Virgin Media 2008 Annual Report Download - page 34

sector at both the U.K. and the EU level. Regulatory changes relating to our activities and those of our
competitors, 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 in which we operate are subject to investigation by regulators, which could lead to enforcement
actions, fines and penalties or the assertion of private litigation claims and damages. Any such action
could harm our reputation and result in increased costs to the business.
There is no assurance that new products we may introduce will achieve full functionality or market
acceptance.
Our strategy requires that we roll-out new products and services, including, for example, the
present roll-out of 50Mb broadband. We cannot guarantee that this new service, or any other new
product or service that we may develop in the future, will perform as expected. Should these new
products and services fail to perform as expected or should they fail to gain market acceptance, our
results of operations may be negatively effected.
We are subject to tax in more than one tax jurisdiction and our structure poses various tax risks.
We are subject to taxation in the U.S. and the U.K. Our effective tax rate and tax liability will be
affected by a number of factors in addition to our operating results, including the amount of taxable
income in particular jurisdictions, the tax rates in those jurisdictions, tax treaties between jurisdictions,
the manner in which and extent to which we transfer funds to and repatriate funds from our
subsidiaries, accounting standards and changes in accounting standards, and future changes in the law.
As we operate in more than one tax jurisdiction and may therefore incur losses in one jurisdiction that
cannot be offset against income earned in a different jurisdiction, we may pay income taxes in one
jurisdiction for a particular period even though on an overall basis we incur a net loss for that period.
We have a U.S. holding company structure in which substantially all of our operations are
conducted in U.K. subsidiaries that are owned by one or more members of a U.S. holding company
group. As a result, although we do not expect to have current U.K. tax liabilities on our operating
earnings for at least the medium term, our operations may give rise to U.S. tax on ‘‘Subpart F’’ income
generated by our U.K. subsidiaries, or on repatriations of cash from our U.K. operating subsidiaries to
the U.S. holding company group. While we believe that we have substantial U.S. tax basis in some of
our U.K. subsidiaries which may be available to avoid or reduce U.S. tax on repatriation of cash from
our U.K. subsidiaries, there can be no assurance that the Internal Revenue Service, or IRS, will not
seek to challenge the amount of that tax basis or that we will be able to utilize such basis under
applicable tax law. As a result, although in accordance with applicable law we will seek to minimize our
U.S. tax liability as well as our overall worldwide tax liability, we may incur U.S. tax liabilities with
respect to repatriation of cash from our U.K. subsidiaries to the United States. The amount of the tax
liability, if any, would depend upon a multitude of factors, including the amount of cash actually
repatriated.
Acquisitions and other strategic transactions present many risks, and we may not realize the financial and
strategic goals that were contemplated at the time of any transaction.
From time to time we have made acquisitions, dispositions and have entered into other strategic
transactions. In connection with such transactions, we may incur unanticipated expenses, fail to realize
anticipated benefits, have difficulty integrating the acquired businesses, disrupt relationships with
current and new employees, customers and suppliers, incur significant indebtedness, or have to delay or
not proceed with announced transactions. These factors could harm our business and our reputation.
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