Virgin Media 2009 Annual Report Download - page 142

VIRGIN MEDIA INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
Note 14—Income Taxes (Continued)
Deferred income taxes reflect the net tax effects of temporary differences between the carrying
amounts of assets and liabilities for financial reporting purposes and the amounts used for income tax
purposes. Significant components of deferred tax liabilities and assets are as follows (in millions):
December 31,
2009 2008
Deferred tax liabilities:
Intangibles .................................... £ 74.0 £ 142.5
Equity investments .............................. 83.0 79.2
Convertible senior notes .......................... 39.9 48.3
Derivative instruments ........................... — 15.7
Unrealized foreign exchange differences ............... 1.1 0.6
Total deferred tax liabilities .......................... 198.0 286.3
Deferred tax assets:
Net operating losses ............................. 1,030.6 1,108.7
Capital losses .................................. 3,442.1 3,390.0
Depreciation and amortization ...................... 2,218.3 2,097.2
Accrued expenses ............................... 83.5 91.7
Derivative instruments ........................... 11.0 —
Capital costs and other ........................... 105.2 112.4
Total deferred tax assets ............................ 6,890.7 6,800.0
Valuation allowance for deferred tax assets .............. (6,775.7) (6,592.9)
Net deferred tax assets ............................. 115.0 207.1
Net deferred tax liabilities .......................... £ 83.0 £ 79.2
The following table summarizes the movements in our deferred tax valuation allowance during the
years ended December 31, 2009, 2008 and 2007 (in millions):
Year ended December 31,
2009 2008 2007
Balance, January 1 ......................... £6,592.9 £6,554.1 £6,705.2
Effect of changes in tax rates ................ — — (444.9)
Increase in UK and US deferred tax attributes,
inclusive of foreign exchange movements ...... 182.8 38.8 293.8
Balance, December 31 ....................... £6,775.7 £6,592.9 £6,554.1
A valuation allowance is recorded to reduce the deferred tax asset to an amount that is more
likely than not to be realized. To the extent that the portion of the valuation allowance is reduced, the
benefit will be recognized as a reduction of income tax expense.
At December 31, 2009, we had net operating loss carryforwards for U.S. federal income tax
purposes of £304 million that expire between 2018 and 2027. We have U.K. net operating loss
carryforwards of £3.3 billion that have no expiration date. Pursuant to U.K. law, these losses are only
available to offset income of the separate entity that generated the loss. A portion of the U.K. net
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