Twenty-First Century Fox 2007 Annual Report Download - page 45

Management’s Discussion and Analysis of Financial Condition and Results of Operations (continued)
Results of Operations
Results of Operations–Fiscal 2007 versus Fiscal 2006
The following table sets forth the Company’s operating results for fiscal 2007 as compared to fiscal 2006.
2007 2006 Change % Change
For the years ended June 30, ($ millions)
Revenues $28,655 $25,327 $3,328 13%
Expenses:
Operating 18,645 16,593 2,052 12%
Selling, general and administrative 4,655 3,982 673 17%
Depreciation and amortization 879 775 104 13%
Other operating charges 24 109 (85) (78)%
Total operating income 4,452 3,868 584 15%
Interest expense, net (524) (545) 21 (4)%
Equity earnings of affiliates 1,019 888 131 15%
Other, net 359 194 165 85%
Income from continuing operations before income tax expense and
minority interest in subsidiaries 5,306 4,405 901 20%
Income tax expense (1,814) (1,526) (288) 19%
Minority interest in subsidiaries, net of tax (66) (67) 1 (1)%
Income from continuing operations 3,426 2,812 614 22%
Gain on disposition of discontinued operations, net of tax — 515 (515) **
Income before cumulative effect of accounting change 3,426 3,327 99 3%
Cumulative effect of accounting change, net of tax — (1,013) 1,013 **
Net income $ 3,426 $ 2,314 $1,112 48%
Diluted earnings per share from continuing operations(1) $ 1.08 $ 0.87 $ 0.21 24%
** not meaningful
(1) Represents earnings per share based on the total weighted average shares outstanding (Class A Common Stock and Class B
Common Stock combined) for the fiscal years ended June 30, 2007 and 2006. Class A Common Stock carry rights to a greater
dividend than Class B Common Stock through fiscal 2007. As such, net income available to the Company’s stockholders is allo-
cated between the Class A Common Stock and Class B Common Stock. Subsequent to the final fiscal 2007 dividend payment,
shares of Class A Common Stock will cease to carry any rights to a greater dividend than shares of Class B Common Stock. See
Note 20 to the Consolidated Financial Statements of News Corporation.
Overview–The Company’s revenues in fiscal 2007 increased 13% as compared to fiscal 2006. The increase was primarily due to
revenue increases at the Cable Network Programming, Filmed Entertainment, DBS, Newspapers, Television and Other segments.
Operating expenses for the fiscal year end June 30, 2007 increased 12% from fiscal 2006, primarily due to higher sports pro-
gramming rights at the DBS, Cable Network Programming, Television and Other segments. The increase in operating expenses was
also due to higher amortization of production and participation costs and higher home entertainment manufacturing and marketing
expenses at the Filmed Entertainment segment.
Selling, general and administrative expenses increased 17% in the fiscal year ended June 30, 2007 as compared to fiscal 2006,
primarily due to increased personnel costs, higher costs relating to Internet activities and incremental costs resulting from acquis-
itions. Depreciation and Amortization for fiscal 2007 increased 13% as compared to fiscal 2006, primarily resulting from acquisitions
and additional plant and equipment placed into service.
Operating income increased 15% for the fiscal year ending June 30, 2007 as compared to fiscal 2006, primarily due to
increased Operating income at the Cable Networks Programming, DBS, Newspapers and Filmed Entertainment segments.
During the fiscal year ended June 30, 2007, the weakening of the U.S. dollar resulted in an increase of approximately 2% in
both revenues and Operating income as compared to fiscal 2006.
Interest expense, net–Interest expense, net for the fiscal year ended June 30, 2007 decreased $21 million as compared to fiscal
2006, primarily due to an increase in interest income resulting from higher cash balances during the period. The increase in interest
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