Virgin Media 2010 Annual Report Download - page 222

VIRGIN MEDIA INVESTMENT HOLDINGS LIMITED AND SUBSIDIARIES
VIRGIN MEDIA INVESTMENTS LIMITED AND SUBSIDIARIES
COMBINED NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (continued)
Note 13—Income Taxes (continued)
The total amount of unrecognized tax benefits as of December 31, 2010 and 2009 was nil. We recognize
interest and penalties related to unrecognized tax benefits in income tax expense. The statute of limitations is
open for the years 2007 to 2010 in the U.S. and 2009 to 2010 in the U.K., our major tax jurisdictions.
At each period end, it is necessary for us to make certain estimates and assumptions to compute the
provision for income taxes including, but not limited to the expected operating income (or loss) for the year,
projections of the proportion of income (or loss) earned and taxed in the U.K. and the extent to which this income
(or loss) may also be taxed in the United States, permanent and temporary differences, the likelihood of deferred
tax assets being recovered and the outcome of contingent tax risks. In the normal course of business, our tax
returns are subject to examination by various taxing authorities. Such examinations may result in future tax and
interest assessments by these taxing authorities for uncertain tax positions taken in respect to matters such as
business acquisitions and disposals and certain financing transactions including intercompany transactions,
amongst others. We accrue a liability when we believe an assessment may be probable and the amount is
estimable. In accordance with generally accepted accounting principles, the impact of revisions to these estimates
is recorded as income tax expense or benefit in the period in which they become known. Accordingly, the
estimates used to compute the provision for income taxes may change as new events occur, as more experience is
acquired, as additional information is obtained and as our tax environment changes.
Note 14—Related Party Transactions
Virgin Media Inc. and its consolidated subsidiaries
We are wholly owned subsidiaries of Virgin Media. We charge Virgin Media and our other group
companies for operating costs and selling, general and administrative expenses incurred by us on their behalf.
The following information summarizes our significant related party transactions with Virgin Media and its group
companies (in millions):
Year ended December 31,
2010 2009 2008
Operating costs ........................................................... £39.8 £45.4 £48.6
Selling, general and administrative expenses .................................... 44.8 45.1 47.0
£84.6 £90.5 £95.6
The above recharges are recorded in operating costs and selling, general and administrative expenses and
offset the respective costs incurred.
Virgin Enterprises Limited
We have identified Virgin Enterprises Limited as a related party to us. Virgin Entertainment Investment
Holdings Limited became a holder of Virgin Media Inc’s common stock as a result of its acquisition of Virgin
Mobile on July 4, 2006. As of December 31, 2010, Virgin Entertainment Investment Holdings Limited
beneficially owned 4.8% of Virgin Media Inc.’s common stock (based on SEC filings). Virgin Enterprises
Limited is a wholly owned subsidiary of Virgin Entertainment Investment Holdings Limited. In addition, Gordon
McCallum is a member of Virgin Media Inc.’s Board of Directors and is a Director of Virgin Enterprises
Limited.
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