News Corporation SEC Preliminary Proxy Statement -32-
December 21 2012 - 1:27PM
UK Regulatory
have retained independent outside counsel and are actively
engaged in these matters. The MSC conducted an internal
investigation of the three other titles at NI Group Limited ("News
International") and engaged independent outside counsel to advise
it on these investigations and all other matters it handles. As a
result of these matters, News International has instituted
governance reforms and issued certain enhanced policies to its
employees. (See Note 9-Commitments and Contingencies.)
NOTE 3. RESTRUCTURING PROGRAMS
Fiscal 2013
During the three months ended September 30, 2012, New News
Corporation recorded restructuring charges of $115 million, of
which $112 million related to the newspaper businesses. The
restructuring charges primarily related to the reorganization of
the Australian newspaper businesses which was announced at the end
of fiscal 2012 and the continued reorganization of the U.K.
newspaper business. The restructuring charges recorded in the first
quarter of fiscal 2013 were primarily for termination benefits in
Australia and contract termination payments in the U.K.
Fiscal 2012
During the three months ended September 30, 2011, New News
Corporation recorded restructuring charges of $64 million related
to the newspaper businesses. New News Corporation reorganized
portions of the U.K. newspaper business and recorded restructuring
charges in the first quarter of fiscal 2012 primarily for
termination benefits as a result of the shutdown of The News of the
World and certain organizational restructurings at other
newspapers.
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NEW NEWS CORPORATION
NOTES TO THE UNAUDITED COMBINED FINANCIAL STATEMENTS
(CONTINUED)
Changes in program liabilities were as follows:
For the three months ended September 30,
-----------------------------------------------------------------------------------------
2012 2011
------------------------------------------ --------------------------------------------
One time Facility One time Facility
termination related Other termination related Other
benefits costs costs Total benefits costs costs Total
------------- ---------- ----- ----- ------------- ---------- ----- -------
(in millions)
Balance,
beginning
of period $ 51 $ 8 $ - $ 59 $ 23 $ 10 $ - $ 33
Additions 64 - 51 115 50 - 14 64
Payments (70) (1) (49) (120) (20) (1) (10) (31)
Other - - (2) (2) (2) - (4) (6)
Balance,
end of
period $ 45 $ 7 $ - $ 52 $ 51 $ 9 $ - $ 60
New News Corporation expects to record an additional $16 million
of restructuring charges, principally related to additional
termination benefits at the newspaper businesses. As of September
30, 2012, restructuring liabilities of approximately $46 million
and $6 million were included in the combined balance sheets in
other current liabilities and other liabilities, respectively.
NOTE 4. INVESTMENTS
New News Corporation's investments were comprised of the
following:
As of As of
September June
Ownership 30, 30,
Percentage 2012 2012
------------- ------------- ------
(in millions)
Equity method
investments:
Sky Network Television
Ltd. (a) New Zealand media company 44% $ 399 $ 390
Foxtel Australia pay television 25% 206 198
Australia sports cable network
FOX SPORTS Australia programming 50% 170 171
Other equity method
investments various 34 35
Other investments various 336 332
Total Investments $ 1,145 $1,126
(a) The market value of New News Corporation's investment in Sky Network Television
Ltd. was $719 million and was valued using quoted market prices as of September
30, 2012.
NOTE 5. GOODWILL AND OTHER INTANGIBLE ASSETS
The increase in the carrying value of Intangible assets, net and
Goodwill of $161 million during the three months ended September
30, 2012, was primarily due to the acquisitions of Thomas Nelson at
the Book Publishing segment and AIBM at the News and Information
Services segment and foreign currency adjustments.
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NEW NEWS CORPORATION
NOTES TO THE UNAUDITED COMBINED FINANCIAL STATEMENTS
(CONTINUED)
NOTE 6. EQUITY
The following table summarizes changes in equity:
For the three months ended September 30,
-------------------------------------------------------------------------------------------
2012 2011
--------------------------------------------- -------------------------------------------
Total Total
New News New News
Corporation Noncontrolling Total Corporation Noncontrolling Total
Equity Interests Equity Equity Interests Equity
-------------- ---------------- --------- -------------- ---------------- -------
(in millions)
Balance,
beginning
of period $ 8,809 $ 110 $ 8,919 $ 12,334 $ 95 $12,429
Net (loss)
income (92) 9 (83) 38 7 45
Other
comprehensive
income (loss) 101 1 102 (665) (9) (674)
Other - (11) (11) - - -
Net increase
(decrease)
in Parent
company
investment 267 - 267 (182) - (182)
Balance, end
of period $ 9,085 $ 109 $ 9,194 $ 11,525 $ 93 $11,618
NOTE 7. EQUITY BASED COMPENSATION
Until consummation of the distribution from Parent, New News
Corporation's employees participate in Parent's equity plans.
Parent has plans authorized to grant equity awards of Parent stock
to New News Corporation's employees. The share-based payment
expense recorded by New News Corporation, in the periods presented,
includes the expense associated with the employees historically
attributable to New News Corporation's operations, as well as the
expense associated with the allocation of stock compensation
expense for corporate employees.
The following table summarizes New News Corporation's
equity-based compensation transactions:
For the three
months
ended September
30,
----------------------
2012 2011
-------------- ------
(in millions)
Equity-based compensation-New News Corporation's Employees $ 15 $ 7
Equity-based compensation-Allocated 1 2
Equity-based compensation-Total $ 16 $ 9
As of September 30, 2012, total compensation cost related to
restricted stock units ("RSUs") and performance stock units
("PSUs") not yet recognized for all equity-based compensation plans
was approximately $60 million, and is expected to be recognized
over a weighted average period between one and two years.
Compensation expense on all equity-based awards is generally
recognized on a straight-line basis over the vesting period of the
entire award. However, certain performance based awards are
recognized on an accelerated basis.
The intrinsic value of stock options exercised during the three
months ended September 30, 2012 and 2011 was $7 million and nil,
respectively. The intrinsic value of the stock options outstanding
as of September 30, 2012 and June 30, 2012 was $17 million and $8
million, respectively.
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NEW NEWS CORPORATION
NOTES TO THE UNAUDITED COMBINED FINANCIAL STATEMENTS
(CONTINUED)
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