Twenty-First Century Fox 2011 Annual Report Download - page 30

Download and view the complete annual report

Please find page 30 of the 2011 Twenty-First Century Fox annual report below. You can navigate through the pages in the report by either clicking on the pages listed below, or by using the keyword search tool below to find specific information within the annual report.

Page out of 106

  • 1
  • 2
  • 3
  • 4
  • 5
  • 6
  • 7
  • 8
  • 9
  • 10
  • 11
  • 12
  • 13
  • 14
  • 15
  • 16
  • 17
  • 18
  • 19
  • 20
  • 21
  • 22
  • 23
  • 24
  • 25
  • 26
  • 27
  • 28
  • 29
  • 30
  • 31
  • 32
  • 33
  • 34
  • 35
  • 36
  • 37
  • 38
  • 39
  • 40
  • 41
  • 42
  • 43
  • 44
  • 45
  • 46
  • 47
  • 48
  • 49
  • 50
  • 51
  • 52
  • 53
  • 54
  • 55
  • 56
  • 57
  • 58
  • 59
  • 60
  • 61
  • 62
  • 63
  • 64
  • 65
  • 66
  • 67
  • 68
  • 69
  • 70
  • 71
  • 72
  • 73
  • 74
  • 75
  • 76
  • 77
  • 78
  • 79
  • 80
  • 81
  • 82
  • 83
  • 84
  • 85
  • 86
  • 87
  • 88
  • 89
  • 90
  • 91
  • 92
  • 93
  • 94
  • 95
  • 96
  • 97
  • 98
  • 99
  • 100
  • 101
  • 102
  • 103
  • 104
  • 105
  • 106

Management’s Discussion and Analysis of Financial Condition and Results of Operations (continued)
In July 2011, S&P’s Ratings Services placed the Company’s BBB+ corporate credit rating on CreditWatch with negative implications. Moody’s
Investors Service reaffirmed the Company’s corporate credit rating of Baa1 in July 2011.
Revolving Credit Agreement
In May 2007, NAI, entered into a credit agreement (the “Credit Agreement”), among NAI as Borrower, the Company as Parent Guarantor,
the lenders named therein (the “Lenders”), Citibank, N.A. as Administrative Agent and JPMorgan Chase Bank, N.A. as Syndication Agent. The
Credit Agreement provides a $2.25 billion unsecured revolving credit facility with a sub-limit of $600 million available for the issuance of letters of
credit and has a maturity date of May 2012. Borrowings are in U.S. dollars only, while letters of credit are issuable in U.S. dollars or Euros. The
significant terms of the agreement include the requirement that the Company maintain specific leverage ratios and limitations on secured
indebtedness. NAI pays a facility fee of 0.08% regardless of facility usage. NAI pays interest for borrowings at LIBOR plus 0.27% and pays
commission fees on letters of credit at 0.27%. NAI pays an additional fee of 0.05% if borrowings under the facility exceed 50% of the committed
facility. The interest and fees are based on the Company’s current debt rating. As of June 30, 2011, approximately $77 million in standby letters of
credit, for the benefit of third parties, were outstanding.
Commitments and Guarantees
The Company has commitments under certain firm contractual arrangements (“firm commitments”) to make future payments. These firm
commitments secure the future rights to various assets and services to be used in the normal course of operations. The following table summarizes
the Company’s material firm commitments as of June 30, 2011.
Payments Due by Period
Total 1 year 2-3 years 4-5 years
After 5
years
As of June 30, 2011 (in millions)
Contracts for capital expenditure $ 490 $ 408 $ 47 $ 32 $ 3
Operating leases(a)
Land and buildings 2,746 371 644 546 1,185
Plant and machinery 1,781 251 455 342 733
Other commitments
Borrowings 15,495 32 434 950 14,079
Sports programming rights(b) 20,493 3,412 5,283 2,441 9,357
Entertainment programming rights 3,756 1,847 1,330 436 143
Other commitments and contractual obligations(c) 4,371 1,002 1,374 604 1,391
Total commitments, borrowings and contractual obligations $49,132 $7,323 $9,567 $5,351 $26,891
The Company also has certain contractual arrangements in relation to certain investees that would require the Company to make payments or
provide funding if certain circumstances occur (“contingent guarantees”). The Company does not expect that these contingent guarantees will
result in any material amounts being paid by the Company in the foreseeable future. The timing of the amounts presented in the table below reflect
when the maximum contingent guarantees will expire and does not indicate that the Company expects to incur an obligation to make payments
during that time frame.
Amount of Guarantees Expiration Per Period
As of June 30, 2011
Contingent guarantees:
Total
Amounts
Committed 1 year 2-3 years 4-5 years
After 5
years
(in millions)
Sports programming rights(d) $ 308 $ 15 $131 $162 $ —
Indemnity(e) 801 27 54 54 666
Letters of credit and other 249 249 — — —
$1,358 $291 $185 $216 $666
(a) The Company leases transponders, office facilities, warehouse facilities, printing plants, equipment and microwave transmitters used to carry broadcast signals. These leases, which are
classified as operating leases, expire at certain dates through fiscal 2090.
(b) The Company’s contract with MLB gives the Company rights to broadcast certain regular season and post season games, as well as exclusive rights to broadcast MLB’s World Series and
All-Star Game through the 2013 MLB season.
Under the Company’s contract with NFL, remaining future minimum payments for program rights to broadcast certain football games are payable over the remaining term of the contract
through fiscal 2014.
28 News Corporation