Virgin Media 2010 Annual Report Download - page 224

VIRGIN MEDIA INVESTMENT HOLDINGS LIMITED AND SUBSIDIARIES
VIRGIN MEDIA INVESTMENTS LIMITED AND SUBSIDIARIES
COMBINED NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (continued)
Note 14—Related Party Transactions (continued)
During the years ended December 31, 2010, 2009 and 2008, we received cash payments from UKTV for
loan principal payments, interest, dividends and consortium tax relief totaling £34.4 million, £21.1 million and
£46.7 million, respectively.
Note 15—Commitments and Contingent Liabilities
At December 31, 2010, we were committed to pay £1,262.5 million for equipment and services exclusive of
capital and operating leases. This amount includes £743.6 million for operations and maintenance contracts and
other commitments from January 1, 2012 to 2031. The aggregate amount of the fixed and determinable portions
of these obligations for the succeeding five fiscal years and thereafter is as follows (in millions):
Year ending December 31:
2011 ............................................. £ 518.9
2012 ............................................. 251.1
2013 ............................................. 204.4
2014 ............................................. 86.9
2015 ............................................. 74.2
Thereafter ........................................ 127.0
£1,262.5
This table excludes £672.4 million of accounts payable and accrued liabilities as at December 31, 2010
which will be paid in 2011.
We are involved in lawsuits, claims, investigations and proceedings, consisting of intellectual property,
commercial, employee and employee benefits which arise in the ordinary course of our business. In accordance
with the Contingencies Topic of the FASB ASC, we recognize a provision for a liability when management
believes that it is both probable that a liability has been incurred and the amount of the loss can be reasonably
estimated. We believe we have adequate provisions for any such matters. We review these provisions at least
quarterly and adjust these provisions to reflect the impact of negotiations, settlements, rulings, advice of legal
counsel and other information and events pertaining to a particular case. Whilst litigation is inherently
unpredictable, we believe that we have valid defenses with respect to legal matters pending against us.
Nevertheless, it is possible that cash flows or results of operations could be materially affected in any particular
period by the unfavorable resolution of one or more of these contingencies, or because of the diversion of
management’s attention and the creation of significant expenses.
Our revenue generating activities are subject to Value Added Tax, or VAT. The U.K. tax authorities have
challenged our VAT treatment of certain of these activities. As a result, we have estimated contingent losses
totaling £62.5 million as of December 31, 2010 that are not accrued for as we do not deem them to be probable of
resulting in a liability. Any challenge of the VAT treatment of these activities could be subject to court
proceedings before a potential settlement would be required. We currently expect an initial hearing on these
matters to take place in late 2011 or early 2012.
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