Virgin Media 2008 Annual Report Download - page 68

same period in 2006. This increase was primarily attributable to the reverse acquisition of Telewest and
to the acquisition of Virgin Mobile and higher marketing costs in connection with the Virgin Media
rebrand, partially offset by a reduction in our employee expenses as a result of our integration activities
together with lower company bonus scheme payments, a reduction in our share-based compensation
expense resulting primarily from stock and option forfeitures, lower bad debt expense due to
operational improvements in our billing and collections following the integration of our systems and
processes, and gains resulting from the settlement of certain contractual issues.
Restructuring and other charges
Restructuring and other charges of £28.7 million in the year ended December 31, 2007 and
£67.0 million in the year ended December 31, 2006 related primarily to employee termination costs and
lease exit costs in connection with our programs initiated in respect of the reverse acquisition of
Telewest.
The following tables summarize our historical restructuring accruals and the restructuring accruals
resulting from our acquisitions made during 2006 (in millions):
Historical
Restructuring Acquisition Restructuring
Accruals Accruals Total
Involuntary
Employee
Termination
Lease and Related Lease
Exit Costs Costs Exit Costs
Balance, December 31, 2006 ..................... £43.4 £ 18.7 £ 64.7 £126.8
Amendments offset against goodwill ................ — — (11.3) (11.3)
Charged to expense ............................ 3.6 27.9 5.5 37.0
Revisions ................................... (0.1) — (8.2) (8.3)
Utilized .................................... (11.0) (34.0) (9.6) (54.6)
Balance, December 31, 2007 ..................... £35.9 £ 12.6 £ 41.1 £ 89.6
Depreciation expense
For the year ended December 31, 2007, depreciation expense increased to £924.9 million from
£799.1 million for the same period in 2006. This increase was primarily attributable to the reverse
acquisition of Telewest and the acquisition of Virgin Mobile, together with purchases of new fixed
assets during the year and the effect of a full year of depreciation expense in 2007 for assets placed in
service in 2006.
Amortization expense
For the year ended December 31, 2007, amortization expense increased to £313.3 million from
£246.6 million for the same period in 2006. The increase in amortization expense related to additional
intangible assets arising from the reverse acquisition of Telewest and from the acquisition of Virgin
Mobile.
Interest income and other, net
For the year ended December 31, 2007, interest income and other decreased to £19.5 million from
£34.7 million for the year ended December 31, 2006 primarily as a result of increased losses on
disposals of fixed assets and a decline in interest income due to lower average cash balances, partially
offset by a gain on disposal of investments. In 2007, interest income and other included gains on
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