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News Corporation Reports Second Quarter Results For Fiscal 2014

Conference call

News Corporation’s earnings conference call can be heard live at 4:30pm Eastern Standard Time on February 6, 2014. To listen to the call, please visit http://investors.newscorp.com.

Cautionary Statement Concerning Forward-Looking Statements

This document contains certain “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. These statements are based on management’s views and assumptions regarding future events and business performance as of the time the statements are made. Actual results may differ materially from these expectations due to changes in global economic, business, competitive market and regulatory factors. More detailed information about these and other factors that could affect future results is contained in our filings with the Securities and Exchange Commission. The “forward-looking statements” included in this document are made only as of the date of this document and we do not have any obligation to publicly update any “forward-looking statements” to reflect subsequent events or circumstances, except as required by law.

About News Corporation

News Corporation (NASDAQ: NWS, NWSA; ASX: NWS, NWSLV) is a global, diversified media and information services company focused on creating and distributing authoritative and engaging content to consumers throughout the world. The company comprises businesses across a range of media, including: news and information services, cable network programming in Australia, digital real estate services, book publishing, digital education, and pay-TV distribution in Australia. Headquartered in New York, the activities of News Corporation are conducted primarily in the United States, Australia, and the United Kingdom. More information is available at:  www.newscorp.com.

NEWS CORPORATION
 
CONSOLIDATED AND COMBINED STATEMENTS OF OPERATIONS
(Unaudited; in millions, except share and per share amounts)
       
For the three months ended For the six months ended
December 31, December 31,
2013   2012 2013   2012
 
Revenues:

Advertising

$ 1,080 $ 1,163 $ 2,038 $ 2,204
Circulation and Subscription 661 654 1,340 1,262
Consumer 377 346 688 672
Other   120     158     244     316  
 
Total Revenues 2,238 2,321 4,310 4,454
 
Operating expenses (1,274 ) (1,352 ) (2,569 ) (2,686 )
Selling, general and administrative (637 ) (669 ) (1,273 ) (1,379 )
Depreciation and amortization (138 ) (129 ) (279 ) (254 )
Impairment and restructuring charges (36 ) (62 ) (63 ) (177 )
Equity earnings of affiliates 17 28 30 54
Interest, net 16 18 33 29
Other, net   (231 )   1,252     (672 )   1,255  
(Loss) income before income tax benefit (45 ) 1,407 (483 ) 1,296
Income tax benefit   211     4     687     32  
Net income 166 1,411 204 1,328
Less: Net income attributable to noncontrolling interests   (15 )   (12 )   (26 )   (21 )
Net income attributable to News Corporation stockholders $ 151   $ 1,399   $ 178   $ 1,307  
Less: Adjustments to Net income attributable to
News Corporation stockholders – Redeemable
Preferred Stock Dividends   (1 )   -     (1 )   -  
Net income available to News Corporation stockholders $ 150   $ 1,399   $ 177   $ 1,307  
 
Weighted average shares outstanding:
Basic 579 579 579 579
Diluted 580 579 580 579
 
Net income available to News Corporation stockholders per share
Basic and diluted $ 0.26 $ 2.42 $ 0.31 $ 2.26
 
NEWS CORPORATION
 
CONSOLIDATED BALANCE SHEETS
(in millions)
             

As of December

31, 2013

As of June 30,

2013

ASSETS (unaudited) (audited)
Current assets:
Cash and cash equivalents $ 2,908 $ 2,381
Amounts due from 21st Century Fox - 247
Receivables, net 1,481 1,335
Income taxes receivable 147 29
Other current assets   576   651
Total current assets   5,112   4,643
 
Non-current assets:
Investments 2,431 2,499
Property, plant and equipment, net 2,927 2,992
Intangible assets, net 2,120 2,186
Goodwill 2,728 2,725
Other non-current assets   665   598
Total assets $ 15,983 $ 15,643
 
LIABILITIES AND EQUITY
Current liabilities:
Accounts payable $ 242 $ 242
Accrued expenses 1,115 1,108
Amounts due to 21st Century Fox, net 83 -
Deferred revenue 380 389
Other current liabilities   472   432
Total current liabilities   2,292   2,171
 
Non-current liabilities:
Retirement benefit obligations 284 345
Deferred income taxes 239 152
Other non-current liabilities 277 279
 
Commitments and contingencies
 
Redeemable preferred stock 20 20
 
Equity:
Class A common stock 4 4
Class B common stock 2 2
Additional paid-in capital 12,309 12,281
Retained earnings 177 -
Accumulated other comprehensive income   257   271
Total News Corporation stockholders' equity 12,749 12,558
Noncontrolling interests   122   118
Total equity   12,871   12,676
Total liabilities and equity $ 15,983 $ 15,643
 
NEWS CORPORATION
 
CONSOLIDATED AND COMBINED STATEMENTS OF CASH FLOWS
(Unaudited; in millions)
       
For the six months ended
December 31,
2013     2012
 
Operating activities:
Net Income $ 204 $ 1,328
 
Adjustments to reconcile net income to cash provided by operating activities:
Depreciation and amortization 279 254
Equity earnings of affiliates (30 ) (54 )
Cash distributions received from affiliates 47 118
Foreign tax refund payable to 21st Century Fox 148 -
Foreign tax refund receivable (140 ) -
Impairment charges, net of tax 12 -
Other, net (49 ) (1,255 )
Deferred income taxes and taxes payable 85 (82 )
Change in operating assets and liabilities, net of acquisitions:
Receivables and other assets (244 ) (188 )
Inventories, net 51 11
Accounts payable and other liabilities 65 (129 )
Pension and postretirement benefit plans   (21 ) 2  
Net cash provided by operating activities   407   5  
 
Investing activities:
Capital expenditures (147 ) (141 )
Acquisitions, net of cash acquired (26 ) (2,154 )
Investments in equity affiliates and other (2 ) (3 )
Proceeds from dispositions   100     26  
Net cash used in investing activities   (75 )   (2,272 )
 
Financing activities:
Net transfers from 21st Century Fox and affiliates 217 2,115
Repayment of borrowings acquired in the CMH acquisition - (235 )
Dividends paid (13 ) (11 )
Purchase of subsidiary shares from noncontrolling interest   -     (8 )
Net cash provided by financing activities   204     1,861  
 
Net increase (decrease) in cash and cash equivalents 536 (406 )
Cash and cash equivalents, beginning of period 2,381 1,133
Exchange movement on opening cash balance   (9 )   14  
Cash and cash equivalents, end of period $ 2,908   $ 741  
 

NOTE 1 – ADJUSTED REVENUES, ADJUSTED TOTAL SEGMENT EBITDA AND ADJUSTED SEGMENT EBITDA

The Company uses revenues, Total Segment EBITDA and Segment EBITDA excluding the impact of acquisitions, divestitures, costs associated with the U.K. Newspaper Matters and foreign exchange fluctuations (“Adjusted Revenues, Adjusted Total Segment EBITDA and Adjusted Segment EBITDA”) to evaluate the performance of the Company’s operations exclusive of certain items that impact the comparability of results from period to period. The calculation of Adjusted Revenues, Adjusted Total Segment EBITDA and Adjusted Segment EBITDA may not be comparable to similarly titled measures reported by other companies, since companies and investors may differ as to what type of events warrant adjustment. Adjusted Revenues, Adjusted Total Segment EBITDA and Adjusted Segment EBITDA are not measures of performance under generally accepted accounting principles and should not be construed as substitutes for amounts determined under GAAP as measures of performance.

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