Twenty-First Century Fox 2005 Annual Report Download - page 55

NEWS CORPORATION
growing Australian economy. The Australian newspapers’ Operating income was 40% higher in fiscal 2004 as compared to fiscal 2003. This
increase was due to the revenue increases noted above. In fiscal 2004, the weakening of the U.S. dollar against the Australian dollar resulted in
24% and 25% of the increases to revenue and operating income noted above, respectively.
Book Publishing (6% and 7% of the Company’s consolidated revenues in fiscal years 2004 and 2003, respectively)
HarperCollins recorded revenues of $1,276 million, a $114 million or 10% increase from fiscal 2003 revenues of $1,162 million. Increased
revenues are primarily attributable to strong performances at the Zondervan, Canadian and the Australian / New Zealand divisions. In fiscal year
2004, HarperCollins had 97 titles on the New York Times Bestseller List, with 9 titles reaching the number one position compared to 111 titles
on the New York Times Bestseller List in fiscal 2003. Notable releases and strong titles in fiscal 2004 included The Purpose Driven Life by Rick
Warren, The Proper Care and Feeding of Husbands by Laura Schlessinger, Good to Great by Jim Collins, Deliver Us From Evil by Sean
Hannity, One Hundred Years Of Solitude by Gabriel Garcia Marquez, Dr. Atkins New Diet Revolution by Robert Atkins, I Already Know I Love
You
by Billy Crystal and My Side by David Beckham. In addition, the 10th book in the successful Lemony Snicket Childrens series, The Slippery
Slope
, achieved bestseller status after its release. Fiscal 2004 Operating income was $157 million, an increase of 20% due to the revenue
increases noted above.
Other (4% and 6% of the Company’s consolidated revenues in fiscal years 2004 and 2003, respectively)
For the year ended June 30, 2004, Other revenues decreased $129 million to $834 million from $963 million in fiscal 2003. This decrease is
primarily due to the revenue generated from the broadcast of the Cricket World Cup in fiscal 2003 with no comparable broadcast revenue in
fiscal 2004. Other Operating loss decreased to $128 million in fiscal 2004 from $148 million in fiscal 2003. This decrease resulted primarily from
the revenue decreases noted above coupled with a decrease in expenses. In fiscal 2003, expenses were higher due to the expenses associated
with the Cricket World Cup played.
Liquidity and Capital Resources
Current Financial Condition
The Company’s principal source of liquidity is internally generated funds; however, the Company has access to the worldwide capital markets, a
$1.75 billion Revolving Credit Facility and various film financing alternatives to supplement its cash flows. The availability under the Revolving
Credit Facility as of June 30, 2005 was reduced by letters of credit issued which totaled $168 million. Also as of June 30, 2005, the Company
had consolidated cash and cash equivalents of approximately $6.5 billion. The Company believes that cash flows from operations will be
adequate for the Company to conduct its operations. The Company’s internally generated funds are highly dependent upon the state of the
advertising market and public acceptance of film and television products. Any significant decline in the advertising market or the performance of
its films could adversely impact its cash flows from operations which could require the Company to seek other sources of funds including
proceeds from the sale of certain assets or other alternative sources.
The principal uses of cash that affect the Company’s liquidity position include the following: investments in the production and distribution of
new feature films and television programs; the acquisition of and payments under programming rights for entertainment and sports programming;
paper purchases; operational expenditures; capital expenditures; interest expense; income tax payments; investments in associated entities;
dividends; acquisitions and stock repurchases.
Sources and Uses of Cash
Net cash provided by operating activities for the fiscal years ended June 30, 2005 and 2004 is as follows (in millions):
Year Ended June 30, 2005 2004
Net cash provided by operating activities $3,371 $2,395
The increase in net cash provided by operating activities reflects higher operating results and resulting cash collections primarily from
increased sale of home entertainment product and lower cash spent on the production of feature films at the Filmed Entertainment segment
during the year ended June 30, 2005. These increases were offset by higher sports rights and film participation payments and higher interest due
to an increase in total borrowings. The higher sports rights payments reflects contractually scheduled increases on our national and international
sports contracts as well as the renewal of several sports teams’ local rights agreements.
Net cash used in investing activities for the fiscal year ended June 30, 2005 and 2004 is as follows (in millions):
Year Ended June 30, 2005 2004
Cash flows (used in) provided by investing activities:
Purchases of property, plant and equipment $(901) $ (361)
Acquisitions, net of cash acquired (69) (202)
Investments in associated entities, net (106) (3,237)
Proceeds from sale of investments, non-current assets and business disposals 800 869
Other (27) (91)
Net cash used in investing activities $(303) $(3,022)
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