Virgin Media 2013 Annual Report Download - page 86

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VIRGIN MEDIA INC.
(See note 1)
Notes to Consolidated Financial Statements — (Continued)
December 31, 2013, 2012 and 2011
II - 61
(15) Commitments and Contingencies
Commitments
In the normal course of business, we have entered into agreements that commit our company to make cash payments in future
periods with respect to non-cancelable operating leases, programming contracts, purchases of customer premises equipment and
other items. The pound sterling equivalents of such commitments as of December 31, 2013 are presented below:
Payments due during:
2014 2015 2016 2017 2018 Thereafter Total
in millions
Programming obligations .......................... £ 188.7 £ 163.0 £ 115.5 £ 47.7 £ 16.0 £ — £ 530.9
Network and connectivity commitments... 106.8 98.1 78.9 76.5 18.9 5.0 384.2
Purchase commitments.............................. 234.7 27.7 — — — — 262.4
Operating leases......................................... 37.6 32.2 25.5 18.9 13.1 51.7 179.0
Other commitments ................................... 89.5 66.8 36.6 26.4 9.8 — 229.1
Total...................................................... £ 657.3 £ 387.8 £ 256.5 £ 169.5 £ 57.8 £ 56.7 £ 1,585.6
Network and connectivity commitments include only the fixed minimum commitments associated with our mobile virtual
network operator (MVNO) agreement. As such, the commitments shown in the above table may be significantly less than the
actual amounts we ultimately pay in these periods.
Programming commitments consist of obligations associated with certain of our programming contracts that are enforceable
and legally binding on us in that we have agreed to pay minimum fees without regard to (i) the actual number of subscribers to
the programming services, (ii) whether we terminate service to a portion of our subscribers or dispose of a portion of our distribution
systems or (iii) whether we discontinue our premium film or sports services. The amounts reflected in the table with respect to
these contracts are significantly less than the amounts we expect to pay in these periods under these contracts. Payments to
programming vendors have in the past represented, and are expected to continue to represent in the future, a significant portion
of our operating costs. In this regard, during the period from June 8 to December 31, 2013, the period from January 1 to June 7,
2013, and the years ended December 31, 2012 and 2011, the programming costs incurred aggregated £307.9 million, £232.3
million, £505.9 million and £481.2 million, respectively. The ultimate amount payable in excess of the contractual minimums of
our content contracts is dependent upon the number of subscribers to our service.
Purchase commitments include unconditional purchase obligations associated with commitments to purchase customer
premises and other equipment that are enforceable and legally binding on us.
In addition to the commitments set forth in the table above, we have significant commitments under (i) derivative instruments
and (ii) defined benefit plans and similar arrangements, pursuant to which we expect to make payments in future periods. For
information concerning our derivative instruments, including the net cash paid or received in connection with these instruments
during 2013, 2012 and 2011, see note 4. For information concerning our defined benefit plans, see note 13.
Rental expense under non-cancelable operating lease arrangements amounted to £24.9 million, £18.2 million, £49.8 million
and £47.1 million during the period from June 8 to December 31, 2013, the period from January 1 to June 7, 2013, and the years
ended December 31, 2012 and 2011, respectively. It is expected that in the normal course of business, operating leases that expire
generally will be renewed or replaced by similar leases.
We have established a defined contribution benefit plan for our subsidiaries’ employees. The aggregate expense for matching
contributions under the various defined contribution employee benefit plans was £11.2 million, £7.7 million, £13.7 million and
£13.6 million during the period from June 8 to December 31, 2013, the period from January 1 to June 7, 2013, and the years ended
December 31, 2012 and 2011, respectively.