Virgin Media 2008 Annual Report Download - page 56

Selling, general and administrative expenses. For the year ended December 31, 2008, selling,
general and administrative expenses decreased to £884.3 million from £960.2 million for the same
period in 2007. This decrease was primarily attributable to lower employee costs primarily as a result of
fewer employees, lower bad debt expense and a reduction in costs in relation to marketing and our
rebrand to Virgin Media in 2007. The decrease was partially offset by increased professional charges.
Restructuring and other charges
For the year ended December 31, 2008, restructuring and other charges decreased to £22.7 million
from £28.7 million for the same period in 2007. Restructuring and other charges in the year ended
December 31, 2008, related primarily to contract and lease exit costs in connection with the
restructuring program initiated in the last quarter of 2008 as discussed below. Restructuring and other
charges in the year ended December 31, 2007, related primarily to employee termination costs and
lease exit costs in connection with our restructuring programs initiated in respect of the reverse
acquisition of Telewest.
During the fourth quarter of 2008, we commenced the implementation of a restructuring plan
aimed at driving further improvements in our operational performance and eliminating inefficiencies in
order to create a fully-integrated, customer-focused organization. This plan will involve the incurrence
of substantial operating and capital expenditures, including certain costs which we expect to treat as
restructuring costs under FAS 146.
The following table summarizes our historical restructuring accruals, the restructuring accruals
resulting from the acquisitions made by us during 2006 and the restructuring plan announced in 2008
(in millions):
Historical
Restructuring 2006 Acquisition 2008
Accruals Restructuring Accruals Restructuring Accruals Total
Involuntary Involuntary
Employee Employee
Termination Termination Lease and
Lease and Related Lease and Related Contract
Exit Costs Costs Exit Costs Costs Exit Costs
Balance, December 31, 2007 .... £35.9 £ 12.6 £41.1 £ — £ — £ 89.6
Charged to expense ........... 2.3 — 3.4 2.0 14.0 21.7
Revisions .................. (1.0) (1.7) 3.7 — — 1.0
Utilized ................... (20.7) (10.9) (9.7) — — (41.3)
Balance, December 31, 2008 .... £16.5 £ — £38.5 £2.0 £14.0 £ 71.0
Depreciation expense
For the year ended December 31, 2008, depreciation expense decreased to £905.1 million from
£924.9 million for the same period in 2007. This decrease was primarily as a result of fixed assets
becoming fully depreciated, partially offset by increases in depreciation in respect of new fixed assets,
relating particularly to the upgrade and expansion of our networks, and changes in the useful economic
lives of certain asset categories with effect from January 1, 2008.
Amortization expense
For the year ended December 31, 2008, amortization expense decreased to £296.9 million from
£313.3 million for the same period in 2007. The decrease in amortization expense related primarily to
the final amortization of certain intangible assets, partially offset by the reduction in the remaining
useful economic lives of certain intangible assets with effect from January 1, 2008.
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