Virgin Media 2008 Annual Report Download - page 107

VIRGIN MEDIA INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
Note 2—Significant Accounting Policies (Continued)
In 2006, we initiated a number of restructuring programs as part of our acquisitions of Telewest
and Virgin Mobile. Accruals in respect to exit activities of the acquired businesses are recognized under
EITF 95-3, Recognition of Liabilities in Connection with a Purchase Business Combination, and included
in the acquired company’s opening balance sheet. Accruals in respect to exit activities of the historic
NTL business are recognized under FAS 146.
In 2008, we initiated a restructuring program aimed at driving further improvements in our
operational performance and eliminating inefficiencies. Accruals in respect to exit activities within this
program are recognized at the date the liability is incurred.
Revenue Recognition
We recognize revenue only when it is realized or realizable and earned. We recognize revenue
when all of the following are present:
• persuasive evidence of an arrangement exists between us and our customers;
• delivery has occurred or the services have been rendered;
• the price for the service is fixed or determinable; and
• collectibility is reasonably assured.
Fixed line telephone, cable television and internet revenues are recognized as the services are
provided to customers. At the end of each period, adjustments are recorded to defer revenue relating
to services billed in advance and to accrue for 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, on the basis that we market and
maintain a unified fiber network through which we provide all of these services. Installation revenues
are recognized at the time the installation has been completed to the extent that those fees are less
than direct selling costs. Installation fees in excess of direct selling costs are deferred and amortized
over the expected life of the customer’s connection.
Rental revenues in respect of line rentals and rental of equipment provided to customers are
recognized on a straight-line basis over the term of the rental agreement.
Mobile handset and other equipment revenues are recognized when the goods have been delivered
and title has passed. Equipment revenue is stated net of discounts earned through service usage.
Mobile service revenues include airtime, data, roaming and long-distance revenues and are invoiced
and recorded as part of a periodic billing cycle. Service revenues are recognized as the services are
provided. At the end of each period, adjustments are recorded to defer revenue relating to services
billed in advance and to accrue for earned but unbilled services.
Contract customers are billed in arrears based on usage and revenue is recognized when the
service is rendered and collectibility is reasonably assured. Revenue from non-contract pre-pay
customers is recorded as deferred revenue prior to commencement of services and is recognized as the
services are rendered or usage expires.
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