following the reverse acquisition of Telewest and the acquisition of Virgin Mobile. For the year ended December 31, 2007, cash used in investing activities was £509.8 million...

  • Page 78
    ... year ended December 31, 2006. For the year ended December 31, 2007, the principal uses of cash were the partial repayments of our senior credit facility and capital lease payments, totaling £1,170.8 million, and the principal components of cash provided by financing activities were new borrowings...

  • Page 79
    .... In addition, the terms of our existing and future indebtedness and the laws of the jurisdictions under which our subsidiaries are organized limit the payment of dividends, loan repayments and other distributions from them under many circumstances. Our debt agreements contain restrictions on our...

  • Page 80
    ... of the remaining £187.0 million. We anticipate using cash generated from operations and cash on our balance sheet, which may be supplemented by amounts undrawn on our revolving credit facility, proceeds from debt offerings, or other sources, to pay the outstanding amount. Although we had £181...

  • Page 81
    ... for Tranche C) has the benefit of a full and unconditional senior secured guarantee from Virgin Media Finance PLC as well as first priority pledges of the shares and assets of substantially all of the operating subsidiaries of Virgin Media Investment Holdings Limited, or VMIH, and of receivables...

  • Page 82
    ...for stock splits, stock dividends or distributions, the issuance of certain rights or warrants, certain cash dividends or distributions or stock repurchases where the price exceeds market values. In the event of specified fundamental changes relating to Virgin Media Inc., referred to as ''make whole...

  • Page 83
    ...result in a default under our senior credit facility. Debt Ratings To access public debt capital markets, we rely on credit rating agencies to assign corporate credit ratings. A rating is not a recommendation by the rating agency to buy, sell or hold our securities. A credit rating agency may change...

  • Page 84
    Cash Dividends We commenced the payment of regular quarterly dividends in June 2006. During the years ended December 31, 2008, 2007 and 2006, we paid the following dividends: Board Declaration Date Per Share Dividend Record Date Payment Date Total Amount (in millions) Year ended December 31, 2006: ...

  • Page 85
    ... for hedge accounting, are recognized through the consolidated statement of operations immediately. Effective cash flow accounting hedges are recognized as either assets or liabilities and measured at fair value with changes in the fair value recorded within other comprehensive income (loss). The...

  • Page 86
    ... fixed and floating rates. We have designated some of the cross-currency interest rate swaps as cash flow hedges under FAS 133, because they hedge against changes in the pound sterling value of the interest payments on the senior notes that result from changes in the U.S. dollar and euro exchange...

  • Page 87
    ... consolidated financial statements of Virgin Media Inc. and Management's Discussion and Analysis of Financial Condition and Results of Operations-Derivative Instruments and Hedging Activities. The fair market value of long term fixed interest rate debt and the amount of future interest payments on...

  • Page 88
    ... facility is satisfied. See Liquidity and Capital Resources-Senior Credit Facility. Year ended December 31, 2009 Long term debt (including U.S. Dollars Fixed rate ...Variable rate ...Average interest rate ...current portion 531.9 US LIBOR plus 2.0%-3.5% 0.71 - 423.9 EURIBOR plus 2.0%-3.5% 0.91...

  • Page 89
    ...December 31, 2007 about our long term fixed and variable interest rate debt that are sensitive to changes in interest rates and foreign currency exchange rates (in millions). Year ended December 31, 2008 Long term Debt including current portion U.S. Dollars Fixed rate ...- Variable rate ...- Average...

  • Page 90
    ...timely decisions regarding required disclosure. (b) Management's Annual Report on Internal Control Over Financial Reporting for Virgin Media Inc. Our management is responsible for establishing and maintaining adequate internal control over our financial reporting, as such term is defined in Exchange...

  • Page 91
    ... annual report includes an attestation report of Ernst & Young LLP, our registered public accounting firm, regarding internal control over financial reporting of Virgin Media Inc. (c) Management's Annual Report on Internal Control Over Financial Reporting for Virgin Media Investment Holdings Limited...

  • Page 92
    ... with the standards of the Public Company Accounting Oversight Board (United States), the consolidated balance sheets of Virgin Media Inc. and subsidiaries as of December 31, 2008 and 2007, and the related consolidated statements of operations, shareholders' equity, and cash flows for each of the...

  • Page 93
    ... ACCOUNTANT FEES AND SERVICES The information required by this Item is incorporated by reference to our Proxy Statement for the 2009 Annual Meeting of Stockholders. PART IV ITEM 15. (a) (1) Financial Statements-See list of Financial Statements on page F-1. (2) Financial Statement Schedules-See list...

  • Page 94
    (This page has been left blank intentionally.)

  • Page 95
    ... financial statements of Virgin Media Investment Holdings Limited and Subsidiaries are included in Item 8: Report of Independent Registered Public Accounting Firm ...Consolidated Balance Sheets-December 31, 2008 and 2007 ...Consolidated Statements of Operations-Years ended December 31, 2008, 2007...

  • Page 96
    ... Position FAS 143-1 ''Accounting for Electronic Waste Obligations'' as of December 12, 2006. We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States), Virgin Media Inc.'s internal control over financial reporting as of December 31, 2008...

  • Page 97
    ... financial instruments ...Deferred revenue and other long term liabilities . Deferred income taxes ...Commitments and contingent liabilities Total liabilities ...Minority interest ...Shareholders' equity Common stock-$0.01 par value; authorized 1,000.0 (2008 and 2007) shares; issued 329.0 (2008...

  • Page 98
    VIRGIN MEDIA INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF OPERATIONS (in millions, except per share data) Year ended December 31, 2008 2007 2006 Revenue ...Costs and expenses Operating costs (exclusive of depreciation shown separately below) Selling, general and administrative expenses ......

  • Page 99
    ... in investing activities ...Financing activities New borrowings, net of financing fees ...Proceeds from employee stock option exercises ...Principal payments on long term debt and capital leases Dividends paid ... Net cash (used in) provided by financing activities ...Effect of exchange rate changes...

  • Page 100
    ... acquisition of Virgin Mobile ...Stock compensation costs ...Dividends paid ...Comprehensive loss: Net loss for the year ended December 31, 2006 ...Currency translation adjustment ...Net losses on derivatives, net of tax . . Reclassification of derivative losses to net income, net of tax ...Pension...

  • Page 101
    ... broadband and mobile virtual network operator and second largest provider in the U.K. of pay television and fixed line telephone services by customer numbers. Through ntl:Telewest Business, which also operates under the Virgin Media group, we provide a complete portfolio of voice, data and internet...

  • Page 102
    ... the accounting acquirer, primarily because Virgin Media Holdings' shareholders owned 75% of the common stock upon completion of the merger. Following the merger, Telewest changed its name to NTL Incorporated, and subsequently to Virgin Media Inc. As a result, the historical financial statements of...

  • Page 103
    VIRGIN MEDIA INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued) Note 2-Significant Accounting Policies (Continued) Fair Values We have determined the estimated fair value amounts presented in these consolidated financial statements using available market information and ...

  • Page 104
    VIRGIN MEDIA INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued) Note 2-Significant Accounting Policies (Continued) recoverability. The movements in our allowance for doubtful accounts for the years ended December 31, 2008, 2007 and 2006 are as follows (in millions): Year ...

  • Page 105
    ... are allocated to various reporting units, which are the operating segments. For purposes of performing the impairment test of goodwill, we established the following reporting units: Cable, Mobile, Virgin Media TV and sit-up. We compare the fair value of the reporting unit to its carrying amount...

  • Page 106
    ... period over which the asset will be utilized, projected future operating results of the asset group, discount rate and long term growth rate. During the year ending December 31, 2008, we impaired intangible assets relating to our sit-up reporting unit totaling £14.9 million. As of December 31...

  • Page 107
    ... earned but unbilled services. Installation revenues are recognized in accordance with the provisions of FASB Statement No. 51, Financial Reporting by Cable Television Companies, in relation to connection and activation fees for cable television, as well as fixed line telephone and internet services...

  • Page 108
    ...the services are delivered. Advertising sales revenue is recognized at estimated realizable values when the advertising is aired. Retail revenues are recognized on dispatch of goods to customers and are net of discounts given and less actual and expected returns, refunds and credit card charge-backs...

  • Page 109
    ... volatility in future cash flows and earnings associated with foreign currency payments in relation to operating costs and purchases of fixed assets incurred in the normal course of business. Our objective in managing exposure to fluctuations in interest rates and foreign currency exchange rates is...

  • Page 110
    ... is performed and documented at each period end to ensure that the hedge remains highly effective. We recognize all derivative financial instruments as either assets or liabilities measured at fair value. Gains and losses resulting from changes in fair value are accounted for depending on the use of...

  • Page 111
    ...securities is anti-dilutive. The average number of shares outstanding is computed as follows (in millions) (as adjusted for the reverse acquisition of Telewest): Year ended December 31, 2008 2007 2006 Adjusted number of shares outstanding at start of period ...Issues of common stock (average number...

  • Page 112
    ...'s financial position, financial performance and cash flows. FAS 161 requires qualitative disclosures about objectives and strategies for using derivatives, quantitative disclosures about fair value amounts of and gains and losses on derivative instruments and disclosures about credit-risk-related...

  • Page 113
    ...The average market price per share of common stock utilized in determining the value of new common stock issued of £15.07 ($26.59) was based on an average of the closing prices of our common stock divided by the Telewest acquisition conversion ratio of 2.5 times for a range of trading days (January...

  • Page 114
    ... shares of Virgin Media Inc. new common stock at an option price calculated in accordance with the formula in the merger agreement. In accordance with the terms of Telewest's equity-based plans, a significant proportion of Telewest's outstanding options that were granted prior to March 3, 2006...

  • Page 115
    .... Customer lists represented existing contracts that related primarily to underlying customer relationships pertaining to the services provided by Telewest. The fair value of these assets was determined utilizing the income approach. We amortize the fair value of these assets on a straight-line...

  • Page 116
    ...Virgin Media that would have been reported had the acquisitions been completed as of the dates presented, and should not be taken as representative of the future consolidated results of operations or financial condition of Virgin Media. 2006 Pro Forma (unaudited) Revenue ...Operating income ...Loss...

  • Page 117
    VIRGIN MEDIA INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued) Note 5-Fixed Assets (Including Leases) Fixed assets consist of (in millions): December 31, 2008 Under Capital Leases 2007 Under Capital Leases Useful Economic Life Total Total Operating equipment Cable ...

  • Page 118
    VIRGIN MEDIA INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued) Note 5-Fixed Assets (Including Leases) (Continued) Future minimum annual payments under capital and operating leases at December 31, 2008 are as follows (in millions). The table reflects our contractual ...

  • Page 119
    VIRGIN MEDIA INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued) Note 6-Goodwill and Intangible Assets Goodwill and intangible assets consist of (in millions): Estimated Useful Life December 31, 2008 2007 Goodwill and intangible assets not subject to amortization: Goodwill...

  • Page 120
    ... as a result of declining market multiples of comparable companies. The income approach valuations in respect of the Mobile reporting unit declined as a result of a combination of an increased discount rate, a reduced terminal value multiple and reduced long term cash flow estimates. As a result, we...

  • Page 121
    ... CONSOLIDATED FINANCIAL STATEMENTS (Continued) Note 7-Investments Through our wholly owned subsidiary, Flextech Broadband Limited, we own a 50% equity investment in the UKTV joint venture companies and a 49.9% equity investment in the Setanta Sports News channel. These investments are accounted for...

  • Page 122
    ...for stock splits, stock dividends or distributions, the issuance of certain rights or warrants, certain cash dividends or distributions or stock repurchases where the price exceeds market values. In the event of specified fundamental changes relating to Virgin Media Inc., referred to as ''make whole...

  • Page 123
    ... on our consolidated statement of operations is as follows (in millions, except per share data): Year ended December 31, 2008 As As Reported Adjustments Adjusted Interest expense ...Income tax benefit ...Net loss ...Net loss per share: Basic and diluted ...Senior Credit Facility (493.3) 6.8 (913...

  • Page 124
    ... Media Finance PLC. In addition, the bulk of the facility is secured through guarantees and first priority pledges of the shares and assets of substantially all of the operating subsidiaries of Virgin Media Investment Holdings Limited, or VMIH, and of receivables arising under any intercompany loans...

  • Page 125
    ... to pay increased levels of dividends on our common stock. On May 15, 2007, we made a mandatory prepayment of £73.6 million on our senior credit facility as a result of cash flow generated in 2006. On December 17, 2007, we made a voluntary prepayment of £200.0 million utilizing available cash...

  • Page 126
    ... reported in the consolidated balance sheets approximate fair value due to the short maturity and nature of these financial instruments. Derivative financial instruments: As a result of our financing activities, we are exposed to market risks from changes in interest and foreign currency exchange...

  • Page 127
    VIRGIN MEDIA INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued) Note 9-Fair Value Measurements (Continued) The carrying amounts and fair values of our long term debt are as follows (in millions): December 31, 2008 Carrying Fair Amount Value December 31, 2007 Carrying Fair ...

  • Page 128
    VIRGIN MEDIA INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued) Note 10-Derivative Financial Instruments and Hedging Activities The fair values of our derivative instruments recorded on our consolidated balance sheet were as follows (in millions): December 31, 2008 ...

  • Page 129
    ... Changes in fair value included within foreign currency (losses) gains Cross-currency interest rate swaps ...Foreign currency forward rate contracts ... £ - 70.7 £ 70.7 During the years ended December 31, 2008, 2007 and 2006, the reclassification of derivative gains to foreign currency (losses...

  • Page 130
    ... and pound sterling exchange rates. These foreign currency forward rate contracts have not been designated as accounting hedges under FAS 133. As such, the contracts are carried at fair value on our balance sheet with changes in the fair value recognized immediately in the consolidated statement of...

  • Page 131
    ... shares of common stock for issuance under the Virgin Media Inc. Stock Incentive Plan. Stock Option Grants As a result of the reverse acquisition of Telewest as described in note 4, the outstanding options on March 3, 2006 were converted into 2.5 options to purchase shares in the new parent company...

  • Page 132
    ... contractual term of 6.5 years. Non-vested Shares As a result of the reverse acquisition of Telewest, each share of our common stock issued and outstanding immediately prior to the effective date of the acquisition was converted into the right to receive 2.5 shares of the new parent company. F-38

  • Page 133
    ...value of shares vested during the years ended December 31, 2008, 2007 and 2006, was £2.9 million, £7.9 million and £1.3 million, respectively. Virgin Media Long Term Incentive Plan Participants in the Virgin Media Long Term Incentive Plan for 2008, 2007 and 2006 are awarded restricted stock units...

  • Page 134
    ...revenue and other long term liabilities ...Accumulated other comprehensive income ...Obligations and Funded Status £32.3 10.6 £9.4 9.4 £41.7 20.0 The change in projected benefit obligation was as follows (in millions): Year ended December 31, 2008 2007 Benefit obligation at beginning Service...

  • Page 135
    VIRGIN MEDIA INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued) Note 12-Employee Benefit Plans (Continued) The change in plan assets was as follows (in millions): Year ended December 31, 2008 2007 Fair value of plan assets at beginning of year . Actual return on plan ...

  • Page 136
    ... benefit obligation ...Fair value of plan assets ...The components of net periodic benefit costs were as follows (in millions): £307.8 273.9 £323.9 318.6 Year ended December 31, 2008 2007 2006 Service cost ...Interest cost ...Expected return on plan assets Recognized actuarial loss ...Plan...

  • Page 137
    ... periodic benefit costs were as follows: December 31, 2008 2007 Discount rate ...Expected long term rate of return on plan assets ...Rate of compensation increase ... 5.75% 5.00% 6.68% 6.57% 3.50% 3.25% Where investments are held in bonds and cash, the expected long term rate of return is taken to...

  • Page 138
    ... the funding position. There were no directly owned shares of our common stock included in the equity securities at December 31, 2008 or 2007. Cash Flows We expect to contribute a total of £13.5 million to our defined benefit pension plans during 2009. Estimated Future Benefit Payments The benefits...

  • Page 139
    VIRGIN MEDIA INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued) Note 13-Restructuring and other charges (Continued) The following tables summarize, for the years ended December 31, 2006, 2007 and 2008, our historical restructuring accruals, the restructuring accruals ...

  • Page 140
    VIRGIN MEDIA INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued) Note 14-Income Taxes The expense/(benefit) for income taxes consists of the following (in millions): Year ended December 31, 2008 2007 2006 Current: Federal ...State and local ...Foreign ...Total current ......

  • Page 141
    ...our deferred tax valuation allowance during the years ended December 31, 2008, 2007 and 2006 (in millions): Year ended December 31, 2008 2007 2006 Balance, January 1, ...Acquisitions ...Expiry of U.S. capital loss carryforwards ...Effect of changes in tax rates ...Increase in UK and US deferred tax...

  • Page 142
    ... in note 4, acquisitions took place in 2006 that affected our share ownership. We consider that these changes caused an ownership change pursuant to Section 382 during 2006. These ownership changes will not restrict our ability to utilize U.S. net operating loss carryforwards at Virgin Media Inc. in...

  • Page 143
    ...TO CONSOLIDATED FINANCIAL STATEMENTS (Continued) Note 14-Income Taxes (Continued) A reconciliation of the beginning and ending amounts of unrecognized tax benefits is as follows (in millions): 2008 2007 Balance at January 1, ...Additions based on tax positions related to the current year Additions...

  • Page 144
    ...Virgin'' name for the TV, broadband internet, telephone and mobile phone services we provide to our residential customers, as well as the acquisition and branding of sports, movies and other premium television content and the sale of certain communications equipment, such as set top boxes and cable...

  • Page 145
    ... Board of Directors. In connection with the reverse acquisition of Telewest, each share of our common stock issued and outstanding immediately prior to the effective time of the acquisition was converted into the right to receive 2.5 shares of the new parent entity's common stock. On March 3, 2006...

  • Page 146
    VIRGIN MEDIA INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued) Note 16-Shareholders' Equity (Continued) The following table summarizes the movement in the number of shares of common stock outstanding during the years ended December 31, 2006, 2007 and 2008 (in millions, ...

  • Page 147
    VIRGIN MEDIA INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued) Note 16-Shareholders' Equity (Continued) our subsidiaries' existing and future indebtedness and the laws of jurisdictions under which those subsidiaries are organized limit the payment of dividends, loan ...

  • Page 148
    ... of broadband and fixed line telephone services to consumers, businesses and public sector organizations on our cable network and, to a lesser extent, off our cable network. We operate our Content segment through our wholly owned subsidiaries Virgin Media Television Limited, or Virgin Media TV, and...

  • Page 149
    VIRGIN MEDIA INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued) Note 18-Industry Segments (Continued) Segment information for the year ended December 31, 2008, 2007 and 2006 was as follows (in millions): Cable Year ended December 31, 2008 Content Mobile Elims. Total ...

  • Page 150
    VIRGIN MEDIA INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued) Note 18-Industry Segments (Continued) Year ended December 31, 2006 Content Mobile Elims. Cable Total Revenue ...Inter segment revenue ...Operating costs ...Selling, general and administrative expenses ... ...

  • Page 151
    ... STATEMENTS (Continued) Note 19-Condensed Consolidated Financial Information (Continued) December 31, 2008 Virgin Media Finance Other guarantors All other VMIH subsidiaries Adjustments (in millions) Balance sheets Company Total Cash and cash equivalents ...£ Restricted cash ...Other current...

  • Page 152
    ... STATEMENTS (Continued) Note 19-Condensed Consolidated Financial Information (Continued) December 31, 2007 Virgin Media Finance Other guarantors All other VMIH subsidiaries Adjustments (in millions) Balance sheets Company Total Cash and cash equivalents ...£ Restricted cash ...Other current...

  • Page 153
    ... FINANCIAL STATEMENTS (Continued) Note 19-Condensed Consolidated Financial Information (Continued) Year ended December 31, 2008 Virgin Media Other All other Company Finance guarantors VMIH subsidiaries Adjustments (in millions) Statements of operations Total Revenue ...Operating costs ...Selling...

  • Page 154
    ... FINANCIAL STATEMENTS (Continued) Note 19-Condensed Consolidated Financial Information (Continued) Year ended December 31, 2007 Virgin Media Other All other Company Finance guarantors VMIH subsidiaries Adjustments (in millions) Statements of operations Total Revenue ...Operating costs ...Selling...

  • Page 155
    ... FINANCIAL STATEMENTS (Continued) Note 19-Condensed Consolidated Financial Information (Continued) Year ended December 31, 2006 Virgin Media Other All other Company Finance guarantors VMIH subsidiaries Adjustments (in millions) Statements of operations Total Revenue ...Operating costs ...Selling...

  • Page 156
    ... (drawdowns) on loans to group companies ...(477.3) Purchase of investments ...- Other ...- Net cash (used in) provided by investing activities ...(477.3) Financing activities: New borrowings, net of financing fees . Proceeds from employee stock options Principal payments on long term debt and...

  • Page 157
    ... ended December 31, 2007 Virgin Media Other All other Company Finance guarantors VMIH subsidiaries Adjustments (in millions) Statements of cash flows Total Net cash provided by (used in) operating activities ...£(17.6) Investing activities: Purchase of fixed and intangible assets ...Acquisitions...

  • Page 158
    ...Financing activities: New borrowings, net of financing fees ...Issuance of stock ...Proceeds from employee stock option excercises ...Share redemption ...Principal payments on long term debt and capital leases ...Dividends paid ...Net cash provided by financing activities ...Effect of exchange rates...

  • Page 159
    VIRGIN MEDIA INC. SCHEDULE I-CONDENSED FINANCIAL INFORMATION OF REGISTRANT CONDENSED BALANCE SHEETS (in millions except par value) December 31, 2008 2007 Assets Current assets Cash and cash equivalents ...Other current assets ...Total current assets Fixed assets, net ...Investments in and loans ...

  • Page 160
    VIRGIN MEDIA INC. CONDENSED FINANCIAL INFORMATION OF REGISTRANT STATEMENT OF OPERATIONS (in millions) Year ended December 31, 2008 2007 2006 Costs and expenses General and administrative expenses ...Restructuring and other charges ...Operating loss ...Other income (expense) Interest income and ...

  • Page 161
    ... STATEMENT OF CASH FLOWS (in millions) Year ended December 31, 2008 2007 2006 Net cash used in operating activities ...Investing activities Principal (drawdowns) repayments on loans to group companies ...Net cash (used in) provided by investing activities ...Financing activities Proceeds from new...

  • Page 162
    ...In our condensed financial statements, our investment in subsidiaries is stated at cost plus equity in the undistributed earnings of the subsidiaries. Our share of net loss of our subsidiaries is included in net loss using the equity method of accounting. The condensed financial statements should be...

  • Page 163
    ... balance sheets of Virgin Media Investment Holdings Limited and subsidiaries (the ''Company''), an indirect wholly-owned subsidiary of Virgin Media Inc. (the ''Parent''), as of December 31, 2008 and 2007, and the related consolidated statements of operations, shareholders' equity, and cash...

  • Page 164
    ...due to group companies ...Derivative financial instruments ...Deferred revenue and other long term liabilities Deferred income taxes ...Commitments and contingent liabilities Minority interest ...Shareholders' equity Common stock-£0.001 par value; authorized 1,000,000 ordinary shares (2008 and 2007...

  • Page 165
    VIRGIN MEDIA INVESTMENT HOLDINGS LIMITED AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF OPERATIONS (in millions) Year ended December 31, 2008 2007 2006 Revenue ...Costs and expenses Operating costs (exclusive of depreciation shown separately below) Selling, general and administrative expenses ......

  • Page 166
    VIRGIN MEDIA INVESTMENT HOLDINGS LIMITED AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS (in millions) Year ended December 31, 2008 2007 2006 Operating activities Net loss ...Cumulative effect of changes in accounting principles ...Loss before cumulative effect of changes in accounting ...

  • Page 167
    VIRGIN MEDIA INVESTMENT HOLDINGS LIMITED AND SUBSIDIARIES CONSOLIDATED STATEMENT OF SHAREHOLDERS' EQUITY (in millions, except share data) Accumulated Other Comprehensive Income (Loss) Share Capital Net £0.001 Additional Comprehensive Foreign Pension (Losses) Par Value Paid-In Income Currency ...

  • Page 168
    ... broadband and mobile virtual network operator and second largest provider in the U.K. of pay television and fixed line telephone services by customer numbers. Through ntl:Telewest Business, which also operates under the Virgin Media group, we provide a complete portfolio of voice, data and internet...

  • Page 169
    ... over the operating and financial policies, the equity method of accounting is used. Accordingly, our share of the earnings and losses of these companies are included in the share of income (losses) in equity investments in the accompanying consolidated statements of operations. For investments in...

  • Page 170
    ...are recorded at the exchange rate ruling at the date of the transaction and are remeasured each period with gains and losses recorded in the consolidated statement of operations. Cash Equivalents and Restricted Cash Cash equivalents are short term highly liquid investments purchased with an original...

  • Page 171
    VIRGIN MEDIA INVESTMENT HOLDINGS LIMITED AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued) Note 2-Significant Accounting Policies (Continued) Inventory Inventory consists of consumer goods for re-sale and programming inventory. Consumer goods for re-sale are valued at the lower...

  • Page 172
    ... are allocated to various reporting units, which are the operating segments. For purposes of performing the impairment test of goodwill, we established the following reporting units: Cable, Mobile, Virgin Media TV and sit-up. We compare the fair value of the reporting unit to its carrying amount...

  • Page 173
    ... period over which the asset will be utilized, projected future operating results of the asset group, discount rate and long term growth rate. During the year ending December 31, 2008, we impaired intangible assets relating to our sit-up reporting unit totaling £14.9 million. As of December 31...

  • Page 174
    ... earned but unbilled services. Installation revenues are recognized in accordance with the provisions of FASB Statement No. 51, Financial Reporting by Cable Television Companies, in relation to connection and activation fees for cable television, as well as fixed line telephone and internet services...

  • Page 175
    VIRGIN MEDIA INVESTMENT HOLDINGS LIMITED AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued) Note 2-Significant Accounting Policies (Continued) services are delivered. Advertising sales revenue is recognized at estimated realizable values when the advertising is aired. Retail ...

  • Page 176
    VIRGIN MEDIA INVESTMENT HOLDINGS LIMITED AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued) Note 2-Significant Accounting Policies (Continued) Derivative Financial Instruments We are exposed to various market risks, including changes in foreign currency exchange rates and ...

  • Page 177
    VIRGIN MEDIA INVESTMENT HOLDINGS LIMITED AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued) Note 2-Significant Accounting Policies (Continued) Software Development Costs We capitalize costs related to computer software developed or obtained for internal use in accordance with ...

  • Page 178
    VIRGIN MEDIA INVESTMENT HOLDINGS LIMITED AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued) Note 3-Recent Accounting Pronouncements (Continued) In December 2007, the FASB issued Statement No. 141(R), Business Combinations, or FAS 141(R). FAS 141(R) requires the acquiring entity ...

  • Page 179
    .... The average market price per share of common stock utilized in determining the value of new common stock issued of £15.07 ($26.59) was based on an average of the closing prices of Virgin Media common stock divided by the Telewest acquisition conversion ratio of 2.5 times for a range of trading...

  • Page 180
    VIRGIN MEDIA INVESTMENT HOLDINGS LIMITED AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued) Note 4-Acquisitions (Continued) Contractual relationships represented the fair value of certain contracts with distributors of our products and services. The fair value of these ...

  • Page 181
    VIRGIN MEDIA INVESTMENT HOLDINGS LIMITED AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued) Note 5-Fixed Assets (Including Leases) Fixed assets consist of (in millions): December 31, 2008 Under Capital Leases 2007 Under Capital Leases Useful Economic Life Total Total ...

  • Page 182
    VIRGIN MEDIA INVESTMENT HOLDINGS LIMITED AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued) Note 5-Fixed Assets (Including Leases) (Continued) Future minimum annual payments under capital and operating leases at December 31, 2008 are as follows (in millions). The table reflects...

  • Page 183
    VIRGIN MEDIA INVESTMENT HOLDINGS LIMITED AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued) Note 6-Goodwill and Intangible Assets Goodwill and intangible assets consist of (in millions): Estimated Useful Life December 31, 2008 2007 Goodwill and intangible assets not subject to...

  • Page 184
    ... as a result of declining market multiples of comparable companies. The income approach valuations in respect of the Mobile reporting unit declined as a result of a combination of an increased discount rate, a reduced terminal value multiple and reduced long term cash flow estimates. As a result, we...

  • Page 185
    ...Share of net assets ... 137.7 215.8 353.5 145.6 223.1 368.7 Note 8-Long Term Debt Long term debt consists of (in millions): December 31, 2008 2007 8.75% U.S. Dollar senior loan notes due 2014 due to Virgin Media Finance PLC 9.75% Sterling senior loan notes due 2014 due to Virgin Media Finance PLC...

  • Page 186
    VIRGIN MEDIA INVESTMENT HOLDINGS LIMITED AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued) Note 8-Long Term Debt (Continued) Senior Notes Our parent, Virgin Media Finance PLC, issued senior notes due 2014 on April 13, 2004. On July 25, 2006, Virgin Media Finance PLC issued $...

  • Page 187
    VIRGIN MEDIA INVESTMENT HOLDINGS LIMITED AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued) Note 8-Long Term Debt (Continued) to June 2012 and reset certain financial covenant ratios. These changes will only become effective after we have made certain principal repayments under...

  • Page 188
    ...to pay increased levels of dividends on Virgin Media's common stock. On May 15, 2007, we made a mandatory prepayment of £73.6 million on our senior credit facility as a result of cash flow generated in 2006. On December 17, 2007, we made a voluntary prepayment of £200.0 million utilizing available...

  • Page 189
    VIRGIN MEDIA INVESTMENT HOLDINGS LIMITED AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued) Note 9-Fair Value Measurements (Continued) FAS 157 defines fair value as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction ...

  • Page 190
    ...of our long term debt are as follows (in millions): December 31, 2008 Carrying Fair Amount Value December 31, 2007 Carrying Fair Amount Value Senior credit facility ...8.75% U.S. dollar loan notes due 2014 to Virgin Media Finance PLC ...9.75% Sterling loan notes due 2014 to Virgin Media Finance PLC...

  • Page 191
    VIRGIN MEDIA INVESTMENT HOLDINGS LIMITED AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued) Note 10-Derivative Financial Instruments and Hedging Activities The fair values of our derivative instruments recorded on our consolidated balance sheet were as follows (in millions): ...

  • Page 192
    VIRGIN MEDIA INVESTMENT HOLDINGS LIMITED AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued) Note 10-Derivative Financial Instruments and Hedging Activities (Continued) The gains or losses on derivative instruments recognized through the consolidated statement of operations and ...

  • Page 193
    ... and pound sterling exchange rates. These foreign currency forward rate contracts have not been designated as accounting hedges under FAS 133. As such, the contracts are carried at fair value on our balance sheet with changes in the fair value recognized immediately in the consolidated statement of...

  • Page 194
    VIRGIN MEDIA INVESTMENT HOLDINGS LIMITED AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued) Note 10-Derivative Financial Instruments and Hedging Activities (Continued) The foreign exchange risks relating to the $550 million 9.125% senior notes due 2016, the A225 million senior ...

  • Page 195
    VIRGIN MEDIA INVESTMENT HOLDINGS LIMITED AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued) Note 11-Employee Benefit Plans (Continued) Obligations and Funded Status The change in projected benefit obligation was as follows (in millions): Year ended December 31, 2008 2007 ...

  • Page 196
    VIRGIN MEDIA INVESTMENT HOLDINGS LIMITED AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued) Note 11-Employee Benefit Plans (Continued) Amount Included in Other Comprehensive Income The amount included in other comprehensive income for the years ended December 31, 2008 and 2007 ...

  • Page 197
    VIRGIN MEDIA INVESTMENT HOLDINGS LIMITED AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued) Note 11-Employee Benefit Plans (Continued) The components of net periodic benefit costs were as follows (in millions): Year ended December 31, 2008 2007 2006 Service cost ...Interest ...

  • Page 198
    ... position. There were no directly owned shares of Virgin Media's common stock included in the equity securities at December 31, 2008 or 2007. Cash Flows We expect to contribute a total of £13.5 million to our defined benefit pension plans during 2009. Estimated Future Benefit Payments The benefits...

  • Page 199
    VIRGIN MEDIA INVESTMENT HOLDINGS LIMITED AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued) Note 11-Employee Benefit Plans (Continued) Defined Contribution Pension Plans Our subsidiaries operate defined contribution pension plans in the U.K. The total expense in relation to ...

  • Page 200
    VIRGIN MEDIA INVESTMENT HOLDINGS LIMITED AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued) Note 12-Restructuring and other charges (Continued) during 2006 and the accruals for our restructuring plans announced in the fourth quarter of 2008 (in millions): Historical ...

  • Page 201
    VIRGIN MEDIA INVESTMENT HOLDINGS LIMITED AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued) Note 13-Income Taxes (Continued) There are significant current year losses in the U.K. The current tax benefit relates to amounts receivable in respect of the sale of U.K. tax losses to ...

  • Page 202
    VIRGIN MEDIA INVESTMENT HOLDINGS LIMITED AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued) Note 13-Income Taxes (Continued) January 10, 2003 is reduced, the benefit would reduce excess reorganization value, then reduce other intangible assets existing at that date, then be ...

  • Page 203
    VIRGIN MEDIA INVESTMENT HOLDINGS LIMITED AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued) Note 13-Income Taxes (Continued) A reconciliation of the beginning and ending amounts of unrecognized tax benefits is as follows (in millions): 2008 2007 Balance at January 1, ......

  • Page 204
    ...Virgin'' name for the TV, broadband internet, telephone and mobile phone services we provide to our residential customers, as well as the acquisition and branding of sports, movies and other premium television content and the sale of certain communications equipment, such as set top boxes and cable...

  • Page 205
    ...party to us. We had agreements with Virgin Retail Limited in respect to sales of our communications services (such as internet, television, fixed line telephone and mobile telephone services), through the various Virgin Megastores outlets. On September 17, 2007, the Virgin Group sold its interest in...

  • Page 206
    ...our method of internal reporting. Our primary segment is our Cable segment, which consists of the distribution of television programming to consumers and the provision of broadband and fixed line telephone services to consumers, businesses and public sector organizations on our cable network and, to...

  • Page 207
    ... FINANCIAL STATEMENTS (Continued) Note 16-Industry Segments (Continued) our cable network. We operate a Content segment through our wholly owned subsidiaries Virgin Media Television Limited, or Virgin Media TV, and sit-up Limited, or sit-up, which supply television programming to the U.K. pay...

  • Page 208
    VIRGIN MEDIA INVESTMENT HOLDINGS LIMITED AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued) Note 16-Industry Segments (Continued) Year ended December 31, 2007 Content Mobile Elims. Cable Total Revenue ...Inter segment revenue ...Operating costs ...Selling, general and ...

  • Page 209
    ... BERKETT Neil A. Berkett Chief Executive Officer Date: February 26, 2009 By: /s/ JERRY V. ELLIOTT Jerry V. Elliott Chief Financial Officer VIRGIN MEDIA INVESTMENT HOLDINGS LIMITED Date: February 26, 2009 By: /s/ NEIL A. BERKETT Neil A. Berkett Chief Executive Officer Date: February 26, 2009...

  • Page 210
    ... the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated. VIRGIN MEDIA INC. Name Title Date By: /s/ NEIL A. BERKETT Neil A. Berkett Chief Executive Officer and Director (principal...

  • Page 211
    Name Title Date By: /s/ JAMES F. MOONEY James F. Mooney Director February 26, 2009 By: /s/ JOHN RIGSBY John Rigsby Director February 26, 2009 By: /s/ STEVEN J. SIMMONS Steven J. Simmons Director February 26, 2009 By: /s/ GEORGE R. ZOFFINGER George R. Zoffinger Director February 26,...

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    VIRGIN MEDIA INVESTMENT HOLDINGS LIMITED Name Title Date By: /s/ NEIL A. BERKETT Neil A. Berkett Chief Executive Officer (principal executive officer) February 26, 2009 By: /s/ JERRY V. ELLIOTT Jerry V. Elliott Chief Financial Officer (principal accounting and financial officer) February 26,...

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    ...to Exhibit 2.1 to the Current Report on Form 8-K of Virgin Media Inc. as filed with the Securities and Exchange Commission on December 20, 2005). Amendment No. 1 to Amended and Restated Agreement and Plan of Merger, dated as of January 30, 2006, among NTL Incorporated, Telewest Global, Inc., Neptune...

  • Page 214
    ... Exchange Commission on March 1, 2007). High Yield Intercreditor Deed dated 13 April 2004 among NTL Cable PLC as Issuer, NTL Investment Holdings Limited as Borrower and as High Yield Guarantor, Credit Suisse First Boston as Facility Agent and Bank Group Security Trustee, The Bank of New York as High...

  • Page 215
    ... 8-K of Virgin Media Holdings Inc. as filed with the Securities and Exchange Commission on April 20, 2004). Indenture, dated as of July 25, 2006, among NTL Cable PLC, NTL Incorporated, the Intermediate Guarantors (as defined in the Indenture), NTL Investment Holdings Limited, The Bank of New York as...

  • Page 216
    ... Report on Form 10-Q of Virgin Media Inc. as filed with the Securities and Exchange Commission on November 9, 2006). Senior Guarantee, dated as of October 30, 2006, among NTL Holdings Inc., NTL (UK) Group, Inc., NTL Communications Limited, NTL Incorporated, NTL, Telewest LLC and The Bank of New York...

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    ... the Current Report on Form 8-K of Virgin Media Inc. as filed with the Securities and Exchange Commission on July 12, 2006). Form of Restricted Stock Unit Agreement used for grants made on May 16, 2007 by Virgin Media Inc. to its executive officers pursuant to the 2007-2009 long-term incentive plan...

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    ... (Incorporated by reference to Exhibit 10.1 to the Current Report on Form 8-K of Virgin Media Inc. as filed with the Securities and Exchange Commission on May 9, 2008). Restricted Stock Agreement, dated as of March 16, 2006, between NTL Incorporated and Neil A. Berkett (Incorporated by reference to...

  • Page 219
    ...Current Report on Form 8-K of Virgin Media Inc. as filed with the Securities and Exchange Commission on February 7, 2006). Letter Agreement, dated as of January 12, 2009, between Telewest Communications Group Limited and Malcolm Wall. Restricted Stock Agreement, dated as of May 26, 2006, between NTL...

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    ... 10.6 to the Quarterly Report on Form 10-Q of Virgin Media Inc. as filed with the Securities and Exchange Commission on November 8, 2007). Letter Agreement, dated as of April 3, 2006, between NTL Incorporated and Virgin Enterprises Limited relating to Virgin Enterprises Limited's right to propose...

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    ... the Annual Report on Form 10-K of Virgin Media Inc. as filed with the Securities and Exchange Commission on February 29, 2008). List of subsidiaries of the registrant. Consent of Ernst & Young LLP for the registrant. Consent of Ernst & Young LLP for the additional registrant. Certification of Chief...

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    Stockholder Information Virgin Media Inc. NASDAQ: VMED www.virginmedia.com Corporate Headquarters Virgin Media Inc. 909 Third Avenue Suite 2863 New York, NY 10022 Tel: +1 212 906 8440 Head Office Media House Bartley Wood Business Park Hook Hampshire RG27 9UP Tel: +44 (0) 1256 75 2000 Independent ...

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