Virgin Media 2008 Annual Report Download - page 173

VIRGIN MEDIA INVESTMENT HOLDINGS LIMITED AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
Note 2—Significant Accounting Policies (Continued)
long-lived assets with other assets and liabilities at the lowest level for which identifiable cash flows are
largely independent of the cash flows of other assets and liabilities (the asset group) and, secondly,
estimating the undiscounted future cash flows that are directly associated with and expected to arise
from the use of and eventual disposition of such asset group. We estimate the undiscounted cash flows
over the remaining useful life of the primary asset within the asset group. If the carrying value of the
asset group exceeds the estimated undiscounted cash flows, we record an impairment charge to the
extent the carrying value of the long-lived asset exceeds its fair value. We determine fair value through
quoted market prices in active markets or, if quoted market prices are unavailable, through the
performance of internal analysis of discounted cash flows or external appraisals. The undiscounted and
discounted cash flow analyses are based on a number of estimates and assumptions, including the
expected 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, 2008, there were no indicators of impairment
that suggest the carrying amounts of our long-lived assets are not recoverable.
Deferred Financing Costs
Deferred financing costs are incurred in connection with the issuance of debt and are amortized
over the term of the related debt using the effective interest method. Deferred financing costs of
£104.8 million and £88.9 million as of December 31, 2008 and 2007, respectively, are included in other
assets on the consolidated balance sheets.
Restructuring Costs
As of January 1, 2003, we adopted FASB Statement No. 146, Accounting for Costs Associated with
Exit or Disposal Activities, or FAS 146, and recognize a liability for costs associated with restructuring
activities when the liability is incurred. Prior to 2003, we recognized a liability for costs associated with
restructuring activities at the time a commitment to restructure was given in accordance with
EITF 94-3, Liability Recognition for Certain Employee Termination Benefits and Other Costs to Exit an
Activity (including Certain Costs Incurred in a Restructuring), or EITF 94-3. Liabilities for costs
associated with restructuring activities initiated prior to January 1, 2003 continue to be accounted for
under EITF 94-3.
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.
F-79