FISCAL 2015 FOURTH QUARTER KEY
FINANCIAL HIGHLIGHTS
- Revenues of $2.14 billion compared
to $2.19 billion in the prior year
- Reported Total Segment EBITDA of
$191 million compared to $127 million in the prior year
- Adjusted EPS were $0.07 compared to
$0.01 in the prior year – Reported EPS, which includes an
impairment charge of $371 million, were ($0.65) compared to $0.02
in the prior year
- Company has initiated a strategic
review of its Digital Education segment
- The Board of Directors has declared
its first semi-annual cash dividend of $0.10 per share
News Corporation (“News Corp” or the “Company”)
(NASDAQ:NWS)(NASDAQ:NWSA)(ASX:NWS)(ASX:NWSLV) today reported
financial results for the three months and fiscal year ended June
30, 2015.
Commenting on the results, Chief Executive Robert Thomson
said:
“Thanks to solid performance across a number of our businesses,
including the fast-growing realtor.com®, we had a strong fourth
quarter finish to a good fiscal year. Despite an uneven global
economy, very tough currency headwinds and the ongoing
transformation of the media landscape, for fiscal 2015 we posted
stable revenues, robust EBITDA growth and healthy free cash
flow.
“With disciplined internal investments, strategic acquisitions
and ongoing product innovation, we have aggressively shifted the
company to be more global and more digital. We have clearly emerged
as an international leader in digital real estate, opened up new
territories at HarperCollins, expanded digital subscriber
penetration at our mastheads and successfully integrated our
programmatic exchange, creating new digital and mobile advertising
opportunities across News Corp.
“We have begun to execute on a capital return program that
signifies our confidence in the prospects of the company and the
efficacy of its long-term strategy. The year ahead will be an
opportunity to build on the sound and profitable platform we have
collectively created."
FULL YEAR RESULTS
The Company reported fiscal 2015 full year total revenues of
$8.63 billion, a 1% increase as compared to the prior year revenues
of $8.57 billion. The increase reflects growth in the Book
Publishing and Digital Real Estate Services segments, primarily as
a result of the acquisitions of Harlequin Enterprises Limited
(“Harlequin”) and Move, Inc. (“Move”), respectively, which was
partially offset by adverse foreign currency fluctuations and lower
advertising revenues at the News and Information Services segment.
Adjusted revenues (as defined in Note 1) were 1% lower than the
prior year.
The Company reported full year Total Segment EBITDA of $852
million, an 11% increase as compared to $770 million in the prior
year. These results include $50 million in fees and costs in fiscal
2015 and $72 million in fiscal 2014 – net of indemnification –
related to the U.K. Newspaper Matters (as defined below). The
improvement was driven by increased revenues in the Book Publishing
segment due to the inclusion of Harlequin results and lower
expenses, mainly due to the increased capitalization of software
development costs, at the Digital Education segment; partially
offset by adverse foreign currency fluctuations, declines at the
News and Information Services segment, which includes higher legal
costs at News America Marketing, and stock-based compensation
expense in connection to the acquisition of Move. Adjusted Total
Segment EBITDA (as defined in Note 1) increased 15% compared to the
prior year.
Impairment and restructuring charges were $455 million and $94
million in the fiscal years ended June 30, 2015 and 2014,
respectively. Included in impairment and restructuring charges for
fiscal 2015 was a non-cash impairment charge of $371 million
related to the Amplify business. In the fourth quarter of fiscal
2015, the Company determined it would cease actively marketing
Amplify’s Access products to new customers; however, it will
continue to provide service and support to its existing customers.
Additionally, the Company is reviewing strategic alternatives with
respect to Amplify’s remaining digital education businesses. This
change in Amplify’s strategy and related outlook resulted in a
reduction in expected future cash flows for the business. As a
result, the Company determined that the fair value of Amplify
declined below its carrying value and recorded an impairment
charge.
Net loss available to News Corporation stockholders was $149
million as compared to net income available to News Corporation
stockholders of $237 million in the prior year. Adjusted net income
available to News Corporation stockholders (as defined in Note 3)
was $272 million compared to $268 million in the prior year.
Net loss per share available to News Corporation stockholders
was $0.26 as compared to net income per share available to News
Corporation stockholders of $0.41 in the prior year. Adjusted EPS
(as defined in Note 3) were $0.47 compared to $0.46 in the prior
year.
Free cash flow available to News Corporation was $368 million in
the fiscal year ended June 30, 2015, compared to $365 million in
the prior year.
FOURTH QUARTER RESULTS
The Company reported fiscal 2015 fourth quarter total revenues
of $2.14 billion, a 2% decrease as compared to the prior year
fourth quarter revenues of $2.19 billion. The majority of the
revenue decline reflects adverse foreign currency fluctuations and
lower advertising revenues at the News and Information Services
segment, partially offset by growth in the Digital Real Estate
Services and Book Publishing segments, primarily as a result of the
acquisitions of Move and Harlequin, respectively. Adjusted revenues
were 1% lower than the corresponding prior year period.
The Company’s fourth quarter Total Segment EBITDA of $191
million, which includes fees and costs, net of indemnification,
related to the U.K. Newspaper Matters of $8 million, was a 50%
increase as compared to $127 million in the prior year. This
increase was primarily driven by lower expenses at the News and
Information Services and Digital Education segments, partially
offset by adverse foreign currency fluctuations. Adjusted Total
Segment EBITDA increased 62% compared to the prior year.
Net loss available to News Corporation stockholders was $379
million as compared to net income available to News Corporation
stockholders of $12 million in the prior year. Impairment and
restructuring charges were $424 million and $21 million in the
three months ended June 30, 2015 and 2014, respectively. The
impairment and restructuring charges for the three months ended
June 30, 2015 include an impairment charge of $371 million related
to Amplify, as discussed above. Adjusted net income available to
News Corporation stockholders was $38 million compared to $6
million in the prior year.
Net loss per share available to News Corporation stockholders
was $0.65 as compared to net income per share available to News
Corporation stockholders of $0.02 in the prior year. Adjusted EPS
were $0.07 compared to $0.01 in the prior year.
SEGMENT REVIEW
For the three months ended For the fiscal
years ended June 30, June 30, 2015 2014 % Change 2015
2014 % Change (in millions) (in millions)
Revenues: News and Information Services $ 1,404 $ 1,558 (10
)% $ 5,731 $ 6,153 (7 )% Book Publishing 390 361 8 % 1,667 1,434 16
% Digital Real Estate Services 189 113 67 % 625 408 53 % Cable
Network Programming 133 136 (2 )% 500 491 2 % Digital Education 24
18 33 % 109 88 24 % Other 1 - **
1 - **
Total Revenues $
2,141 $ 2,186 (2 )% $ 8,633 $ 8,574 1 %
Segment EBITDA: News and Information Services $ 169 $
131 29 % $ 603 $ 665 (9 )% Book Publishing 33 33 - % 221 197 12 %
Digital Real Estate Services(a) 45 62 (27 )% 201 214 (6 )% Cable
Network Programming 22 19 16 % 135 128 5 % Digital Education (24 )
(53 ) 55 % (93 ) (193 ) 52 % Other(b) (54 ) (65 ) 17
% (215 ) (241 ) 11 %
Total Segment EBITDA $
191 $ 127 50 % $ 852 $ 770 11 %
** - Not meaningful
(a)
Digital Real Estate Services Segment EBITDA for the fiscal
year ended June 30, 2015 includes one-time transaction costs of
approximately $19 million related to the acquisition of Move.
(b)
Other Segment EBITDA for the three months and fiscal year ended
June 30, 2015 includes fees and costs, net of indemnification,
related to the U.K. Newspaper Matters of $8 million and $50
million, respectively. Other Segment EBITDA for the three months
and fiscal year ended June 30, 2014 includes fees and costs related
to the U.K. Newspaper Matters of $16 million and $72 million,
respectively.
News and Information Services
Full Year Segment Results
Fiscal 2015 full year revenues decreased $422 million, or 7%,
compared to the prior year. Total segment advertising revenues
declined 10%, driven primarily by weakness in the print advertising
market coupled with the negative impact of foreign currency
fluctuations. Circulation and subscription revenues declined 4%,
due to adverse foreign currency fluctuations. Adjusted revenues
declined 3% compared to the prior year.
Full year Segment EBITDA decreased $62 million, or 9%, as
compared to the prior year. Results were impacted by lower
advertising revenues, higher legal expenses at News America
Marketing of $20 million, negative foreign currency fluctuations
and one-time expenses of $11 million related to the termination of
a distribution contract in connection with continued cost reduction
initiatives, which more than offset lower operating expenses.
Adjusted Segment EBITDA decreased 6% compared to the prior
year.
Fourth Quarter Segment Results
Revenues for the fourth quarter of fiscal 2015 decreased $154
million, or 10%, compared to the prior year, as a result of a 13%
decline in advertising revenues and a 5% decline in circulation
revenues, driven by negative foreign currency fluctuations.
Adjusted revenues declined 2% compared to the prior year. Segment
EBITDA increased $38 million in the quarter, or 29%, as compared to
the prior year. The increase was driven by lower operating
expenses, partially offset by lower advertising revenues, one-time
expenses of $11 million related to the termination of a
distribution contract in connection with continued cost reduction
initiatives and negative foreign currency fluctuations. Adjusted
Segment EBITDA increased 34% compared to the prior year.
Book Publishing
Full Year Segment Results
Full year revenues increased $233 million, or 16%, compared to
the prior year driven by the inclusion of Harlequin results and
strong backlist sales in the general books category, resulting from
the success of American Sniper by Chris Kyle, partially offset by
lower revenues from the Divergent series by Veronica Roth. Digital
sales, which consist of revenues generated through the sale of
e-books and digital audio books, represented 22% of Consumer
revenues for fiscal 2015. Segment EBITDA increased $24 million, or
12%, from the prior year primarily due to the inclusion of the
results of Harlequin and lower expenses, partially offset by lower
contribution from the Divergent series. Adjusted revenues and
Adjusted Segment EBITDA each decreased 2%, compared to the prior
year.
Fourth Quarter Segment Results
Revenues in the quarter increased $29 million, or 8%, compared
to the prior year driven by the inclusion of Harlequin results,
partially offset by lower revenues from the Divergent series.
Digital sales represented 23% of Consumer revenues for the quarter.
Segment EBITDA was flat from the prior year as the inclusion of
results from Harlequin and lower expenses offset lower contribution
from the Divergent series. Adjusted revenues decreased 9% and
Adjusted Segment EBITDA decreased 18%, compared to the prior
year.
Digital Real Estate Services
Full Year Segment Results
Fiscal 2015 revenues increased $217 million, or 53%, compared to
the prior year, primarily due to the inclusion of the results of
Move, which was acquired in November 2014, coupled with higher
revenues at REA Group Limited (“REA Group”) due to the impact of
increased listing depth product penetration and higher pricing,
despite a decline in Australian listing volumes across the market
and the negative impact of foreign currency fluctuations. Segment
EBITDA decreased $13 million, or 6%, compared to the prior year
primarily due to the inclusion of a loss of $39 million related to
the acquisition of Move and negative foreign currency fluctuations,
partially offset by increased revenues at REA Group. Segment EBITDA
includes $21 million of stock-based compensation expense and $19
million of one-time transaction costs, both related to the
acquisition of Move. Adjusted revenues and Adjusted Segment EBITDA
increased 18% and 23%, respectively, compared to the prior
year.
For the full year, Move saw strength in its Connection for
Co-Brokerage product and Media revenues. Based on Move’s internal
data, average monthly unique users of realtor.com®’s web and mobile
sites for the fiscal fourth quarter grew 42% year-over-year to
approximately 45 million, which was driven by almost 80% growth in
mobile users; traffic accelerated in July to 48 million monthly
unique users, or 43% growth year-over-year.
Fourth Quarter Segment Results
Revenues in the quarter increased $76 million, or 67%, compared
to the prior year due to the inclusion of the results of Move
coupled with higher listing depth product penetration and higher
pricing at REA Group. Segment EBITDA in the quarter decreased $17
million, or 27%, compared to the prior year due to certain expenses
at Move and the negative impact of foreign currency fluctuations,
partially offset by the improvement at REA Group. At Move, strong
revenue performance was offset by $7 million of legal expenses and
$5 million of stock-based compensation expense related to the
acquisition.
Adjusted revenues and Adjusted Segment EBITDA increased 15% and
18%, respectively, compared to the prior year.
Cable Network Programming
Full Year Segment Results
Fiscal 2015 full year revenues increased $9 million, or 2%,
compared to the prior year driven by higher affiliate and
advertising revenues, partially offset by adverse foreign currency
fluctuations. Segment EBITDA increased $7 million, or 5%, from the
prior year, primarily driven by higher revenues, partially offset
by adverse foreign currency fluctuations and higher programming
costs. Adjusted revenues and Adjusted Segment EBITDA for the full
year increased 11% and 15%, respectively, compared to the prior
year.
Fourth Quarter Segment Results
In the fourth quarter of fiscal 2015, revenues decreased $3
million, or 2%, compared to the prior year, as higher affiliate and
advertising revenues were more than offset by negative foreign
currency fluctuations. Segment EBITDA in the quarter increased $3
million, or 16%, compared to the prior year. Adjusted revenues
increased 15% and Adjusted Segment EBITDA increased 37%, compared
to the prior year.
Digital Education
Full Year Segment Results
Revenues for the full year increased $21 million, or 24%,
compared to the prior year. Segment EBITDA improved $100 million,
or 52%, compared to the prior year, primarily due to the impact of
the capitalization of Amplify Learning’s software development costs
of $53 million, reduced development expenses and increased
revenues.
Fourth Quarter Segment Results
Revenues in the quarter increased $6 million, or 33%, and
Segment EBITDA improved $29 million, or 55%.
Other
Full Year Segment Results
Full year Segment EBITDA improved by $26 million, primarily due
to decreased fees and costs, net of indemnification, related to the
claims and investigations arising out of certain conduct at The
News of the World (the “U.K. Newspaper Matters”).
The net expense related to the U.K. Newspaper Matters was $50
million for the full year, as compared to $72 million in the prior
year.
Fourth Quarter Segment Results
Segment EBITDA in the quarter improved by $11 million. The net
expense related to the U.K. Newspaper Matters was $8 million for
the three months ended June 30, 2015, as compared to $16 million in
the prior year.
REVIEW OF EQUITY EARNINGS (LOSSES) OF AFFILIATES’
RESULTS
Full year equity earnings from affiliates were $58 million
compared to $90 million in the prior year. Equity earnings from
affiliates for the fourth quarter were $10 million compared to $37
million in the prior year.
For the three months ended For the fiscal years ended
June 30, June 30, 2015 2014 2015 2014 (in millions)
(in millions) Foxtel(a) $ 11 $
37
$ 59 $
90
Other equity affiliates, net (1 ) - (1
) - Total equity earnings of affiliates $ 10 $
37 $ 58 $ 90
(a)
The Company amortized $13 million and $57 million related to
excess cost over the Company’s proportionate share of its
investment’s underlying net assets allocated to finite-lived
intangible assets during the three months and fiscal year ended
June 30, 2015, respectively, and $16 million and $62 million in the
corresponding periods of fiscal 2014, respectively. Such
amortization is reflected in Equity earnings of affiliates in the
Statements of Operations.
On a U.S. GAAP basis, full year Foxtel revenues decreased $239
million, or 8%, to $2,658 million and Foxtel EBITDA decreased $143
million, or 16%, to $760 million as compared to the prior year, due
in large part to the adverse impact of foreign currency
fluctuations. In local currency, full year Foxtel revenues
increased 1%, driven by subscriber gains and Foxtel EBITDA
decreased 8% due to short-term impacts related to the investment in
key initiatives: the new Foxtel pricing and packaging, increased
investment in Presto and the launch of Triple Play.
Total closing subscribers were over 2.8 million as of June 30,
2015, a 9% increase compared to the prior year period, as a result
of higher subscriber sales and lower churn, driven by the new
pricing and packaging strategy that was implemented in November
2014. Cable and satellite churn improved to 10.9% from 12.5% in the
prior year. Broadcast residential ARPU was A$93, a 2% decline
compared to the prior year.
Foxtel operating income for the years ended June 30, 2015 and
2014 after depreciation and amortization of $319 million and $349
million, respectively, was $441 million and $554 million,
respectively. Operating income decreased as a result of the factors
noted above. Foxtel’s net income of $232 million decreased from
$304 million in the prior year as a result of the factors noted
above.
FREE CASH FLOW AVAILABLE TO NEWS CORPORATION
Free cash flow available to News Corporation is a non-GAAP
financial measure defined as net cash provided by operating
activities, less capital expenditures, and REA Group free cash
flow, plus cash dividends received from REA Group.
The Company considers free cash flow available to News
Corporation to provide useful information to management and
investors about the amount of cash generated by the business after
capital expenditures, which can then be used for strategic
opportunities including, among others, investing in the Company’s
business, strategic acquisitions, strengthening the Company’s
balance sheet, dividend payouts and repurchasing stock. A
limitation of free cash flow available to News Corporation is that
it does not represent the total increase or decrease in the cash
balance for the period. Management compensates for the limitation
of free cash flow available to News Corporation by also relying on
the net change in cash and cash equivalents as presented in the
Company’s consolidated statements of cash flows prepared in
accordance with GAAP which incorporates all cash movements during
the period.
The following table presents a reconciliation of net cash
provided by operating activities to free cash flow available to
News Corporation:
For the fiscal years ended
June 30,
2015 2014 (in millions) Net cash provided by
operating activities $ 831 $ 854 Less: Capital expenditures
(378 ) (379 ) 453 475 Less: REA Group free cash flow (130 )
(145 ) Plus: Cash dividends received from REA Group 45
35 Free cash flow available to News
Corporation $ 368 $ 365
Free cash flow available to News Corporation in the fiscal year
ended June 30, 2015 was $368 million compared to $365 million in
the prior year. The improvement was primarily due to higher
dividends received from REA Group and lower REA Group free cash
flow, which is excluded from free cash flow available to News
Corporation, offset by lower cash provided by operating activities.
Cash provided by operating activities decreased as a result of the
absence of the net receipts related to a foreign tax refund of $73
million and lease incentives of $35 million received during the
fiscal year ended June 30, 2014, as well as higher net tax payments
of $54 million and approximately $45 million of higher deferred
compensation payments related to the acquisition of Wireless
Generation incurred in the fiscal year ended June 30, 2015. The
decrease in the fiscal year ended June 30, 2015 was partially
offset by lower pension contributions of $92 million, lower
restructuring payments of $55 million and lower payments for fees
and costs related to the U.K. Newspaper Matters of $31 million. The
figures include a decrease of free cash flow available to News
Corporation of approximately $30 million related to the
strengthening of the U.S. dollar against local currencies.
OTHER ITEMS
Dividends
In August 2015, the Company declared its first semi-annual cash
dividend of $0.10 per share for Class A Common Stock and Class B
Common Stock. This dividend is payable on October 21, 2015 with a
record date for determining dividend entitlements of September 16,
2015.
Stock Repurchases
On May 10, 2015, the Company announced it had begun repurchasing
shares of Class A Common Stock under its previously disclosed stock
repurchase program. From May 10, 2015 through August 6, 2015, the
Company repurchased approximately 3 million shares for
approximately $45 million. The remaining authorized amount under
the Company’s stock repurchase program as of August 6, 2015 was
approximately $455 million.
COMPARISON OF ADJUSTED INFORMATION TO U.S. GAAP
INFORMATION
Adjusted revenues, Adjusted Total Segment EBITDA, Total Segment
EBITDA, Adjusted net income available to News Corporation
stockholders, Adjusted EPS and Free cash flow available to News
Corporation are non-GAAP financial measures contained in this
earnings release. This information is provided in order to allow
investors to make meaningful comparisons of the Company’s operating
performance between periods and to view the Company’s business from
the same perspective as Company management. These non-GAAP measures
may be different than similar measures used by other companies and
should be considered in addition to, not as a substitute for,
measures of financial performance calculated in accordance with
GAAP. Reconciliations for the differences between non-GAAP measures
used in this earnings release and comparable financial measures
calculated in accordance with U.S. GAAP are included in Notes 1, 2
and 3 and the reconciliation of Net cash provided by operating
activities to Free cash flow available to News Corporation is
included above.
Conference call
News Corporation’s earnings conference call can be heard live at
6:00pm Eastern Daylight Time on August 12, 2015. To listen to the
call, please visit http://investors.newscorp.com.
Cautionary Statement Concerning Forward-Looking
Statements
This document contains certain “forward-looking statements”
within the meaning of the Private Securities Litigation Reform Act
of 1995. These statements are based on management’s views and
assumptions regarding future events and business performance as of
the time the statements are made. Actual results may differ
materially from these expectations due to changes in global
economic, business, competitive market and regulatory factors. More
detailed information about these and other factors that could
affect future results is contained in our filings with the
Securities and Exchange Commission. The “forward-looking
statements” included in this document are made only as of the date
of this document and we do not have any obligation to publicly
update any “forward-looking statements” to reflect subsequent
events or circumstances, except as required by law.
About News Corporation
News Corporation (NASDAQ:NWS)(NASDAQ:NWSA)(ASX:NWS)(ASX:NWSLV)
is a global, diversified media and information services company
focused on creating and distributing authoritative and engaging
content to consumers throughout the world. The company comprises
businesses across a range of media, including: news and information
services, book publishing, digital real estate services, cable
network programming in Australia, digital education, and pay-TV
distribution in Australia. Headquartered in New York, the
activities of News Corporation are conducted primarily in the
United States, Australia, and the United Kingdom. More information
is available at: www.newscorp.com.
NEWS CORPORATION
CONSOLIDATED STATEMENTS OF
OPERATIONS
(Unaudited; in millions, except share
and per share amounts)
For the three months ended For the fiscal
years ended June 30, June 30, 2015 2014 2015 2014
Revenues: Advertising $ 973 $ 1,029 $ 3,835 $ 4,019
Circulation and Subscription 665 683 2,654 2,688 Consumer 371 344
1,594 1,374 Other 132 130 550
493 Total Revenues 2,141 2,186 8,633
8,574 Operating expenses (1,229 ) (1,311 ) (5,025 ) (5,139 )
Selling, general and administrative (721 ) (748 ) (2,756 ) (2,665 )
Depreciation and amortization (132 ) (157 ) (530 ) (578 )
Impairment and restructuring charges (424 ) (21 ) (455 ) (94 )
Equity earnings of affiliates 10 37 58 90 Interest, net 14 18 56 68
Other, net 5 20 75
(653 ) Income (loss) before income tax (expense) benefit (336 ) 24
56 (397 ) Income tax (expense) benefit (27 ) 5
(134 ) 691 Net (loss) income (363 ) 29 (78 )
294 Less: Net income attributable to noncontrolling interests
(15 ) (16 ) (69 ) (55 ) Net (loss)
income attributable to News Corporation stockholders (378 ) 13 (147
) 239 Less: Adjustments to Net (loss) income attributable to News
Corporation stockholders – Redeemable Preferred Stock Dividends
(1 ) (1 ) (2 ) (2 ) Net (loss) income
available to News Corporation stockholders $ (379 ) $ 12 $
(149 ) $ 237 Weighted average shares outstanding:
Basic 583 579 581 579 Diluted 583 580 581 580 Net (loss)
income available to News Corporation stockholders per share: Basic
and diluted $ (0.65 ) $ 0.02 $ (0.26 ) $ 0.41
NEWS CORPORATION
CONSOLIDATED BALANCE SHEETS
(Unaudited; in millions)
As of June 30,
As of June 30,
2015
2014
ASSETS Current assets: Cash and cash equivalents $ 1,951 $
3,145
Amounts due from 21st Century Fox 63 66 Receivables, net 1,310
1,388 Other current assets 651 671
Total current assets 3,975 5,270
Non-current assets: Investments 2,379 2,609 Property, plant and
equipment, net 2,746 3,009 Intangible assets, net 2,242 2,137
Goodwill 3,063 2,782 Other non-current assets 688
682 Total assets $ 15,093 $ 16,489
LIABILITIES AND EQUITY Current liabilities: Accounts
payable $ 239 $ 276 Accrued expenses 1,151 1,188 Deferred revenue
361 369 Other current liabilities 404 431
Total current liabilities 2,155 2,264
Non-current liabilities: Retirement benefit
obligations 305 272 Deferred income taxes 166 224 Other non-current
liabilities 331 310 Commitments and contingencies
Redeemable preferred stock 20 20 Equity: Class A common
stock 4 4 Class B common stock 2 2 Additional paid-in capital
12,433 12,390 Retained earnings 88 237 Accumulated other
comprehensive (loss) income (582 ) 610 Total
News Corporation stockholders' equity 11,945 13,243 Noncontrolling
interests 171 156 Total equity
12,116 13,399 Total liabilities and equity $
15,093 $ 16,489
NEWS CORPORATION
CONSOLIDATED STATEMENTS OF CASH
FLOWS
(Unaudited; in millions)
For the fiscal years ended June 30, 2015 2014
Operating activities: Net (loss) income $ (78 ) $ 294
Adjustments to reconcile net (loss) income to cash provided
by operating activities: Depreciation and amortization 530 578
Equity earnings of affiliates (58 ) (90 ) Cash distributions
received from affiliates 138 153 Impairment charges, net of tax 371
14 Other, net (75 ) (68 ) Deferred income taxes and taxes payable 8
32 Change in operating assets and liabilities, net of acquisitions:
Receivables and other assets 34 (105 ) Inventories, net 11 23
Accounts payable and other liabilities (28 ) 126 Pension and
postretirement benefit plans (22 ) (103 ) Net cash provided
by operating activities 831 854
Investing activities: Capital expenditures (378 ) (379 )
Acquisitions, net of cash acquired (1,190 ) (45 ) Investments in
equity affiliates and other (146 ) (1 ) Other investments (224 )
(83 ) Proceeds from dispositions 182 202 Other 15
- Net cash used in investing activities (1,741
) (306 )
Financing activities: Net transfers
from 21st Century Fox and affiliates - 217 Repayment of borrowings
(129 ) - Repurchase of shares (30 ) - Dividends paid (30 ) (24 )
Other, net (1 ) (4 ) Net cash (used in) provided by
financing activities (190 ) 189 Net
(decrease) increase in cash and cash equivalents (1,100 ) 737 Cash
and cash equivalents, beginning of period 3,145 2,381 Exchange
movement on opening cash balance (94 ) 27 Cash
and cash equivalents, end of period $ 1,951 $ 3,145
NOTE 1 – ADJUSTED REVENUES, ADJUSTED TOTAL SEGMENT EBITDA AND
ADJUSTED SEGMENT EBITDA
The Company uses revenues, Total Segment EBITDA and Segment
EBITDA excluding the impact of acquisitions, divestitures, costs
associated with the U.K. Newspaper Matters and foreign currency
fluctuations (“Adjusted Revenues, Adjusted Total Segment EBITDA and
Adjusted Segment EBITDA”) to evaluate the performance of the
Company’s operations exclusive of certain items that impact the
comparability of results from period to period. The calculation of
Adjusted Revenues, Adjusted Total Segment EBITDA and Adjusted
Segment EBITDA may not be comparable to similarly titled measures
reported by other companies, since companies and investors may
differ as to what type of events warrant adjustment. Adjusted
Revenues, Adjusted Total Segment EBITDA and Adjusted Segment EBITDA
are not measures of performance under generally accepted accounting
principles and should not be construed as substitutes for amounts
determined under GAAP as measures of performance.
However, management uses these measures in comparing the
Company’s historical performance and believes that they provide
meaningful and comparable information to investors to assist in
their analysis of our performance relative to prior periods and our
competitors.
The following table reconciles reported revenues and reported
Total Segment EBITDA to Adjusted Revenues and Adjusted Total
Segment EBITDA for the three months and fiscal years ended June 30,
2015 and 2014.
Revenues Total Segment EBITDA For the three
months ended June 30, For the three months ended June 30, 2015
2014 Difference 2015 2014 Difference
(in millions) (in millions)
As reported $ 2,141 $
2,186 $ (45 ) $
191
$ 127 $ 64 Impact of acquisitions (155 ) - (155 ) 8 - 8
Impact of divestitures - (4 ) 4 - - - Impact of
foreign currency fluctuations 168 - 168 24 - 24 Net impact
of U.K. Newspaper Matters - - - 8 16 (8 )
As adjusted $ 2,154 $ 2,182 $ (28 ) $ 231
$ 143 $ 88 Revenues Total
Segment EBITDA For the fiscal years ended June 30, For the fiscal
years ended June 30, 2015 2014 Difference 2015 2014 Difference (in
millions) (in millions)
As reported $ 8,633 $ 8,574 $
59 $ 852 $ 770 $ 82 Impact of acquisitions (485 ) - (485 )
16 - 16 Impact of divestitures (1 ) (49 ) 48 - (3 ) 3
Impact of foreign currency fluctuations 319 - 319 50 - 50
Net impact of U.K. Newspaper Matters - - - 50 72 (22 )
As adjusted $ 8,466 $ 8,525 $
(59 ) $ 968 $ 839 $ 129
Adjusted Revenues and Adjusted Segment EBITDA by segment for the
three months and fiscal years ended June 30, 2015 and 2014 are as
follows:
For the three months ended June 30, 2015 2014
% Change (in millions)
Adjusted Revenues: News and
Information Services $ 1,516 $ 1,554 (2 )% Book Publishing 328 361
(9 )% Digital Real Estate Services 130 113 15 % Cable Network
Programming 156 136 15 % Digital Education 24 18 33 % Other
- - **
Adjusted Total Revenues $
2,154 $ 2,182 (1 )%
Adjusted Segment
EBITDA: News and Information Services $ 175 $ 131 34 % Book
Publishing 27 33 (18 )% Digital Real Estate Services 73 62 18 %
Cable Network Programming 26 19 37 % Digital Education (24 ) (53 )
55 % Other (46 ) (49 ) 6 %
Adjusted Total Segment
EBITDA $ 231 $ 143 62 % ** - Not
meaningful For the fiscal years ended June 30, 2015
2014 % Change (in millions)
Adjusted Revenues: News
and Information Services $ 5,933 $ 6,110 (3 )% Book Publishing
1,399 1,430 (2 )% Digital Real Estate Services 480 406 18 % Cable
Network Programming 545 491 11 % Digital Education 109 88 24 %
Other - - **
Adjusted Total
Revenues $ 8,466 $ 8,525 (1 )%
Adjusted
Segment EBITDA: News and Information Services $ 620 $ 661 (6 )%
Book Publishing 194 197 (2 )% Digital Real Estate Services 265 215
23 % Cable Network Programming 147 128 15 % Digital Education (93 )
(193 ) 52 % Other (165 ) (169 ) 2 %
Adjusted Total
Segment EBITDA $ 968 $ 839 15 % ** - Not
meaningful
The following tables reconcile reported revenues and Segment
EBITDA by segment to Adjusted Revenues and Adjusted Segment EBITDA
by segment for the three months ended June 30, 2015 and 2014.
For the three months ended June 30, 2015
Impact of
Net Impact
Foreign
of U.K.
As
Impact of
Impact of
Currency
Newspaper
As
Reported
Acquisitions
Divestitures
Fluctuations
Matters
Adjusted
(in millions)
Revenues: News and Information Services
$ 1,404 $ - $ - $
112
$
-
$ 1,516 Book Publishing 390 (73 ) - 11 - 328 Digital Real Estate
Services 189 (81 ) - 22 - 130 Cable Network Programming 133 - - 23
- 156 Digital Education 24 - - - - 24 Other 1
(1 ) - - - -
Total Revenues $ 2,141 $ (155 ) $ - $
168 $ - $ 2,154
Segment EBITDA:
News and Information Services $ 169 $ - $ - $ 6 $ - $ 175 Book
Publishing 33 (7 ) - 1 - 27 Digital Real Estate Services 45 15 - 13
- 73 Cable Network Programming 22 - - 4 - 26 Digital Education (24
) - - - - (24 ) Other (54 ) - -
- 8 (46 )
Total Segment
EBITDA $ 191 $ 8 $ - $ 24 $ 8
$ 231 For the three months ended June
30, 2014
Impact of
Net Impact
Foreign
of U.K.
As
Impact of
Impact of
Currency
Newspaper
As
Reported
Acquisitions
Divestitures
Fluctuations
Matters
Adjusted
(in millions)
Revenues: News and Information Services
$ 1,558 $ - $ (4 ) $ - $ - $ 1,554 Book Publishing 361 - - - - 361
Digital Real Estate Services 113 - - - - 113 Cable Network
Programming 136 - - - - 136 Digital Education 18 - - - - 18 Other
- - - -
- -
Total Revenues $ 2,186
$ - $ (4 ) $ - $ - $ 2,182
Segment EBITDA: News and Information Services $ 131 $
- $ - $ - $ - $ 131 Book Publishing 33 - - - - 33 Digital Real
Estate Services 62 - - - - 62 Cable Network Programming 19 - - - -
19 Digital Education (53 ) - - - - (53 ) Other (65 )
- - - 16
(49 )
Total Segment EBITDA $ 127 $ - $ -
$ - $ 16 $ 143
The following tables reconcile reported revenues and Segment
EBITDA by segment to Adjusted Revenues and Adjusted Segment EBITDA
by segment for the fiscal years ended June 30, 2015 and 2014.
For the fiscal year ended June 30, 2015
Impact of
Net Impact
Foreign
of U.K.
As
Impact of
Impact of
Currency
Newspaper
As
Reported
Acquisitions
Divestitures
Fluctuations
Matters
Adjusted
(in millions)
Revenues: News and Information Services
$ 5,731 $ (8 ) $ - $
210
$
-
$ 5,933 Book Publishing 1,667 (288 ) - 20 - 1,399 Digital Real
Estate Services 625 (188 ) (1 ) 44 - 480 Cable Network Programming
500 - - 45 - 545 Digital Education 109 - - - - 109 Other 1
(1 ) - - -
-
Total Revenues $ 8,633 $ (485 ) $ (1
) $ 319 $ - $ 8,466
Segment
EBITDA: News and Information Services $ 603 $ 5 $ - $ 12 $ - $
620 Book Publishing 221 (28 ) - 1 - 194 Digital Real Estate
Services 201 39 - 25 - 265 Cable Network Programming 135 - - 12 -
147 Digital Education (93 ) - - - - (93 ) Other (215 )
- - - 50
(165 )
Total Segment EBITDA $ 852 $ 16
$ - $ 50 $ 50 $ 968 For
the fiscal year ended June 30, 2014
Impact of
Net Impact
Foreign
of U.K.
As
Impact of
Impact of
Currency
Newspaper
As
Reported
Acquisitions
Divestitures
Fluctuations
Matters
Adjusted
(in millions)
Revenues: News and Information Services
$ 6,153 $ - $ (43 ) $ - $ - $ 6,110 Book Publishing 1,434 - (4 ) -
- 1,430 Digital Real Estate Services 408 - (2 ) - - 406 Cable
Network Programming 491 - - - - 491 Digital Education 88 - - - - 88
Other - - - -
- -
Total Revenues $
8,574 $ - $ (49 ) $ - $ - $ 8,525
Segment EBITDA: News and Information Services
$ 665 $ - $ (4 ) $ - $ - $ 661 Book Publishing 197 - - - - 197
Digital Real Estate Services 214 - 1 - - 215 Cable Network
Programming 128 - - - - 128 Digital Education (193 ) - - - - (193 )
Other (241 ) - - -
72 (169 )
Total Segment EBITDA $ 770
$ - $ (3 ) $ - $ 72 $ 839
NOTE 2 – TOTAL SEGMENT EBITDA
Segment EBITDA is defined as revenues less operating expenses
and selling, general and administrative expenses. Segment EBITDA
does not include: Depreciation and amortization, impairment and
restructuring charges, equity earnings of affiliates, interest,
net, other, net, income tax (expense) benefit and net income
attributable to noncontrolling interests. Management believes that
Segment EBITDA 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. Segment EBITDA provides
management, investors and equity analysts with a measure to analyze
operating performance of each of the Company’s business segments
and its enterprise value against historical data and competitors’
data, although historical results may not be indicative of future
results (as operating performance is highly contingent on many
factors, including customer tastes and preferences).
Total Segment EBITDA is a non-GAAP measure and should be
considered in addition to, not as a substitute for, net (loss)
income, cash flow and other measures of financial performance
reported in accordance with GAAP. In addition, this measure does
not reflect cash available to fund requirements and excludes items,
such as depreciation and amortization and impairment and
restructuring charges, which are significant components in
assessing the Company’s financial performance. The following table
reconciles Total Segment EBITDA to Net (loss) income.
For the three months ended June 30, 2015 2014
Change % Change (in millions)
Revenues $ 2,141
$ 2,186 $ (45 ) (2 )% Operating expenses (1,229 ) (1,311 ) 82 6 %
Selling, general and administrative (721 ) (748 )
27 4 %
Total Segment EBITDA 191 127 64 50 %
Depreciation and amortization (132 ) (157 ) 25 16 % Impairment and
restructuring charges (424 ) (21 ) (403 ) ** Equity earnings of
affiliates 10 37 (27 ) (73 )% Interest, net 14 18 (4 ) (22 )%
Other, net 5 20 (15 ) (75 )%
(Loss) income before income tax (expense) benefit (336 ) 24 (360 )
** Income tax (expense) benefit (27 ) 5
(32 ) **
Net (loss) income $ (363 ) $ 29 $
(392 ) ** ** - Not meaningful For the fiscal
years ended June 30, 2015 2014 Change % Change (in millions)
Revenues $ 8,633 $ 8,574 $ 59 1 % Operating expenses (5,025
) (5,139 ) 114 2 % Selling, general and administrative
(2,756 ) (2,665 ) (91 ) (3 )%
Total Segment
EBITDA 852 770 82 11 % Depreciation and amortization (530 )
(578 ) 48 8 % Impairment and restructuring charges (455 ) (94 )
(361 ) ** Equity earnings of affiliates 58 90 (32 ) (36 )%
Interest, net 56 68 (12 ) (18 )% Other, net 75
(653 ) 728 ** Income (loss) before income tax
(expense) benefit 56 (397 ) 453 ** Income tax (expense) benefit
(134 ) 691 (825 ) **
Net
(loss) income $ (78 ) $ 294 $ (372 ) ** **
- Not meaningful
NOTE 3 – ADJUSTED NET INCOME AVAILABLE TO NEWS CORPORATION
STOCKHOLDERS AND ADJUSTED EPS
The Company uses net (loss) income available to News Corporation
stockholders and diluted earnings per share (“EPS”) excluding
expenses related to U.K. Newspaper Matters, Impairment and
restructuring charges, and “Other, net”, net of tax (“adjusted net
income available to News Corporation stockholders and adjusted
EPS”) to evaluate the performance of the Company’s operations
exclusive of certain items that impact the comparability of results
from period to period. The calculation of adjusted net income
available to News Corporation stockholders and adjusted EPS may not
be comparable to similarly titled measures reported by other
companies, since companies and investors may differ as to what type
of events warrant adjustment. Adjusted net income available to News
Corporation stockholders and adjusted EPS are not measures of
performance under generally accepted accounting principles and
should not be construed as substitutes for consolidated net (loss)
income available to News Corporation stockholders and net (loss)
income per share as determined under GAAP as a measure of
performance.
However, management uses these measures in comparing the
Company’s historical performance and believes that they provide
meaningful and comparable information to investors to assist in
their analysis of our performance relative to prior periods and our
competitors.
The following tables reconcile reported net (loss) income
available to News Corporation stockholders and reported diluted EPS
to adjusted net income available to News Corporation stockholders
and adjusted EPS for the three months and fiscal years ended June
30, 2015 and 2014.
For the three months ended For the three months ended
June 30, 2015 June 30, 2014
Net (loss)incomeavailable
tostockholders
EPS
Net incomeavailable tostockholders
EPS (in millions, except per share data)
As
reported $ (379 ) $ (0.65 ) $ 12 $ 0.02 U.K. Newspaper
Matters 8 0.02 16 0.03 Impairment and restructuring charges
424 0.73 21 0.03 Other, net (5 ) (0.01 ) (20 ) (0.03 )
Tax impact on items above (10 ) (0.02 ) (23 ) (0.04 )
As adjusted
$ 38 $ 0.07 $ 6 $ 0.01
For the fiscal year ended For the fiscal year ended June 30, 2015
June 30, 2014
Net (loss)incomeavailable
tostockholders
EPS
Net incomeavailable tostockholders
EPS (in millions, except per share data)
As reported
$ (149 ) $ (0.26 ) $ 237 $ 0.41 U.K. Newspaper Matters 50
0.09 72 0.13 Impairment and restructuring charges 455 0.78
94 0.16 Other, net (a) (75 ) (0.13 ) 653 1.13 Tax
impact on items above(b) (20 ) (0.03 ) (788 ) (1.37 ) Impact
of noncontrolling interest on items included in Other, net above 11
0.02 - -
As adjusted $ 272 $ 0.47 $ 268 $ 0.46
(a)
Other, net for the fiscal year ended June 30, 2015 primarily
includes a gain on the sale of marketable securities and dividends
received from cost method investments. Other, net for the fiscal
year ended June 30, 2014 primarily includes a foreign tax refund
paid to 21st Century Fox offset by a gain on a third party pension
contribution and gain on a sale of Australian property.
(b)
Tax impact on items above for the fiscal ended June 30, 2014
primarily includes a foreign tax refund of $721 million which has
an offsetting payable to 21st Century Fox included within Other,
net above.
View source
version on businesswire.com: http://www.businesswire.com/news/home/20150812006274/en/
News CorporationMichael Florin, 212-416-3363Investor
Relationsmflorin@newscorp.comorJim Kennedy, 212-416-4064Corporate
Communicationsjkennedy@newscorp.com
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