Virgin Media 2008 Annual Report Download - page 54

Such a valuation requires management to make significant estimates and assumptions, especially with
respect to intangible assets.
Critical estimates in valuing certain of the intangible assets include but are 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’s assumptions about fair
value are based upon assumptions believed to be reasonable, but which are inherently uncertain and
unpredictable. Assumptions may be incomplete or inaccurate, and unanticipated events and
circumstances may occur, which may affect management’s estimates.
Other estimates associated with the accounting for these acquisitions may change as additional
information becomes available regarding the assets acquired and liabilities assumed. In particular,
liabilities in relation to tax exposures or liabilities to restructure the pre-acquisition businesses of NTL,
Telewest and Virgin Mobile, including the exit of properties and termination of employees, are revised
as estimates are updated.
Recent Accounting Pronouncements
In September 2006, FASB issued Statement No. 157, Fair Value Measurements, or FAS 157.
FAS 157 provides guidance for using fair value to measure assets and liabilities. It also responds to
investors’ requests for expanded information about the extent to which companies measure assets and
liabilities at fair value, the information used to measure fair value, and the effect of fair value
measurements on earnings. FAS 157 applies whenever other standards require (or permit) assets or
liabilities to be measured at fair value, and does not expand the use of fair value in any new
circumstances. FAS 157 is effective for certain financial instruments included in financial statements
issued for fiscal years beginning after November 15, 2007 and for all other non-financial instruments for
fiscal years beginning after November 15, 2008. The provisions of FAS 157 relating to certain financial
instruments were adopted by us in the first quarter of 2008 effective January 1, 2008, and did not have
a material impact on our consolidated financial statements.
In February 2007, the FASB issued Statement No. 159, The Fair Value Option for Financial Assets
and Financial Liabilities—Including an amendment of FASB Statement No. 115, or FAS 159. FAS 159
allows companies to elect to measure certain assets and liabilities at fair value and is effective for fiscal
years beginning after November 15, 2007. We did not elect to measure any of our financial assets or
liabilities at fair value as a result of the implementation of FAS 159.
In December 2007, the FASB issued Statement No. 141(R), Business Combinations, or FAS 141(R).
FAS 141(R) requires the acquiring entity in a business combination to prospectively recognize the full
fair value of assets acquired and liabilities assumed in the transaction (whether a full or partial
acquisition); establishes the acquisition-date fair value as the measurement objective for all assets
acquired and liabilities assumed; requires expensing of most transaction and restructuring costs; and
requires the acquirer to disclose to investors and other users all of the information needed to evaluate
and understand the nature and financial effect of the business combination. Further, regardless of the
business combination date, any subsequent changes to acquired uncertain tax positions and valuation
allowances associated with acquired deferred tax assets will no longer be applied to goodwill but will be
recognized as an adjustment to income tax expense. FAS 141(R) is effective for financial statements
issued for fiscal years beginning after December 15, 2008. While we are still addressing the impact of
the adoption of FAS 141(R), it is not expected to have a material impact on our consolidated financial
statements.
In December 2007, the FASB issued Statement No. 160, Noncontrolling Interests in Consolidated
Financial Statements—an Amendment of ARB No. 51, or FAS 160. FAS 160 establishes requirements for
ownership interests in subsidiaries held by parties other than ourselves (sometimes called ‘‘minority
52