REA : Form 10-Q filed by News Corp with SEC

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 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 September 30, 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 001-35769

NEWS CORPORATION

(Exact name of registrant as specified in its charter)

Delaware	46-2950970
(State or other jurisdiction of	(I.R.S. Employer
incorporation or organization)	Identification No.)
1211 Avenue of the Americas, New York, New York	10036
(Address of principal executive offices)	(Zip Code)

[phone]

(Registrant's telephone number, including area code)

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, a smaller reporting company, or an emerging growth 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	☐
Non-accelerated filer	☐	Smaller reporting company	☐
Emerging growth company	☐

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 November 2, 2018, 385,214,811 shares of Class A Common Stock and 199,630,240 shares of Class B Common Stock were outstanding.

FORM 10-Q TABLE OF CONTENTS

Page
Part I. Financial Information
Item 1. Financial Statements
Consolidated Statements of Operations for the three months ended September 30, 2018 and 2017 (unaudited)	2
Consolidated Statements of Comprehensive Income for the three months ended September 30, 2018 and 2017 (unaudited)	3
Consolidated Balance Sheets as of September 30, 2018 (unaudited) and June 30, 2018 (audited)	4
Consolidated Statements of Cash Flows for the three months ended September 30, 2018 and 2017 (unaudited)	5
Notes to the Unaudited Consolidated Financial Statements	6
Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations	33
Item 3. Quantitative and Qualitative Disclosures About Market Risk	52
Item 4. Controls and Procedures	52
Part II. Other Information
Item 1. Legal Proceedings	53
Item 1A. Risk Factors	53
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds	53
Item 3. Defaults Upon Senior Securities	53
Item 4. Mine Safety Disclosures	53
Item 5. Other Information	53
Item 6. Exhibits	54
Signature	55

CONSOLIDATED STATEMENTS OF OPERATIONS

(Unaudited; millions, except per share amounts)

For the three months ended

September 30,

Notes

2018

2017

Revenues:

664 682

Circulation and subscription Advertising

$

1,034 $ 651

Consumer Real estate Other

400 386

227 203

Total Revenues Operating expenses

Selling, general and administrative Depreciation and amortization Impairment and restructuring charges Equity losses of affiliates

199 136

2

2,524

2,058

(1,340) (1,149)

(826) (661)

(163) (97)

(18) (15)

4 5

(3) (10)

Interest (expense) income, net Other, net

(16) 6

14

20 9

Income before income tax expense

178 141

Income tax expense

12

(50) (54)

Net income

128 87

Less: Net income attributable to noncontrolling interests Net income attributable to News Corporation stockholders

Basic and diluted earnings per share:

(27) (19)

$

101

$

68

10

Net income available to News Corporation stockholders per share

Cash dividends declared per share of common stock

$ $

The accompanying notes are an integral part of these unaudited consolidated financial statements.

2

0.17 0.10

$ $

0.12 0.10

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(Unaudited; millions)

For the three months ended

September 30,

2018 2017

Net income

$

128

$ 87

Other comprehensive income:

Foreign currency translation adjustments

(110) 134

Net change in the fair value of cash flow hedges(a)

2

-

Unrealized holding losses on securities, net(b) - (13)Benefit plan adjustments, net(c)

5 (6)Share of other comprehensive income from equity affiliates, net(d) - 1

Other comprehensive (loss) income Comprehensive income

(103)

116

25 203

Less: Net income attributable to noncontrolling interests

(27) (19)

Less: Other comprehensive loss (income) attributable to noncontrolling interests Comprehensive income attributable to News Corporation stockholders

28 (4)

$

26

$

180

• (a) Net of income tax expense of $1 million and nil for the three months ended September 30, 2018 and 2017, respectively.

• (b) Net of income tax benefit of $6 million for the three months ended September 30, 2017.

• (c) Net of income tax expense (benefit) of $1 million and ($2) million for the three months ended September 30, 2018 and 2017, respectively.

• (d) Net of income tax benefit of nil for the three months ended September 30, 2017.

The accompanying notes are an integral part of these unaudited consolidated financial statements.

3

CONSOLIDATED BALANCE SHEETS (Millions, except share and per share amounts)

Notes

As of	As of
September 30, 2018	June 30, 2018
(unaudited)	(audited)

Assets: Current assets:

Cash and cash equivalents Receivables, net Inventory, net Other current assets Total current assets Non-current assets: Investments

$

1,886 $ 2,034

14

1,648 1,612

388 376

547 372

4,469

4,394

5

390 393

Property, plant and equipment, net Intangible assets, net

2,512 2,560

2,607 2,671

Goodwill

5,153 5,218

Deferred income tax assets Other non-current assets

260 279

12 14

897 831

Total assets

$

16,288

$

16,346

Liabilities and Equity: Current liabilities: Accounts payable Accrued expenses Deferred revenue Current borrowings Other current liabilities Total current liabilities Non-current liabilities:

$

537 $ 605

1,258 1,340

436 516

671 462

6 14

643 372

3,545

3,295

Borrowings 6 Retirement benefit obligations

1,186 1,490

241 245

Deferred income tax liabilities 12 Other non-current liabilities

401 389

485 430

Commitments and contingencies 11

Redeemable preferred stock 7 - 20

Class A common stock(a) Class B common stock(b) Additional paid-in capital Accumulated deficit

4 4

2 2

12,257 (2,032)

12,322 (2,163)

Accumulated other comprehensive loss

(970)

(874)

Total News Corporation stockholders' equity Noncontrolling interests

9,261 9,291

1,169 1,186

Total equity

8

10,430

10,477

Total liabilities and equity

$

16,288

$

16,346

• (a) Class A common stock, $0.01 par value per share ("Class A Common Stock"), 1,500,000,000 shares authorized, 385,202,454 and 383,385,353 shares issued and outstanding, net of 27,368,413 treasury shares at par at September 30, 2018 and June 30, 2018, respectively.

• (b) Class B common stock, $0.01 par value per share ("Class B Common Stock"), 750,000,000 shares authorized, 199,630,240 shares issued and outstanding, net of 78,430,424 treasury shares at par at September 30, 2018 and June 30, 2018, respectively.

The accompanying notes are an integral part of these unaudited consolidated financial statements.

4