Twenty-First Century Fox 2008 Annual Report Download - page 63

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NEWSCORP
Management’s Discussion and Analysis of Financial Condition and Results of Operations (continued)
from FIM’s Internet sites. The revenue increase was also driven by incremental revenues from the Jamba joint venture which was formed in January
2007, as well as higher revenues from NDS.
Operating results for the fiscal year ended June 30, 2008 increased $235 million as compared to fiscal 2007. The increase was primarily due to
a gain of $126 million from the sale of a parcel of land the Company owned in the United Kingdom in June 2008 and due to the revenue increases
noted above. The revenue increases at FIM were partially offset by higher costs due to increased development and technical activity, the domestic
and international expansion of the business and costs associated with the launch of new business ventures. Also contributing to the increase in
operating results was the absence of losses for the ICC Cricket World Cup included in fiscal 2007; however, this was offset by start up losses in
conjunction with the Company’s Eastern European broadcasting initiatives.
Results of Operations—Fiscal 2007 versus Fiscal 2006
The following table sets forth the Company’s operating results for fiscal 2007 as compared to fiscal 2006.
2007 2006 Change % Change
For the years ended June 30, ($ 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%
Equity earnings of affiliates 1,019 888 131 15%
Interest expense, net (843) (791) (52) 7%
Interest income 319 246 73 30%
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 carried rights to a greater dividend than Class B Common
Stock through fiscal 2007. As such, net income available to the Company’s stockholders is allocated 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 ceased to carry any rights to a
greater dividend than shares of Class B Common Stock. See Note 19 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 and Information Services, Television and Other segments.
Operating expenses for the fiscal year end June 30, 2007 increased 12% from fiscal 2006, primarily due to higher sports programming 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 acquisitions. 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.
62 NEWSCORP 2008 Annual Report