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fox-10q_20191231.htm

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, 2019

☐	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 (212) 852-7000

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 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 February 4, 2020, 344,808,708 shares of Class A Common Stock, par value $0.01 per share, and 262,024,419 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 and Combined Statements of Operations for the three and six months ended December 31, 2019 and 2018	1
		Unaudited Consolidated and Combined Statements of Comprehensive Income for the three and six months ended December 31, 2019 and 2018	2
		Consolidated Balance Sheets as of December 31, 2019 (unaudited) and June 30, 2019 (audited)	3
		Unaudited Consolidated and Combined Statements of Cash Flows for the six months ended December 31, 2019 and 2018	4
		Unaudited Consolidated and Combined Statements of Equity for the three and six months ended December 31, 2019 and 2018	5
		Notes to the Unaudited Consolidated and Combined Financial Statements	6
	Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	24
	Item 3.	Quantitative and Qualitative Disclosures About Market Risk	35
	Item 4.	Controls and Procedures	35
Part II. Other Information
	Item 1A.	Risk Factors	36
	Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	37
	Item 3.	Defaults Upon Senior Securities	37
	Item 4.	Mine Safety Disclosures	37
	Item 5.	Other Information	37
	Item 6.	Exhibits	38
	Signature		39

FOX CORPORATION

UNAUDITED CONSOLIDATED AND COMBINED STATEMENTS OF OPERATIONS

(IN MILLIONS, EXCEPT PER SHARE AMOUNTS)

	For the three months ended December 31,						For the six months ended December 31,
	2019			2018			2019			2018
Revenues	$	3,778		$	3,583		$	6,445		$	6,124
Operating expenses		(3,091	)		(2,818	)		(4,559	)		(4,309	)
Selling, general and administrative		(431	)		(329	)		(783	)		(628	)
Depreciation and amortization		(57	)		(51	)		(107	)		(94	)
Impairment and restructuring charges		-			-			(9	)		-
Interest expense		(90	)		(15	)		(180	)		(31	)
Interest income		8			-			25			-
Other, net		302			(339	)		287			(200	)

Income before income tax expense		419			31			1,119			862
Income tax expense		(105	)		(7	)		(292	)		(223	)

Net income		314			24			827			639

Less: Net income attributable to noncontrolling interests		(14	)		(16	)		(28	)		(27	)

Net income attributable to Fox Corporation stockholders	$	300		$	8		$	799		$	612

EARNINGS PER SHARE DATA

Weighted average shares
Basic		617			621			619			621
Diluted		620			621			622			621

Net income attributable to Fox Corporation stockholders per share
Basic	$	0.49		$	0.01		$	1.29		$	0.99
Diluted	$	0.48		$	0.01		$	1.28		$	0.99

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

FOX CORPORATION

UNAUDITED CONSOLIDATED AND COMBINED STATEMENTS OF COMPREHENSIVE INCOME

(IN MILLIONS)

	For the three months ended December 31,						For the six months ended December 31,
	2019			2018			2019			2018
Net income	$	314		$	24		$	827		$	639
Other comprehensive income, net of tax
Benefit plan adjustments		8			2			12			3
								-
Other comprehensive income, net of tax		8			2			12			3

Comprehensive income		322			26			839			642

Less: Net income attributable to noncontrolling interests^(a)		(14	)		(16	)		(28	)		(27	)

Comprehensive income attributable to Fox Corporation stockholders	$	308		$	10		$	811		$	615

^(a)

Net income attributable to noncontrolling interests includes $3 million and $10 million for the three months ended December 31, 2019 and 2018, respectively, and $12 million and $21 million for the six months ended December 31, 2019 and 2018, respectively, relating to redeemable noncontrolling interests.

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

FOX CORPORATION

CONSOLIDATED BALANCE SHEETS

(IN MILLIONS, EXCEPT SHARE AND PER SHARE AMOUNTS)

	As of December 31, 2019			As of June 30, 2019
	(unaudited)			(audited)
ASSETS
Current assets
Cash and cash equivalents	$	1,991		$	3,234
Receivables, net		2,733			1,967
Inventories, net		1,544			1,129
Other		130			148

Total current assets		6,398			6,478

Non-current assets
Property, plant and equipment, net		1,330			1,313
Intangible assets, net		2,911			2,851
Goodwill		2,991			2,691
Deferred tax assets		4,398			4,651
Other non-current assets		2,422			1,525

Total assets	$	20,450		$	19,509

LIABILITIES AND EQUITY
Current liabilities
Accounts payable, accrued expenses and other current liabilities	$	1,816		$	1,712

Total current liabilities		1,816			1,712

Non-current liabilities
Borrowings		6,753			6,751
Other liabilities		1,312			899
Redeemable noncontrolling interests		216			189
Commitments and contingencies
Equity
Class A common stock^(a)		3			4
Class B common stock^(b)		3			3
Additional paid-in capital		9,849			9,891
Retained earnings		775			357
Accumulated other comprehensive loss		(296	)		(308	)

Total Fox Corporation stockholders' equity		10,334			9,947
Noncontrolling interests		19			11

Total equity		10,353			9,958

Total liabilities and equity	$	20,450		$	19,509

^(a)	Class A common stock, $0.01 par value per share, 2,000,000,000 shares authorized, 346,509,519 shares and 354,422,419 shares issued and outstanding at par as of December 31, 2019 and June 30, 2019, respectively.

^(b)	Class B common stock, $0.01 par value per share, 1,000,000,000 shares authorized, 264,013,196 and 266,173,651 shares issued and outstanding at par as of December 31, 2019 and June 30, 2019, respectively.

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

FOX CORPORATION

UNAUDITED CONSOLIDATED AND COMBINED STATEMENTS OF CASH FLOWS

(IN MILLIONS)

	For the six months ended December 31,
	2019			2018
OPERATING ACTIVITIES
Net income	$	827		$	639

Adjustments to reconcile net income to cash (used in) provided by operating activities
Depreciation and amortization		107			94
Amortization of cable distribution investments		14			19
Impairment and restructuring charges		9			-
Equity-based compensation		65			-
Other, net		(287	)		200
Deferred income taxes		246			57
Change in operating assets and liabilities, net of acquisitions and dispositions
Receivables and other assets		(640	)		(587	)
Inventories net of program rights payable		(354	)		(168	)
Accounts payable and other liabilities		(243	)		(218	)

Net cash (used in) provided by operating activities		(256	)		36

INVESTING ACTIVITIES
Property, plant and equipment		(110	)		(88	)
Acquisitions, net of cash acquired		(260	)		-
Purchase of investments		-			(100	)
Other investing activities, net		21			(63	)

Net cash used in investing activities		(349	)		(251	)

FINANCING ACTIVITIES
Net transfers to Twenty-First Century Fox, Inc.		-			(312	)
Repurchase of shares		(421	)		-
Dividends paid and distributions		(169	)		(22	)
Other financing activities, net		(48	)		-

Net cash used in financing activities		(638	)		(334	)

Net decrease in cash and cash equivalents		(1,243	)		(549	)
Cash and cash equivalents, beginning of year		3,234			2,500

Cash and cash equivalents, end of period	$	1,991		$	1,951

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

FOX CORPORATION

UNAUDITED CONSOLIDATED AND COMBINED STATEMENTS OF EQUITY

(IN MILLIONS)

	Class A						Class B					Twenty-First Century		Additional						Accumulated Other			Total Fox Corporation
	Common Stock						Common Stock					Fox, Inc.		Paid-in			Retained			Comprehensive			Stockholders'			Noncontrolling			Total
	Shares			Amount			Shares			Amount		Investment		Capital			Earnings			(Loss) Income			Equity			Interests^(a)			Equity
Balance, September 30, 2019		354		$	4			266		$	3	$	-	$	9,921		$	696		$	(304	)	$	10,320		$	10		$	10,330
Net income		-			-			-			-		-		-			300			-			300			11			311
Other comprehensive income		-			-			-			-		-		-			-			8			8			-			8
Shares repurchased		(8	)		(1	)		(2	)		-		-		(194	)		(232	)		-			(427	)		-			(427	)
Other		1			-			-			-		-		122			11			-			133			(2	)		131
Balance, December 31, 2019		347		$	3			264		$	3	$	-	$	9,849		$	775		$	(296	)	$	10,334		$	19		$	10,353

Balance, September 30, 2018		-		$	-			-		$	-	$	11,106	$	-		$	-		$	(61	)	$	11,045		$	9		$	11,054
Net income		-			-			-			-		8		-			-			-			8			6			14