Twenty-First Century Fox 2006 Annual Report Download - page 83

News Corporation
Notes totheConsolidated Financial Statements (CONTINUED)
In exchange for approximately 78 million shares of Class ACommon Stock and approximately 247 million shares of
Class BCommon Stock owned directly through the CrudenGroup and indirectly (through QPL) by the CrudenGroup, the
Harris Trustreceived shares of News Corporation in the same exchange ratio as all other TNCL stockholders in the
Reorganization. The shares of News Corporation non-voting Class ACommon Stock that the Harris Trust received were
reduced by the number of shares equal in value to the netdebt and certain other net liabilities of the CrudenGroup which
were assumed by the Company in the transaction. The shares issued to the Harris Trust were approximately 61 million
shares of Class ACommon Stock and approximately 247 million shares of Class BCommon Stock with an approximate
aggregate value of $6 billion, and the Company assumed approximately $250 million of net debt and certain other net
liabilities of the CrudenGroup. All of the debt assumed was retired in November 2004.
The 61 million shares of Class ACommon Stock issued to the Harris Trust were based on agreed estimates. The Com-
pany agreed to compensate the Harris Trust for any difference between the estimated amounts and the actual amounts (the
“Adjustment Amount”) after the completion of the Reorganization, and it was subsequently agreed that the Company
would issue to the Harris Trustadditional shares of Class ACommon Stock of approximately equivalent value to the
Adjustment Amount. The Adjustment Amount owed to theHarris Trustwasapproximately an additional $33 mil-
lion. Following approval by stockholders on October 21, 2005, atotal of approximately two million additional shares of
Class ACommon Stock were issued to the Harris Trust on October 27, 2005, to provide for the difference between the esti-
mated and actual amounts. The numberof shares was determined based on the NewYork Stock Exchange closing price of
the Class ACommon Stock on October 25, 2005.
The Company shares acquired through the acquisition of the Cruden Group, as well as the shares which were indirectly
owned by the Company through its 42% ownership interest in QPL prior to the acquisition, are considered treasury shares.
The treasury shares are accountedforusing the par value method. The number of shares of Class ACommon Stock and
Class BCommon Stock related to this transaction that were held in treasury at June 30, 2006 was approximately
109 million and 314 million, respectively. Immediately following the Reorganization, the Harris Trustowned approx-
imately 29.5% of the voting Class BCommon Stock of News Corporation.
Fox Entertainment Group Acquisition
In March 2005, Fox Acquisition Corp., adirect wholly-owned subsidiary of the Company, completed its offer to the holders
of Class Acommon stock of Fox Entertainment Group, Inc. (“FEG”) to exchange 2.04 shares of the Company’s ClassA
Common Stock for each outstanding share of FEG’s Class Acommon stock validly tendered and not withdrawn in the
exchange offer (the “Offer”). Shortly thereafter, the Company effected amerger of FEG with and into FoxAcquisition Corp.
Each share of FEG Class Acommon stock not acquired in the Offer, other than the shares already owned by the Company,
was converted in the merger into 2.04 shares of the Company’s ClassACommon Stock. The Company issued approx-
imately 357 million shares of its Class ACommon Stock valued at approximately $6.3 billion in exchange for the out-
standing shares of FEG Class Acommon stock, resulting in an excess purchase price of approximately $2.9 billion. After the
consummation of the Offer and the subsequent merger, Fox Acquisition Corp. changed its name to “FoxEntertainment
Group, Inc.” As a result of the Offer, the Company’s ownership interest increased from approximately 82% to 100%. This
acquisition of the remaining non-controlling interests in FEG has been accounted for under the purchase method in
accordance with SFAS No. 141.
The Company has allocated the excess purchase price of $2.9 billion to finite-lived intangible assets, indefinite-lived
intangibles, goodwill and deferred tax liabilities which are includedinthe FilmedEntertainment, Television, Cable Net-
work Programming and Other segments.
In connection with theOffer and subsequent merger, awholly-owned subsidiary of the Company tendered the shares
of Fox Class Acommon stock and Fox Class Bcommon stock that it owned prior to the acquisition to Fox Acquisition
Corp. in exchange for the Company’s ClassACommon Stock at the same exchange ratio as was provided in the Offer for
shares of Fox Class Acommon stock. As a result of the exchange, the wholly-owned subsidiary owns 1,631 million shares of
the Company’s Class ACommon Stock, with an approximate value of $8 billion, which are reflected as treasury shares. The
treasury shares are accountedforusing the par value method.
The following unaudited pro forma consolidated results of operations for the fiscal years ended June 30, 2005 and 2004
assume that the acquisitions of FEG and QPL were completed as of July 1, 2003.
2005 2004
For the years ended June 30, (in millions, except per shareamounts)
Revenues 24,020 21,151
Net Income 2,316 1,781
Earnings per share—basic
Class A 0.74 0.59
Class B 0.62 0.49
Earnings per share—diluted
Class A 0.73 0.59
Class B 0.61 0.49
ANNUAL REPORT 83