Twenty-First Century Fox 2011 Annual Report Download - page 62

Notes to the Consolidated Financial Statements (continued)
Fiscal 2009
During fiscal 2009, the Company performed an interim impairment review in advance of its annual impairment assessment because the
Company believed events had occurred and circumstances had changed that would more likely than not reduce the fair value of the Company’s
goodwill and indefinite-lived intangible assets below their carrying amounts. These events included: (a) the decline of the price of the Company’s
Class A Common Stock and Class B Common Stock below the carrying value of the Company’s stockholders’ equity; (b) the reduced growth in
advertising revenues; (c) the decline in the operating profit margins in some of the Company’s advertising-based businesses; and (d) the decline in
the valuations of other television stations, newspapers and advertising-based companies as determined by the current trading values of those
companies. In addition, the Company performed an annual impairment assessment of goodwill and indefinite-lived intangible assets.
As a result of the impairment reviews performed, the Company recorded non-cash impairment charges of approximately $8.9 billion ($7.2
billion, net of tax) during the fiscal year ended June 30, 2009. The charges consisted of a write-down of the Company’s indefinite-lived intangible
assets (primarily FCC licenses in the Television segment) of $4.6 billion, a write-down of $4.1 billion of goodwill and a write-down of the
Publishing segment’s fixed assets of $185 million in accordance with ASC 360.
Other than the impairments noted above, the Company determined that the goodwill and indefinite-lived intangible assets included in the
consolidated balance sheets were not impaired.
Amortization related to finite-lived intangible assets was $172 million, $191 million and $196 million for the fiscal years ended June 30, 2011,
2010 and 2009, respectively.
Based on the current amount of intangible assets subject to amortization, the estimated amortization expense for each of the succeeding five
fiscal years is as follows: 2012 – $201 million; 2013 – $192 million; 2014 – $175 million; 2015 – $135 million; and 2016 – $116 million. These
amounts may vary as acquisitions and disposals occur in the future and as purchase price allocations are finalized.
NOTE 10. Borrowings
Weighted average
interest rate
at June 30, 2011
Due date at
June 30, 2011
Outstanding
As of June 30,
2011 2010
Description (in millions)
Bank Loans(a) $ 32 $ 80
Public Debt
Senior notes issued under January 1993 indenture(b) 8.52% 2013 - 2034 2,024 2,220
Senior notes issued under March 1993 indenture(c) 6.80% 2014 - 2096 9,939 9,939
Senior notes issued under August 2009 indenture(d) 5.75% 2020 - 2041 3,500 1,000
Liquid Yield Option™ Notes(e) — 81
Total public debt 15,463 13,240
Total borrowings 15,495 13,320
Less current portion (32) (129)
Long-term borrowings $15,463 $13,191
(a) In August 2006, the Company entered into a loan agreement with Raiffeisen Zentralbank Österreich AG (“RZB”), which was subsequently amended in September 2009. As of June 30,
2011, $32 million was outstanding under this loan agreement which was classified as current borrowings. The loan bears interest at LIBOR for a six month period plus a margin of
3.85% per annum. The loans are secured by certain guarantees, bank accounts and share pledges of the Company’s Russian outdoor advertising operating subsidiaries. As a result of the
sale of News Outdoor Russia in July 2011, the Company was released from its RZB loan obligation. (See Note 24 – Subsequent Events)
(b) These notes are issued under the Amended and Restated Indenture dated as of January 28, 1993, as supplemented, by and among News America Incorporated, a 100% owned subsidiary of
the Company as defined in Rule 3-10(h) of Regulation S-X (“NAI”), the Company as Parent Guarantor and U.S. Bank National Association, as Trustee. These notes are direct unsecured
obligations of NAI and rank pari passu with all other unsecured indebtedness of NAI. Redemption may occur, at the option of the holders, at 101% of the principal plus an accrued interest
amount in certain circumstances where a change of control is deemed to have occurred. These notes are subject to certain covenants, which, among other things, restrict secured
indebtedness to 10% of tangible assets and in certain circumstances limit new senior indebtedness.
In February 2011, NAI completed a tender offer on a portion of the $500 million of 9.25% Senior Debentures due February 1, 2013 and retired, at a premium, an aggregate principal
amount of approximately $227 million. The loss on early extinguishment of debt was approximately $36 million which was included in Other, net in the consolidated statements of
operations for the fiscal year ended June 30, 2011.
(c) These notes are issued under the Amended and Restated Indenture dated as of March 24, 1993, as supplemented, by and among NAI, the Company, as Parent Guarantor, and The Bank of
New York Mellon, as Trustee. These notes are direct unsecured obligations of NAI and rank pari passu with all other unsecured indebtedness of NAI. Redemption may occur, at the option
of the holders, at 101% of the principal plus an accrued interest amount in certain circumstances where a change of control is deemed to have occurred. These notes are subject to certain
covenants, which, among other things, restrict secured indebtedness to 10% of tangible assets and in certain circumstances limit new senior indebtedness.
In March 2010, the Company retired its $150 million 4.75% Senior Debentures due 2010.
(d) These notes are issued under the Amended and Restated Indenture dated as of August 25, 2009, as supplemented, by and among NAI, the Company, as Parent Guarantor, and The Bank of
New York Mellon, as Trustee (the “2009 Indenture”). These notes are direct unsecured obligations of NAI and rank pari passu with all other unsecured indebtedness of NAI. Redemption
may occur, at the option of the holders, at 101% of the principal plus an accrued interest amount in certain circumstances where a change of control is deemed to have occurred. These
notes are subject to certain covenants, which, among other things, limit the Company’s ability and the ability of the Company’s subsidiaries, to create liens and engage in a merger, sale or
consolidation transaction. The 2009 Indenture does not contain any financial maintenance covenants.
60 News Corporation