Virgin Media 2012 Annual Report Download - page 118

F-47
Purchase obligations in the table above represent amounts payable under fixed or minimum guaranteed commitments,
and therefore do not represent the total fees that are expected to be paid under certain programming contracts where
amounts payable are generally based on the number of customers receiving the programming.
This table excludes £668.9 million of accounts payable and accrued liabilities as at December 31, 2012 which will be
paid in 2013.
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. Additionally, when we believe it is at least reasonably possible that a liability has
been incurred in excess of any recorded liabilities we provide an estimate of the possible loss or range of loss or a
statement that such an estimate cannot be made. While litigation is inherently unpredictable, we believe that we have
valid defenses with respect to legal matters pending against us.
Our revenue generating activities are subject to VAT. During the second quarter of 2011, we reached an agreement
with the U.K. tax authorities regarding our VAT treatment of certain of these activities. The U.K. tax authorities provided
us with a refund of £81.5 million, which was collected during the second quarter of 2011, and £77.6 million of which is
included in interest income and other, net in the consolidated statement of comprehensive income for the year ended
December 31, 2011.
Our VAT treatment of certain other revenue generating activities remains subject to challenge by the U.K. tax authorities.
As a result, we have estimated contingent losses totaling £31.9 million as of December 31, 2012 that are not accrued
for, as we deem them to be reasonably possible, but not probable, of resulting in a liability. We currently expect an
initial hearing on these matters to take place in 2013.
Our banks have provided guarantees in the form of stand by letters of credit on our behalf as part of our contractual
obligations. The amount of commitment expires over the following periods (in millions):
Year ending December 31:
2013 £ 4.7
2014 —
2015 1.7
2016 —
2017 —
Thereafter 0.6
£ 7.0
Table of Contents
VIRGIN MEDIA INC. AND SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (continued)
Note 14—Commitments and Contingent Liabilities (continued)