Twenty-First Century Fox 2014 Annual Report Download - page 56

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50
owned businesses and the issuances of additional noncontrolling interests at the Company’s cable businesses. These
increases were partially offset by the noncontrolling interests’ share of Sky Deutschland’s net losses.
Segment Analysis
The Company’s operating segments have been determined in accordance with the Company’s internal
management structure, which is organized based on operating activities. The Company evaluates performance based
upon several factors, of which the primary financial measure is Segment OIBDA. Due to the integrated nature of the
operating segments, estimates and judgments are made in allocating certain assets, revenues and expenses.
Segment OIBDA is defined as Revenues less Operating expenses and Selling, general and administrative
expenses. Segment OIBDA does not include: Amortization of cable distribution investments, Depreciation and
amortization, Impairment charges, Equity earnings of affiliates, Interest expense, net, Interest income, Other, net,
Income tax expense and Net income attributable to noncontrolling interests. Management believes that Segment
OIBDA is an appropriate measure for evaluating the operating performance of the Company’s business segments
because it is the primary measure used by the Company’s chief operating decision maker to evaluate the
performance of and allocate resources within the Company’s businesses.
Management believes that information about Total Segment OIBDA assists all users of the Company’s
Consolidated Financial Statements by allowing them to evaluate changes in the operating results of the Company’s
portfolio of businesses separate from non-operational factors that affect Net income, thus providing insight into both
operations and the other factors that affect reported results. Total Segment OIBDA provides management, investors
and equity analysts a measure to analyze the operating performance of the Company’s business and its enterprise
value against historical data and competitors’ data, although historical results, including Segment OIBDA and Total
Segment OIBDA, may not be indicative of future results (as operating performance is highly contingent on many
factors, including customer tastes and preferences).
Total Segment OIBDA is a non-GAAP measure and should be considered in addition to, not as a substitute
for, Net income (loss), cash flow and other measures of financial performance reported in accordance with U.S.
generally accepted accounting principles (“GAAP”). In addition, this measure does not reflect cash available to fund
requirements and excludes items, such as Depreciation and amortization and Impairment charges, which are
significant components in assessing the Company’s financial performance.