Virgin Media 2010 Annual Report Download - page 57

Goodwill and Intangible Asset Impairments
In the first quarter of 2010, we rebranded our Business reporting unit with the Virgin trademarks. As a
result, we recorded an impairment expense of £4.7 million for the year ended December 31, 2009 for the
Telewest trademark. We performed our annual impairment reviews for our Business and Consumer reporting
units as at October 1, 2010 and 2009. As a result of these reviews we concluded that the fair values of the
reporting units exceeded their carrying values.
Interest Expense
For the year ended December 31, 2010, interest expense increased to £477.8 million from £455.1 million for
the same period in 2009, mainly as a result of a larger proportion of higher cost bond debt, partially offset by
lower debt balances under the senior credit facility following the prepayments made during the year.
We paid cash interest of £438.8 million for the year ended December 31, 2010 and £404.2 million for the
year ended December 31, 2009. The increase in cash interest payments was primarily due to differences in the
timing of interest payments on our senior credit facility and senior notes.
Loss on Extinguishment of Debt
For the year ended December 31, 2010, loss on extinguishment of debt was £70.0 million, which related to
the write off of deferred financing costs as a result of the partial repayments of our senior credit facility in 2010
and the call premium totaling £5.5 million on the repayment of a portion of the senior notes due 2014. For the
year ended December 31, 2009, loss on extinguishment of debt was £54.5 million which related to the write off
of deferred financing costs as a result of the partial prepayment of our senior credit facility in 2009 and the call
premium totaling £30.3 million on the repayment of a portion of the senior notes due 2014.
Share of Income From Equity Investments
For the year ended December 31, 2010, share of income from equity investments was £24.0 million as
compared with income of £14.1 million for the same period in 2009. The share of income from equity
investments in the year ended December 31, 2010 was primarily comprised of our proportionate share of the
income earned by UKTV. Setanta Sports News ceased broadcasting on June 23, 2009 when Setanta Sports
Limited entered administration. See Segmental Results of Operations for the Years Ended December 31, 2009
and 2008—Television Channel Joint Ventures.
(Losses) Gains on Derivative Instruments
The losses on derivative instruments of £65.6 million in the year ended December 31, 2010 were mainly
driven by the termination of swaps relating to the previous senior credit facility refinanced in March 2010.
Additionally, the loss on derivative instruments includes a loss of £13.5 million related to our conversion hedges,
which represents the difference between the cash we paid and the fair value, as of December 31, 2010, and a loss
of £5.1 million related to cross-currency interest swaps on our U.S. dollar convertible senior notes that are not
designated as hedges for accounting purposes. The losses on derivative instruments of £114.5 million in the year
ended December 31, 2009, were mainly driven by the U.S. dollar and euro weakening against the pound sterling
in the first six months of the year, which resulted in a reduction in the fair value of the U.S. dollar and euro
denominated cross-currency interest rate swaps not designated as hedges for accounting purposes
Foreign Currency Gains (Losses)
For the year ended December 31, 2010, foreign currency losses were £34.1 million as compared with gains
of £119.0 million for the same period in 2009. The foreign currency losses for the year ended December 31, 2010
were primarily due to the weakening of the pound sterling relative to the U.S. dollar and related foreign exchange
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