Twenty-First Century Fox 2008 Annual Report Download - page 91

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NEWSCORP
Notes to the Consolidated Financial Statements (continued)
In the fourth quarter of fiscal 2008, facts and circumstances regarding one of the Company’s fiscal 2007 uncertain tax positions changed,
allowing the Company to conclude that it was more likely than not that the tax benefits from this position would be realized. Consequently, the
accrual related to this position, due to its certainty, was reclassified out of uncertain tax positions into other liabilities in the Company’s
consolidated balance sheet and will be released when recognized.
Of the total unrecognized tax benefits at June 30, 2008 of $1.8 billion, approximately $ 1.7 billion would affect the Company’s effective income
tax rate, if and when recognized in future fiscal years.
The Company recognizes interest and penalty charges related to unrecognized tax benefits as income tax expense, which is consistent with
the recognition in prior reporting periods. The Company had recorded liabilities for accrued interest of $342 million and $258 million as of June 30,
2008 and 2007, respectively. The increase for the fiscal year ended June 30, 2008 was $78 million of additional interest accrued and $6 million of
accrued interest which was acquired in December 2007 as part of the Dow Jones & Company, Inc. (“Dow Jones”) acquisition.
The Company does not presently anticipate such uncertain income tax positions will significantly increase or decrease in the next 12 months;
however, actual developments in this area could differ from those currently expected.
The Internal Revenue Service concluded its examination of the Company’s U.S. federal income tax returns through 2002, and has commenced
examining the Company’s returns for the years subsequent to 2002. Additionally, the Company’s income tax returns for the years 2000 through
2007 are subject to examination in various foreign jurisdictions.
Earnings per share
Prior to fiscal 2008, Net income available to the Company’s common stockholders was allocated between the Company’s two classes of common
stock, Class A common stock, par value $0.01 per share (“Class A Common Stock”) and Class B common stock, par value $0.01 per share (“Class B
Common Stock”). The allocation between classes was based upon the two-class method. Under the two-class method, earnings per share for each
class of common stock was allocated according to dividends declared and participation rights in undistributed earnings. Subsequent to the final
fiscal 2007 dividend, shares of Class A Common Stock no longer carry the right to a greater dividend than shares of Class B Common Stock and;
therefore, Net income is allocated equally to Class A and Class B stockholders. Accordingly, since the apportionment of earnings has been
eliminated as required by the Company’s Restated Certificate of Incorporation, the Company has presented the earnings of Class A Common Stock
and Class B Common Stock as a single class for fiscal 2008. (See Note 19—Earnings Per Share)
Basic earnings per share for the Class A and Class B Common Stock is calculated by dividing net income or loss by the weighted average
number of shares of Class A and Class B Common Stock outstanding. Diluted earnings per share for Class A and Class B Common Stock is
calculated similarly, except that the calculation includes the dilutive effect of the assumed issuance of shares issuable under the Company’s
equity-based compensation plans and the dilutive effect of convertible securities.
Comprehensive income
The Company follows SFAS No. 130, “Reporting Comprehensive Income,” for the reporting and display of comprehensive income.
2008 2007 2006
For the years ended June 30, (in millions)
Accumulated other comprehensive income, net of tax:
Unrealized holding gains (losses) on securities:
Balance, beginning of year $ 140 $ 19 $ 83
Fiscal year activity (69) 121 (64)
Balance, end of year 71 140 19
Pension plan adjustments:
Balance, beginning of year (205) (79) (246)
Adoption of SFAS No. 158 — (199) —
Fiscal year activity (86) 73 167
Balance, end of year (291) (205) (79)
Foreign currency translation adjustments:
Balance, beginning of year 1,010 140 (9)
Fiscal year activity 976 870 149
Balance, end of year 1,986 1,010 140
Total accumulated other comprehensive income, net of tax $1,766 $ 945 $ 80
90 NEWSCORP 2008 Annual Report