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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 March 31, 2021

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 001-38776

 

FOX CORPORATION

(Exact Name of Registrant as Specified in its Charter)

 

Delaware

 

83-1825597

(State or Other Jurisdiction
of Incorporation or Organization)

 

(I.R.S. Employer
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 (212852-7000

 

Securities registered pursuant to Section 12(b) of the Act:

 

Title of Each Class

Trading Symbols

Name of Each Exchange
on Which Registered

Class A Common Stock, par value $0.01 per share

FOXA

The Nasdaq Global Select Market

Class B Common Stock, par value $0.01 per share

FOX

The Nasdaq Global Select Market

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 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 Act).     Yes       No  

As of May 3, 2021, 326,938,206 shares of Class A Common Stock, par value $0.01 per share, and 253,269,403 shares of Class B Common Stock, par value $0.01 per share, were outstanding.

 

 

 


 

 

FOX CORPORATION

FORM 10-Q

TABLE OF CONTENTS

 

 

 

Page

Part I. Financial Information

 

 

Item 1.

 

Financial Statements

 

 

 

Unaudited Consolidated Statements of Operations for the three and nine months ended March 31, 2021 and 2020

1

 

 

 

Unaudited Consolidated Statements of Comprehensive Income for the three and nine months ended March 31, 2021 and 2020

2

 

 

 

Consolidated Balance Sheets as of March 31, 2021 (unaudited) and June 30, 2020 (audited)

3

 

 

 

Unaudited Consolidated Statements of Cash Flows for the nine months ended March 31, 2021 and 2020

4

 

 

 

Unaudited Consolidated Statements of Equity for the three and nine months ended March 31, 2021 and 2020

5

 

 

 

Notes to the Unaudited Consolidated Financial Statements

6

 

Item 2.

 

Management’s Discussion and Analysis of Financial Condition and Results of Operations

20

 

Item 3.

 

Quantitative and Qualitative Disclosures About Market Risk

32

 

Item 4.

 

Controls and Procedures

33

Part II. Other Information

 

 

Item 1.

 

Legal Proceedings

34

 

Item 1A.

 

Risk Factors

34

 

Item 2.

 

Unregistered Sales of Equity Securities and Use of Proceeds

34

 

Item 3.

 

Defaults Upon Senior Securities

34

 

Item 4.

 

Mine Safety Disclosures

34

 

Item 5.

 

Other Information

34

 

Item 6.

 

Exhibits

35

 

Signature

36

 

 

 


 

 

FOX CORPORATION

UNAUDITED CONSOLIDATED STATEMENTS OF OPERATIONS

(IN MILLIONS, EXCEPT PER SHARE AMOUNTS)

 

 

 

For the three months ended

March 31,

 

 

For the nine months ended

March 31,

 

 

 

2021

 

 

2020

 

 

2021

 

 

2020

 

Revenues

 

$

3,215

 

 

$

3,440

 

 

$

10,019

 

 

$

9,885

 

Operating expenses

 

 

(1,885

)

 

 

(2,061

)

 

 

(6,399

)

 

 

(6,620

)

Selling, general and administrative

 

 

(437

)

 

 

(464

)

 

 

(1,267

)

 

 

(1,247

)

Depreciation and amortization

 

 

(78

)

 

 

(57

)

 

 

(216

)

 

 

(164

)

Impairment and restructuring charges

 

 

-

 

 

 

-

 

 

 

(35

)

 

 

(9

)

Interest expense

 

 

(98

)

 

 

(89

)

 

 

(296

)

 

 

(269

)

Interest income

 

 

-

 

 

 

8

 

 

 

3

 

 

 

33

 

Other, net

 

 

61

 

 

 

(632

)

 

 

752

 

 

 

(345

)

Income before income tax expense

 

 

778

 

 

 

145

 

 

 

2,561

 

 

 

1,264

 

Income tax expense

 

 

(196

)

 

 

(55

)

 

 

(632

)

 

 

(347

)

Net income

 

 

582

 

 

 

90

 

 

 

1,929

 

 

 

917

 

Less: Net income attributable to noncontrolling interests

 

 

(15

)

 

 

(12

)

 

 

(32

)

 

 

(40

)

Net income attributable to Fox Corporation stockholders

 

$

567

 

 

$

78

 

 

$

1,897

 

 

$

877

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

EARNINGS PER SHARE DATA

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Weighted average shares

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic

 

 

589

 

 

 

608

 

 

 

595

 

 

 

615

 

Diluted

 

 

593

 

 

 

612

 

 

 

598

 

 

 

619

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net income attributable to Fox Corporation stockholders per share

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic

 

$

0.96

 

 

$

0.13

 

 

$

3.19

 

 

$

1.43

 

Diluted

 

$

0.96

 

 

$

0.13

 

 

$

3.17

 

 

$

1.42

 

 

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

1


 

FOX CORPORATION

UNAUDITED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(IN MILLIONS)

 

 

 

For the three months ended

March 31,

 

 

For the nine months ended

March 31,

 

 

 

2021

 

 

2020

 

 

2021

 

 

2020

 

Net income

 

$

582

 

 

$

90

 

 

$

1,929

 

 

$

917

 

Other comprehensive income, net of tax

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Benefit plan adjustments

 

 

9

 

 

 

5

 

 

 

25

 

 

 

17

 

Other comprehensive income, net of tax

 

 

9

 

 

 

5

 

 

 

25

 

 

 

17

 

Comprehensive income

 

 

591

 

 

 

95

 

 

 

1,954

 

 

 

934

 

Less: Net income attributable to noncontrolling interests(a)

 

 

(15

)

 

 

(12

)

 

 

(32

)

 

 

(40

)

Comprehensive income attributable to Fox Corporation stockholders

 

$

576

 

 

$

83

 

 

$

1,922

 

 

$

894

 

 

(a)

Net income attributable to noncontrolling interests includes $5 million and $4 million for the three months ended March 31, 2021 and 2020, respectively, and $13 million and $16 million for the nine months ended March 31, 2021 and 2020, respectively, relating to redeemable noncontrolling interests.

 

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

2


 

FOX CORPORATION

CONSOLIDATED BALANCE SHEETS

(IN MILLIONS, EXCEPT SHARE AND PER SHARE AMOUNTS)

 

 

 

As of

March 31,

2021

 

 

As of

June 30,

2020

 

 

 

(unaudited)

 

 

(audited)

 

ASSETS

 

 

 

 

 

 

 

 

Current assets

 

 

 

 

 

 

 

 

Cash and cash equivalents

 

$

5,765

 

 

$

4,645

 

Receivables, net

 

 

2,153

 

 

 

1,888

 

Inventories, net

 

 

685

 

 

 

856

 

Other

 

 

91

 

 

 

97

 

Total current assets

 

 

8,694

 

 

 

7,486

 

Non-current assets

 

 

 

 

 

 

 

 

Property, plant and equipment, net

 

 

1,626

 

 

 

1,498

 

Intangible assets, net

 

 

3,156

 

 

 

3,198

 

Goodwill

 

 

3,403

 

 

 

3,409

 

Deferred tax assets

 

 

3,853

 

 

 

4,358

 

Other non-current assets

 

 

2,175

 

 

 

1,801

 

Total assets

 

$

22,907

 

 

$

21,750

 

LIABILITIES AND EQUITY

 

 

 

 

 

 

 

 

Current liabilities

 

 

 

 

 

 

 

 

Borrowings

 

$

749

 

 

$

-

 

Accounts payable, accrued expenses and other current liabilities

 

 

2,236

 

 

 

1,906

 

Total current liabilities

 

 

2,985

 

 

 

1,906

 

Non-current liabilities

 

 

 

 

 

 

 

 

Borrowings

 

 

7,201

 

 

 

7,946

 

Other liabilities

 

 

1,412

 

 

 

1,482

 

Redeemable noncontrolling interests

 

 

225

 

 

 

305

 

Commitments and contingencies

 

 

 

 

 

 

 

 

Equity

 

 

 

 

 

 

 

 

Class A common stock(a)

 

 

3

 

 

 

3

 

Class B common stock(b)

 

 

3

 

 

 

3

 

Additional paid-in capital

 

 

9,555

 

 

 

9,831

 

Retained earnings

 

 

1,912

 

 

 

674

 

Accumulated other comprehensive loss

 

 

(392

)

 

 

(417

)

Total Fox Corporation stockholders' equity

 

 

11,081

 

 

 

10,094

 

Noncontrolling interests

 

 

3

 

 

 

17

 

Total equity

 

 

11,084

 

 

 

10,111

 

Total liabilities and equity

 

$

22,907

 

 

$

21,750

 

 

(a)

Class A common stock, $0.01 par value per share, 2,000,000,000 shares authorized, 328,797,729 shares and 343,608,673 shares issued and outstanding at par as of March 31, 2021 and June 30, 2020, respectively.

(b)

Class B common stock, $0.01 par value per share, 1,000,000,000 shares authorized, 254,094,035 shares and 261,078,355 shares issued and outstanding at par as of March 31, 2021 and June 30, 2020, respectively.

 

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

3


 

FOX CORPORATION

UNAUDITED CONSOLIDATED STATEMENTS OF CASH FLOWS

(IN MILLIONS)

 

 

 

For the nine months ended

March 31,

 

 

 

2021

 

 

2020

 

OPERATING ACTIVITIES

 

 

 

 

 

 

 

 

Net income

 

$

1,929

 

 

$

917

 

Adjustments to reconcile net income to cash provided by operating activities

 

 

 

 

 

 

 

 

Depreciation and amortization

 

 

216

 

 

 

164

 

Amortization of cable distribution investments

 

 

17

 

 

 

19

 

Impairment and restructuring charges

 

 

35

 

 

 

9

 

Equity-based compensation

 

 

112

 

 

 

101

 

Other, net

 

 

(752

)

 

 

345

 

Deferred income taxes

 

 

528

 

 

 

255

 

Change in operating assets and liabilities, net of acquisitions and dispositions

 

 

 

 

 

 

 

 

Receivables and other assets

 

 

(382

)

 

 

(395

)

Inventories net of program rights payable

 

 

257

 

 

 

167

 

Accounts payable and accrued expenses

 

 

88

 

 

 

(178

)

Other changes, net

 

 

(182

)

 

 

(59

)

Net cash provided by operating activities

 

 

1,866

 

 

 

1,345

 

INVESTING ACTIVITIES

 

 

 

 

 

 

 

 

Property, plant and equipment

 

 

(333

)

 

 

(192

)

Acquisitions, net of cash acquired

 

 

-

 

 

 

(611

)

Proceeds from dispositions, net

 

 

93

 

 

 

45

 

Sale of investments

 

 

-

 

 

 

349

 

Purchase of investments

 

 

(86

)

 

 

-

 

Other investing activities, net

 

 

(3

)

 

 

12

 

Net cash used in investing activities

 

 

(329

)

 

 

(397

)

FINANCING ACTIVITIES

 

 

 

 

 

 

 

 

Repurchase of shares

 

 

(713

)

 

 

(600

)

Non-operating cash flows from (to) The Walt Disney Company

 

 

113

 

 

 

(70

)

Settlement of Divestiture Tax prepayment

 

 

462

 

 

 

-

 

Dividends paid and distributions

 

 

(182

)

 

 

(321

)

Purchase of subsidiary noncontrolling interest

 

 

(67

)

 

 

-

 

Other financing activities, net

 

 

(30

)

 

 

5

 

Net cash used in financing activities

 

 

(417

)

 

 

(986

)

Net increase (decrease) in cash and cash equivalents

 

 

1,120

 

 

 

(38

)

Cash and cash equivalents, beginning of year

 

 

4,645

 

 

 

3,234

 

Cash and cash equivalents, end of period

 

$

5,765

 

 

$

3,196

 

 

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

 

 

4


 

 

FOX CORPORATION

UNAUDITED CONSOLIDATED STATEMENTS OF EQUITY

(IN MILLIONS)

 

 

 

Class A

 

 

Class B

 

 

Additional

 

 

 

 

 

 

Accumulated

Other

 

 

Total Fox

Corporation

 

 

 

 

 

 

 

 

 

 

 

Common Stock

 

 

Common Stock

 

 

Paid-in

 

 

Retained

 

 

Comprehensive

 

 

Stockholders'

 

 

Noncontrolling

 

 

Total

 

 

 

Shares

 

 

Amount

 

 

Shares

 

 

Amount

 

 

Capital

 

 

Earnings

 

 

Loss

 

 

Equity

 

 

Interests(a)

 

 

Equity

 

Balance, December 31, 2020

 

 

335

 

 

$

3

 

 

 

257

 

 

$

3

 

 

$

9,655

 

 

$

1,657

 

 

$

(401

)

 

$

10,917

 

 

$

4

 

 

$

10,921

 

Net income

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

567

 

 

 

-

 

 

 

567

 

 

 

10

 

 

 

577

 

Other comprehensive income

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

9

 

 

 

9

 

 

 

-

 

 

 

9

 

Dividends

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

(134

)

 

 

-

 

 

 

(134

)

 

 

-

 

 

 

(134

)

Shares repurchased

 

 

(6

)

 

 

-

 

 

 

(3

)

 

 

-

 

 

 

(146

)

 

 

(160

)

 

 

-

 

 

 

(306

)

 

 

-

 

 

 

(306

)

Other

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

46

 

 

 

(18

)

 

 

-

 

 

 

28

 

 

 

(11

)

 

 

17

 

Balance, March 31, 2021

 

 

329

 

 

$

3

 

 

 

254

 

 

$

3

 

 

$

9,555

 

 

$

1,912

 

 

$

(392

)

 

$

11,081

 

 

$

3

 

 

$

11,084

 

Balance, December 31, 2019

 

 

347

 

 

$

3

 

 

 

264

 

 

$

3

 

 

$

9,849

 

 

$

775

 

 

$

(296

)

 

$

10,334

 

 

$

19

 

 

$

10,353

 

Net income

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

78

 

 

 

-

 

 

 

78

 

 

 

8

 

 

 

86

 

Other comprehensive income

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

5

 

 

 

5

 

 

 

-

 

 

 

5

 

Dividends

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

(139

)

 

 

-

 

 

 

(139

)

 

 

-

 

 

 

(139

)

Shares repurchased

 

 

(4

)

 

 

-

 

 

 

(3

)

 

 

-

 

 

 

(79

)

 

 

(94

)

 

 

-

 

 

 

(173

)

 

 

-

 

 

 

(173

)

Other

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

40

 

 

 

(31

)

 

 

-

 

 

 

9

 

 

 

(8

)

 

 

1

 

Balance, March 31, 2020

 

 

343

 

 

$

3

 

 

 

261

 

 

$

3

 

 

$

9,810

 

 

$

589

 

 

$

(291

)

 

$

10,114

 

 

$

19

 

 

$

10,133

 

Balance, June 30, 2020

 

 

344

 

 

$

3

 

 

 

261

 

 

$

3

 

 

$

9,831

 

 

$

674

 

 

$

(417

)

 

$

10,094

 

 

$

17

 

 

$

10,111

 

Net income

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

1,897