Twenty-First Century Fox 2011 Annual Report Download - page 50

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Notes to the Consolidated Financial Statements (continued)
Comprehensive income
The Company follows ASC 220, “Comprehensive Income,” for the reporting and display of comprehensive income. The components of
accumulated comprehensive income were as follows:
2011 2010 2009
For the years ended June 30, (in millions)
Accumulated other comprehensive income, net of tax:
Unrealized holding gains on securities:
Balance, beginning of year $ 122 $ 73 $ 71
Fiscal year activity 88 49 2
Balance, end of year 210 122 73
Pension plans:
Balance, beginning of year (591) (383) (291)
Fiscal year activity 54 (208) (92)
Balance, end of year (537) (591) (383)
Foreign currency translation:
Balance, beginning of year 67 315 1,986
Fiscal year activity(1) 1,893 (248) (1,671)
Balance, end of year 1,960 67 315
Total accumulated other comprehensive income, net of tax
Balance, beginning of year (402) 5 1,766
Fiscal year activity, net of income tax (expense) benefit of $(60) million, $74 million and $70 million 2,035 (407) (1,761)
Balance, end of year $1,633 $(402) $ 5
(1) Excludes $15 million, $(2) million and $(38) million relating to noncontrolling interests and redeemable noncontrolling interests for the fiscal years ended June 30, 2011, 2010 and 2009,
respectively.
Equity based compensation
The Company accounts for share based payments in accordance with ASC 718, “Compensation – Stock Compensation” (“ASC 718”). ASC
718 requires that the cost resulting from all share-based payment transactions be recognized in the consolidated financial statements. ASC 718
establishes fair value as the measurement objective in accounting for share-based payment arrangements and requires all companies to apply a fair-
value-based measurement method in accounting for generally all share-based payment transactions with employees.
Derivatives
ASC 815, “Derivatives and Hedging” (“ASC 815”), requires every derivative instrument (including certain derivative instruments embedded in
other contracts) to be recorded on the balance sheet at fair value as either an asset or a liability (See Note 7 – Fair Value). ASC 815 also requires
that changes in the fair value of recorded derivatives be recognized currently in earnings unless specific hedge accounting criteria are met.
The Company uses financial instruments designated as cash flow hedges to hedge its limited exposures to foreign currency exchange risks
associated with the costs for producing or acquiring films and television programming abroad. All cash flow hedges are recorded at fair value on
the consolidated balance sheets. (See Note 7 – Fair Value) The effective changes in fair value of derivatives designated as cash flow hedges are
recorded in accumulated other comprehensive income with foreign currency translation adjustments. Amounts are reclassified from accumulated
other comprehensive income when the underlying hedged item is recognized in earnings. If derivatives are not designated as hedges, changes in fair
value are recorded in earnings as Other, net in the consolidated statements of operations.
Recent accounting pronouncements
On July 1, 2010, the Company adopted the new provisions of ASC 810-10-65-2, “Transition Related to FASB Statement No. 167, Amendments
to FASB Interpretation No. 46(R).” ASC 810-10-65-2 changes the approach to determining the primary beneficiary of a variable interest entity
(“VIE”) and requires the Company to regularly assess whether it is the primary beneficiary of a VIE. The Company’s adoption of ASC 810-10-65-2
did not have a material effect on the Company’s consolidated financial statements.
The Company has an unconsolidated investment in a VIE and the Company’s aggregate risk of loss related to this unconsolidated VIE as of
June 30, 2011 was approximately $544 million which consisted of debt and equity securities and was included in Investments in the consolidated
balance sheets. In addition, the Company has agreed to provide loans to this VIE of approximately $150 million. As of June 30, 2011, funding of
these loans has not yet been requested by this VIE.
The Company also has a consolidated investment in a VIE; however, the assets, liabilities, net income and cash flows attributable to this entity
were not material to the Company in any of the periods presented.
48 News Corporation