Twenty-First Century Fox 2005 Annual Report Download - page 108

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NEWS CORPORATION
Notes to the Consolidated Financial Statements (continued)
> Note 17 Gain on Sale of Subsidiary/Affiliate Shares
FEG
In November 2002, FEG sold 50 million shares of its Class A common stock in a public offering. The net proceeds received by FEG were
approximately $1.2 billion and were used to repay intercompany indebtedness to the Company and its affiliates. This offering reduced the
Company’s equity ownership and voting percentage in FEG from 85% and 98% to 81% and 97%, respectively, and increased minority interest
in subsidiaries. In accordance with SAB No. 51, the Company recognized a gain of approximately $71 million in connection with this transaction
in Gain on sale of subsidiary/affiliate shares in the accompanying consolidated statements of operations for the year ended June 30, 2003. This
gain was limited because the Company’s ownership interest in FEG increased since the time of FEG’s initial public offering in fiscal year 1999.
BSkyB
In November 2002, BSkyB issued 43.2 million new shares as consideration related to its purchase of an interest in British Interactive
Broadcasting Holdings Limited. In accordance with SAB No. 51, the Company recognized a gain of approximately $92 million in connection with
this transaction in Gain on sale of subsidiary/affiliate shares in the accompanying consolidated statements of operations for the year ended June
30, 2003. As a result of this transaction, the Company’s ownership in BSkyB was diluted to 35%.
> Note 18 Income Taxes
Income before income tax expense was attributable to the following jurisdictions:
2005 2004 2003
For the years ended June 30, (in millions)
United States (including exports) $2,896 $1,995 $ 782
Foreign 665 760 884
Income before income tax expense $3,561 $2,755 $1,666
Significant components of the Company’s provisions for income taxes were as follows:
2005 2004 2003
For the years ended June 30, (in millions)
Current:
United States
Federal $51 $— $ —
State & local 45 38 16
Foreign 179 401 278
Total current $ 275 $ 439 $294
Deferred $ 945 $ 575 $335
Total provision for income taxes $1,220 $1,014 $629
The reconciliation of income tax attributable to continuing operations computed at the statutory rate to income tax expense is:
For the years ended June 30, 2005 2004 2003
US federal income tax rate 35% 35% 35%
State and local taxes 111
Effect of foreign taxes 1 — 1
Gain for which no expense was recognized — 16
Permanent basis difference on sale of investment — (5) —
Resolution of tax matters (3) ——
Change in valuation allowance (1) 8 —
Other permanent differences 1 (3) (5)
Effective tax rate 34% 37% 38%
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