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fox-10q_20200331.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 March 31, 2020

☐	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 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 May 4, 2020, 342,642,286 shares of Class A Common Stock, par value $0.01 per share, and 261,078,355 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, 2020 and 2019	1
		Unaudited Consolidated Statements of Comprehensive Income for the three and nine months ended March 31, 2020 and 2019	2
		Consolidated Balance Sheets as of March 31, 2020 (unaudited) and June 30, 2019 (audited)	3
		Unaudited Consolidated Statements of Cash Flows for the nine months ended March 31, 2020 and 2019	4
		Unaudited Consolidated Statements of Equity for the three and nine months ended March 31, 2020 and 2019	5
		Notes to the Unaudited Consolidated Financial Statements	6
	Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	26
	Item 3.	Quantitative and Qualitative Disclosures About Market Risk	38
	Item 4.	Controls and Procedures	38
Part II. Other Information
	Item 1.	Legal Proceedings	39
	Item 1A.	Risk Factors	39
	Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	40
	Item 3.	Defaults Upon Senior Securities	40
	Item 4.	Mine Safety Disclosures	40
	Item 5.	Other Information	40
	Item 6.	Exhibits	41
	Signature		42

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,
	2020			2019			2020			2019
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

EARNINGS PER SHARE DATA

Weighted average shares
Basic		608			621			615			621
Diluted		612			621			619			621

Net income attributable to Fox Corporation stockholders per share
Basic	$	0.13		$	0.85		$	1.43		$	1.84
Diluted	$	0.13		$	0.85		$	1.42		$	1.84

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

FOX CORPORATION

UNAUDITED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(IN MILLIONS)

	For the three months ended March 31,						For the nine months ended March 31,
	2020			2019			2020			2019
Net income	$	90		$	539		$	917		$	1,178
Other comprehensive income, net of tax
Benefit plan adjustments		5			2			17			5
Other comprehensive income, net of tax		5			2			17			5
Comprehensive income		95			541			934			1,183
Less: Net income attributable to noncontrolling interests^(a)		(12	)		(10	)		(40	)		(37	)
Comprehensive income attributable to Fox Corporation stockholders	$	83		$	531		$	894		$	1,146

^(a)	Net income attributable to noncontrolling interests includes $4 million and $6 million for the three months ended March 31, 2020 and 2019, respectively, and $16 million and $27 million for the nine months ended March 31, 2020 and 2019, respectively, relating to redeemable noncontrolling interests.

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

FOX CORPORATION

CONSOLIDATED BALANCE SHEETS

(IN MILLIONS, EXCEPT SHARE AND PER SHARE AMOUNTS)

	As of March 31, 2020			As of June 30, 2019
	(unaudited)			(audited)
ASSETS
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^(a)		3			4
Class B common stock^(b)		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

^(a)	Class A common stock, $0.01 par value per share, 2,000,000,000 shares authorized, 342,640,682 shares and 354,422,419 shares issued and outstanding at par as of March 31, 2020 and June 30, 2019, respectively.

^(b)	Class B common stock, $0.01 par value per share, 1,000,000,000 shares authorized, 261,078,355 shares and 266,173,651 shares issued and outstanding at par as of March 31, 2020 and June 30, 2019, respectively.

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

FOX CORPORATION

UNAUDITED CONSOLIDATED STATEMENTS OF CASH FLOWS

(IN MILLIONS)

	For the nine months ended March 31,
	2020			2019
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

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

FOX CORPORATION

UNAUDITED CONSOLIDATED 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, 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 declared		-			-		-			-		-			-			(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, December 31, 2018		-		$	-		-		$	-	$	10,596		$	-		$	-		$	(202	)		$	10,394		$	12		$	10,406
Net income		-			-		-			-		424			-			105			-				529			4			533
Other comprehensive income		-			-		-			-		-			-			-			2				2			-			2
Other		-			-		-			-		(27	)		5			(4	)		-				(26	)		(5	)		(31	)
Net decrease in Twenty-First Century Fox, Inc. investment		-			-		-			-		(2,285	)		-			-			(14	)	^(b)		(2,299	)		-			(2,299	)
Conversion of Twenty-First Century Fox, Inc. investment		354			4		266			3		(8,708	)		8,701			-			-				-			-			-
Balance, March 31, 2019		354		$	4		266		$	3	$	-		$	8,706		$	101		$	(214	)		$	8,600		$	11		$	8,611