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Press Release: News Corporation Reports Second -5-

· 02/04/2021 16:40
For the six months ended December 31, ------------------------------------------ 2020 2019 Change % Change ----- ------------ ----------- -------- (in millions) Net income (loss) $308 $ (108) $ 416 ** Add: Income tax expense 110 31 79 ** Other, net (71) (6) (65) ** Interest expense, net 20 4 16 ** Equity losses of affiliates 4 5 (1) (20)% Impairment and restructuring charges 63 326 (263) (81)% Depreciation and amortization 331 324 7 2% ---- -------- ------- -------- Total Segment EBITDA $765 $ 576 $ 189 33% === ==== === ========For the three months ended December 31, -------------------------------------- 2020 2019 Change % Change ----- -------- ----------- -------- (in millions) Net income $261 $103 $ 158 ** Add: Income tax expense 85 52 33 63% Other, net (54) (2) (52) ** Interest expense, net 12 8 4 50% Equity losses of affiliates 3 3 -- --% Impairment and restructuring charges 23 29 (6) (21)% Depreciation and amortization 167 162 5 3% ---- ---- ------- -------- Total Segment EBITDA $497 $355 $ 142 40% === === === ========Equity losses of affiliates 4 5 Cash distributions received from affiliates 7 5 Impairment charges -- 292 Other, net (71) (6) Deferred income taxes and taxes payable 21 (35) Change in operating assets and liabilities, net of acquisitions: Receivables and other assets (172) (1,661) Inventories, net 27 3 Accounts payable and other liabilities (36) 1,287 ------------- ------------ Net cash provided by operating activities 483 192 ------------- ------------ Investing activities: Capital expenditures (173) (237) Acquisitions, net of cash acquired (90) (2) Investments in equity affiliates and other (11) (8) Proceeds from property, plant and equipment and other asset dispositions 3 10 Other, net (5) 3 ------------- ------------ Net cash used in investing activities (276) (234) ------------- ------------ Financing activities: Borrowings 146 917 Repayment of borrowings (248) (1,161) Dividends paid (80) (81) Other, net (37) (3) ------------- ------------ Net cash used in financing activities (219) (328) ------------- ------------ Net change in cash and cash equivalents (12) (370) Cash and cash equivalents, beginning of period 1,517 1,643 Exchange movement on opening cash balance 57 (1) ------------- ------------ Cash and cash equivalents, end of period $ 1,562 $ 1,272 ========= ========

NOTE 1 -- TOTAL SEGMENT EBITDA

Segment EBITDA is defined as revenues less operating expenses and selling, general and administrative expenses. Segment EBITDA does not include: depreciation and amortization, impairment and restructuring charges, equity losses of affiliates, interest (expense) income, net, other, net and income tax (expense) benefit. Management believes that Segment EBITDA is an appropriate measure for evaluating the operating performance of the Company's business segments because it is the primary measure used by the Company's chief operating decision maker to evaluate the performance of and allocate resources within the Company's businesses. Segment EBITDA provides management, investors and equity analysts with a measure to analyze the operating performance of each of the Company's business segments and its enterprise value against historical data and competitors' data, although historical results may not be indicative of future results (as operating performance is highly contingent on many factors, including customer tastes and preferences).

Total Segment EBITDA is a non-GAAP measure and should be considered in addition to, not as a substitute for, net income (loss), cash flow and other measures of financial performance reported in accordance with GAAP. In addition, this measure does not reflect cash available to fund requirements and excludes items, such as depreciation and amortization and impairment and restructuring charges, which are significant components in assessing the Company's financial performance. The Company believes that the presentation of Total Segment EBITDA provides useful information regarding the Company's operations and other factors that affect the Company's reported results. Specifically, the Company believes that by excluding certain one-time or non-cash items such as impairment and restructuring charges and depreciation and amortization, as well as potential distortions between periods caused by factors such as financing and capital structures and changes in tax positions or regimes, the Company provides users of its consolidated financial statements with insight into both its core operations as well as the factors that affect reported results between periods but which the Company believes are not representative of its core business. As a result, users of the Company's consolidated financial statements are better able to evaluate changes in the core operating results of the Company across different periods. The following tables reconcile net income (loss) to Total Segment EBITDA for the three and six months ended December 31, 2020 and 2019:

** - Not meaningful

** - Not meaningful

NOTE 2 -- 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, fees and costs, net of indemnification, related to the claims and investigations arising out of certain conduct at The News of the World (the "U.K. Newspaper Matters") and foreign currency fluctuations ("Adjusted Revenues," "Adjusted Total Segment EBITDA" and "Adjusted Segment EBITDA," respectively) to evaluate the performance of the Company's core business operations exclusive of certain items that impact the comparability of results from period to period such as the unpredictability and volatility of currency fluctuations. The Company calculates the impact of foreign currency fluctuations for businesses reporting in currencies other than the U.S. dollar by multiplying the results for each quarter in the current period by the difference between the average exchange rate for that quarter and the average exchange rate in effect during the corresponding quarter of the prior year and totaling the impact for all quarters in the current 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. However, management uses these measures in comparing the Company's historical performance and believes that they provide meaningful and comparable information to investors to assist in their analysis of our performance relative to prior periods and our competitors.

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February 04, 2021 16:40 ET (21:40 GMT)