Virgin Media 2011 Annual Report Download - page 185

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)
Mobile service revenues include airtime, data, roaming and long-distance revenues and are invoiced and
recorded as part of a periodic billing cycle. Service revenues are recognized as the services are provided. At the
end of each period, adjustments are recorded to defer revenue relating to services billed in advance and to accrue
for earned but unbilled services. Revenue from non-contract pre-pay customers is recorded as deferred revenue
prior to commencement of services and is recognized as the services are rendered or usage rights expire.
Business
Rental revenues in respect of line rentals and rental of equipment provided to customers are recognized on a
straight-line basis over the term of the rental agreement.
Installation revenues are recognized when the contracted service has been delivered, which is generally
when a customer is connected to our network and has acknowledged acceptance.
Subscriber Acquisition Costs
Costs incurred in respect of the acquisition of our customers, including payments to distributors and the cost
of mobile handsets and mobile handset promotions, are expensed as incurred.
Advertising Expense
We expense the cost of advertising as incurred. Advertising costs were £127.3 million, £116.8 million and
£97.5 million in 2011, 2010 and 2009, respectively.
Stock-Based Compensation
We are indirect, wholly owned subsidiaries of Virgin Media. Accordingly, we have no stock-based
compensation plans. Certain of our employees participate in the stock-based compensation plans of Virgin
Media, which are described in Virgin Media’s consolidated financial statements.
Pensions
We account for our defined benefit pension arrangements in accordance with the Compensation-Retirement
Benefits Topic of the FASB ASC which requires that pension expense is recognized on an accrual basis over
employees’ approximate service periods. Pension expense calculated is generally independent of funding
decisions or requirements.
We recognize the funded status of our defined benefit post-retirement plans on our balance sheet and
changes in the funded status are reflected in comprehensive income.
Derivative Financial Instruments
We are exposed to various market risks, including changes in foreign currency exchange rates and interest
rates. As certain portions of our indebtedness accrue interest at variable rates, we are exposed to volatility in
future cash flows and earnings associated with variable interest rate payments. Also, substantially all of our
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