NEW YORK, May 6, 2020 /PRNewswire/ -- Fox Corporation
(Nasdaq: FOXA, FOX) ("FOX" or the "Company") today reported
financial results for the three months ended March 31, 2020.
The Company reported total quarterly revenues of $3.44 billion, a 25% increase from the
$2.75 billion of revenues reported in
the prior year quarter, reflecting revenue growth across all
operating segments. Advertising revenues increased 44%, led by the
broadcast of Super Bowl LIV at the Television segment.
Affiliate revenues increased 10%, led by increases at the
Television segment due to higher fees from third-party FOX
affiliates and higher average rates per subscriber, partially
offset by net subscriber declines, at the Company's owned and
operated television stations. The Company also reported a 27%
increase in other revenues, led by the operation of the FOX Studios
Lot for third parties and the impact of the consolidation of
Credible Labs Inc at the Other, Corporate and Eliminations
segment.
Quarterly net income decreased to $90
million from the $539 million
in the prior year quarter, primarily due to a loss recognized in
other, net related to the change in fair value of the Company's
former investment in Roku, Inc., as well as higher operating and
selling, general and administrative expenses. The increase in
selling, general and administrative expenses primarily reflects
higher costs related to FOX operating as a standalone public
company following the Distribution1 in the prior
year quarter. Quarterly net income attributable to Fox Corporation
stockholders decreased to $78 million
($0.13 per share) compared to
$529 million ($0.85 per share) in the prior year quarter.
Quarterly Adjusted EBITDA2 of $920 million was 20% higher than the prior year
quarter, primarily due to higher contributions at the Television
and Cable Network Programming segments. Adjusted net income
attributable to Fox Corporation stockholders3 was
$568 million ($0.93 per share), which was higher than the
$471 million ($0.76 per share) adjusted result in the prior
year quarter.
Commenting on the results, Executive Chairman and Chief
Executive Officer Lachlan Murdoch
said:
"We delivered exceptional
operational and financial results in the quarter, highlighted by
our successful broadcast of Super Bowl LIV on FOX. While we
remain focused on continuing to execute against the strategy that
drove this strong performance, we are acutely mindful of the global
health crisis and its countless impacts. Our highest priority
remains the safety and well-being of our employees and their
families. Due to the selfless dedication of many of our colleagues,
the strength of FOX has been on display throughout the crisis as we
continue to provide news, information, entertainment and assistance
to communities around the country. As we eventually emerge, we are
confident that FOX's focused collection of assets – centered on
live and event programming – will be even more in-demand by
advertisers and audiences alike, positioning us well for the future
and enabling us to maximize long-term shareholder value."
|
1
|
On March 19, 2019,
the Company became a standalone publicly traded company through the
pro rata distribution by Twenty-First Century Fox, Inc. (now known
as TFCF Corporation) ("21CF") of all of the issued and outstanding
common stock of FOX to 21CF stockholders (other than holders that
were subsidiaries of 21CF) (the "Distribution"). See page 5 for
additional detail.
|
2
|
Adjusted EBITDA is
considered a non-GAAP financial measure. See Note 1 for a
description of Adjusted EBITDA and a reconciliation of net income
to Adjusted EBITDA.
|
3
|
Excludes net income
effects of Impairment and restructuring charges, adjustments to
Equity (losses) earnings of affiliates, Other, net and tax
provision adjustments. See Note 2 for a description of adjusted net
income and adjusted earnings per share attributable to Fox
Corporation stockholders, which are considered non-GAAP financial
measures, and a reconciliation of reported net income and earnings
per share attributable to Fox Corporation stockholders to adjusted
net income and adjusted earnings per share attributable to Fox
Corporation stockholders.
|
REVIEW OF
OPERATING RESULTS
|
|
|
|
|
|
Three Months
Ended
March
31,
|
|
|
Nine Months
Ended
March
31,
|
|
|
|
2020
|
|
|
2019
|
|
|
2020
|
|
|
2019
|
|
|
|
$
Millions
|
|
Revenues by
Component:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Affiliate
fee
|
|
$
|
1,559
|
|
|
$
|
1,420
|
|
|
$
|
4,389
|
|
|
$
|
4,102
|
|
Advertising
|
|
|
1,570
|
|
|
|
1,088
|
|
|
|
4,621
|
|
|
|
4,138
|
|
Other
|
|
|
311
|
|
|
|
244
|
|
|
|
875
|
|
|
|
636
|
|
Total
revenues
|
|
$
|
3,440
|
|
|
$
|
2,752
|
|
|
$
|
9,885
|
|
|
$
|
8,876
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Segment
Revenues:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cable Network
Programming
|
|
$
|
1,467
|
|
|
$
|
1,383
|
|
|
$
|
4,221
|
|
|
$
|
4,082
|
|
Television
|
|
|
1,926
|
|
|
|
1,370
|
|
|
|
5,548
|
|
|
|
4,796
|
|
Other, Corporate and
Eliminations
|
|
|
47
|
|
|
|
(1)
|
|
|
|
116
|
|
|
|
(2)
|
|
Total
revenues
|
|
$
|
3,440
|
|
|
$
|
2,752
|
|
|
$
|
9,885
|
|
|
$
|
8,876
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Segment
EBITDA:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cable Network
Programming
|
|
$
|
792
|
|
|
$
|
741
|
|
|
$
|
2,032
|
|
|
$
|
1,893
|
|
Television
|
|
|
224
|
|
|
|
99
|
|
|
|
261
|
|
|
|
256
|
|
Other, Corporate and
Eliminations
|
|
|
(96)
|
|
|
|
(74)
|
|
|
|
(256)
|
|
|
|
(177)
|
|
Adjusted
EBITDA4
|
|
$
|
920
|
|
|
$
|
766
|
|
|
$
|
2,037
|
|
|
$
|
1,972
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Depreciation and
amortization:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cable Network
Programming
|
|
$
|
15
|
|
|
$
|
12
|
|
|
$
|
44
|
|
|
$
|
35
|
|
Television
|
|
|
17
|
|
|
|
28
|
|
|
|
46
|
|
|
|
80
|
|
Other, Corporate and
Eliminations
|
|
|
25
|
|
|
|
18
|
|
|
|
74
|
|
|
|
37
|
|
Total depreciation
and amortization
|
|
$
|
57
|
|
|
$
|
58
|
|
|
$
|
164
|
|
|
$
|
152
|
|
|
|
4
|
Adjusted EBITDA is
considered a non-GAAP financial measure. See Note 1 for a
description of Adjusted EBITDA and a reconciliation of net income
to Adjusted EBITDA.
|
CABLE NETWORK
PROGRAMMING
|
|
|
|
|
|
Three Months
Ended
March
31,
|
|
|
Nine Months
Ended
March
31,
|
|
|
|
2020
|
|
|
2019
|
|
|
2020
|
|
|
2019
|
|
|
|
$
Millions
|
|
Revenues
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Affiliate
fee
|
|
$
|
1,006
|
|
|
$
|
968
|
|
|
$
|
2,902
|
|
|
$
|
2,845
|
|
Advertising
|
|
|
304
|
|
|
|
276
|
|
|
|
895
|
|
|
|
893
|
|
Other
|
|
|
157
|
|
|
|
139
|
|
|
|
424
|
|
|
|
344
|
|
Total
revenues
|
|
|
1,467
|
|
|
|
1,383
|
|
|
|
4,221
|
|
|
|
4,082
|
|
Operating
expenses
|
|
|
(554)
|
|
|
|
(547)
|
|
|
|
(1,866)
|
|
|
|
(1,896)
|
|
Selling, general and
administrative
|
|
|
(126)
|
|
|
|
(105)
|
|
|
|
(342)
|
|
|
|
(322)
|
|
Amortization of cable
distribution investments
|
|
|
5
|
|
|
|
10
|
|
|
|
19
|
|
|
|
29
|
|
Segment
EBITDA
|
|
$
|
792
|
|
|
$
|
741
|
|
|
$
|
2,032
|
|
|
$
|
1,893
|
|
Cable Network Programming reported quarterly segment revenues of
$1.47 billion, an increase of
$84 million or 6% from the amount
reported in the prior year quarter, reflecting increases in
affiliate, advertising and other revenues. Affiliate revenues
increased $38 million or 4% as
contractual price increases, including the impact of distribution
agreement renewals, were partially offset by net subscriber
declines. Advertising revenues increased $28
million or 10% as stronger ratings and higher digital
advertising revenues at FOX News Media were partially offset by the
impact of higher preemptions associated with breaking news coverage
at FOX News Media and fewer live events at FS1 due to Coronavirus
Disease 2019 ("COVID-19"). Other revenues increased $18 million or 13%, primarily due to higher
sports sublicensing revenues.
Cable Network Programming reported quarterly segment EBITDA of
$792 million, an increase of
$51 million or 7% from the amount
reported in the prior year quarter, as the revenue increases noted
above were partially offset by higher expenses. The increase in
expenses was primarily due to higher digital costs and
political coverage at FOX News Media and higher FOX Sports and FOX
News production costs related to on-location studio shows in
Miami leading up to Super Bowl
LIV. Partially offsetting the increase in expenses was lower
NASCAR programming rights amortization at FS1 due to the
postponement of live events because of COVID-19.
TELEVISION
|
|
|
|
|
|
Three Months
Ended
March
31,
|
|
|
Nine Months
Ended
March
31,
|
|
|
|
2020
|
|
|
2019
|
|
|
2020
|
|
|
2019
|
|
|
|
$
Millions
|
|
Revenues
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Advertising
|
|
$
|
1,266
|
|
|
$
|
812
|
|
|
$
|
3,726
|
|
|
$
|
3,245
|
|
Affiliate
fee
|
|
|
553
|
|
|
|
452
|
|
|
|
1,487
|
|
|
|
1,257
|
|
Other
|
|
|
107
|
|
|
|
106
|
|
|
|
335
|
|
|
|
294
|
|
Total
revenues
|
|
|
1,926
|
|
|
|
1,370
|
|
|
|
5,548
|
|
|
|
4,796
|
|
Operating
expenses
|
|
|
(1,486)
|
|
|
|
(1,114)
|
|
|
|
(4,713)
|
|
|
|
(4,075)
|
|
Selling, general and
administrative
|
|
|
(216)
|
|
|
|
(157)
|
|
|
|
(574)
|
|
|
|
(465)
|
|
Segment
EBITDA
|
|
$
|
224
|
|
|
$
|
99
|
|
|
$
|
261
|
|
|
$
|
256
|
|
Television reported quarterly segment revenues of $1.93 billion, an increase of $556 million or 41% from the amount reported in
the prior year quarter, reflecting increases in advertising,
affiliate and other revenues. Advertising revenues increased
$454 million or 56%, primarily due to
the broadcast of Super Bowl LIV, partially offset by the
impact of one less NFL Divisional playoff game compared to the
prior year quarter. Also contributing to the increase in
advertising revenues were higher cyclical political revenues at FOX
Television Stations, partially offset by a decline in the local
advertising market as a result of COVID-19. Affiliate revenues
increased $101 million or 22% due to
increases in fees from third-party FOX affiliates and higher
average rates per subscriber, partially offset by net subscriber
declines, at the Company's owned and operated television
stations.
Television reported quarterly segment EBITDA of $224 million, an increase of $125 million from the amount reported in the
prior year quarter, as the revenue increases noted above were
partially offset by higher expenses. The increase in expenses was
primarily due to higher programming rights amortization and
production costs at FOX Sports related to the broadcast of Super
Bowl LIV, partially offset by the impact of one less NFL
Divisional playoff game compared to the prior year quarter. Also
contributing to the increase in expenses were incremental
investments in original scripted programming and co-production
arrangements with third-party studios at FOX Entertainment,
partially offset by the absence of a write-down of certain
entertainment and syndicated programming in the prior year
quarter.
ISSUANCE OF SENIOR NOTES
In April, the Company issued $600
million of 3.05% senior notes due 2025 and $600 million of 3.50% senior notes due 2030.
ACQUISITION OF TUBI, INC. AND SALE OF STAKE IN ROKU,
INC.
In April, the Company completed its acquisition of Tubi Inc., a
leading free ad-supported streaming service, for approximately
$445 million in net cash
consideration at closing. The Company financed the Tubi acquisition
principally with the net proceeds of approximately $340 million from the sale of its stake in Roku,
Inc. in March. The Company purchased its stake in Roku, Inc. for
approximately $40 million.
The Company recorded a loss of approximately $470 million during the quarter ended
March 31, 2020 due to the change in
fair value of the Company's investment in Roku, Inc. prior to
disposition, which is recognized in net income in accordance with
United States generally accepted
accounting principles ("GAAP"). This loss, along with other gains
or losses on investments, non-recurring, infrequent or unusual
items, are excluded from Adjusted EBITDA and adjusted net income
and adjusted earnings per share attributable to Fox Corporation
stockholders. See Notes 1 and 2 for more information about these
non-GAAP financial measures.
IMPACT OF COVID-19
The impact of COVID-19 and measures to prevent its spread are
affecting the macroeconomic environment, as well as the business of
the Company, in a number of ways. For example, while the Company's
national news ratings remain strong, sporting events for which the
Company has broadcast rights have been cancelled or postponed, the
production of certain entertainment content the Company acquires
has been suspended and demand in local advertising markets has
declined. The magnitude of the impacts will depend on the duration
and extent of COVID-19 and the effect of governmental actions,
consumer behavior and actions taken by the Company's business
partners in response to the pandemic and such governmental actions.
The evolving and uncertain nature of this situation makes it
challenging for the Company to estimate the future performance of
its businesses, particularly over the near to medium term,
including the supply and demand for its services, its cash flows
and its current and future advertising revenue. However, the impact
of COVID-19 could have a material adverse effect on the Company's
business, financial condition or results of operations over the
near to medium term. A significant decline in estimated advertising
revenue or the expected popularity of the Company's programming
could lead to a downward revision in the fair value of, among other
things, the Company's reporting units, indefinite-lived intangible
assets and long-lived assets and result in an impairment and a
non-cash charge that is material to the Company's reported net
earnings.
DISTRIBUTION
On March 19, 2019, the Company
became a standalone publicly traded company through the pro rata
distribution by Twenty-First Century Fox, Inc. (now known as TFCF
Corporation) ("21CF") of all of the issued and outstanding common
stock of FOX to 21CF stockholders (other than holders that were
subsidiaries of 21CF) (the "Distribution") in accordance with the
Amended and Restated Distribution Agreement and Plan of Merger,
dated as of June 20, 2018, by and
between 21CF and 21CF Distribution Merger Sub, Inc. Following the
Distribution, approximately 354 million and approximately 266
million shares of the Company's class A common stock and class B
common stock, respectively, began trading independently on The
Nasdaq Global Select Market. In connection with the Distribution,
the Company entered into the Separation and Distribution Agreement,
dated as of March 19, 2019 with 21CF,
which effected the internal restructuring (the "Separation")
whereby 21CF transferred to FOX a portfolio of 21CF's news, sports
and broadcast businesses, including FOX News Media (consisting of
FOX News and FOX Business), FOX Entertainment, FOX Sports, FOX
Television Stations, and sports cable networks FS1, FS2, FOX
Deportes and Big Ten Network, and certain other assets, and FOX
assumed from 21CF the liabilities associated with such businesses
and certain other liabilities. The Separation and the Distribution
were effected as part of a series of transactions contemplated by
the Amended and Restated Merger Agreement and Plan of Merger, dated
as of June 20, 2018, by and among
21CF, The Walt Disney Company ("Disney") and certain subsidiaries
of Disney, pursuant to which, among other things, 21CF became a
wholly-owned subsidiary of Disney.
BASIS OF PRESENTATION
The Unaudited Consolidated Financial Statements of the Company
have been prepared in accordance with GAAP.
The Company's financial statements for the three and nine months
ended March 31, 2020 and 2019 and as
of March 31, 2020 and June 30, 2019 are presented on a consolidated
basis. The Company's Unaudited Consolidated Financial Statements
for the three and nine months ended March
31, 2020 reflect the Company's results of operations and
cash flows as a standalone company, and the Company's Consolidated
Balance Sheets as of March 31, 2020
and June 30, 2019 consist of the
Company's consolidated balances.
Prior to the Distribution, which occurred on March 19, 2019, the Company's financial
statements were derived from the unaudited consolidated financial
statements and accounting records of 21CF. The Unaudited
Consolidated Statements of Operations for the three and nine months
ended March 31, 2019 include, for the
periods prior to March 19, 2019,
allocations for certain support functions that were provided on a
centralized basis within 21CF prior to the Distribution and not
recorded at the business unit level, such as certain expenses
related to finance, legal, insurance, information technology,
compliance and human resources management activities, among others.
21CF did not routinely allocate these costs to any of its business
units. These expenses were allocated to FOX on the basis of direct
usage when identifiable, with the remainder allocated on a pro rata
basis of combined revenues, headcount or other relevant measures.
Management believes the assumptions underlying the Unaudited
Consolidated Financial Statements, including the assumptions
regarding allocating general corporate expenses from 21CF, are
reasonable. Nevertheless, the Unaudited Consolidated Financial
Statements may not include all of the actual expenses that would
have been incurred by FOX and may not reflect FOX's consolidated
results of operations and cash flows had it been a standalone
company during the entirety of the periods presented. Actual costs
that would have been incurred if FOX had been a standalone company
would depend on multiple factors, including organizational
structure and strategic decisions made in various areas, including
information technology and infrastructure. The Unaudited
Consolidated Statements of Operations includes corporate
allocations of approximately $100
million and $270 million for
the three and nine months ended March 31,
2019, respectively, in Selling, general and administrative
expenses.
Cautionary Statement Concerning Forward-Looking
Statements
This press release contains "forward-looking statements" within
the meaning of the Private Securities Litigation Reform Act of
1995. Words such as "may," "will," "should," "likely,"
"anticipates," "expects," "intends," "plans," "projects,"
"believes," "estimates," "outlook" and similar expressions are used
to identify these forward-looking statements. These statements are
based on management's current expectations and beliefs and are
subject to uncertainty and changes in circumstances. Actual results
may vary materially from those expressed or implied by the
statements in this press release due to changes in economic,
business, competitive, technological, strategic and/or regulatory
factors and other factors affecting the operation of the Company's
businesses, including the impact of COVID-19. More detailed
information about these factors is contained in the documents the
Company has filed with or furnished to the Securities and Exchange
Commission (the "SEC"), including the Company's Annual Report on
Form 10-K for the fiscal year ended June 30,
2019.
Statements in this press release speak only as of the date they
were made, and the Company undertakes no duty to update or release
any revisions to any forward-looking statement made in this press
release or to report any events or circumstances after the date of
this press release or to reflect the occurrence of unanticipated
events or to conform such statements to actual results or changes
in the Company's expectations, except as required by law.
To access a copy of this press release through the Internet,
access Fox Corporation's corporate website located at
http://www.foxcorporation.com.
CONSOLIDATED
STATEMENTS OF OPERATIONS
|
|
|
|
|
|
Three Months
Ended
March
31,
|
|
|
Nine Months
Ended
March
31,
|
|
|
|
2020
|
|
|
2019
|
|
|
2020
|
|
|
2019
|
|
|
|
$ Millions, except
per share amounts
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenues
|
|
$
|
3,440
|
|
|
$
|
2,752
|
|
|
$
|
9,885
|
|
|
$
|
8,876
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating
expenses
|
|
|
(2,061)
|
|
|
|
(1,660)
|
|
|
|
(6,620)
|
|
|
|
(5,969)
|
|
Selling, general and
administrative
|
|
|
(464)
|
|
|
|
(336)
|
|
|
|
(1,247)
|
|
|
|
(964)
|
|
Depreciation and
amortization
|
|
|
(57)
|
|
|
|
(58)
|
|
|
|
(164)
|
|
|
|
(152)
|
|
Impairment and
restructuring charges
|
|
|
-
|
|
|
|
(14)
|
|
|
|
(9)
|
|
|
|
(14)
|
|
Interest
expense
|
|
|
(89)
|
|
|
|
(81)
|
|
|
|
(269)
|
|
|
|
(112)
|
|
Interest
income
|
|
|
8
|
|
|
|
19
|
|
|
|
33
|
|
|
|
19
|
|
Other, net
|
|
|
(632)
|
|
|
|
84
|
|
|
|
(345)
|
|
|
|
(116)
|
|
Income before
income tax expense
|
|
|
145
|
|
|
|
706
|
|
|
|
1,264
|
|
|
|
1,568
|
|
Income tax
expense
|
|
|
(55)
|
|
|
|
(167)
|
|
|
|
(347)
|
|
|
|
(390)
|
|
Net
income
|
|
|
90
|
|
|
|
539
|
|
|
|
917
|
|
|
|
1,178
|
|
Less: Net income
attributable to noncontrolling interests
|
|
|
(12)
|
|
|
|
(10)
|
|
|
|
(40)
|
|
|
|
(37)
|
|
Net income
attributable to Fox Corporation stockholders
|
|
$
|
78
|
|
|
$
|
529
|
|
|
$
|
877
|
|
|
$
|
1,141
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average
shares:
|
|
|
612
|
|
|
|
621
|
|
|
|
619
|
|
|
|
621
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income
attributable to Fox Corporation stockholders per share:
|
|
$
|
0.13
|
|
|
$
|
0.85
|
|
|
$
|
1.42
|
|
|
$
|
1.84
|
|
CONSOLIDATED
BALANCE SHEETS
|
|
|
|
|
|
March
31,
2020
|
|
|
June
30,
2019
|
|
Assets:
|
|
$
Millions
|
|
Current
assets:
|
|
|
|
|
|
|
|
|
Cash and cash
equivalents
|
|
$
|
3,196
|
|
|
$
|
3,234
|
|
Receivables,
net
|
|
|
2,453
|
|
|
|
1,967
|
|
Inventories,
net
|
|
|
971
|
|
|
|
1,129
|
|
Other
|
|
|
124
|
|
|
|
148
|
|
Total current
assets
|
|
|
6,744
|
|
|
|
6,478
|
|
|
|
|
|
|
|
|
|
|
Non-current
assets:
|
|
|
|
|
|
|
|
|
Property, plant and
equipment, net
|
|
|
1,386
|
|
|
|
1,313
|
|
Intangible assets,
net
|
|
|
3,084
|
|
|
|
2,851
|
|
Goodwill
|
|
|
3,089
|
|
|
|
2,691
|
|
Deferred tax
assets
|
|
|
4,386
|
|
|
|
4,651
|
|
Other non-current
assets
|
|
|
1,548
|
|
|
|
1,525
|
|
Total
assets
|
|
$
|
20,237
|
|
|
$
|
19,509
|
|
|
|
|
|
|
|
|
|
|
Liabilities and
Equity:
|
|
|
|
|
|
|
|
|
Current
liabilities:
|
|
|
|
|
|
|
|
|
Accounts payable,
accrued expenses and other current liabilities
|
|
$
|
1,780
|
|
|
$
|
1,712
|
|
|
|
|
|
|
|
|
|
|
Non-current
liabilities:
|
|
|
|
|
|
|
|
|
Borrowings
|
|
|
6,754
|
|
|
|
6,751
|
|
Other
liabilities
|
|
|
1,312
|
|
|
|
899
|
|
Redeemable
noncontrolling interests
|
|
|
258
|
|
|
|
189
|
|
Commitments and
contingencies
|
|
|
|
|
|
|
|
|
Equity:
|
|
|
|
|
|
|
|
|
Class A common stock,
$0.01 par value
|
|
|
3
|
|
|
|
4
|
|
Class B common stock,
$0.01 par value
|
|
|
3
|
|
|
|
3
|
|
Additional paid-in
capital
|
|
|
9,810
|
|
|
|
9,891
|
|
Retained
earnings
|
|
|
589
|
|
|
|
357
|
|
Accumulated other
comprehensive loss
|
|
|
(291)
|
|
|
|
(308)
|
|
Total Fox Corporation stockholders' equity
|
|
|
10,114
|
|
|
|
9,947
|
|
Noncontrolling
interests
|
|
|
19
|
|
|
|
11
|
|
Total equity
|
|
|
10,133
|
|
|
|
9,958
|
|
Total liabilities
and equity
|
|
$
|
20,237
|
|
|
$
|
19,509
|
|
CONSOLIDATED
STATEMENTS OF CASH FLOWS
|
|
|
|
|
|
Nine Months Ended
March 31,
|
|
|
|
2020
|
|
|
2019
|
|
|
|
$
Millions
|
|
Operating
Activities:
|
|
|
|
|
|
|
|
|
Net income
|
|
$
|
917
|
|
|
$
|
1,178
|
|
Adjustments to
reconcile net income to cash provided by operating
activities
|
|
|
|
|
|
|
|
|
Depreciation and
amortization
|
|
|
164
|
|
|
|
152
|
|
Amortization of cable
distribution investments
|
|
|
19
|
|
|
|
29
|
|
Impairment and
restructuring charges
|
|
|
9
|
|
|
|
14
|
|
Equity-based
compensation
|
|
|
101
|
|
|
|
5
|
|
Other, net
|
|
|
345
|
|
|
|
116
|
|
Deferred income
taxes
|
|
|
255
|
|
|
|
322
|
|
Change in operating
assets and liabilities, net of acquisitions and
dispositions
|
|
|
|
|
|
|
|
|
Receivables and other
assets
|
|
|
(299)
|
|
|
|
(196)
|
|
Inventories net of
program rights payable
|
|
|
167
|
|
|
|
137
|
|
Accounts payable and
other liabilities
|
|
|
(333)
|
|
|
|
(133)
|
|
Net cash provided
by operating activities
|
|
|
1,345
|
|
|
|
1,624
|
|
|
|
|
|
|
|
|
|
|
Investing
Activities:
|
|
|
|
|
|
|
|
|
Property, plant and
equipment
|
|
|
(192)
|
|
|
|
(147)
|
|
Acquisitions, net of
cash acquired
|
|
|
(611)
|
|
|
|
-
|
|
Sale of
investments
|
|
|
349
|
|
|
|
-
|
|
Purchase of
investments
|
|
|
-
|
|
|
|
(100)
|
|
Other investing
activities, net
|
|
|
57
|
|
|
|
(64)
|
|
Net cash used in
investing activities
|
|
|
(397)
|
|
|
|
(311)
|
|
|
|
|
|
|
|
|
|
|
Financing
activities:
|
|
|
|
|
|
|
|
|
Borrowings
|
|
|
-
|
|
|
|
6,750
|
|
Net transfers to
Twenty-First Century Fox, Inc.
|
|
|
-
|
|
|
|
(1,233)
|
|
Net dividend paid to
Twenty-First Century Fox, Inc.
|
|
|
-
|
|
|
|
(6,500)
|
|
Repurchase of
shares
|
|
|
(600)
|
|
|
|
-
|
|
Dividends paid and
distributions
|
|
|
(321)
|
|
|
|
(33)
|
|
Other financing
activities, net
|
|
|
(65)
|
|
|
|
21
|
|
Net cash used in
financing activities
|
|
|
(986)
|
|
|
|
(995)
|
|
|
|
|
|
|
|
|
|
|
Net (decrease)
increase in cash and cash equivalents
|
|
|
(38)
|
|
|
|
318
|
|
Cash and cash
equivalents, beginning of year
|
|
|
3,234
|
|
|
|
2,500
|
|
Cash and cash
equivalents, end of period
|
|
$
|
3,196
|
|
|
$
|
2,818
|
|
|
|
|
|
|
|
|
|
|
NOTE 1 – ADJUSTED EBITDA
Beginning with the announcement of the Company's financial
results for the first quarter of fiscal 2020, the Company has
renamed as "Adjusted EBITDA" the measure that it had previously
referred to as "Total Segment EBITDA" and, prior to the
announcement of the Company's financial results for the third
quarter of fiscal 2019, as "Total Segment OIBDA." The definition of
this measure has not changed: Adjusted EBITDA is defined as
Revenues less Operating expenses and Selling, general and
administrative expenses. Adjusted EBITDA does not include:
Amortization of cable distribution investments, Depreciation and
amortization, Impairment and restructuring charges, Interest
expense, Interest income, Other, net and Income tax expense.
Management believes that information about Adjusted EBITDA
assists all users of the Company's Unaudited Consolidated Financial
Statements by allowing them to evaluate changes in the operating
results of the Company's portfolio of businesses separate from
non-operational factors that affect net income, thus providing
insight into both operations and the other factors that affect
reported results. Adjusted EBITDA provides management, investors
and equity analysts a measure to analyze the operating performance
of the Company's business and its enterprise value against
historical data and competitors' data, although historical results,
including Adjusted EBITDA, may not be indicative of future results
(as operating performance is highly contingent on many factors,
including customer tastes and preferences).
Adjusted EBITDA is considered a non-GAAP financial measure and
should be considered in addition to, not as a substitute for, net
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 charges, which
are significant components in assessing the Company's financial
performance. Adjusted EBITDA may not be comparable to similarly
titled measures reported by other companies.
The following table reconciles net income to Adjusted EBITDA for
the three and nine months ended March 31,
2020 and 2019:
|
|
Three Months
Ended
March
31,
|
|
|
Nine Months
Ended
March
31,
|
|
|
|
2020
|
|
|
2019
|
|
|
2020
|
|
|
2019
|
|
|
|
$
Millions
|
|
Net
income
|
|
$
|
90
|
|
|
$
|
539
|
|
|
$
|
917
|
|
|
$
|
1,178
|
|
Add:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Amortization of cable
distribution investments
|
|
|
5
|
|
|
|
10
|
|
|
|
19
|
|
|
|
29
|
|
Depreciation and
amortization
|
|
|
57
|
|
|
|
58
|
|
|
|
164
|
|
|
|
152
|
|
Impairment and
restructuring charges
|
|
|
-
|
|
|
|
14
|
|
|
|
9
|
|
|
|
14
|
|
Interest
expense
|
|
|
89
|
|
|
|
81
|
|
|
|
269
|
|
|
|
112
|
|
Interest
income
|
|
|
(8)
|
|
|
|
(19)
|
|
|
|
(33)
|
|
|
|
(19)
|
|
Other, net
|
|
|
632
|
|
|
|
(84)
|
|
|
|
345
|
|
|
|
116
|
|
Income tax
expense
|
|
|
55
|
|
|
|
167
|
|
|
|
347
|
|
|
|
390
|
|
Adjusted
EBITDA
|
|
$
|
920
|
|
|
$
|
766
|
|
|
$
|
2,037
|
|
|
$
|
1,972
|
|
NOTE 2 – ADJUSTED NET INCOME AND ADJUSTED EPS
The Company uses net income and earnings per share ("EPS")
attributable to Fox Corporation stockholders excluding net income
effects of Impairment and restructuring charges, adjustments to
Equity (losses) earnings of affiliates, Other, net, and tax
provision adjustments ("Adjusted Net Income" and "Adjusted EPS"
respectively) to evaluate the performance of the Company's
operations exclusive of certain items that impact the comparability
of results from period to period.
Adjusted Net Income and Adjusted EPS may not be comparable to
similarly titled measures reported by other companies. Adjusted Net
Income and Adjusted EPS are not measures of performance under GAAP
and should be considered in addition to, and not as substitutes
for, net income attributable to Fox Corporation stockholders and
EPS as reported in accordance with GAAP. However, management uses
these measures in comparing the Company's historical performance
and believes that they provide meaningful and comparable
information to management, investors and equity analysts to assist
in their analysis of the Company's performance relative to prior
periods and the Company's competitors.
The following table reconciles net income and EPS attributable
to Fox Corporation stockholders to Adjusted Net Income and Adjusted
EPS for the three months ended March 31,
2020 and 2019:
|
|
Three Months
Ended
|
|
|
|
March 31,
2020
|
|
|
March 31,
2019
|
|
|
|
Income
|
|
|
EPS
|
|
|
Income
|
|
|
EPS
|
|
|
|
$ Millions, except per share data
|
|
Net
income
|
|
$
|
90
|
|
|
|
|
|
|
$
|
539
|
|
|
|
|
|
Less: Net income
attributable to
noncontrolling interests
|
|
|
(12)
|
|
|
|
|
|
|
|
(10)
|
|
|
|
|
|
Net income
attributable to Fox
Corporation stockholders
|
|
$
|
78
|
|
|
$
|
0.13
|
|
|
$
|
529
|
|
|
$
|
0.85
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Impairment and
restructuring charges
|
|
|
-
|
|
|
|
-
|
|
|
|
14
|
|
|
|
0.02
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other,
net5
|
|
|
627
|
|
|
|
1.02
|
|
|
|
(85)
|
|
|
|
(0.14)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Tax
provision
|
|
|
(137)
|
|
|
|
(0.22)
|
|
|
|
13
|
|
|
|
0.02
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Rounding
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
0.01
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
As
adjusted
|
|
$
|
568
|
|
|
$
|
0.93
|
|
|
$
|
471
|
|
|
$
|
0.76
|
|
|
5
|
Other, net
presented above excludes equity losses of affiliates.
|
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SOURCE Fox Corporation