Twenty-First Century Fox 2006 Annual Report Download - page 44

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Results of Operations (CONTINUED)
Results of Operations—Fiscal 2006 versus Fiscal 2005
The following table sets forth the Company’s operating results for fiscal 2006 as compared to fiscal 2005.
2006 2005 Change % Change
For the years ended June 30, ($ millions)
Revenues $25,327 $23,859 $ 1,468 6%
Expenses:
Operating $16,593 $15,901 $6924%
Selling, general and administrative 3,982 3,697 285 8%
Depreciation andamortization 775 648 127 20%
Other operating charges 109 49 60 **
Total operating income $3,868 $3,564 $304 9%
Interest expense, net $(545) $ (536) $ (9) 2%
Equity earnings of affiliates 888 355 533 **
Other, net 194 178 16 9%
Income from continuing operations before income tax expense and
minority interest in subsidiaries $4,405 $3,561 $844 24%
Income tax expense (1,526) (1,220) (306) 25%
Minority interest in subsidiaries, net of tax (67) (213) 146 (69)%
Income from continuing operations 2,812 2,128 68432%
Gain on disposition of discontinued operations, net of tax 515 —515**
Income before cumulative effect of accounting change 3,327 2,128 1,199 56%
Cumulative effect of accounting change, net of tax (1,013) — (1,013) **
Net income $2,314 $2,128 $186 9%
Diluted earnings per sharefrom continuing operations(1) $0.87 $0.69 $0.18 26%
** not meaningful
(1) Represents earnings per share basedonthe total weighted average shares outstanding (Class ACommon Stock and
Class BCommon Stock combined) for the fiscal years ended June 30, 2006 and 2005. Class ACommon Stock carry
rights to agreater dividend than Class BCommon Stock through fiscal 2007. As such, net income available to the
Company’s stockholders is allocated between the Class ACommon Stock and Class BCommon Stock.
Overview—The Company’s revenues in fiscal 2006 increased 6% as compared to fiscal 2005. The increase was primarily
due to revenue increases at the Cable Network Programming, Filmed Entertainment,DBSandOther segments.
Operating expenses for the fiscal year ended June 30, 2006 increased approximately 4% from fiscal 2005, primarily due
to increased expenses at the Cable Network Programming segment and acquisitions made by the Newspaper segment and
FIM during fiscal 2005 and 2006. The increased operating expenses at the Cable Network Programming segment were due
to the acquisition in April 2005 of the Florida and Ohio Regional Sports Networks (“RSNs”) and Fox Sports Net, a national
sports program service, and higher programming costs at the remaining RSNs and the FX Network (“FX”). In addition,
operating results include the consolidation of Queensland Press Pty Ltd (“QPL”), which was acquired in November 2004,
within the Newspapers segment and the impact of the internet businesses acquired by the Company in fiscal 2006, collec-
tively referred to as the “FIM acquisitions.” These increases were partially offset by reduced operating expenses at the
Filmed Entertainment and Television segments. The operating expense reduction at the FilmedEntertainment segment was
due to reduced amortization of production andparticipation costs. The decrease in operatingexpenses at the Television
segment was mainly due to the absence of programming costs for the NFL’s Super Bowl and NASCAR’s Daytona 500 that
were broadcast in fiscal 2005.
Selling, general and administrative expenses increased approximately 8% for the fiscal year ended June 30, 2006 from
fiscal 2005, primarily due to the consolidation of the Florida and Ohio RSNs, Fox Sports Net and QPL. In addition,the
impact of acquisitions at FIM also contributed to the increase in selling, general and administrative expenses during the
fiscal year ended June 30, 2006. Depreciation and amortization expense increased approximately 20% during the fiscal year
ended June 30, 2006, when compared to fiscal 2005, primarily due to the amortization of intangible assets acquired on the
purchase of the minority interest in the FEG in March 2005, as well as incremental expenses resulting from the FIM acquis-
itions. Accelerated depreciation recognized on printing plant assets in the United Kingdom also contributed to the increase.
44 NEWS CORPORATION