Twenty-First Century Fox 2007 Annual Report Download - page 82

NEWS CORPORATION
Notes to the Consolidated Financial Statements (continued)
The following unaudited pro forma consolidated results of operations for the fiscal year ended June 30, 2005 assumes that the
acquisitions of FEG and QPL were completed as of July 1, 2004.
For the year ended June 30, 2005
(in millions,
except per
share amounts)
Revenues $24,020
Net Income 2,316
Earnings per share—basic
Class A 0.74
Class B 0.62
Earnings per share—diluted
Class A 0.73
Class B 0.61
Pro forma data may not be indicative of the results that would have been obtained had these events actually occurred at the
beginning of the periods presented, nor does it intend to be a projection of future results.
Other fiscal 2005 transactions
In September 2004, the Company purchased Telecom Italia S.p.A.’s (“Telecom Italia”) 20% interest in SKY Italia for cash consid-
eration of $108 million, thereby increasing the Company’s ownership interest in SKY Italia to 100%.
In April 2005, the Company and Rainbow Media Holdings (“Rainbow”) exchanged their investments in Regional Programming
Partners (“RPP”). Under the terms of the agreement, the Company exchanged its 40% interest in RPP for Rainbow’s 60% interests in
Fox Sports Net Ohio and Fox Sports Net Florida (formerly included in the RPP business) and Rainbow’s 50% interests in National
Sports Partners and National Advertising Partners increasing the Company’s ownership in these entities to 100%. In addition, the
Company retained its 40% interest in SportsChannel Pacific Associates (“SportsChannel Bay Area”) (also formerly included in the
RPP business) and remitted to RPP the $150 million in promissory notes it received from RPP as a result of RPP’s December 2003
acquisition of the Company’s direct ownership interests in SportsChannel Chicago Associates (“SportsChannel Chicago”) and
SportsChannel Bay Area. The Company accounted for this exchange in accordance with APB Opinion No. 29, “Accounting for
Nonmonetary Transactions” and accordingly the Company recorded the assets received at fair value upon closing. The Company
has recognized a loss of approximately $85 million on this restructuring in Other, net in the accompanying consolidated statement
of operations.
In February 2004, the Company sold the Los Angeles Dodgers (“Dodgers”) and related properties to entities owned by Frank
McCourt (the “McCourt Entities”) for $421 million in consideration. Part of the consideration delivered by the McCourt Entities at
closing was a $125 million note secured by certain real estate in Boston, Massachusetts. In March 2006, the McCourt entities
remitted the real estate to the Company in full satisfaction of the note, including accrued interest of $20 million. This real estate
consisted of approximately 23 acres located in the Seaport District of Boston, Massachusetts. In conjunction with this transfer, the
Company assumed $36 million in debt. The Company recorded the assets and liabilities received at fair value upon closing. No gain
or loss was recognized as the net fair value of the land approximated the value of the note. In September 2006, the Company sold
this property for $202 million in cash. The Company discharged all of the debt on the property at the time of the sale. Upon the
completion of the March 2006 transaction, the Company recorded the assets and liabilities received at fair value and accordingly no
gain or loss was recognized on the sale of the land in September 2006.
Note 4 United Kingdom Redundancy Program
In fiscal 2005, the Company announced its intention to invest in new printing plants in the United Kingdom to take advantage of
technological and market changes. As the new automated technology comes on line, the Company expects lower production costs
and improved newspaper quality, including expanded color.
In conjunction with this project, during fiscal 2006, the Company received formal approval for the construction of the main new
plant which was the last contingency, thereby committing the Company to a redundancy program (the “Program”) for certain
production employees at the Company’s U.K. newspaper operations. The Program is in response to the reduced workforce that will
be required as new printing presses and the new printing facilities eventually come on line. As a result of this Program, the Company
expects to reduce its production workforce by approximately 65%, and as of June 30, 2007, over 700 employees in the United
Kingdom had already voluntarily accepted severance agreements and are expected to leave the Company in fiscal 2008.
In accordance with SFAS No. 88, “Employers’ Accounting for Settlements & Curtailments of Defined Benefit Pension Plans and
for Termination Benefits,” the Company recorded a redundancy provision of approximately $109 million during fiscal 2006 in Other
NEWS CORPORATION 2007 Annual Report 81