Exhibit 99.1
 | News Corporation |
EARNINGS RELEASE FOR THE QUARTER ENDED DECEMBER 31, 2005
NEWS CORPORATION REPORTS SECOND QUARTER
OPERATING INCOME OF $920 MILLION AS
REVENUES INCREASE TO $6.7 BILLION
INCOME FROM CONTINUING OPERATIONS INCREASES
TO $694 MILLION
QUARTER HIGHLIGHTS
| • | Cable Network Programming operating income up 15% on advertising growth at Fox News Channel and higher affiliate revenues at the Regional Sports Networks. |
| • | Television operating income up 20% on strong revenue growth at STAR and lower promotional costs at the FOX Network due to the earlier launch of its fall lineup versus a year ago. |
| • | Filmed Entertainment delivers operating income of $299 million on continued strength of home entertainment sales of film and television titles. $108 million decrease versus prior year reflects record home entertainment results in second quarter a year ago. |
| • | New subscriber additions at SKY Italia improve operating results by $52 million. At quarter end the subscriber base had expanded to 3.6 million, an increase of 496,000 subscribers in the past 12 months. |
| • | Newspaper operating income declines as $99 million in redundancy costs associated with the printing project and advertising weakness in the U.K. more than offsets the inclusion of Queensland Press’ results in Australia. |
| • | Increased contributions from the In-Store division drives Magazines and Inserts operating income up 4% while an array of bestsellers at HarperCollins raises Book Publishing operating income 24%. |
NEW YORK, NY, February 8, 2006 –News Corporation (NYSE: NWS, NWSA; ASX: NWS, NWSLV) today reported second quarter income from continuing operations of $694 million, ($0.21 per share on a diluted combined basis1), as compared with $386 million ($0.13 per share on a diluted combined basis1) reported in the second quarter a year ago. These results primarily reflect an increase in equity earnings of affiliates and increased Other income from the unrealized change in fair value of certain outstanding exchangeable debt securities partially offset by a decrease in consolidated operating income.
Consolidated operating income for the second quarter of $920 million was down 4% versus the $954 million reported a year ago, primarily as a result of a $99 million redundancy provision recorded this quarter in connection with the U.K. newspaper printing project, as well as a reduction from the record Filmed Entertainment operating income reported in the second quarter a year ago. These items more than offset double-digit improvements from the Television, Cable Network Programming, Direct Broadcast Satellite and Book Publishing segments.
| (1) | See supplemental financial data on page 14 for detail on earnings per share |
| News Corporation EARNINGS RELEASE FOR THE QUARTER ENDED DECEMBER 31, 2005 |
Commenting on the results, Chairman and Chief Executive Officer Rupert Murdoch said:
“Our performance this quarter reflects the sustained momentum we have generated across the majority of our businesses. We translated the desirable audiences we deliver for advertisers into double-digit earnings gains at our Television and Cable Network Programming segments. We drastically lowered SKY Italia’s operating loss, keeping it on track to deliver its first full year of profitability. And, while we faced comparisons to a record quarter year ago at our film studio, we released a number of successful films this quarter each of which should generate strong returns later this fiscal year when distributed in home entertainment.
“We also hit the ground running with our recent new media investments, expanding the number of registered users of MySpace to over 50 million and positioning us to capitalize on the expanding on-line advertising pie as broadband continues to proliferate. Additionally, we are spending considerable time exploring ways to increase the value of our vast content libraries, such as our recently announced deal between FX, the FOX network and DIRECTV for on-demand content. The sustained financial success we have achieved over the last several years provides us the flexibility to invest in these new business opportunities while at the same time delivering continued fiscal year growth to our shareholders.”
Consolidated Operating Income
| 3 Months Ended December 31, | 6 Months Ended December 31, | |||||||||||||||
| 2005 | 2004 | 2005 | 2004 | |||||||||||||
| US Millions | ||||||||||||||||
Filmed Entertainment | $ | 299 | $ | 407 | $ | 667 | $ | 698 | ||||||||
Television | 183 | 153 | 343 | 387 | ||||||||||||
Cable Network Programming | 262 | 227 | 459 | 393 | ||||||||||||
Direct Broadcast Satellite Television | (53 | ) | (105 | ) | (114 | ) | (226 | ) | ||||||||
Magazines and Inserts | 76 | 73 | 152 | 137 | ||||||||||||
Newspapers | 69 | 184 | 194 | 302 | ||||||||||||
Book Publishing | 77 | 62 | 147 | 122 | ||||||||||||
Other | 7 | (47 | ) (a) | (19 | ) | (93 | )(a) | |||||||||
Total Consolidated Operating Income | $ | 920 | $ | 954 | $ | 1,829 | $ | 1,720 | ||||||||
| (a) | The three months and six months ended December 31, 2004 include $36 million and $49 million, respectively, of costs associated with the reincorporation. |
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| News Corporation EARNINGS RELEASE FOR THE QUARTER ENDED DECEMBER 31, 2005 |
REVIEW OF OPERATING RESULTS
FILMED ENTERTAINMENT
The Filmed Entertainment segment reported second quarter operating income of $299 million versus the $407 million reported in the same period a year ago. The year on year decline is primarily due to difficult comparisons with record second quarter results a year ago, led by the worldwide home entertainment performances ofDay After Tomorrow, Garfield,Dodgeball: A True Underdog Story andI, Robot,as well as from the catalog performance ofThe Star Wars Trilogy. The current-year results primarily reflect several successful film and television home entertainment releases, as well as increased revenues from the worldwide theatrical and pay-TV markets.
Second quarter film results were largely driven by the worldwide home entertainment performances ofFantastic Four,Kingdom of Heaven, Star Wars Episode III andMr. & Mrs. Smith, as well as by contributions from various catalog titles includingNapoleon Dynamite andDay After Tomorrow. Additionally, the pay-TV availability ofSideways andI, Robot contributed to the strong quarterly results. The current quarter also included launch costs for several successful theatrical releases includingCheaper By the Dozen2,The Family Stone,The Ringer and Walk the Line, which has grossed over $110 million in domestic box office and won three Golden Globes including Best Picture, Best Actor and Best Actress – Comedy or Musical.
Twentieth Century Fox Television (TCFTV) increased contributions versus the second quarter a year ago, primarily reflecting continued momentum in home entertainment sales, most notably fromFamily Guyand24. Several TCFTV shows garnered Golden Globe nominations including Best Television Series – Musical or Comedy forMy Name is Earland Best Television Series – Drama forPrison Break.
TELEVISION
The Television segment reported second quarter operating income of $183 million, an increase of $30 million, or 20%, versus the same period a year ago, primarily reflecting higher contributions from the FOX Broadcasting Company (FBC) and STAR which were partially offset by a decline at the FOX Television Stations.
At the FOX Broadcasting Company, second quarter operating results improved by $39 million compared to a year ago as entertainment ratings growth and increased pricing drove higher advertising revenues. Additionally, lower promotional costs versus the second quarter a year ago, due to the earlier launch of FBC’s fall line-up, also contributed to the year on year growth. These gains were partially offset by increased programming costs for movies and returning series. Following the end of the quarter, the network further strengthened its schedule with the return ofAmerican Idoland24, both of which premiered to higher ratings than a year ago and are winning their time slots among key demographics.
Fox Television Stations’ (FTS) second quarter operating income declined 3% from the same period a year ago, primarily as a result of higher programming costs from the continued expansion of local newscasts and higher promotion for the November sweeps period. Despite softness in the overall advertising market and lower political spending, revenues for the quarter were in-line with a year ago as FTS generated market share gains with a stronger primetime line-up and continued success in morning newscasts.
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| News Corporation EARNINGS RELEASE FOR THE QUARTER ENDED DECEMBER 31, 2005 |
STAR’s second quarter operating income increased 43% as advertising and subscription revenue growth, mainly from India, drove total revenues up nearly 30%. Advertising gains were led by weekend programming initiatives at STAR Plus and from the successful launch of STAR One, while subscription revenues increased on new channel offerings and higher pricing.
CABLE NETWORK PROGRAMMING
Cable Network Programming reported second quarter operating income of $262 million, an increase of $35 million over last year’s result. The 15% growth primarily reflects advertising strength at the Fox News Channel and affiliate revenue growth at the Regional Sports Networks (RSNs).
The Fox News Channel (FNC) reported operating income growth of 24% compared to the second quarter a year ago primarily from higher advertising on increased pricing and volume. During the quarter viewership at FNC was more than double its nearest competitor in primetime and was over 80% higher on a 24 hour basis. It was also the sixth consecutive quarter FNC has had more total viewers than all other cable news networks combined.
At our other cable channels (including the RSNs, the FX Channel (FX) and SPEED Channel) operating profit increased 13% despite the positive impact in the second quarter a year ago from the NHL lockout. At the RSNs, revenue gains, primarily from increased affiliate rates and additional DBS subscribers, were partially offset by programming costs associated with broadcasting NHL games. Current quarter results also included higher revenues and costs associated with the consolidation of FSN Ohio, FSN Florida and National Sports Partners after acquiring a controlling stake in the fourth quarter of fiscal 2005. At FX, double-digit revenue growth in the quarter was driven by increased affiliate revenues from higher rates and additional subscribers, as well as by increased advertising revenues on ratings growth and higher pricing. These revenue gains were offset primarily by increased programming costs for returning seriesThe ShieldandNip/Tuck, the highest rated series on basic cable among Adults 18-49, as well as by costs for several newly acquired series.
DIRECT BROADCAST SATELLITE TELEVISION
SKY Italia reported a second quarter operating loss of $53 million, an improvement of $52 million versus a loss of $105 million a year ago on local currency revenue growth of 14%. This improvement primarily reflects subscription revenue growth primarily from subscriber additions, with more than 496,000 net new subscribers added over the past 12 months, bringing SKY Italia’s subscriber base to 3.6 million at quarter end. The revenue growth was partially offset by increased programming costs associated with the larger subscriber base as well as higher spending primarily due to the broadcast of additional movie titles and the addition of new entertainment channels on the basic programming tier.
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| News Corporation EARNINGS RELEASE FOR THE QUARTER ENDED DECEMBER 31, 2005 |
MAGAZINES AND INSERTS
The Magazines and Inserts segment reported second quarter operating income of $76 million, an increase of 4% versus the $73 million reported in the quarter a year ago. The growth was driven by higher contributions from the In-Store division due to increased demand for its advertising products, partially offset by continued lower pricing at the Free Standing Inserts division.
NEWSPAPERS
The Newspapers segment reported second quarter operating income of $69 million, a decrease of $115 million versus the same period a year ago. The inclusion of results from the Queensland Press Group, which was acquired in November 2004, was more than offset by redundancy and depreciation costs associated with the development of new printing operations and lower advertising revenues in the UK.
The Australian newspaper group reported an increase in second quarter operating income in local currency terms versus fiscal 2005. The growth was primarily driven by the inclusion of results from the Queensland Press Group and slightly higher circulation revenue, which benefited from increased cover pricing.
The U.K. newspaper group reported an operating income decline in local currency terms in the second quarter as circulation revenue growth was more than offset by lower advertising revenues and by costs associated with the development of new printing operations. During the quarter, these costs primarily included the recording of a $99 million redundancy provision, reflected in Other operating charge, as well as higher depreciation. The circulation revenue gains were the result of increased cover prices across all major titles, as well as from increased circulation atThe Times andThe Sun.
BOOK PUBLISHING
HarperCollins reported record second quarter operating income of $77 million, an increase of $15 million versus the same period a year ago. The 24% year-on-year increase was driven by strong sales ofThe Chronicles of Narnia series by C.S. Lewis, fueled by the worldwide motion picture release ofThe Lion, The Witch and The Wardrobein December. In addition, the General Books Group had continued strong sales in the quarter from such titles asMarley & Me by John Grogan,Freakonomics by Steven D. Levitt and Stephen J. Dubner,State of Fear by Michael Crichton, andYOU: The Owner’s Manual by Dr. Mehmet Oz and Dr. Michael F. Roizen. During the quarter, HarperCollins had 43 books on The New York Times bestseller list, including five books that reached the #1 spot.
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| News Corporation EARNINGS RELEASE FOR THE QUARTER ENDED DECEMBER 31, 2005 |
OTHER ITEMS
On October 3, 2005, the Company announced the sale of its TSL Education LTD business for $395 million. As a result of this transaction, which was completed in October 2005, the Company recognized a gain of $381 million which is included in Gain on disposition of discontinued operations, net of tax.
On June 13, 2005, the Company announced that its Board of Directors approved a stock repurchase program, under which the Company is authorized to acquire up to an aggregate of $3 billion in the Company’s Class A and Class B common stock. The program is expected to be completed within two years, but may be suspended or discontinued at any time. As of February 8, 2006, the Company has purchased more than $1.6 billion of stock under the program.
A dividend of $0.06 per Class A share and a dividend of $0.05 per Class B share has been declared and is payable on April 19, 2006. The record date for determining dividend entitlements is March 15, 2006.
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| News Corporation EARNINGS RELEASE FOR THE QUARTER ENDED DECEMBER 31, 2005 |
REVIEW OF EQUITY EARNINGS OF AFFILIATES’ RESULTS
Second quarter net earnings from affiliates were $160 million versus $48 million in the same period a year ago. The improvement was primarily due to increased contributions from The DIRECTV Group and BSkyB as a result of higher DTH subscribers and increased pricing, partially offset by the unfavorable impact from foreign currency fluctuations at Sky Brasil.
The Company’s share of equity earnings (losses) of affiliates is as follows:
| 3 Months Ended December 31, | 6 Months Ended December 31, | ||||||||||||||||||
| % Owned | 2005 | 2004 | 2005 | 2004 | |||||||||||||||
| US Millions | US Millions | ||||||||||||||||||
BSkyB | 37.6 | % (a) | $ | 86 | $ | 64 | $ | 186 | $ | 142 | |||||||||
The DIRECTV Group | 33.8 | % | 19 | (77 | ) | 28 | (177 | ) | |||||||||||
Sky Brasil | 49.7 | % | (10 | ) | 12 | 4 | 25 | ||||||||||||
FOXTEL | 25.0 | % | (1 | ) | (7 | ) | (3 | ) | (14 | ) | |||||||||
Other affiliates | Various | (b) | 66 | 56 | 131 | 87 | |||||||||||||
Total affiliated entities’ earnings | $ | 160 | $ | 48 | $ | 346 | $ | 63 | |||||||||||
Further details on the certain affiliated entities follow.
| (a) | Due to BSkyB’s stock repurchase program, News’ ownership in BSkyB increased from 37.2% as of September 30, 2005 to 37.6% as of December 31, 2005. |
| (b) | Primarily comprising Gemstar-TV Guide International, Fox Cable Networks associates, Sky Network Television Limited, Innova and Queensland Press (through November 12, 2004). |
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| News Corporation EARNINGS RELEASE FOR THE QUARTER ENDED DECEMBER 31, 2005 |
BSkyB (in STG and IFRS)(1)
| 3 Months Ended December 31, | 6 Months Ended December 31, | |||||||||||
| 2005 | 2004 | 2005 | 2004 | |||||||||
| Millions (except subscribers) | Millions (except subscribers) | |||||||||||
Revenues | £ | 1,113 | £ | 1,009 | £ | 2,136 | £ | 1,957 | ||||
Operating profit | 199 | 167 | 414 | 356 | ||||||||
Net income | £ | 134 | £ | 123 | £ | 274 | £ | 245 | ||||
News’ reportable 37.6% share (in US$ and US GAAP) | $ | 86 | $ | 64 | $ | 186 | $ | 142 | ||||
Ending Subscribers | 11,948,000 | 11,485,000 | ||||||||||
DTH Subscribers | 8,059,000 | 7,609,000 | ||||||||||
The DIRECTV Group, Inc.(1)
| 3 Months Ended December 31, | 6 Months Ended December 31, | |||||||||||||
| 2005 | 2004 | 2005 | 2004 | |||||||||||
| Millions (except subscribers) | Millions (except subscribers) | |||||||||||||
Revenues | $ | 3,596 | $ | 3,362 | $ | 6,829 | $ | 6,224 | ||||||
Operating profit (loss) | 219 | (445 | ) | 375 | (1,995 | ) | ||||||||
Net income (loss) | $ | 121 | $ | (288 | ) | $ | 216 | $ | (1,297 | ) | ||||
News’ reportable 33.8% share | $ | 19 | $ | (77 | ) | $ | 28 | $ | (177 | ) | ||||
Ending Subscribers | 15,133,000 | 13,940,000 | ||||||||||||
| 1 | Please refer to respective companies’ earnings releases for detailed information. |
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| News Corporation EARNINGS RELEASE FOR THE QUARTER ENDED DECEMBER 31, 2005 |
Foreign Exchange Rates
Average foreign exchange rates used in the year-to-date results are as follows:
| 6 Months Ended December 31, | ||||
| 2005 | 2004 | |||
Australian Dollar/U.S. Dollar | 0.75 | 0.73 | ||
U.K. Pounds Sterling/U.S. Dollar | 1.77 | 1.84 | ||
Euro/U.S. Dollar | 1.20 | 1.25 | ||
To receive a copy of this press release through the Internet, access News Corp’s corporate Web site located at http://www.newscorp.com
Audio from News Corp’s conference call with analysts on the second quarter results can be heard live on the Internet at 4:45 PM. Eastern Standard Time today. To listen to the call, visit http://www.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.
| CONTACTS: | ||
| Reed Nolte, Investor Relations | Andrew Butcher, Press Inquiries | |
| 212-852-7092 | 212-852-7070 |
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| News Corporation EARNINGS RELEASE FOR THE QUARTER ENDED DECEMBER 31, 2005 |
CONSOLIDATED STATEMENTS OF OPERATIONS
| 3 Months Ended December 31, | 6 Months Ended December 31, | |||||||||||||||
| 2005 | 2004 | 2005 | 2004 | |||||||||||||
| US Millions (except per share amounts) | ||||||||||||||||
Revenues | $ | 6,665 | $ | 6,562 | $ | 12,347 | $ | 11,708 | ||||||||
Expenses: | ||||||||||||||||
Operating expenses | 4,471 | 4,485 | 8,110 | 7,865 | ||||||||||||
Selling, general, and administrative | 978 | 938 | 1,937 | 1,797 | ||||||||||||
Depreciation and amortization | 197 | 149 | 372 | 277 | ||||||||||||
Other operating charge | 99 | 36 | 99 | 49 | ||||||||||||
Operating income | 920 | 954 | 1,829 | 1,720 | ||||||||||||
Other income (expense): | ||||||||||||||||
Interest expense, net | (141 | ) | (137 | ) | (269 | ) | (262 | ) | ||||||||
Equity earnings of affiliates | 160 | 48 | 346 | 63 | ||||||||||||
Other, net | 62 | (114 | ) | 73 | 77 | |||||||||||
Income from continuing operations before income tax expense and minority interest in subsidiaries | 1,001 | 751 | 1,979 | 1,598 | ||||||||||||
Income tax expense | (292 | ) | (276 | ) | (674 | ) | (456 | ) | ||||||||
Minority interest in subsidiaries, net of tax | (15 | ) | (89 | ) | (31 | ) | (131 | ) | ||||||||
Income from continuing operations | 694 | 386 | 1,274 | 1,011 | ||||||||||||
Gain on disposition of discontinued operations, net of tax | 381 | — | 381 | — | ||||||||||||
Income before cumulative effect of accounting change | 1,075 | 386 | 1,655 | 1,011 | ||||||||||||
Cumulative effect of accounting change, net of tax | — | — | (1,013 | ) | — | |||||||||||
Net income | $ | 1,075 | $ | 386 | $ | 642 | $ | 1,011 | ||||||||
Basic earnings per share: | ||||||||||||||||
Income from continuing operations | ||||||||||||||||
Class A | $ | 0.23 | $ | 0.14 | $ | 0.41 | $ | 0.37 | ||||||||
Class B | $ | 0.19 | $ | 0.12 | $ | 0.35 | $ | 0.31 | ||||||||
Net income | ||||||||||||||||
Class A | $ | 0.35 | $ | 0.14 | $ | 0.21 | $ | 0.37 | ||||||||
Class B | $ | 0.29 | $ | 0.12 | $ | 0.17 | $ | 0.31 | ||||||||
Diluted earnings per share: | ||||||||||||||||
Income from continuing operations | ||||||||||||||||
Class A | $ | 0.22 | $ | 0.14 | $ | 0.41 | $ | 0.36 | ||||||||
Class B | $ | 0.19 | $ | 0.11 | $ | 0.34 | $ | 0.30 | ||||||||
Net income | ||||||||||||||||
Class A | $ | 0.35 | $ | 0.14 | $ | 0.21 | $ | 0.36 | ||||||||
Class B | $ | 0.29 | $ | 0.11 | $ | 0.17 | $ | 0.30 | ||||||||
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| News Corporation EARNINGS RELEASE FOR THE QUARTER ENDED DECEMBER 31, 2005 |
CONSOLIDATED BALANCE SHEETS
| December 31, 2005 | June 30, 2005 | |||||||
| US Millions | ||||||||
Assets | ||||||||
Current assets: | ||||||||
Cash and cash equivalents | $ | 5,243 | $ | 6,470 | ||||
Receivables, net | 5,433 | 4,353 | ||||||
Inventories, net | 1,917 | 1,516 | ||||||
Other | 385 | 440 | ||||||
Total current assets | 12,978 | 12,779 | ||||||
Non-current assets: | ||||||||
Receivables | 708 | 673 | ||||||
Investments | 10,414 | 10,268 | ||||||
Inventories, net | 2,598 | 2,366 | ||||||
Property, plant, and equipment, net | 4,454 | 4,346 | ||||||
Intangible assets | 11,189 | 12,517 | ||||||
Goodwill | 12,167 | 10,944 | ||||||
Other non-current assets | 933 | 799 | ||||||
Total non-current assets | 42,463 | 41,913 | ||||||
Total assets | $ | 55,441 | $ | 54,692 | ||||
Liabilities and Stockholders’ Equity | ||||||||
Current liabilities: | ||||||||
Borrowings | $ | 944 | $ | 912 | ||||
Accounts payable, accrued expenses and other current liabilities | 3,956 | 3,564 | ||||||
Participations, residuals and royalties payable | 1,277 | 1,051 | ||||||
Program rights payable | 745 | 696 | ||||||
Deferred revenue | 510 | 426 | ||||||
Total current liabilities | 7,432 | 6,649 | ||||||
Non-current liabilities: | ||||||||
Borrowings | 11,260 | 10,087 | ||||||
Other liabilities | 3,492 | 3,543 | ||||||
Deferred income taxes | 4,434 | 4,817 | ||||||
Minority interest in subsidiaries | 224 | 219 | ||||||
Commitments and contingencies | ||||||||
Stockholders’ Equity: | ||||||||
Class A common stock, $0.01 par value | 22 | 22 | ||||||
Class B common stock, $0.01 par value | 10 | 10 | ||||||
Additional paid-in capital | 28,858 | 30,044 | ||||||
Accumulated deficit and accumulated other comprehensive loss | (291 | ) | (699 | ) | ||||
Total stockholders’ equity | 28,599 | 29,377 | ||||||
Total liabilities and stockholders’ equity | $ | 55,441 | $ | 54,692 | ||||
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| News Corporation EARNINGS RELEASE FOR THE QUARTER ENDED DECEMBER 31, 2005 |
CONSOLIDATED STATEMENTS OF CASH FLOWS
| 6 Months Ended December 31, | ||||||||
| 2005 | 2004 | |||||||
| US Millions | ||||||||
Operating activities: | ||||||||
Net income | $ | 642 | $ | 1,011 | ||||
Gain on disposition of discontinued operations | (381 | ) | — | |||||
Cumulative effect of accounting change, net of tax | 1,013 | — | ||||||
Income from continuing operations | $ | 1,274 | $ | 1,011 | ||||
Adjustments to reconcile income from continuing operations to cash provided by operating activities: | ||||||||
Depreciation and amortization | 372 | 277 | ||||||
Amortization of cable distribution investments | 53 | 58 | ||||||
Equity earnings of affiliates | (346 | ) | (63 | ) | ||||
Cash distributions received from investees | 94 | 52 | ||||||
Other, net | (73 | ) | (77 | ) | ||||
Minority interest in subsidiaries, net of tax | 31 | 131 | ||||||
Change in operating assets and liabilities, net of acquisitions: | ||||||||
Receivables and other assets | (1,280 | ) | (1,026 | ) | ||||
Inventories, net | (833 | ) | (276 | ) | ||||
Accounts payable and other liabilities | 1,169 | 893 | ||||||
Net cash provided by operating activities | 461 | 980 | ||||||
Investing activities: | ||||||||
Property, plant, and equipment | (412 | ) | (425 | ) | ||||
Acquisitions, net of cash acquired | (1,576 | ) | (114 | ) | ||||
Investments in associated entities | (29 | ) | (61 | ) | ||||
Other investments | (40 | ) | (30 | ) | ||||
Proceeds from sale of non-current assets | 115 | 544 | ||||||
Proceeds from disposition of discontinued operations | 395 | — | ||||||
Net cash used in investing activities | (1,547 | ) | (86 | ) | ||||
Financing activities: | ||||||||
Issuance of debt | 1,149 | 1,755 | ||||||
Repayment of borrowings | (7 | ) | (1,829 | ) | ||||
Cash on deposit | — | 275 | ||||||
Issuance of shares | 73 | 37 | ||||||
Repurchase of shares | (1,067 | ) | — | |||||
Dividends paid | (241 | ) | (121 | ) | ||||
Net cash (used in) provided by financing activities | (93 | ) | 117 | |||||
Net increase (decrease) in cash and cash equivalents | (1,179 | ) | 1,011 | |||||
Cash and cash equivalents, beginning of period | 6,470 | 4,051 | ||||||
Exchange movement on opening cash balance | (48 | ) | 133 | |||||
Cash and cash equivalents, end of period | $ | 5,243 | $ | 5,195 | ||||
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| News Corporation EARNINGS RELEASE FOR THE QUARTER ENDED DECEMBER 31, 2005 |
SEGMENT INFORMATION
| 3 Months Ended December 31, | 6 Months Ended December 31, | |||||||||||||||
| 2005 | 2004 | 2005 | 2004 | |||||||||||||
| US Millions | US Millions | |||||||||||||||
Revenues | ||||||||||||||||
Filmed Entertainment | $ | 1,607 | $ | 1,872 | $ | 3,026 | $ | 3,249 | ||||||||
Television | 1,596 | 1,564 | 2,644 | 2,568 | ||||||||||||
Cable Network Programming | 810 | 624 | 1,585 | 1,224 | ||||||||||||
Direct Broadcast Satellite Television | 620 | 581 | 1,118 | 996 | ||||||||||||
Magazines and Inserts | 265 | 259 | 532 | 491 | ||||||||||||
Newspapers | 1,010 | 1,010 | 2,022 | 1,875 | ||||||||||||
Book Publishing | 390 | 377 | 781 | 741 | ||||||||||||
Other | 367 | 275 | 639 | 564 | ||||||||||||
| $ | 6,665 | $ | 6,562 | $ | 12,347 | $ | 11,708 | |||||||||
Operating Income | ||||||||||||||||
Filmed Entertainment | $ | 299 | $ | 407 | $ | 667 | $ | 698 | ||||||||
Television | 183 | 153 | 343 | 387 | ||||||||||||
Cable Network Programming | 262 | 227 | 459 | 393 | ||||||||||||
Direct Broadcast Satellite Television | (53 | ) | (105 | ) | (114 | ) | (226 | ) | ||||||||
Magazines and Inserts | 76 | 73 | 152 | 137 | ||||||||||||
Newspapers | 69 | 184 | 194 | 302 | ||||||||||||
Book Publishing | 77 | 62 | 147 | 122 | ||||||||||||
Other | 7 | (47 | ) | (19 | ) | (93 | ) | |||||||||
| $ | 920 | $ | 954 | $ | 1,829 | $ | 1,720 | |||||||||
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| News Corporation EARNINGS RELEASE FOR THE QUARTER ENDED DECEMBER 31, 2005 |
NOTE 1 - SUPPLEMENTAL EARNINGS PER SHARE DATA
Earnings per share is presented on a combined basis as the Company will not be required to present the two class method beginning in Fiscal 2008. Currently under US GAAP, earnings per share is computed individually for the Class A and Class B shares. Class A non-voting shares carry rights to a greater dividend than Class B voting shares through fiscal 2007. As such, net income available to the Company’s common stockholders is allocated between our two classes of common stock. The allocation between classes was based upon the two-class method. Earnings per share by class and by total weighted average shares outstanding (Class A and Class B combined) is as follows:
| 3 Months Ended December 31, | 6 Months Ended December 31, | ||||||||||||
| 2005 | 2004 | 2005 | 2004 | ||||||||||
Basic earnings per share: | |||||||||||||
Income from continuing operations | |||||||||||||
Class A | $ | 0.23 | $ | 0.14 | $ | 0.41 | $ | 0.37 | |||||
Class B | $ | 0.19 | $ | 0.12 | $ | 0.35 | $ | 0.31 | |||||
Total | $ | 0.21 | $ | 0.13 | $ | 0.39 | $ | 0.35 | |||||
Gain on disposition of discontinued operations, net of tax | |||||||||||||
Class A | $ | 0.12 | $ | — | $ | 0.12 | $ | — | |||||
Class B | $ | 0.10 | $ | — | $ | 0.10 | $ | — | |||||
Total | $ | 0.12 | $ | — | $ | 0.12 | $ | — | |||||
Cumulative effect of accounting change, net of tax | |||||||||||||
Class A | $ | — | $ | — | ($ | 0.33 | ) | $ | — | ||||
Class B | $ | — | $ | — | ($ | 0.27 | ) | $ | — | ||||
Total | $ | — | $ | — | ($ | 0.31 | ) | $ | — | ||||
Net income | |||||||||||||
Class A | $ | 0.35 | $ | 0.14 | $ | 0.21 | $ | 0.37 | |||||
Class B | $ | 0.29 | $ | 0.12 | $ | 0.17 | $ | 0.31 | |||||
Total | $ | 0.33 | $ | 0.13 | $ | 0.20 | $ | 0.35 | |||||
Diluted earnings per share: | |||||||||||||
Income from continuing operations | |||||||||||||
Class A | $ | 0.22 | $ | 0.14 | $ | 0.41 | $ | 0.36 | |||||
Class B | $ | 0.19 | $ | 0.11 | $ | 0.34 | $ | 0.30 | |||||
Total | $ | 0.21 | $ | 0.13 | $ | 0.39 | $ | 0.34 | |||||
Gain on disposition of discontinued operations, net of tax | |||||||||||||
Class A | $ | 0.12 | $ | — | $ | 0.12 | $ | — | |||||
Class B | $ | 0.10 | $ | — | $ | 0.10 | $ | — | |||||
Total | $ | 0.12 | $ | — | $ | 0.12 | $ | — | |||||
Cumulative effect of accounting change, net of tax | |||||||||||||
Class A | $ | — | $ | — | ($ | 0.32 | ) | $ | — | ||||
Class B | $ | — | $ | — | ($ | 0.27 | ) | $ | — | ||||
Total | $ | — | $ | — | ($ | 0.31 | ) | $ | — | ||||
Net income | |||||||||||||
Class A | $ | 0.35 | $ | 0.14 | $ | 0.21 | $ | 0.36 | |||||
Class B | $ | 0.29 | $ | 0.11 | $ | 0.17 | $ | 0.30 | |||||
Total | $ | 0.33 | $ | 0.13 | $ | 0.20 | $ | 0.34 | |||||
Weighted average shares outstanding (diluted), in millions: | |||||||||||||
Class A | 2,255 | 1,976 | 2,277 | 1,974 | |||||||||
Class B | 1,025 | 1,016 | 1,027 | 998 | |||||||||
Total | 3,280 | 2,992 | 3,304 | 2,972 | |||||||||
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| News Corporation EARNINGS RELEASE FOR THE QUARTER ENDED DECEMBER 31, 2005 |
NOTE 2 - OPERATING INCOME BEFORE DEPRECIATION AND AMORTIZATION
Operating income before depreciation and amortization, defined as operating income plus depreciation and amortization and the amortization of cable distribution investments, eliminates the variable effect across all business segments of non-cash depreciation and amortization. Since operating income before depreciation and amortization is a non-GAAP measure it should be considered in addition to, not as a substitute for, operating income, net income, cash flow and other measures of financial performance reported in accordance with GAAP. Operating income before depreciation and amortization does not reflect cash available to fund requirements, and the items excluded from operating income before depreciation and amortization, such as depreciation and amortization, are significant components in assessing the Company’s financial performance. Management believes that operating income before depreciation and amortization is an appropriate measure for evaluating the operating performance of the Company’s business segments. Operating income before depreciation and amortization, which is the information reported to and used by the Company’s chief decision maker for the purpose of making decisions about the allocation of resources to segments and assessing their performance, provides management, investors and equity analysts a measure to analyze operating performance of each business segment and enterprise value against historical and competitors’ data.
The following table reconciles operating income before depreciation and amortization to the presentation of operating income.
| 3 Months Ended December 31, | 6 Months Ended December 31, | |||||||||||
| 2005 | 2004 | 2005 | 2004 | |||||||||
| US $ Millions | US $ Millions | |||||||||||
Operating income | $ | 920 | $ | 954 | $ | 1,829 | $ | 1,720 | ||||
Depreciation and amortization | 197 | 149 | 372 | 277 | ||||||||
Amortization of cable distribution investments | 26 | 28 | 53 | 58 | ||||||||
Operating income before depreciation and amortization | $ | 1,143 | $ | 1,131 | $ | 2,254 | $ | 2,055 | ||||
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| News Corporation EARNINGS RELEASE FOR THE QUARTER ENDED DECEMBER 31, 2005 |
For the Three Months Ended December 31, 2005 (US Millions) | ||||||||||||||
| Operating income (loss) | Depreciation and amortization | Amortization of cable distribution | Operating income (loss) before depreciation and amortization | |||||||||||
Filmed Entertainment | $ | 299 | $ | 27 | $ | — | $ | 326 | ||||||
Television | 183 | 23 | — | 206 | ||||||||||
Cable Network Programming | 262 | 13 | 26 | 301 | ||||||||||
Direct Broadcast Satellite Television | (53 | ) | 43 | — | (10 | ) | ||||||||
Magazines and Inserts | 76 | 1 | — | 77 | ||||||||||
Newspapers | 69 | 65 | — | 134 | ||||||||||
Book Publishing | 77 | 1 | — | 78 | ||||||||||
Other | 7 | 24 | — | 31 | ||||||||||
Consolidated Total | $ | 920 | $ | 197 | $ | 26 | $ | 1,143 | ||||||
For the Three Months Ended December 31, 2004 (US Millions) | ||||||||||||||
| Operating income (loss) | Depreciation and amortization | Amortization of cable distribution investments | Operating income (loss) before depreciation and | |||||||||||
Filmed Entertainment | $ | 407 | $ | 13 | $ | — | $ | 420 | ||||||
Television | 153 | 21 | — | 174 | ||||||||||
Cable Network Programming | 227 | 10 | 28 | 265 | ||||||||||
Direct Broadcast Satellite Television | (105 | ) | 40 | — | (65 | ) | ||||||||
Magazines and Inserts | 73 | 1 | — | 74 | ||||||||||
Newspapers | 184 | 46 | — | 230 | ||||||||||
Book Publishing | 62 | 2 | — | 64 | ||||||||||
Other | (47 | ) | 16 | — | (31 | ) | ||||||||
Consolidated Total | $ | 954 | $ | 149 | $ | 28 | $ | 1,131 | ||||||
Page 16
| News Corporation EARNINGS RELEASE FOR THE QUARTER ENDED DECEMBER 31, 2005 |
For the Six Months Ended December 31, 2005 (US Millions) | ||||||||||||||
| Operating income (loss) | Depreciation and amortization | Amortization of cable distribution investments | Operating income (loss) before depreciation and amortization | |||||||||||
Filmed Entertainment | $ | 667 | $ | 46 | $ | — | $ | 713 | ||||||
Television | 343 | 42 | — | 385 | ||||||||||
Cable Network Programming | 459 | 25 | 53 | 537 | ||||||||||
Direct Broadcast Satellite Television | (114 | ) | 84 | — | (30 | ) | ||||||||
Magazines and Inserts | 152 | 3 | — | 155 | ||||||||||
Newspapers | 194 | 131 | — | 325 | ||||||||||
Book Publishing | 147 | 3 | — | 150 | ||||||||||
Other | (19 | ) | 38 | — | 19 | |||||||||
Consolidated Total | $ | 1,829 | $ | 372 | $ | 53 | $ | 2,254 | ||||||
For the Six Months Ended December 31, 2004 (US Millions) | ||||||||||||||
| Operating income (loss) | Depreciation and amortization | Amortization of cable distribution investments | Operating income (loss) before depreciation and amortization | |||||||||||
Filmed Entertainment | $ | 698 | $ | 25 | $ | — | $ | 723 | ||||||
Television | 387 | 41 | — | 428 | ||||||||||
Cable Network Programming | 393 | 20 | 58 | 471 | ||||||||||
Direct Broadcast Satellite Television | (226 | ) | 72 | — | (154 | ) | ||||||||
Magazines and Inserts | 137 | 3 | — | 140 | ||||||||||
Newspapers | 302 | 81 | — | 383 | ||||||||||
Book Publishing | 122 | 3 | — | 125 | ||||||||||
Other | (93 | ) | 32 | — | (61 | ) | ||||||||
Consolidated Total | $ | 1,720 | $ | 277 | $ | 58 | $ | 2,055 | ||||||
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