Virgin Media 2008 Annual Report Download - 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 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.
Subscriber Acquisition Costs
Costs incurred in respect to the acquisition of customers of our Mobile segment, including
payments to distributors and the cost of handset promotions, are expensed as incurred.
Advertising Expense
We expense the cost of advertising as incurred. Advertising costs were £97.2 million, £104.9 million
and £80.5 million in 2008, 2007 and 2006, respectively.
Stock-Based Compensation
We are an indirect, wholly owned subsidiary of Virgin Media. Accordingly, we have no stock-based
compensation plans. Certain of our employees participate in the stock-based compensation plans of
Virgin Media, which are described in Virgin Media’s consolidated financial statements. On
December 16, 2004, the FASB issued Statement No. 123 (revised 2004), Share Based Payment, or
FAS 123R, which is a revision of FASB Statement No. 123, Accounting for Stock-Based Compensation,
or FAS 123. FAS 123R also supersedes APB 25 and amends FASB Statement No. 95, Statement of Cash
Flows, or FAS 95.
Virgin Media adopted FAS 123R on January 1, 2006 and elected to use the modified prospective
method, whereby, prior period results were not restated. Stock-based compensation expense is
recognized as a component of selling, general and administrative expenses in the consolidated
statement of operations.
Pensions
We account for our defined benefit pension plans using FASB Statement No. 87, Employer’s
Accounting for Pensions, or FAS 87, and the disclosure rules under FASB Statement No. 132 (revised),
Employers Disclosures about Pensions and Other Postretirement Benefits, an Amendment of FASB
Statements 87, 88 and 106, or FAS 132R. Under FAS 87, pension expense is recognized on an accrual
basis over employees’ approximate service periods. Pension expense calculated under FAS 87 is
generally independent of funding decisions or requirements.
In September 2006, the FASB issued Statement No. 158, Employers’ Accounting for Defined Benefit
Pension and Other Postretirement Plans—An Amendment of FASB Statement No. 87, 88, 106 and 132(R),
or FAS 158. FAS 158 requires that the funded status of defined benefit postretirement plans be
recognized on a company’s balance sheet, and changes in the funded status be reflected in
comprehensive income, effective for fiscal years ending after December 15, 2006, which we adopted for
the year ended December 31, 2006. FAS 158 also requires companies to measure the funded status of
the plan as of the date of its fiscal year-end, effective for fiscal years ending after December 15, 2008.
The impact of adopting the recognition provisions of FAS 158 as of December 31, 2006 was an increase
in liabilities of £9.4 million and a pre-tax increase in the accumulated other comprehensive loss of
£9.4 million.
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