Twenty-First Century Fox 2011 Annual Report Download - page 64

Notes to the Consolidated Financial Statements (continued)
BUCS
During fiscal 2003, News Corporation Finance Trust II (the “Trust”) issued an aggregate of $1.65 billion 0.75% BUCS representing interests
in debentures issued by NAI and guaranteed on a senior basis by the Company and certain of its subsidiaries. The net proceeds from the BUCS
issuance were used to purchase approximately 85% of the Company’s outstanding TOPrS. The BUCS were exchangeable at the holders’ option
into BSkyB ordinary shares based on an exchange ratio of 77.09 BSkyB ordinary shares per $1,000 original liquidation amount of BUCS. The
Trust was able to pay the exchange market value of each BUCS by delivering ordinary shares of BSkyB or a combination of cash and ordinary
shares of BSkyB. In fiscal 2010, the Company redeemed all the outstanding BUCS for an aggregate of approximately $1.65 billion in cash.
The total net proceeds from the issuance of the BUCS were allocated between the fair value of the obligation and the fair value of the exchange
feature. The fair values of the obligation and the exchange feature were determined by pricing the issuance with and without the exchange feature.
The original fair value of the obligation was recorded in non-current borrowings and in accordance with ASC 815, the call option feature of the
exchangeable debentures was reported at fair value and in non-current other liabilities. As a result of the Company’s redemption of the
outstanding BUCS during fiscal 2010, there were no BUCS included in borrowings or non-current liabilities at June 30, 2011 or 2010.
NOTE 12. Film Production Financing
The Company enters into arrangements with third parties to co-produce certain of its theatrical productions. These arrangements, which are
referred to as co-financing arrangements, take various forms. The parties to these arrangements include studio and non-studio entities both
domestic and international. In several of these agreements, other parties control certain distribution rights. The Filmed Entertainment segment
records the amounts received for the sale of an economic interest as a reduction of the cost of the film, as the investor assumes full risk for that
portion of the film asset acquired in these transactions. The substance of these arrangements is that the third-party investors own an interest in the
film and, therefore, receive a participation based on the third-party investor’s contractual interest in the profits or losses incurred on the film.
Consistent with the requirements of ASC 926, the estimate of the third-party investor’s interest in profits or losses incurred on the film is
determined by reference to the ratio of actual revenue earned to date in relation to total estimated ultimate revenues. During the fiscal year ended
June 30, 2011, the Company bought out the ownership interests of a group of third party investors in an existing slate of films and extended its
co-financing arrangement with such investors for an additional two years for production starts through August 1, 2012. The Company negotiated
a buy out of the investors’ remaining interests in their underlying slate of films, at a price that was based on the then remaining projected future
cash flows that the investors would have received from the slate.
NOTE 13. Stockholders’ Equity
Preferred Stock and Common Stock
Under the News Corporation Restated Certificate of Incorporation, the Company’s Board of Directors (the “Board”) is authorized to issue
shares of preferred stock or common stock at any time, without stockholder approval, and to determine all the terms of those shares, including the
following:
(i) the voting rights, if any, except that the issuance of preferred stock or series common stock which entitles holders thereof to more than
one vote per share requires the affirmative vote of the holders of a majority of the combined voting power of the then outstanding shares of
the Company’s capital stock entitled to vote generally in the election of directors;
(ii) the dividend rate and preferences, if any, which that preferred stock or common stock will have compared to any other class; and
(iii) the redemption and liquidation rights and preferences, if any, which that preferred stock or common stock will have compared to any
other class.
Any decision by the Board to issue preferred stock or common stock must, however, be taken in accordance with the Board’s fiduciary duty to
act in the best interests of the Company’s stockholders. The Company is authorized to issue 100,000,000 shares of preferred stock, par value
$0.01 per share. As of June 30, 2011, there were no shares of preferred stock issued or outstanding. The Board has the authority, without any
further vote or action by the stockholders, to issue preferred stock in one or more series and to fix the number of shares, designations, relative
rights (including voting rights), preferences, qualifications and limitations of such series to the full extent permitted by Delaware law.
The Company has two classes of common stock that are authorized and outstanding, non-voting Class A Common Stock and voting Class B
Common Stock.
As of June 30, 2011, there were approximately 44,000 holders of record of shares of Class A Common Stock and 1,300 holders of record of
Class B Common Stock.
In the event of a liquidation or dissolution of the Company, or a portion thereof, holders of Class A Common Stock and Class B Common
Stock shall be entitled to receive all of the remaining assets of the Company available for distribution to its stockholders, ratably in proportion to
the number of shares held by Class A Common Stock holders and Class B Common Stock holders, respectively. In the event of any merger or
consolidation with or into another entity, the holders of Class A Common Stock and the holders of Class B Common Stock shall be entitled to
receive substantially identical per share consideration.
Stock Repurchase Program
The Board had authorized a total stock repurchase program of $6 billion with a remaining authorized amount under the program of
approximately $1.8 billion, excluding commissions as of June 30, 2011. The Company did not repurchase any shares during the fiscal years ended
June 30, 2011, 2010 and 2009.
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