Virgin Media 2011 Annual Report Download - page 180

VIRGIN MEDIA INVESTMENT HOLDINGS LIMITED AND SUBSIDIARIES
VIRGIN MEDIA INVESTMENTS LIMITED AND SUBSIDIARIES
COMBINED NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (continued)
Note 2—Significant Accounting Policies (continued)
Use of Estimates
The preparation of financial statements in conformity with GAAP requires management to make estimates
and assumptions that affect the amounts reported in the financial statements and accompanying notes. Such
estimates and assumptions impact, among others, the following: the amount of uncollectible accounts receivable,
the amount to be paid to terminate certain agreements included in restructuring costs, amounts accrued for
vacated properties, the amount to be paid for other liabilities, including contingent liabilities, our pension
expense and pension funding requirements, amounts to be paid under our employee incentive plans, costs for
interconnection, the amount of costs to be capitalized in connection with the construction and installation of our
network and facilities, goodwill and indefinite life assets, long-lived assets, certain other intangible assets and the
computation of our valuation allowance on deferred tax assets. Actual results could differ from those estimates.
Fair Values
We have determined the estimated fair value amounts presented in these consolidated financial statements
using available market information and appropriate methodologies including, where appropriate, the recording of
adjustments to fair values to reflect non-performance risk. However, considerable judgment is required in
interpreting market data to develop the estimates of fair value. The estimates presented in these consolidated
financial statements are not necessarily indicative of the amounts that we could realize in a current market
exchange. The use of different market assumptions and/or estimation methodologies may have a material effect
on the estimated fair value amounts. We have based these fair value estimates on pertinent information available
to us as of December 31, 2011 and 2010.
Foreign Currency Translation
Our reporting currency is the pound sterling because substantially all of our revenues, operating costs and
selling, general and administrative expenses are denominated in U.K. pound sterling. Exchange gains and losses
on translation of our net equity investments in subsidiaries having functional currencies other than the pound
sterling are reported as a separate component of accumulated other comprehensive income in shareholder’s
equity. Foreign currency transactions involving amounts denominated in currencies other than a subsidiary’s
functional currency are recorded at the exchange rate ruling at the date of the transaction and are remeasured
each period with gains and losses recorded in the consolidated statement of operations.
Cash and Cash Equivalents and Restricted Cash
Cash equivalents are short term highly liquid investments purchased with an original maturity of three
months or less and are recorded at amortized cost, which approximates fair value. We had cash equivalents
totaling £241.7 million and £335.4 million as at December 31, 2011 and 2010, respectively.
Restricted cash balances of £1.9 million as at December 31, 2011 and £2.2 million as at December 31, 2010
represent cash balances collateralized against performance bonds given on our behalf.
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