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VIRGIN MEDIA INC.
(See note 1)
Notes to Condensed Consolidated Financial Statements — (Continued)
June 30, 2014
(unaudited)
9
These condensed consolidated financial statements reflect our consideration of the accounting and disclosure implications of
subsequent events through August 21, 2014, the date of issuance.
Alignment of accounting policies
On June 8, 2013, we adopted Liberty Global’s accounting policy for installation fees relating to our B2B contracts involving
both installation services and the provision of ongoing services. Previously, we generally treated installation fees received from
customers with B2B contracts as a separate deliverable and recognized revenue upon completion of the installation activity in an
amount that was based on the relative standalone selling price methodology. Our current accounting policy is to generally defer
upfront installation fees on our B2B contracts and recognize the associated revenue over the contractual term of the arrangement.
In this regard, we recognized £10.2 million and £7.3 million of installation revenue during the three months ended March 31, 2013
and the period from April 1, 2013 to June 7, 2013, respectively, that would have been deferred under Liberty Global’s accounting
policy.
The following table provides a rollforward of our deferred revenue for installation services provided to customers with B2B
contracts during the six months ended June 30, 2014 (in millions):
Balance at January 1, 2014..................................................................................................................................... £ 31.9
Amounts deferred for completed installation services (a) ................................................................................ 15.7
Amortization of deferred revenue over contract life......................................................................................... (2.9)
Balance at March 31, 2014..................................................................................................................................... 44.7
Amounts deferred for completed installation services (a) ................................................................................ 14.0
Amortization of deferred revenue over contract life......................................................................................... (3.9)
Balance at June 30, 2014 ........................................................................................................................................ £ 54.8
______________
(a) Represents amounts that would have been recognized upfront as installation revenue under Old Virgin Media’s policy, but
were deferred under Liberty Global’s policy.
Reclassifications
Certain prior period amounts have been reclassified to conform to the presentation of Liberty Global, including reclassifications
between operating costs and SG&A expenses in our condensed consolidated statements of operations for the period from June 8
to June 30, 2013, the period from April 1 to June 7, 2013 and the period from January 1 to June 7, 2013.
(2) Recent Accounting Pronouncements
In May 2014, the Financial Accounting Standards Board issued Accounting Standards Update (ASU) No. 2014-09, Revenue
from Contracts with Customers (ASU 2014-09), which requires an entity to recognize the amount of revenue to which it expects
to be entitled for the transfer of promised goods or services to customers. ASU 2014-09 will replace most existing revenue
recognition guidance in U.S. GAAP when it becomes effective on January 1, 2017. Early application is not permitted. This new
standard permits the use of either the retrospective or cumulative effect transition method. We are currently evaluating the effect
that ASU 2014-09 will have on our consolidated financial statements and related disclosures. We have not yet selected a transition
method nor have we determined the effect of the standard on our ongoing financial reporting.