| Description of Business and Basis of Presentation (Policies) | 12 Months Ended |
| Jun. 30, 2017 |
| Accounting Policies [Abstract] | |
| Basis of Presentation | Basis of
presentation The consolidated financial
statements of the Company have been prepared in accordance with
generally accepted accounting principles in the United States of
America (“GAAP”). The Company’s financial
statements as of and for the fiscal years ended June 30, 2017,
2016 and 2015 are presented on a consolidated basis. The consolidated financial
statements are referred to herein as the “Consolidated
Financial Statements.” The consolidated statements of
operations are referred to herein as the “Statements of
Operations.” The consolidated balance sheets are referred to
herein as the “Balance Sheets.” The consolidated
statements of cash flows are referred to herein as the
“Statements of Cash Flows.” The Company maintains a
52-53 week fiscal year ending on the Sunday closest to June 30
in each year. Fiscal 2017, fiscal 2016 and fiscal 2015 included 52,
53 and 52 weeks, respectively. All references to the fiscal years
ended June 30, 2017, 2016, and 2015 relate to the fiscal years
ended July 2, 2017, July 3, 2016, and June 28,
2015, respectively. For convenience purposes, the Company continues
to date its consolidated financial statements as of
June 30. |
| Principles of consolidation | Principles of
consolidation The Consolidated Financial
Statements include the accounts of all majority-owned and
controlled subsidiaries. In addition, the Company evaluates its
relationships with other entities to identify whether they are
variable interest entities (“VIEs”) as defined by
Financial Accounting Standards Board (“FASB”)
Accounting Standards Codification (“ASC”) 810-10,
“Consolidation” (“ASC 810-10”) and whether
the Company is the primary beneficiary. Consolidation is required
if both of these criteria are met. All significant intercompany
accounts and transactions have been eliminated in consolidation,
including the intercompany portion of transactions with equity
method investees. Changes in the
Company’s ownership interest in a consolidated subsidiary
where a controlling financial interest is retained are accounted
for as capital transactions. When the Company ceases to have a
controlling interest in a consolidated subsidiary the Company will
recognize a gain or loss in the Statements of Operations upon
deconsolidation. |
| Reclassifications | Reclassifications Certain reclassifications
have been made to the prior period consolidated financial
statements to conform to the fiscal 2017 presentation.
Specifically, the Company reclassified its listing revenues
generated primarily from agents, brokers and developers from
advertising revenue to real estate revenue for all periods
presented to better reflect the Company’s revenue mix and how
management reviews the performance of the Digital Real Estate
Services segment. Additionally, in the third quarter of fiscal
2017, the Company revised the Statements of Cash Flows to present
cash flow activities from discontinued operations within each of
the operating, investing and financing activities
categories. |
| Use of estimates | Use of
estimates The preparation of the
Company’s Consolidated Financial Statements in conformity
with GAAP requires management to make estimates and assumptions
that affect the amounts that are reported in the Consolidated
Financial Statements and accompanying disclosures. Actual results
could differ from those estimates. |
| Cash and cash equivalents | Cash and cash
equivalents Cash and cash equivalents
consist of cash on hand and other investments that are readily
convertible into cash with original maturities of three months or
less. The Company’s cash and cash equivalents balance as of
June 30, 2017 and 2016 also includes $276 million and $95
million, respectively, which is not readily accessible by the
Company as it is held by REA Group Limited (“REA
Group”), a majority owned but separately listed public
company. REA Group must declare a dividend in order for the
Company to have access to its share of REA Group’s cash
balance. The Company classifies cash
as restricted when the cash is unavailable for use in its general
operations. The restricted cash balance of $315 million as of
June 30, 2016 related to cash set aside for the Wireless Group
acquisition in order to comply with U.K. takeover regulations. (See
Note 3 – Acquisitions, Disposals and Other Transactions). The
Company utilized the restricted cash which was specifically set
aside at June 30, 2016 for purposes of funding the acquisition
and therefore the Company had no restricted cash as of
June 30, 2017. |
| Concentration of credit risk | Concentration of
credit risk Cash and cash equivalents
are maintained with multiple financial institutions. The Company
has deposits held with banks that exceed the amount of insurance
provided on such deposits. Generally, these deposits may be
redeemed upon demand and are maintained with financial institutions
of reputable credit and, therefore, bear minimal credit
risk. |
| Receivables, net | Receivables,
net Receivables are presented
net of an allowance for returns and doubtful accounts, which is an
estimate of amounts that may not be collectible. In determining the
allowance for returns, management analyzes historical returns,
current economic trends and changes in customer demand and
acceptance of the Company’s products. Based on this
information, management reserves a percentage of each dollar of
product sales that provide the customer with the right of return.
The allowance for doubtful accounts is estimated based on
historical experience, receivable aging, current economic trends
and specific identification of certain receivables that are at risk
of not being collected.
Receivables, net consist
of:
As of
June 30,
2017 2016
(in
millions)
Receivables $ 1,484 $ 1,442
Allowances for sales
returns (166 ) (170 )
Allowances for doubtful
accounts (42 ) (43 )
Receivables, net $ 1,276 $ 1,229
The Company’s
receivables did not represent significant concentrations of credit
risk as of June 30, 2017 or June 30, 2016 due to the wide
variety of customers, markets and geographic areas to which the
Company’s products and services are sold. |
| Inventories | Inventories Inventories are valued at
the lower of cost or market. Cost is determined by the weighted
average cost method. The Company records a reserve for excess and
obsolete inventory based upon a calculation using the historical
usage rates, sales patterns of its products and specifically
identified obsolete inventory. Inventory is included within Other
current assets on the Balance Sheets. |
| Prepublication costs | Prepublication
costs The Company capitalizes the
art, prepress, outside editorial, digital conversion and other
costs incurred in the creation of the master copy of a book or
other media (the “prepublication costs”).
Prepublication costs are amortized from the year of publication
over the estimated useful life of the title, using the
straight-line method for capitalized costs with an estimated useful
life of one year or less and sum of the years’ digits for
capitalized costs with an estimated useful life exceeding one year.
The Company regularly reviews the recoverability of the capitalized
costs based on expected future revenues. Prepublications costs are
included in Other non-current assets on the Balance Sheets and were
$31 million and $33 million as of June 30, 2017 and 2016,
respectively. Amortization of prepublication costs for the
fiscal years ended June 30, 2017, 2016 and 2015 was $45
million, $43 million, and $43 million, respectively. |
| Investments | Investments The Company makes
investments in various businesses in the normal course of business.
The Company evaluates its relationships with other entities to
identify whether they are VIEs in accordance with ASC 810-10 and
whether the Company is the primary beneficiary. In determining
whether the Company is the primary beneficiary of a VIE, it
assesses whether it has the power to direct matters that most
significantly impact the activities of the VIE and has the
obligation to absorb losses or the right to receive benefits from
the VIE that could potentially be significant to the VIE. The
Company would consolidate any investments in which it was
determined to be the primary beneficiary of a VIE. Investments in and advances
to equity investments or joint ventures in which the Company has
significant influence, but is not the primary beneficiary, and has
less than a controlling voting interest, are accounted for using
the equity method. Significant influence is generally presumed to
exist when the Company owns an interest between 20% and 50% or when
the Company has the ability to exercise significant influence.
Under the equity method of accounting, the Company includes its
investments and amounts due to and from its equity method
investments in its Balance Sheets. The Company’s Statements
of Operations include the Company’s share of the
investees’ earnings (losses) and the Company’s
Statements of Cash Flows include all cash received from or paid to
the investee. The difference between the
Company’s investment and its share of the fair value of the
underlying net assets of the investee upon acquisition is first
allocated to either finite-lived intangibles, indefinite-lived
intangibles or other assets and liabilities and the balance is
attributed to goodwill. The Company follows ASC 350,
“Intangibles—Goodwill and Other” (“ASC
350”), which requires that equity method finite-lived
intangibles be amortized over their estimated useful life. Such
amortization is reflected in Equity (losses) earnings of affiliates
in the Statements of Operations. Indefinite-lived intangibles and
goodwill are not amortized. Investments in which the
Company has no significant influence (generally less than a 20%
ownership interest) or does not have the ability to exercise
significant influence are designated as available-for-sale
investments if readily determinable market values are available.
The Company reports available-for-sale investments at fair value
based on quoted market prices. Unrealized gains and losses on
available-for-sale investments are included in Accumulated other
comprehensive loss, net of applicable taxes and other adjustments,
until the investment is sold or considered impaired. If an
investment’s fair value is not readily determinable, the
Company accounts for its investment at cost. |
| Property, plant and equipment | Property, plant and
equipment Property, plant and
equipment are stated at cost less accumulated depreciation.
Depreciation is provided using the straight-line method over an
estimated useful life of 3 to 50 years. Leasehold improvements are
amortized using the straight-line method over the shorter of their
useful lives or the life of the lease. Costs associated with the
repair and maintenance of property, plant and equipment are
expensed as incurred. Changes in circumstances, such as
technological advances or changes to the Company’s business
model or capital strategy, could result in the actual useful lives
differing from the Company’s estimates. In those cases where
the Company determines that the useful life of buildings and
equipment should be changed, the Company would depreciate the asset
over its revised remaining useful life, thereby increasing
depreciation expense. |
| Operating Leases | Operating
Leases For operating leases,
minimum lease payments, including minimum scheduled rent increases,
are recognized as rent expense on a straight-line basis over the
applicable lease terms. The term used for straight-line rent
expense is calculated beginning on the date that the Company
obtains possession of the leased premises through the expected
lease termination date. |
| Capitalized software | Capitalized
software In accordance with ASC
350–40 “Internal-use Software,” the Company
capitalizes certain costs incurred in connection with developing or
obtaining internal use software. Costs incurred in the preliminary
project stage are expensed. All direct costs incurred to develop
internal use software during the development stage are capitalized
and amortized using the straight-line method over the estimated
useful life, generally 2 to 10 years. Costs such as maintenance and
training are expensed as incurred. Research and development costs
are also expensed as incurred. |
| Royalty advances to authors | Royalty advances to
authors Royalty advances are
initially capitalized and subsequently expensed as related revenues
are earned or when the Company determines future recovery is not
probable. The Company has a long history of providing authors with
royalty advances, and it tracks each advance earned with respect to
the sale of the related publication. Historically, the longer the
unearned portion of the advance remains outstanding, the less
likely it is that the Company will recover the advance through the
sale of the publication. The Company applies this historical
experience to its existing outstanding royalty advances to estimate
the likelihood of recovery and a provision is established to
write-off the unearned advance, usually between 6 and 12 months
after publication. Additionally, the Company reviews its portfolio
of royalty advances for unpublished titles to determine if
individual royalty advances are not recoverable for discrete
reasons, such as the death of an author prior to completion of a
title or titles, a Company decision to not publish a title, poor
market demand or other relevant factors that could impact
recoverability. Based on this information, the portion of any
advance that the Company believes is not recoverable is
expensed. |
| Goodwill and intangible assets | Goodwill and
intangible assets The Company has goodwill
and intangible assets, including newspaper mastheads, distribution
networks, publishing imprints, radio broadcast licenses, trademarks
and tradenames, channel distribution agreements, publishing rights
and customer relationships. Goodwill is recorded as the difference
between the cost of acquiring entities and amounts assigned to
their tangible and identifiable intangible net assets. In
accordance with ASC 350, the Company’s goodwill and
indefinite-lived intangible assets are tested annually during the
fourth quarter for impairment or earlier if events occur or
circumstances change that would more likely than not reduce the
fair values below their carrying amounts. Intangible assets with
finite lives are amortized over their estimated useful
lives. Goodwill is reviewed for
impairment at a reporting unit level. Reporting units are
determined based on an evaluation of the Company’s operating
segments and the components making up those operating
segments. For purposes of its goodwill impairment review, the
Company has identified Dow Jones, the Australian newspapers, the
U.K. newspapers, News America Marketing, Unruly Holdings Limited
(“Unruly”), Storyful Limited (“Storyful”),
Wireless Group plc (“Wireless Group), FOX SPORTS Australia,
Australia News Channel Pty Ltd (“ANC”), HarperCollins,
REA Group, Move, Inc. (“Move”) and DIAKRIT
International Limited (“DIAKRIT”), as its reporting
units. During the third quarter of fiscal 2017, the Company
early adopted
ASU 2017-04, “Intangibles—Goodwill and Other
(Topic 350): Simplifying the Test for Goodwill Impairment”
(“ASU 2017-04”) which eliminates Step 2 from the
goodwill impairment test and instead requires an entity to perform
its annual, or interim, goodwill impairment test by comparing the
fair value of a reporting unit with its carrying amount and to
recognize an impairment charge for the amount by which the carrying
amount exceeds the reporting unit’s fair value. Under ASU 2017-04, in
assessing goodwill for impairment, the Company has the option to
first perform a qualitative assessment to determine whether events
or circumstances exist that lead to a determination that it is more
likely than not that the fair value of a reporting unit is less
than its carrying amount. If the Company determines that it is not
more likely than not that the fair value of a reporting unit is
less than its carrying amount, the Company is not required to
perform any additional tests in assessing goodwill for impairment.
However, if the Company concludes otherwise or elects not to
perform the qualitative assessment, then it is required to perform
a quantitative analysis to determine the fair value of the
business, and compare the calculated fair value of a reporting unit
with its carrying amount, including goodwill. If through a
quantitative analysis the Company determines the fair value of a
reporting unit exceeds its carrying amount, the goodwill of the
reporting unit is considered not to be impaired. If the Company
concludes that the fair value of the reporting unit is less than
its carrying value, an impairment will be recognized for the amount
by which the carrying amount exceeds the reporting unit’s
fair value.
The Company also performs
impairment reviews on its indefinite-lived intangible assets,
including newspaper mastheads, distribution networks, publishing
imprints, radio broadcast licenses and trademarks and tradenames.
Newspaper mastheads, radio broadcast licenses and book publishing
imprints are reviewed on an aggregated basis in accordance with ASC
350. Distribution networks and trademarks are reviewed
individually. In assessing its indefinite-lived intangible assets
for impairment, the Company has the option to first perform a
qualitative assessment to determine whether events or circumstances
exist that lead to a determination that it is more likely than not
that the fair value of the indefinite-lived intangible asset is
less than its carrying amount. If the Company determines that it is
not more likely than not that the fair value of an indefinite-lived
intangible asset is less than its carrying amount, the Company is
not required to perform any additional tests in assessing the asset
for impairment. However, if the Company concludes otherwise or
elects not to perform the qualitative assessment, then it is
required to perform a quantitative analysis to determine if the
fair value of an indefinite-lived intangible asset is less than its
carrying value. If through a quantitative analysis the Company
determines the fair value of an indefinite-lived intangible asset
exceeds its carrying amount, the indefinite-lived intangible asset
is considered not to be impaired. If the Company concludes that the
fair value of an indefinite-lived intangible asset is less than its
carrying value, an impairment will be recognized for the amount by
which the carrying amount exceeds the indefinite-lived intangible
asset’s fair value. The methods used to
estimate the fair value measurements of the Company’s
reporting units and indefinite-lived intangible assets include
those based on the income approach (including the discounted cash
flow and relief-from-royalty methods) and those based on the market
approach (primarily the guideline public company method). The
resulting fair value measurements of the assets are considered to
be Level 3 measurements. Determining fair value requires the
exercise of significant judgments, including judgments about
appropriate discount rates, long-term growth rates, relevant
comparable company earnings multiples and the amount and timing of
expected future cash flows. The cash flows employed in the analyses
are based on the Company’s estimated outlook and various
growth rates are assumed for years beyond the long-term business
plan period. Discount rate assumptions are based on an assessment
of the risk inherent in the future cash flows of the respective
reporting units. In assessing the reasonableness of its determined
fair values, the Company evaluates its results against other value
indicators, such as comparable public company trading
values. When a business within a
reporting unit is disposed of, goodwill is allocated to the
disposed business using the relative fair value method. |
| Asset impairments | Asset
impairments Investments Equity method investments
are regularly reviewed to determine whether a significant event or
change in circumstances has occurred that may impact the fair value
of each investment. If the fair value of the investment has dropped
below the carrying amount, management considers several factors
when determining whether an other-than-temporary decline in market
value has occurred, including the length of time and extent to
which the market value has been below cost, the financial condition
and near-term prospects of the issuer, the intent and ability of
the Company to retain its investment in the issuer for a period of
time sufficient to allow for any anticipated recovery in market
value and other factors influencing the fair market value, such as
general market conditions. The Company regularly
reviews available-for-sale investment securities for
other-than-temporary impairment based on criteria that include the
extent to which the investment’s carrying value exceeds its
related market value, the duration of the market decline, the
Company’s ability to hold until recovery and the financial
strength and specific prospects of the issuer of the
security.
The Company regularly
reviews investments accounted for at cost for other-than-temporary
impairment based on criteria that include the extent to which the
investment’s carrying value exceeds its related estimated
fair value, the duration of the estimated fair value decline, the
Company’s ability to hold until recovery and the financial
strength and specific prospects of the issuer of the
security. Long-lived
assets ASC 360, “Property,
Plant, and Equipment” (“ASC 360”) and ASC 350
require the Company to periodically review the carrying amounts of
its long-lived assets, including property, plant and equipment and
finite-lived intangible assets, to determine whether current events
or circumstances indicate that such carrying amounts may not be
recoverable. If the carrying amount of the asset is greater than
the expected undiscounted cash flows to be generated by such asset,
an impairment adjustment is recognized if the carrying value of
such asset exceeds its fair value. The Company generally measures
fair value by considering sale prices for similar assets or by
discounting estimated future cash flows using an appropriate
discount rate. Considerable management judgment is necessary to
estimate the fair value of assets, accordingly, actual results
could vary significantly from such estimates. Assets to be disposed
of are carried at the lower of their financial statement carrying
amount or fair value, less their costs to sell. Treasury
Stock The Company accounts for
treasury stock using the cost method. Upon the retirement of
treasury stock, the Company allocates the value of treasury shares
between common stock, additional paid-in capital and retained
earnings. All shares repurchased to date have been
retired. |
| Revenue recognition | Revenue
recognition Revenue is recognized when
persuasive evidence of an arrangement exists, the fees are fixed or
determinable, the product or service has been delivered and
collectability is reasonably assured. The Company considers the
terms of each arrangement to determine the appropriate accounting
treatment. News and Information
Services Advertising revenues are
recognized in the period when advertising is printed, broadcast or
placed on digital platforms, net of commissions and provisions for
estimated sales incentives including rebates, rate adjustments and
discounts. Advertising revenues from integrated marketing services
are recognized when free-standing inserts are published or over the
time period in which in-store marketing services are performed.
Billings to clients and payments received in advance of the
performance of services or delivery of products are recorded as
deferred revenue until the services are performed or the product is
delivered. Circulation and information
services revenues include single-copy and subscription revenues.
Circulation revenues are based on the number of copies of the
printed newspaper (through home-delivery subscriptions and
single-copy sales) and digital subscriptions sold and the rates
charged to the respective customers. Single-copy revenue is
recognized based on date of publication, net of provisions for
related returns. Proceeds from print, digital and electronic
information services subscription revenues are deferred at the time
of sale and are recognized in earnings on a pro rata basis over the
terms of the subscriptions.
Other revenues
are recognized when the related services are performed or the
product has been delivered. Book
Publishing Revenue from the sale of
books for distribution in the retail channel is primarily
recognized upon passing of control to the buyer. Revenue for
electronic books (“e-books”), which is the net amount
received from the retailer, is generally recognized upon electronic
delivery to the customer by the retailer. Revenue is reported net
of any amounts billed to customers for taxes which are remitted to
government authorities. Digital Real Estate
Services Real estate revenues are
derived from the sale of online real estate listing products and
services to agents, brokers and developers. Revenues are recognized
on the fulfillment of customer service obligations, which may
include product performance and/or product service
periods. Advertising revenues are
recognized in the period when advertising is placed on digital
platforms, net of commissions and provisions for estimated sales
incentives including rebates, rate adjustments and
discounts. Subscription revenues from
licensing and advanced reporting products are typically recognized
ratably over the service period of the related
subscription. Cable Network
Programming Affiliate fees received
from cable television systems, direct broadcast satellite operators
and other distribution systems are recognized as revenue in the
period that services are provided. Advertising revenues are
recognized, net of agency commissions, in the period that the
advertisements are aired. |
| Multiple element arrangements | Multiple element
arrangements Revenues derived from a
single sales contract that contains multiple products and services
are allocated based on the relative fair value of each item to be
delivered and recognized in accordance with the applicable revenue
recognition criteria for the specific unit of
accounting. |
| Gross versus net revenue recognition | Gross versus net
revenue recognition In the normal course of
business, the Company acts as or uses an intermediary or agent in
executing transactions with third parties. In connection with these
arrangements, the Company must determine whether to report revenue
based on the gross amount billed to the ultimate customer or on the
net amount received from the customer after commissions and other
payments to third parties. The determination of
whether revenue should be reported on a gross or net basis is based
on an assessment of whether the Company is acting as the principal
or an agent in the transaction. If the Company is acting as a
principal in a transaction, the Company reports revenue on a gross
basis. If the Company is acting as an agent in a transaction, the
Company reports revenue on a net basis. The determination of
whether the Company is acting as a principal or an agent in a
transaction involves judgment and is based on an evaluation of the
terms of the arrangement. The Company serves as the principal in
transactions in which it has substantial risks and rewards of
ownership. |
| Barter transactions | Barter
transactions The Company enters into
transactions that involve the exchange of advertising, in part, for
other products and services, which are recorded at the lesser of
estimated fair value of the advertising given or product or service
received in accordance with the provisions of ASC 605-20-25,
“Advertising Barter Transactions.” Revenue from barter
transactions is recognized when advertising is provided, and
expenses are recognized when products are received or services are
incurred. Revenue from barter transactions included in the
Statements of Operations was $48 million, $58 million and $56
million for the fiscal years ended June 30, 2017, 2016 and
2015, respectively. Expense from barter transactions included in
the Statements of Operations was $48 million, $58 million and $56
million for the fiscal years ended June 30, 2017, 2016 and
2015, respectively. |
| Sales returns | Sales
returns Consistent with industry
practice, certain of the Company’s products, such as books
and newspapers, are sold with the right of return. The Company
records, as a reduction of revenue, the estimated impact of such
returns. In determining the estimate of product sales that will be
returned, management analyzes historical returns, current economic
trends, changes in customer demand and acceptance of the
Company’s products. Based on this information, management
reserves a percentage of each dollar of product sales that provide
the customer with the right of return. |
| Advertising expenses | Advertising
expenses The Company expenses
advertising costs as incurred in accordance with ASC 720-35,
“Other Expenses—Advertising Cost.” Advertising
and promotional expenses recognized totaled $587 million, $607
million and $530 million for the fiscal years ended June 30,
2017, 2016 and 2015, respectively. |
| Shipping and handling | Shipping and
handling Costs incurred for shipping
and handling are reflected in Operating expenses in the Statements
of Operations. |
| Translation of foreign currencies | Translation of
foreign currencies The financial results and
position of foreign subsidiaries and affiliates are translated into
U.S. dollars using the current rate method, whereby operating
results are converted at the average rate of exchange for the
period and assets and liabilities are converted at the closing
rates on the period end date. The resulting translation adjustments
are accumulated as a component of Accumulated other comprehensive
loss. Gains and losses from foreign currency transactions are
generally included in income for the period. |
| Income taxes | Income
taxes The Company accounts for
income taxes in accordance with ASC 740, “Income Taxes”
(“ASC 740”). ASC 740 requires an asset and liability
approach for financial accounting and reporting for income taxes.
Under the asset and liability approach, deferred taxes are provided
for the net tax effects of temporary differences between the
carrying amounts of assets and liabilities for financial reporting
purposes and the amounts used for income tax purposes. Valuation
allowances are established where management determines that it is
more likely than not that some portion or all of a deferred tax
asset will not be realized. Deferred taxes have not been provided
on the cumulative undistributed earnings of foreign subsidiaries to
the extent amounts are expected to be reinvested indefinitely. The
Company recognizes interest and penalty charges related to
unrecognized tax benefits as income tax expense. |
| Earnings (loss) per share | Earnings (loss) per
share Basic earnings (loss) per
share for Class A Common Stock and Class B Common Stock is
calculated by dividing Net income (loss) available to News
Corporation stockholders by the weighted average number of shares
of Class A Common Stock and Class B Common Stock outstanding.
Diluted earnings (loss) per share for Class A Common Stock 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. (See Note 13—Earnings (loss) per share). |
| Equity-based compensation | Equity-based
compensation Equity-based awards are
accounted for in accordance with ASC 718,
“Compensation—Stock Compensation” (“ASC
718”). ASC 718 requires that the cost resulting from all
share-based payment transactions be recognized in the Consolidated
Financial Statements. ASC 718 establishes fair value as the
measurement objective in accounting for share-based payment
arrangements and requires all companies to apply a fair-value-based
measurement method in accounting for generally all share-based
payment transactions with employees. |
| Retirement Benefit Obligations | Retirement Benefit
Obligations The Company provides
defined benefit pension, postretirement healthcare and defined
contribution benefits to the Company’s eligible employees and
retirees. The Company accounts for its defined benefit pension,
postretirement healthcare and defined contribution plans in
accordance with ASC 715, “Compensation—Retirement
Benefits” (“ASC 715”). The expense recognized by
the Company is determined using certain assumptions, including the
discount rate, expected long-term rate of return of pension assets
and mortality rates, among others. The Company recognizes the
funded status of its defined benefit plans (other than
multiemployer plans) as an asset or liability in the Balance Sheets
and recognizes changes in the funded status in the year in which
the changes occur through Accumulated other comprehensive loss in
the Balance Sheets. |
| Fair Value Measurements | Fair Value
Measurements The Company has various
financial instruments that are measured at fair value on a
recurring basis, including certain marketable securities and
derivatives. The Company also applies the provisions of fair value
measurement to various non-recurring measurements for the
Company’s non-financial assets and liabilities. With the
exception of investments measured using the net asset value per
share practical expedient prescribed in ASU 2015-07, the Company
measures assets and liabilities in accordance with ASC 820,
“Fair Value Measurements” (“ASC 820”),
using inputs from the following three levels of the fair value
hierarchy: (i) inputs that are quoted prices in active markets
for identical assets or liabilities (“Level 1”);
(ii) inputs other than quoted prices included within Level 1
that are observable, including quoted prices for similar assets or
liabilities (“Level 2”); and (iii) unobservable
inputs that require the entity to use its own best estimates about
market participant assumptions (“Level 3”). The Company’s assets
measured at fair value on a nonrecurring basis include investments,
long-lived assets, indefinite-lived intangible assets and goodwill.
The Company reviews the carrying amounts of such assets whenever
events or changes in circumstances indicate that the carrying
amounts may not be recoverable or at least annually as of
June 30 for indefinite-lived intangible assets and goodwill.
Any resulting asset impairment would require that the asset be
recorded at its fair value. The resulting fair value measurements
of the assets are considered to be Level 3 measurements. |
| Financial instruments and derivatives | Financial instruments
and derivatives The carrying value of the
Company’s financial instruments, including cash and cash
equivalents, approximate fair value. The Company did not estimate
the fair value of certain cost method investments because it was
not practicable to do so. The fair value of financial instruments
is generally determined by reference to market values resulting
from trading on a national securities exchange or in an
over-the-counter market which are considered to be Level 2
measurements. The Company monitors its positions with, and the
credit quality of, the financial institutions which are
counterparties to its financial instruments. The Company is exposed
to credit loss in the event of nonperformance by the counterparties
to the agreements. As of June 30, 2017, the Company did not
anticipate nonperformance by any of the counterparties.
ASC 815, “Derivatives
and Hedging” (“ASC 815”) requires every
derivative instrument (including certain derivative instruments
embedded in other contracts) to be recorded on the balance sheet at
fair value as either an asset or a liability. ASC 815 also requires
that changes in the fair value of recorded derivatives be
recognized currently in earnings unless specific hedge accounting
criteria are met. The Company uses financial instruments to hedge
its limited exposures to foreign currency exchange risks primarily
associated with payments made to manufacturers and service
providers. These derivative contracts are primarily economic
hedges. The Company records the changes in the fair value of these
items in current earnings. The fair market value of foreign
exchange forward contracts with foreign currency risk outstanding
as of June 30, 2017 and June 30, 2016 was not
material. |
| Recent Accounting Guidance | Recent Accounting
Guidance Adopted In August 2014, the FASB
issued Accounting Standards Update (“ASU”) 2014-15,
“Presentation of Financial Statements—Going Concern
(Subtopic 205-40) (“ASU 2014-15”). ASU 2014-15 is
intended to define management’s responsibility to evaluate
whether there is substantial doubt about an entity’s ability
to continue as a going concern and to provide related footnote
disclosures. Specifically, ASU 2014-15 provides a definition of the
term substantial doubt and requires an assessment for a period of
one year after the date that the financial statements are issued
(or available to be issued). It also requires certain disclosures
when substantial doubt is alleviated as a result of consideration
of management’s plans and requires an express statement and
other disclosures when substantial doubt is not alleviated. The
adoption did not have an impact on the consolidated financial
statements. In February 2015, the FASB
issued ASU 2015-02, “Consolidation (Topic 810): Amendments to
the Consolidation Analysis” (“ASU 2015-02”). ASU
2015-02 is intended to address stakeholder concerns regarding the
usefulness of financial statements where a reporting entity is
required to consolidate a legal entity where the reporting
entity’s contractual rights do not give it the ability to act
primarily on its own behalf, the reporting entity does not hold a
majority of the legal entity’s voting rights, or the
reporting entity is not exposed to a majority of the legal
entity’s economic benefits or obligations. The update amends
the accounting guidance around the consolidation of limited
partnerships, the considerations surrounding the primary
beneficiary determination and the consolidation of certain
investment funds. As permitted by ASU 2015-02, the Company
early-adopted this standard on a prospective basis during the first
quarter of fiscal year 2017. The adoption did not have an impact on
the Company’s consolidated financial statements. In April 2015, the FASB
issued ASU 2015-05, “Intangibles-Goodwill and
Other-Internal-Use Software (Subtopic 350-40): Customer’s
Accounting for Fees Paid in a Cloud Computing Arrangement”
(“ASU 2015-05”). ASU 2015-05 clarifies guidance about
whether a customer’s cloud computing arrangement includes a
software license. If a cloud computing arrangement includes a
software license, then the customer should account for the software
license element of the arrangement consistent with the acquisition
of other software licenses. If a cloud computing arrangement does
not include a software license, the customer should account for the
arrangement as a service contract. ASU 2015-05 was adopted on a
prospective basis for arrangements entered into, or materially
modified beginning July 1, 2016. The adoption did not have a
material impact on the consolidated financial
statements. In January 2017, the FASB
issued ASU 2017-04, “Intangibles—Goodwill and Other
(Topic 350): Simplifying the Test for Goodwill Impairment”
(“ASU 2017-04”). The amendments in ASU 2017-04
eliminate Step 2 from the goodwill impairment test and instead
require an entity to perform its annual, or interim, goodwill
impairment test by comparing the fair value of a reporting unit
with its carrying amount and to recognize an impairment charge for
the amount by which the carrying amount exceeds the reporting
unit’s fair value. The loss recognized should not exceed the
total amount of goodwill allocated to that reporting unit. As
permitted by ASU 2017-04, the Company early-adopted this standard
and applied it prospectively to reduce the complexity and costs of
evaluating goodwill for impairment during the third quarter of
fiscal year 2017. Issued In May 2014, FASB issued
ASU 2014-09, “Revenue from Contracts with Customers (Topic
606)” (“ASU 2014-09”). ASU 2014-09 removes
inconsistencies and differences in existing revenue requirements
between GAAP and International Financial Reporting Standards and
requires a company to recognize revenue when it transfers promised
goods or services to customers in an amount that reflects the
consideration to which the company expects to be entitled in
exchange for those goods or services. In August 2015, the FASB
issued ASU 2015-14, delaying the effective date for adoption. ASU
2014-09 is now effective for interim and annual reporting periods
beginning after July 1, 2018, however, early adoption is
permitted. Once effective, ASU 2014-09 can be applied
retrospectively to each prior reporting period presented or
retrospectively with the cumulative effect of initial adoption
recognized at the date of initial application. The FASB has also issued
several standards which provide additional clarification and
implementation guidance on the previously issued ASU 2014-09 and
have the same effective date as the original standard. The Company is currently
evaluating the overall impact that ASU 2014-09 will have on the
Company’s consolidated financial statements, as well as the
expected timing and method of adoption. The Company continues to
evaluate the available transition methods giving consideration to
the comparability of our financial statements and the application
of the new standard to our contractual arrangements. We plan to
select a transition method by the end of the calendar year 2017.
The Company has established an implementation team, including
external advisers, and has commenced the review of the
Company’s revenue portfolio and related contracts across its
various business units and geographies. Discussions regarding
changes to the Company’s current accounting policies and
practices remain ongoing and preliminary conclusions are subject to
change. Based on the current guidance, the new framework will
become effective on either a full or modified retrospective basis
for the Company on July 1, 2018. In January 2016, the FASB
issued ASU 2016-01, “Financial Instruments—Overall
(Subtopic 825-10): Recognition and Measurement of Financial Assets
and Financial Liabilities” (“ASU 2016-01”). The
amendments in ASU 2016-01 address certain aspects of recognition,
measurement, presentation and disclosure of financial instruments.
ASU 2016-01 is effective for the Company for annual and interim
reporting periods beginning July 1, 2018. As of June 30,
2017, the Company had $97 million in available-for-sale securities
with net unrealized losses of $2 million. In accordance with ASU
2016-01, the cumulative net unrealized gains (losses) contained
within Accumulated other comprehensive loss will be reclassified
through Retained earnings as of July 1, 2018, and changes in
the fair value of available-for-sale securities will be recorded in
the Company’s Statement of Operations beginning July 1,
2018. In February 2016, the FASB
issued ASU 2016-02, “Leases (Topic 842)” (“ASU
2016-02”). The amendments in ASU 2016-02 address certain
aspects in lease accounting, with the most significant impact for
lessees. The amendments in ASU 2016-02 require lessees to recognize
all leases on the balance sheet by recording a right-of-use asset
and a lease liability, and lessor accounting has been updated to
align with the new requirements for lessees. The new standard also
provides changes to the existing sale-leaseback guidance. ASU
2016-02 is effective for the Company for annual and interim
reporting periods beginning July 1, 2019. The Company is
currently evaluating the impact ASU 2016-02 will have on its
consolidated financial statements. The Company’s operating
lease commitments are presented in Note 15—Commitments and
Contingencies.
In March 2016, the FASB
issued ASU 2016-09, “Compensation—Stock Compensation
(Topic 718): Improvements to Employee Share-Based Payment
Accounting” (“ASU 2016-09”). The amendments in
ASU 2016-09 address several aspects of the accounting for
share-based payment transactions, including the income tax
consequences, classification of awards as either equity or
liabilities, and classification on the statement of cash flows. ASU
2016-09 is effective for the Company for annual and interim
reporting periods beginning July 1, 2017. The Company does not
expect the adoption of ASU 2016-09 to have a significant impact on
its consolidated financial statements. In June 2016, the FASB
issued ASU 2016-13, “Financial Instruments—Credit
Losses (Topic 326): Measurement of Credit Losses on Financial
Instruments” (“ASU 2016-13”). The amendments in
ASU 2016-13 require a financial asset (or a group of financial
assets) measured at amortized cost basis to be presented at the net
amount expected to be collected. ASU 2016-13 is effective for the
Company for annual and interim reporting periods
beginning July 1, 2020. The Company is currently evaluating
the impact ASU 2016-13 will have on its consolidated financial
statements. In August 2016, the FASB
issued ASU 2016-15, “Statement of Cash Flows (Topic 230):
Classification of Certain Cash Receipts and Cash Payments (a
consensus of the Emerging Issues Task Force)” (“ASU
2016-15”). The amendments in ASU 2016-15 address eight
specific cash flow issues with the objective of reducing the
existing diversity in practice in how certain cash receipts and
cash payments are presented and classified in the statement of cash
flows under Topic 230, Statement of Cash Flows, and other Topics.
ASU 2016-15 is effective for the Company for annual and interim
reporting periods beginning July 1, 2018. The Company does not
expect the adoption of ASU 2016-15 to have a significant impact on
its consolidated financial statements. In October 2016, the FASB
issued ASU 2016-16, “Income Taxes (Topic 740): Intra-Entity
Transfers of Assets Other Than Inventory” (“ASU
2016-16”). The amendments in ASU 2016-16 require an entity to
recognize the income tax consequences of an intra-entity transfer
of an asset other than inventory when the transfer occurs. The
amendments in ASU 2016-16 eliminate the exception for an
intra-entity transfer of an asset other than inventory. ASU 2016-16
is effective for the Company for annual and interim reporting
periods beginning July 1, 2018. The Company does not expect
the adoption of ASU 2016-16 to have a material impact on its
consolidated financial statements. In October 2016, the FASB
issued ASU 2016-17, “Consolidation (Topic 810): Interests
Held through Related Parties That Are under Common Control”
(“ASU 2016-17”). The amendments in ASU 2016-17 require
that if a reporting entity satisfies the first condition of a
primary beneficiary in a VIE, a reporting entity should include all
of its direct variable interests in a VIE and, on a proportionate
basis, its indirect variable interests in a VIE held through
related parties, including related parties that are under common
control with the reporting entity, when assessing whether it
satisfies the second characteristic of a primary beneficiary If,
after performing that assessment, a reporting entity that is the
single decision maker of a VIE concludes that it does not have the
characteristics of a primary beneficiary, the amendments continue
to require that reporting entity to evaluate whether it and one or
more of its related parties under common control, as a group, have
the characteristics of a primary beneficiary. If the single
decision maker and its related parties that are under common
control, as a group, have the characteristics of a primary
beneficiary, then the party within the related party group that is
most closely associated with the VIE is the primary beneficiary.
ASU 2016-17 is effective for the Company for annual and interim
reporting periods beginning July 1, 2017. The Company is
currently evaluating the impact ASU 2016-17 will have on its
consolidated financial statements. In November 2016, the FASB
issued ASU 2016-18, “Statement of Cash Flows (Topic 230):
Restricted Cash (a consensus of the FASB Emerging Issues Task
Force)” (“ASU 2016-18”). The amendments in ASU
2016-18 require that a statement of cash flows explain the change
during the period in the total of cash, cash equivalents, and
amounts generally described as restricted cash or restricted cash
equivalents. Therefore, amounts generally described as restricted
cash and restricted cash equivalents should be included with cash
and cash equivalents when reconciling the beginning-of-period and
end-of-period total amounts shown on the statement of cash flows.
ASU 2016-18 is effective for the Company for annual and interim
reporting periods beginning July 1, 2018. The Company is
currently evaluating the impact ASU 2016-18 will have on its
consolidated financial statements. In January 2017, the FASB
issued ASU 2017-01, “Business Combinations (Topic 805):
Clarifying the Definition of a Business” (“ASU
2017-01”). The amendments in ASU 2017-01 provide a screen to
determine when a set of assets and activities is not a business.
Under the screen, when substantially all of the fair value of the
gross assets acquired (or disposed of) is concentrated in a single
identifiable asset or a group of similar identifiable assets, the
set is not a business. ASU 2017-01 is effective for the Company for
annual and interim reporting periods beginning July 1, 2018.
The Company is currently evaluating the impact ASU 2017-01 will
have on its consolidated financial statements. In March 2017, the FASB
issued ASU 2017-07, “Compensation—Retirement Benefits
(Topic 715): Improving the Presentation of Net Periodic Pension
Cost and Net Periodic Postretirement Benefit Cost”
(“ASU 2017-07”). The amendments in ASU 2017-07 require
that an employer report the service cost component in the same line
item or items as other compensation costs arising from services
rendered by the pertinent employees during the period. The other
components of net benefit cost as defined in paragraphs 715-30-35-4
and 715-60-35-9 are required to be presented in the income
statement separately from the service cost component and outside a
subtotal of income from operations, if one is presented. If a
separate line item or items are used to present the other
components of net benefit cost, that line item or items must be
appropriately described. If a separate line item or items are not
used, the line item or items used in the income statement to
present the other components of net benefit cost must be disclosed.
ASU 2017-07 is effective for the Company for annual and interim
reporting periods beginning July 1, 2018. The Company is
currently evaluating the impact ASU 2017-07 will have on its
consolidated financial statements. In May 2017, the FASB
issued ASU 2017-09, “Compensation—Stock Compensation
(Topic 718): Scope of Modification Accounting” (“ASU
2017-09”). The amendments in ASU 2017-09 provide guidance
about which changes to the terms or conditions of a share-based
payment award require an entity to apply modification accounting in
Topic 718. ASU 2017-09 is effective for the Company for annual and
interim reporting periods beginning July 1, 2018. Early
adoption of ASU 2017-09 is permitted, including adoption in any
interim period, and the standard should be applied prospectively to
an award modified on or after the adoption date. The Company does
not expect the adoption of ASU 2017-09 to have a significant impact
on its consolidated financial statements. |
