Twenty First Century Fox : Quarterly report which provides a continuing view of a company's financial position

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, DC 20549

FORM 10-Q

(Mark One)

☒ Quarterly report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 for the quarterly period ended December 31, 2018

or

☐

Transition report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 for the transition period from to

Commission file number 001-32352

TWENTY-FIRST CENTURY FOX, INC.

(Exact Name of Registrant as Specified in its Charter)

Delaware	26-0075658
(State or Other Jurisdiction	(I.R.S. Employer
of Incorporation or Organization)	Identification No.)
1211 Avenue of the Americas, New York, New York	10036
(Address of Principal Executive Offices)	(Zip Code)

Registrant's telephone number, including area code [phone]

Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to

Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging company. See the definitions of "large accelerated filer," "accelerated filer," "smaller reporting company," and "emerging growth company" in Rule 12b-2 of the Exchange Act.

Large accelerated filer	☒	Accelerated filer	☐
Smaller reporting company	☐	Emerging growth company	☐

Non-accelerated filer

☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).

Yes ☐

No ☒

As of February 1, 2019, 1,058,408,500 shares of Class A Common Stock, par value $0.01 per share, and 798,520,953 shares of Class B Common Stock, par value $0.01 per share, were outstanding.

FORM 10-Q

TABLE OF CONTENTS

Page
Part I. Financial Information
Item 1. Financial Statements
Unaudited Consolidated Statements of Operations for the three and six months ended December 31, 2018 and 2017	1
Unaudited Consolidated Statements of Comprehensive Income for the three and six months ended December 31, 2018 and 2017	2
Consolidated Balance Sheets as of December 31, 2018 (unaudited) and June 30, 2018 (audited)	3
Unaudited Consolidated Statements of Cash Flows for the six months ended December 31, 2018 and 2017	4
Notes to the Unaudited Consolidated Financial Statements	5
Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations	39
Item 3. Quantitative and Qualitative Disclosures About Market Risk	50
Item 4. Controls and Procedures	52
Part II. Other Information
Item 1. Legal Proceedings	53
Item 1A. Risk Factors	55
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds	63
Item 3. Defaults Upon Senior Securities	63
Item 4. Mine Safety Disclosures	63
Item 5. Other Information	63
Item 6. Exhibits	64
Signature	66

UNAUDITED CONSOLIDATED STATEMENTS OF OPERATIONS

(IN MILLIONS, EXCEPT PER SHARE AMOUNTS)

Revenues Operating expenses

Selling, general and administrative Depreciation and amortization Impairment and restructuring charges Equity (losses) earnings of affiliates Interest expense, net

Interest income Other, net

Income from continuing operations before income tax (expense) benefit

Income tax (expense) benefit

Income from continuing operations

(Loss) income from discontinued operations, net of tax

Net income

Less: Net income attributable to noncontrolling interests

Net income attributable to Twenty-First Century Fox, Inc. stockholders

$

EARNINGS PER SHARE DATA

Income from continuing operations attributable to Twenty-First Century Fox, Inc. stockholders - basic and diluted

Weighted average shares

Basic

Diluted

1,8561,864

Income from continuing operations attributable to Twenty-First Century Fox, Inc. stockholders per share

Basic

Diluted

$ $

Net income attributable to Twenty-First Century Fox, Inc. stockholders per share

For the three months ended

December 31,

For the six months ended

December 31,

2018

2017

2018

8,499$

8,037$

15,676$

(6,005)

• (5,760) (10,429) (10,141)

  (939 )

• (864 )(1,829)(1,712)

(159 )

(142 )

-

(3)

(109 )

(33 )

(294 )

(312 )

86

9

10,475

(229 )

10,527

11,554

703

13,038

(630 )

1,218

10,924

1,921

12,282

(17 )

(5)

10,907

1,916

12,258

(92 )

(85 )

$

10,815

$

1,831

$

12,100

$

10,832

$

1,836

$

12,124

1,8531,855

• 5.84$

  • 0.99$

• 5.81 $

• 0.99 $

Basic

2017

15,039

(317 )

(284 )

(16 )

(24 )

(74 )

27

(594 )

(625 )

94

19

(301 )

1,998

(756 )

827

2,825

(24 )

11

2,836

(158 )

(150 )

$

2,686

$

2,675

1,8551,8521,864 1,854

6.54$ 1.446.50 $ 1.44

Diluted

$ $

5.83$ 5.80 $

0.99$ 0.99 $

The accompanying notes are an integral part of these Unaudited Consolidated Financial Statements.

1

6.52$ 1.456.49 $ 1.45

UNAUDITED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(IN MILLIONS)

For the three months ended

December 31,

For the six months ended

December 31,

Comprehensive income 11,377 2,147

12,568 3,218

2017
Net income	$	$	$	2,836
Other comprehensive income, net of tax
Foreign currency translation adjustments	38	(118 )	79
Cash flow hedges	(1)	(6)	(1)
Unrealized holding gains on securities	97	-	179
Benefit plan adjustments	61	22	67
Equity method investments	36	412	58
-
Other comprehensive income, net of tax	231	310	382
Less: Net income attributable to noncontrolling interests(a)	(85 )	(158 )	(150 )
Less: Other comprehensive loss (income) attributable to noncontrolling
interests	(4)	9	(13 )
Comprehensive income attributable to Twenty-First Century Fox, Inc.
stockholders	$	3,055

2017

2018 10,907$

2018

1,916

12,258

14

(6)

-

16

446

470

(92 )

5

11,290

$

2,058

$

12,419

$

(a)

Net income attributable to noncontrolling interests includes $36 million and $48 million for the three months ended December 31, 2018 and 2017, respectively, and $60 million and $77 million for the six months ended December 31, 2018 and 2017, respectively, relating to redeemable noncontrolling interests.

The accompanying notes are an integral part of these Unaudited Consolidated Financial Statements.

2

CONSOLIDATED BALANCE SHEETS

(IN MILLIONS, EXCEPT SHARE AND PER SHARE AMOUNTS)

As of	As of
December 31,	June 30,
2018	2018
(unaudited)	(audited)

Total Twenty-First Century Fox, Inc. stockholders' equity

- 32,005 19,564

ASSETS
Current assets
Cash and cash equivalents	7,622
Receivables, net	7,120
Inventories, net	3,669
Other	922
Total current assets	19,333
Non-current assets
Receivables, net	724
Investments	4,112
Inventories, net	7,518
Property, plant and equipment, net	1,956
Intangible assets, net	6,101
Goodwill	12,768
Other non-current assets	1,319
Total assets	53,831
LIABILITIES AND EQUITY
Current liabilities
Borrowings	1,054
Accounts payable, accrued expenses and other current liabilities	3,236	3,248
Participations, residuals and royalties payable	1,822	1,748
Program rights payable	1,135	1,368
Deferred revenue	855	826
-
Total current liabilities	7,935	8,244
Non-current liabilities
Borrowings	18,321	18,469
Other liabilities	3,848	3,664
Deferred income taxes	1,971	1,892
Redeemable noncontrolling interests	576	764
Commitments and contingencies
Equity
Class A common stock(a)	11	11
Class B common stock(b)	8	8
Additional paid-in capital	12,573	12,612
Retained earnings	21,292	8,934
Accumulated other comprehensive loss	(1,879)	(2,001)
Noncontrolling interests	1,230	1,234
Total equity	33,235	20,798
Total liabilities and equity	53,831

$

21,281$

8,083

3,934

719

34,017

859

833

8,133

1,971

5,970

12,758

1,345

$

65,886

$

$

887$

$

65,886

$

• (a) Class A common stock, $0.01 par value per share, 6,000,000,000 shares authorized, 1,058,408,500 shares and 1,054,032,541 shares issued and outstanding, net of 123,687,371 treasury shares at par as of December 31, 2018 and June 30, 2018, respectively.

• (b) Class B common stock, $0.01 par value per share, 3,000,000,000 shares authorized, 798,520,953 shares issued and outstanding, net of 356,993,807 treasury shares at par as of December 31, 2018 and June 30, 2018.

The accompanying notes are an integral part of these Unaudited Consolidated Financial Statements.

3