Virgin Media 2011 Annual Report Download - page 210

VIRGIN MEDIA INVESTMENT HOLDINGS LIMITED AND SUBSIDIARIES
VIRGIN MEDIA INVESTMENTS LIMITED AND SUBSIDIARIES
COMBINED NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (continued)
Note 11—Income Taxes (continued)
The U.K. deferred income tax expense for the year ended December 31, 2011 related primarily to our
discontinuance of hedge accounting for the swaps associated with the $550 million 9.125% senior notes that were
prepaid during the year, which resulted in a reclassification of tax effects associated with gains on those swaps
from accumulated other comprehensive income.
Deferred income taxes reflect the net tax effects of temporary differences between the carrying amounts of
assets and liabilities for financial reporting purposes and the amounts used for income tax purposes. Deferred tax
assets are reduced by a valuation allowance if, based upon the weight of available evidence, it is more likely than
not that we will not realize some portion or all of the deferred tax assets. We consider relevant evidence, both
positive and negative, to determine the need for a valuation allowance. Information evaluated includes our
financial position and results of operations for the current and preceeding years, the availability of deferred tax
liabilities and tax carrybacks, as well as an evaluation of currently available information about future years.
Significant components of deferred tax liabilities and assets are as follows (in millions):
December 31,
2011 2010
Deferred tax liabilities:
Intangibles ........................................ £ 0.0 £ 31.5
Equity investments .................................. 0.0 83.0
Derivative instruments ............................... 0.0 6.7
Total deferred tax liabilities ............................... 0.0 121.2
Deferred tax assets:
Net operating losses ................................. 546.1 785.5
Capital losses ...................................... 3,025.8 3,268.7
Depreciation and amortization ......................... 2,115.1 2,268.1
Accrued expenses ................................... 41.6 56.8
Derivative instruments ............................... 5.5 0.0
Employee benefits .................................. 23.5 19.9
Other ............................................. 78.2 92.2
Total deferred tax assets .................................. 5,835.8 6,491.2
Valuation allowance for deferred tax assets ................... (5,835.8) (6,373.2)
Net deferred tax assets ................................... 0.0 118.0
Net deferred tax liabilities ................................ £ 0.0 £ 3.2
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