Twenty-First Century Fox 2011 Annual Report Download - page 89

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Notes to the Consolidated Financial Statements (continued)
(a) See Note 3 – Acquisitions, Disposals and Other Transactions
(b) See Note 10 – Borrowings
(c) See Note 6 – Investments
(d) The Company had certain exchangeable debt securities which contained embedded derivatives. Pursuant to ASC 815, these embedded derivatives are not designated as hedges and, as such,
changes in their fair value were recognized in Other, net in the consolidated statements of operations. The Company redeemed the exchangeable debt securities in fiscal year 2010. (See Note
11–Exchangeable Securities)
NOTE 24. Subsequent Events
In July 2011, the Company announced that it would close its publication, News of the World, after allegations of phone hacking and
payments to police. As a result of these allegations, the Company is subject to several ongoing investigations by U.K. and U.S. regulators and
governmental authorities, including investigations into whether similar conduct may have occurred at the Company’s subsidiaries outside of the
U.K. The Company is fully cooperating with these investigations. In addition, the Company has admitted liability in a number of civil cases related
to the phone hacking allegations and has settled a number of cases. The Company has taken steps to solve the problems relating to News of the
World including the creation and establishment of an independent Management & Standards Committee (the “MSC”), which will have oversight
of, and take responsibility for, all matters in relation to the News of the World phone hacking case, police payments and all other connected issues
at News International Group Limited (“News International”), including as they may relate to other News International publications. The MSC
appointed an independent Chairman, Lord Grabiner QC, and will report directly to Joel Klein, Executive Vice President and a director of the
Company, who in turn will report to Viet Dinh, an independent director and Chairman of the Company’s Nominating and Corporate Governance
Committee. Both directors will update the Company’s Board of Directors. The MSC will ensure full cooperation with all relevant investigations
and inquiries into News of the World matters and all other related issues across News International and will conduct its own internal
investigations where appropriate. The MSC will also be responsible for reviewing existing compliance systems and for proposing and overseeing
the implementation of new compliance, ethics and governance procedures at News International. The Company has engaged outside counsel to
assist it in responding to U.K. and U.S. governmental inquiries.
In July 2011, the Company sold its majority interest in its outdoor advertising businesses in Russia and Romania for approximately $360
million. The Company expects to record a gain related to the sale of this business during the first quarter of fiscal 2012.
A dividend of $0.095 per share of Class A Common Stock and Class B Common Stock has been declared and is payable on October 19, 2011.
The record date for determining dividend entitlements is September 14, 2011.
NOTE 25. Supplemental Guarantor Information
In May 2007, NAI, a 100% owned subsidiary of the Company as defined in Rule 3-10(h) of Regulation S-X, entered into the Credit
Agreement. 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.
The Parent Guarantor presently guarantees the senior public indebtedness of NAI and the guarantee is full and unconditional. The
supplemental condensed consolidating financial information of the Parent Guarantor should be read in conjunction with these consolidated
financial statements.
In accordance with rules and regulations of the SEC, the Company uses the equity method to account for the results of all of the
non-guarantor subsidiaries, representing substantially all of the Company’s consolidated results of operations, excluding certain intercompany
eliminations.
The following condensed consolidating financial statements present the results of operations, financial position and cash flows of NAI, the
Company and the subsidiaries of the Company and the eliminations and reclassifications necessary to arrive at the information for the Company
on a consolidated basis.
2011 Annual Report 87