Document and Entity Information
Document and Entity Information - shares | 9 Months Ended | |
Jun. 30, 2015 | Aug. 06, 2015 | |
Document And Entity Information [Abstract] | ||
Document Type | 10-Q | |
Amendment Flag | false | |
Document Period End Date | Jun. 30, 2015 | |
Document Fiscal Year Focus | 2,015 | |
Document Fiscal Period Focus | Q3 | |
Trading Symbol | wmg | |
Entity Registrant Name | Warner Music Group Corp. | |
Entity Central Index Key | 1,319,161 | |
Current Fiscal Year End Date | --09-30 | |
Entity Filer Category | Non-accelerated Filer | |
Entity Common Stock, Shares Outstanding | 1,055 |
Consolidated Balance Sheets (Un
Consolidated Balance Sheets (Unaudited) - USD ($) $ in Millions | Jun. 30, 2015 | Sep. 30, 2014 |
Current assets: | ||
Cash and equivalents | $ 168 | $ 157 |
Accounts receivable, net of allowances of $59 million and $65 million | 343 | 383 |
Inventories | 39 | 39 |
Royalty advances expected to be recouped within one year | 119 | 102 |
Deferred tax assets | 46 | 46 |
Prepaid and other current assets | 58 | 55 |
Total current assets | 773 | 782 |
Royalty advances expected to be recouped after one year | 219 | 190 |
Property, plant and equipment, net | 227 | 227 |
Goodwill | 1,633 | 1,661 |
Intangible assets subject to amortization, net | 2,597 | 2,884 |
Intangible assets not subject to amortization | 120 | 120 |
Other assets | 95 | 90 |
Total assets | 5,664 | 5,954 |
Current liabilities: | ||
Accounts payable | 151 | 215 |
Accrued royalties | 1,111 | 1,132 |
Accrued liabilities | 235 | 243 |
Accrued interest | 48 | 60 |
Deferred revenue | 247 | 219 |
Current portion of long-term debt | 13 | 13 |
Other current liabilities | 19 | 3 |
Total current liabilities | 1,824 | 1,885 |
Long-term debt | 2,983 | 3,017 |
Deferred tax liabilities, net | 345 | 383 |
Other noncurrent liabilities | 239 | 279 |
Total liabilities | 5,391 | 5,564 |
Equity: | ||
Common stock ($0.001 par value; 10,000 shares authorized; 1,055 shares issued and outstanding) | 0 | 0 |
Additional paid-in capital | 1,128 | 1,128 |
Accumulated deficit | (717) | (649) |
Accumulated other comprehensive loss, net | (157) | (108) |
Total Warner Music Group Corp. equity | 254 | 371 |
Noncontrolling interest | 19 | 19 |
Total equity | 273 | 390 |
Total liabilities and equity | $ 5,664 | $ 5,954 |
Consolidated Balance Sheets (U3
Consolidated Balance Sheets (Unaudited) (Parenthetical) - USD ($) $ in Millions | Jun. 30, 2015 | Sep. 30, 2014 |
Statement Of Financial Position [Abstract] | ||
Accounts receivable, allowances | $ 59 | $ 65 |
Common stock, par value | $ 0.001 | $ 0.001 |
Common stock, shares authorized | 10,000 | 10,000 |
Common stock, shares issued | 1,055 | 1,055 |
Common stock, shares outstanding | 1,055 | 1,055 |
Consolidated Statements of Oper
Consolidated Statements of Operations (Unaudited) - USD ($) $ in Millions | 3 Months Ended | 9 Months Ended | |||
Jun. 30, 2015 | Jun. 30, 2014 | Jun. 30, 2015 | Jun. 30, 2014 | ||
Income Statement [Abstract] | |||||
Revenue | $ 710 | $ 788 | $ 2,216 | $ 2,256 | |
Costs and expenses: | |||||
Cost of revenue | (373) | (417) | (1,136) | (1,177) | |
Selling, general and administrative expenses | [1] | (251) | (319) | (799) | (885) |
Amortization expense | (63) | (67) | (191) | (199) | |
Total costs and expenses | (687) | (803) | (2,126) | (2,261) | |
Operating income (loss) | 23 | (15) | 90 | (5) | |
Loss on extinguishment of debt | (141) | (141) | |||
Interest expense, net | (45) | (48) | (136) | (157) | |
Other (expense) income | (17) | 4 | (12) | (3) | |
Loss before income taxes | (39) | (200) | (58) | (306) | |
Income tax (expense) benefit | (4) | 16 | (7) | 27 | |
Net loss | (43) | (184) | (65) | (279) | |
Less: Income attributable to noncontrolling interest | (1) | (1) | (3) | (3) | |
Net loss attributable to Warner Music Group Corp. | $ (44) | $ (185) | $ (68) | $ (282) | |
[1] | (a) Includes depreciation expense of: $(14) $(14) $(42) $(39) |
Consolidated Statement of Compr
Consolidated Statement of Comprehensive Loss (Unaudited) - USD ($) $ in Millions | 3 Months Ended | 9 Months Ended | ||
Jun. 30, 2015 | Jun. 30, 2014 | Jun. 30, 2015 | Jun. 30, 2014 | |
Statement Of Income And Comprehensive Income [Abstract] | ||||
Net loss | $ (43) | $ (184) | $ (65) | $ (279) |
Other comprehensive loss, net of tax: | ||||
Foreign currency adjustment | 41 | 4 | (49) | (2) |
Other comprehensive income (loss), net of tax | 41 | 4 | (49) | (2) |
Total comprehensive loss | (2) | (180) | (114) | (281) |
Less: Income attributable to noncontrolling interest | (1) | (1) | (3) | (3) |
Comprehensive loss attributable to Warner Music Group Corp. | $ (3) | $ (181) | $ (117) | $ (284) |
Consolidated Statements of Cash
Consolidated Statements of Cash Flows (Unaudited) - USD ($) $ in Millions | 9 Months Ended | |
Jun. 30, 2015 | Jun. 30, 2014 | |
Cash flows from operating activities | ||
Net loss | $ (65) | $ (279) |
Adjustments to reconcile net loss to net cash provided by operating activities: | ||
Loss on extinguishment of debt | 141 | |
Depreciation and amortization | 233 | 238 |
Unrealized gains/losses and remeasurement of foreign denominated loans | 19 | (41) |
Deferred income taxes | (17) | (47) |
Non-cash interest expense | 8 | 11 |
Non-cash share-based compensation expense | 5 | |
Changes in operating assets and liabilities: | ||
Accounts receivable | 16 | 67 |
Inventories | (3) | (4) |
Royalty advances | (55) | (24) |
Accounts payable and accrued liabilities | (86) | (96) |
Royalty payables | 35 | 11 |
Accrued interest | (12) | (25) |
Deferred revenue | 39 | 93 |
Other balance sheet changes | 6 | (9) |
Net cash provided by operating activities | 118 | 41 |
Cash flows from investing activities | ||
Acquisition of music publishing rights, net | (12) | (20) |
Capital expenditures | (51) | (46) |
Investments and acquisitions of businesses, net | (16) | (26) |
Net cash used in investing activities | (79) | (92) |
Cash flows from financing activities | ||
Proceeds from the Revolving Credit Facility | 258 | 490 |
Repayment of the Revolving Credit Facility | (258) | (490) |
Repayment of Acquisition Corp. Senior Term Loan Facility | (10) | (7) |
Financing costs paid | (104) | |
Deferred financing costs paid | (12) | |
Distribution to noncontrolling interest holder | (3) | (2) |
Repayment of capital lease obligations | (2) | (2) |
Net cash (used in) provided by financing activities | (15) | 43 |
Effect of exchange rate changes on cash and equivalents | (13) | (5) |
Net increase (decrease) in cash and equivalents | 11 | (13) |
Cash and equivalents at beginning of period | 157 | 155 |
Cash and equivalents at end of period | $ 168 | 142 |
5.625% Senior Secured Notes | ||
Cash flows from financing activities | ||
Proceeds from issuance of Acquisition Corp | 275 | |
6.750% Senior Notes | ||
Cash flows from financing activities | ||
Proceeds from issuance of Acquisition Corp Senior Notes | 660 | |
11.5% Senior Unsecured Notes | ||
Cash flows from financing activities | ||
Repayment of Acquisition Corp. Senior Unsecured Notes | $ (765) |
Consolidated Statements of Cas7
Consolidated Statements of Cash Flows (Unaudited) (Parenthetical) | Jun. 30, 2015 | Jun. 30, 2014 |
5.625% Senior Secured Notes | ||
Interest rate | 5.625% | 5.625% |
6.750% Senior Notes | ||
Interest rate | 6.75% | 6.75% |
11.5% Senior Unsecured Notes | ||
Interest rate | 11.50% | 11.50% |
Consolidated Statement of Equit
Consolidated Statement of Equity (Unaudited) - 9 months ended Jun. 30, 2015 - USD ($) $ in Millions | Total | Common Stock | Additional Paid-in Capital | Accumulated Deficit | Accumulated Other Comprehensive Loss | Total Warner Music Group Corp. Equity | Noncontrolling Interest |
Beginning balance, shares at Sep. 30, 2014 | 1,055 | 1,055 | |||||
Beginning balance at Sep. 30, 2014 | $ 390 | $ 1,128 | $ (649) | $ (108) | $ 371 | $ 19 | |
Net (loss) income | (65) | (68) | (68) | 3 | |||
Other comprehensive income (loss), net of tax | (49) | (49) | (49) | ||||
Distribution to noncontrolling interest holders | $ (3) | (3) | |||||
Ending balance, shares at Jun. 30, 2015 | 1,055 | 1,055 | |||||
Ending balance at Jun. 30, 2015 | $ 273 | $ 1,128 | $ (717) | $ (157) | $ 254 | $ 19 |
Description of Business
Description of Business | 9 Months Ended |
Jun. 30, 2015 | |
Organization Consolidation And Presentation Of Financial Statements [Abstract] | |
Description of Business | 1. Description of Business Warner Music Group Corp. (the “Company”) was formed on November 21, 2003. The Company is the direct parent of WMG Holdings Corp. (“Holdings”), which is the direct parent of WMG Acquisition Corp. (“Acquisition Corp.”). Acquisition Corp. is one of the world’s major music-based content companies. Acquisition of Warner Music Group by Access Industries Pursuant to an Agreement and Plan of Merger, dated as of May 6, 2011 (the “Merger Agreement”), by and among the Company, AI Entertainment Holdings LLC (formerly Airplanes Music LLC), a Delaware limited liability company (“Parent”) and an affiliate of Access Industries, Inc. (“Access”), and Airplanes Merger Sub, Inc., a Delaware corporation and a wholly owned subsidiary of Parent (“Merger Sub”), on July 20, 2011 (the “Merger Closing Date”) Merger Sub merged with and into the Company with the Company surviving as a wholly owned subsidiary of Parent (the “Merger”). In connection with the Merger, the Company delisted its common stock from the NYSE. The Company continues to file with the SEC current and periodic reports that would be required to be filed with the SEC pursuant to Section 15(d) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”) in accordance with certain covenants contained in the agreements governing its outstanding indebtedness. Acquisition of Parlophone Label Group On July 1, 2013, the Company completed its acquisition of Parlophone Label Group (the “PLG Acquisition”). The Company classifies its business interests into two fundamental operations: Recorded Music and Music Publishing. A brief description of these operations is presented below. Recorded Music Operations The Company’s Recorded Music business primarily consists of the discovery and development of artists and the related marketing, distribution and licensing of recorded music produced by such artists. The Company plays an integral role in virtually all aspects of the recorded music value chain from discovering and developing talent to producing albums and promoting artists and their products. In the United States, Recorded Music operations are conducted principally through the Company’s major record labels—Warner Bros. Records and Atlantic Records. The Company’s Recorded Music operations also include Rhino, a division that specializes in marketing the Company’s music catalog through compilations and reissuances of previously released music and video titles. The Company also conducts its Recorded Music operations through a collection of additional record labels, including, Asylum, Big Beat, Canvasback, East West, Elektra, Erato, FFRR, Fueled by Ramen, Nonesuch, Parlophone, Reprise, Roadrunner, Rykodisc, Sire, Warner Classics, Warner Music Nashville and Word. Outside the United States, Recorded Music activities are conducted in more than 50 countries through various subsidiaries, affiliates and non-affiliated licensees. Internationally, the Company engages in the same activities as in the United States: discovering and signing artists and distributing, marketing and selling their recorded music. In most cases, the Company also markets and distributes the records of those artists for whom the Company’s domestic record labels have international rights. In certain smaller markets, the Company licenses the right to distribute the Company’s records to non-affiliated third-party record labels. The Company’s international artist services operations include a network of concert promoters through which it provides resources to coordinate tours for the Company’s artists and other artists as well as management companies that guide artists with respect to their careers. The Company’s Recorded Music distribution operations include Warner-Elektra-Atlantic Corporation (“WEA Corp.”), which markets and sells music and video products to retailers and wholesale distributors; Alternative Distribution Alliance (“ADA”), which distributes the products of independent labels to retail and wholesale distributors; various distribution centers and ventures operated internationally; and an 80% interest in Word, which specializes in the distribution of music products in the Christian retail marketplace. In addition to the Company’s Recorded Music products being sold in physical retail outlets, Recorded Music products are also sold in physical form to online physical retailers such as Amazon.com, barnesandnoble.com and bestbuy.com and in digital form to online digital download services such as Apple’s iTunes and Google Play, and are offered by digital streaming services such as Apple Music, Deezer, Rhapsody, Spotify and YouTube, including digital radio services such as iHeart Radio, iTunes Radio and Pandora. The Company has integrated the exploitation of digital content into all aspects of its business, including artist and repertoire (“A&R”), marketing, promotion and distribution. The Company’s business development executives work closely with A&R departments to ensure that while a record is being produced, digital assets are also created with all distribution channels in mind, including streaming services, social networking sites, online portals and music-centered destinations. The Company also works side by side with its online and mobile partners to test new concepts. The Company believes existing and new digital businesses will be a significant source of growth for at least the next several years and will provide new opportunities to successfully monetize its assets and create new revenue streams. The proportion of digital revenues attributed to each distribution channel varies by region and proportions may change as the roll out of new technologies continues. As an owner of music content, the Company believes it is well positioned to take advantage of growth in digital distribution and emerging technologies to maximize the value of its assets. The Company has diversified its revenues beyond its traditional businesses by entering into expanded-rights deals with recording artists in order to partner with artists in other aspects of their careers. Under these agreements, the Company provides services to and participates in artists’ activities outside the traditional recorded music business such as touring, merchandising and sponsorships. The Company has built artist services capabilities and platforms for exploiting this broader set of music-related rights and participating more widely in the monetization of the artist brands it helps create. The Company believes that entering into expanded-rights deals and enhancing its artist services capabilities in areas such as concert promotion and management have permited it to diversify revenue streams and capitalize on other revenue opportunities. This provides for improved long-term relationships with artists and allows the Company to more effectively connect artists and fans. Music Publishing Operations While recorded music is focused on exploiting a particular recording of a composition, music publishing is an intellectual property business focused on the exploitation of the composition itself. In return for promoting, placing, marketing and administering the creative output of a songwriter, or engaging in those activities for other rightsholders, the Company’s Music Publishing business garners a share of the revenues generated from use of the composition. The Company’s Music Publishing operations include Warner/Chappell, its global Music Publishing company, headquartered in Los Angeles with operations in over 50 countries through various subsidiaries, affiliates and non-affiliated licensees. The Company owns or controls rights to more than one million musical compositions, including numerous pop hits, American standards, folk songs and motion picture and theatrical compositions. Assembled over decades, its award-winning catalog includes over 65,000 songwriters and composers and a diverse range of genres including pop, rock, jazz, classical, country, R&B, hip-hop, rap, reggae, Latin, folk, blues, symphonic, soul, Broadway, techno, alternative, gospel and other Christian music. Warner/Chappell also administers the music and soundtracks of several third-party television and film producers and studios, including Lucasfilm, Ltd., Hallmark Entertainment and Disney Music Publishing. Through consistent and tactical talent investment, Warner Chappell has developed a broad array of talent across all genres. The Company’s production music library business includes Non-Stop Music, Groove Addicts Production Music Library, Carlin Recorded Music Library, 615 Music and Frank Gari Productions and Gari Communications, collectively branded as Warner/Chappell Production Music. |
Summary of Significant Accounti
Summary of Significant Accounting Policies | 9 Months Ended |
Jun. 30, 2015 | |
Accounting Policies [Abstract] | |
Summary of Significant Accounting Policies | 2. Summary of Significant Accounting Policies Interim Financial Statements The accompanying unaudited consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States (“U.S. GAAP”) for interim financial information and with the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all of the information and notes required by U.S. GAAP for complete financial statements. In the opinion of management, all adjustments (consisting of normal recurring accruals) considered necessary for a fair presentation have been included. Operating results for the three and nine month periods ended June 30, 2015 are not necessarily indicative of the results that may be expected for the fiscal year ended September 30, 2015. The consolidated balance sheet at September 30, 2014 has been derived from the audited consolidated financial statements at that date but does not include all of the information and notes required by U.S. GAAP for complete financial statements. For further information, refer to the consolidated financial statements and notes thereto included in our Annual Report on Form 10-K for the fiscal year ended September 30, 2014 (File No. 001-32502). Basis of Consolidation The accompanying financial statements present the consolidated accounts of all entities in which the Company has a controlling voting interest and/or variable interest required to be consolidated in accordance with U.S. GAAP. All intercompany balances and transactions have been eliminated. Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) Topic 810, Consolidation (“ASC 810”) requires the Company first evaluate its investments to determine if any investments qualify as a variable interest entity (“VIE”). A VIE is consolidated if the Company is deemed to be the primary beneficiary of the VIE, which is the party involved with the VIE that has both (i) the power to control the most significant activities of the VIE and (ii) either the obligation to absorb losses or the right to receive benefits that could potentially be significant to the VIE. If an entity is not deemed to be a VIE, the Company consolidates the entity if the Company has a controlling voting interest. The Company maintains a 52-53 week fiscal year ending on the last Friday in each reporting period. As such, all references to June 30, 2015 and June 30, 2014 relate to the periods ended June 26, 2015 and June 27, 2014, respectively. For convenience purposes, the Company continues to date its financial statements as of June 30. The fiscal year ended September 30, 2014 ended on September 26, 2014. For convenience purposes, the Company continues to date its balance sheet as of September 30. The Company has performed a review of all subsequent events through the date the financial statements were issued, and has determined that no additional disclosures are necessary. New Accounting Pronouncements During the first quarter of fiscal 2015, the Company adopted Accounting Standards Update (“ASU”) 2013-11, Presentation of an Unrecognized Tax Benefit When a Net Operating Loss Carryforward, a Similar Tax Loss, or a Tax Credit Carryforward Exists (“ASU 2013-11”). ASU 2013-11 requires an unrecognized tax benefit, or a portion of an unrecognized tax benefit, to be presented in the financial statements as a reduction to a deferred tax asset for a net operating loss carryforward, a similar tax loss, or a tax credit carryforward. The adoption of this standard did not have an impact on the Company’s financial statements, other than presentation. During the first quarter of fiscal 2015, the Company adopted ASU 2014-17, Business Combinations (Topic 805): Pushdown Accounting (“ASU 2014-17”). This ASU provides acquired entities the option to apply pushdown accounting in their separate financial statements when an acquirer obtains control of them. ASU 2014-17 was effective upon issuance. This election to apply pushdown accounting is made for each individual change-in-control event. The adoption of this standard did not have an impact on the Company’s financial statements. In May 2014, the FASB issued guidance codified in ASC 606, Revenue Recognition – Revenue from Contracts with Customers (“ASC 606”), which replaces the guidance in former ASC 605, Revenue Recognition and ASC 928, Entertainment – Music. The amendment was the result of a joint effort by the FASB and the International Accounting Standards Board to improve financial reporting by creating common revenue recognition guidance for U.S. GAAP and international financial reporting standards ("IFRS"). The joint project clarifies the principles for recognizing revenue and develops a common revenue standard for U.S. GAAP and IFRS. ASC 606 is effective for annual periods beginning after December 15, 2016, and interim periods within those years. Early application is not permitted. The update may be applied using one of two methods: retrospective application to each prior reporting period presented, or retrospective application with the cumulative effect of initially applying the update recognized at the date of initial application. The Company is currently evaluating the transition method that will be elected and the impact of the update on its financial statements and disclosures. In August 2014, the FASB issued ASU 2014-15, Disclosure of Uncertainties about an Entity’s Ability to Continue as a Going Concern (“ASU 2014-15”). This ASU will explicitly require management to assess an entity’s ability to continue as a going concern, and to provide related disclosure when substantial doubt exists. ASU 2014-15 will be effective in the first annual period ending after December 15, 2016, and interim periods thereafter. Earlier adoption is permitted. The adoption of this standard is not expected to have a significant impact on the Company’s financial statements, other than disclosure. In April 2015, the FASB issued ASU 2015-03, Simplifying the Presentation of Debt Issuance Costs (“ASU 2015-03”). This ASU will require that debt issuance costs are presented as a direct deduction to the related debt in the liability section of the balance sheet, rather than presented as an asset. ASU 2015-03 will be effective for annual periods beginning after December 15, 2015, and interim periods within those years. Earlier adoption is permitted. The adoption of this standard is not expected to have a significant impact on the Company’s financial statements, other than presentation. |
Comprehensive Loss
Comprehensive Loss | 9 Months Ended |
Jun. 30, 2015 | |
Equity [Abstract] | |
Comprehensive Loss | 3. Comprehensive Loss Comprehensive loss, which is reported in the accompanying consolidated statements of equity, consists of net (loss) income and other gains and losses affecting equity that, under U.S. GAAP, are excluded from net (loss) income. For the Company, the components of other comprehensive loss primarily consist of foreign currency translation losses and minimum pension liabilities. The following summary sets forth the changes in the components of accumulated other comprehensive loss, net of related taxes: Foreign Minimum Accumulated Currency Pension Other Translation Liability Comprehensive Loss Adjustment Loss, net (in millions) Balance at September 30, 2014 $ (98 ) $ (10 ) $ (108 ) Other comprehensive loss (a) (49 ) — (49 ) Amounts reclassified from accumulated other comprehensive income — — — Balance at June 30, 2015 $ (147 ) $ (10 ) $ (157 ) (a) Foreign currency translation adjustments include intra-entity foreign currency transactions that are of a long-term investment nature of $32.2 million |
Goodwill and Intangible Assets
Goodwill and Intangible Assets | 9 Months Ended |
Jun. 30, 2015 | |
Goodwill And Intangible Assets Disclosure [Abstract] | |
Goodwill and Intangible Assets | 4. Goodwill and Intangible Assets Goodwill The following analysis details the changes in goodwill for each reportable segment: Recorded Music Music Publishing Total (in millions) Balance at September 30, 2014 $ 1,197 $ 464 $ 1,661 Acquisitions 3 — 3 Dispositions — — — Other adjustments (31 ) — (31 ) Balance at June 30, 2015 $ 1,169 $ 464 $ 1,633 Other adjustments during the nine months ended June 30, 2015 represent foreign currency movements. The Company performs its annual goodwill impairment test in accordance with FASB ASC Topic 350, Intangibles—Goodwill and other (“ASC 350”) during the fourth quarter of each fiscal year as of July 1. The Company may conduct an earlier review if events or circumstances occur that would suggest the carrying value of the Company’s goodwill may not be recoverable. No indicators of impairment were identified during the current period that required the Company to perform an interim assessment or recoverability test. Intangible Assets Intangible assets consist of the following: Weighted Average June 30, September 30, Useful Life 2015 2014 (in millions) Intangible assets subject to amortization: Recorded music catalog 11 years $ 1,004 $ 1,040 Music publishing copyrights 27 years 1,500 1,550 Artist and songwriter contracts 13 years 936 975 Trademarks 7 years 7 7 Total gross intangible asset subject to amortization 3,447 3,572 Accumulated amortization (850 ) (688 ) Total net intangible assets subject to amortization 2,597 2,884 Intangible assets not subject to amortization: Trademarks and tradenames Indefinite 120 120 Total net other intangible assets $ 2,717 $ 3,004 |
Debt
Debt | 9 Months Ended |
Jun. 30, 2015 | |
Debt Disclosure [Abstract] | |
Debt | 5. Debt Debt Capitalization Long-term debt, including the current portion, consists of the following: June 30, September 30, 2015 2014 (in millions) Revolving Credit Facility—Acquisition Corp. (a) $ — $ — Senior Term Loan Facility due 2020—Acquisition Corp. (b) 1,285 1,294 5.625% Senior Secured Notes due 2022—Acquisition Corp. 275 275 6.00% Senior Secured Notes due 2021—Acquisition Corp. 450 450 6.25% Senior Secured Notes due 2021—Acquisition Corp. (c) 176 201 6.75% Senior Notes due 2022—Acquisition Corp. 660 660 13.75% Senior Notes due 2019—Holdings 150 150 Total debt 2,996 3,030 Less: current portion 13 13 Total long-term debt $ 2,983 $ 3,017 ( a ) Reflects $150 million of commitments under the Revolving Credit Facility, less letters of credit outstanding of approximately $5 million and $11 million at June 30, 2015 and September 30, 2014, respectively. There were no loans outstanding under the Revolving Credit Facility at June 30, 2015 or September 30, 2014. (b) Principal amount of $1.290 billion and $1.300 billion less unamortized discount of $5 million and $6 million at June 30, 2015 and September 30, 2014, respectively. Of this amount, $13 million, representing the scheduled amortization of the Senior Term Loan Facility, was included in the current portion of long-term debt at June 30, 2015 and September 30, 2014. (c) Face amount of €158 million. Above amounts represent the dollar equivalent of such notes at June 30, 2015 and September 30, 2014. 2014 Debt Refinancing On April 9, 2014, the Company completed a refinancing of part of its outstanding debt (the “2014 Refinancing”). In connection with the 2014 Refinancing, the Company issued $275 million in aggregate principal amount of its 5.625% Senior Secured Notes due 2022 (the “New Senior Secured Notes”) and $660 million in aggregate principal amount of its 6.750% Senior Notes due 2022 (the “New Unsecured Notes”). In connection with the 2014 Refinancing, the Company used $869 million, to redeem or repurchase the Company’s previously outstanding $765 million 11.5% Senior Notes due 2018 and to pay tender/call premiums of $85 million and consent fees of approximately $19 million. The Company also paid approximately $3 million in accrued interest with respect to the notes redeemed or repurchased. The Company recorded a loss on extinguishment of debt of approximately $141 million in the nine months ended June 30, 2014, which represents the difference between the redemption payment and the carrying value of the debt, which included the principal value of $765 million, less unamortized discounts of $13 million and unamortized debt issuance costs of $24 million. Interest Rates The loans under the Revolving Credit Facility bear interest at Acquisition Corp.’s election at a rate equal to (i) the rate for deposits in the borrowing currency in the London interbank market (adjusted for maximum reserves) for the applicable interest period (“Revolving LIBOR”), plus 2.00% per annum, or (ii) the base rate, which is the highest of (x) the corporate base rate established by the administrative agent from time to time, (y) 0.50% in excess of the overnight federal funds rate and (z) the one-month Revolving LIBOR plus 1.0% per annum, plus, in each case, 1.00% per annum. If there is a payment default at any time, then the interest rate applicable to overdue principal will be the rate otherwise applicable to such loan plus 2.0% per annum. Default interest will also be payable on other overdue amounts at a rate of 2.0% per annum above the amount that would apply to an alternative base rate loan. The loans under the Senior Term Loan Facility bear interest at Acquisition Corp.’s election at a rate equal to (i) the rate for deposits in U.S. dollars in the London interbank market (adjusted for maximum reserves) for the applicable interest period (“Term Loan LIBOR”), plus 2.75% per annum, or (ii) the base rate, which is the highest of (x) the corporate base rate established by the administrative agent as its prime rate in effect at its principal office in New York City from time to time, (y) 0.50% in excess of the overnight federal funds rate and (z) one-month Term Loan LIBOR, plus 1.00% per annum, plus, in each case, 1.75% per annum. The loans under the Senior Term Loan Facility are subject to a Term Loan LIBOR “floor” of 1.00%. If there is a payment default at any time, then the interest rate applicable to overdue principal and interest will be the rate otherwise applicable to such loan plus 2.0% per annum. Default interest will also be payable on other overdue amounts at a rate of 2.0% per annum above the amount that would apply to an alternative base rate loan. Amortization and Maturity of Senior Term Loan Facility The loans under the Senior Term Loan Facility amortize in equal quarterly installments due December, March, June and September in aggregate annual amounts equal to 1.00% of the original principal amount of the amended Senior Term Loan Facility, or $13 million per year, with the balance payable on maturity date of the Term Loans. The loans outstanding under the Senior Term Loan Facility mature on July 1, 2020. Maturity of Revolving Credit Facility The maturity date of the Revolving Credit Facility is April 1, 2019. Maturities of Senior Notes and Senior Secured Notes As of June 30, 2015, there are no scheduled maturities of notes until 2019, when $150 million is scheduled to mature. Thereafter, $1.561 billion is scheduled to mature. Interest Expense, net Total interest expense, net, was $45 million and $48 million for the three months ended June 30, 2015 and June 30, 2014, respectively. Total interest expense, net was $136 million and $157 million for the nine months ended June 30, 2015 and June 30, 2014, respectively. The weighted-average interest rate of the Company’s total debt was 5.6% at each of June 30, 2015, September 30, 2014 and June 30, 2014. |
Restructuring
Restructuring | 9 Months Ended |
Jun. 30, 2015 | |
Restructuring And Related Activities [Abstract] | |
Restructuring | 6. Restructuring In conjunction with the PLG Acquisition, the Company undertook a plan to achieve cost savings (the “Restructuring Plan”), primarily through headcount reductions. The Restructuring Plan was approved by the CEO prior to the close of the PLG Acquisition. Under the Restructuring Plan, the Company currently expects to record an aggregate of approximately $75 million in restructuring costs, currently estimated to be made up of employee-related costs of $68 million, real estate costs of $5 million and other costs of $2 million. There were no restructuring costs incurred in the three months ended June 30, 2015 with respect to these actions. Total restructuring costs of $18 million were incurred in the three months ended June 30, 2014 with respect to these actions, which consisted of $15 million of employee-related costs and $3 million of real estate costs. Total restructuring costs of $2 million were incurred in the nine months ended June 30, 2015 with respect to these actions, which consist of $1 million of employee-related costs and $1 million of real estate costs. Total restructuring costs of $42 million were incurred in the nine months ended June 30, 2014 with respect to these actions, which consist of $37 million of employee-related costs, $4 million of real estate costs and $1 million of other costs. Total restructuring costs to date under the Restructuring Plan are $74 million, including total cash payments of $71 million. Employee-related costs include all cash compensation and other employee benefits paid to terminated employees. Real estate costs include costs that will continue to be incurred without economic benefit to us, such as, among others, operating lease payments for office space no longer being used and moving costs incurred during relocation, costs incurred to close a facility and IT costs to wire a new facility. The remainder of the Restructuring Plan is expected to be completed by the end of fiscal 2015. Total restructuring activity is as follows: Employee- Real related Costs Estate Costs Other Total (in millions) Balance at September 30, 2014 $ 12 $ 1 $ — $ 13 Restructuring costs 1 1 — 2 Cash payments (10 ) (2 ) — (12 ) Balance at June 30, 2015 $ 3 $ — $ — $ 3 The restructuring accrual is recorded in other current liabilities on the consolidated balance sheet. These balances reflect estimated future cash outlays. A summary of the charges in the consolidated statements of operations resulting from the Restructuring Plan is shown below: Three Months Ended Nine Months Ended June 30, June 30, 2015 2014 2015 2014 (in millions) Selling, general and administrative expenses $ — $ 18 $ 2 $ 42 Total restructuring expense $ — $ 18 $ 2 $ 42 All of the above expenses were recorded in the Recorded Music reportable segment. |
Commitments and Contingencies
Commitments and Contingencies | 9 Months Ended |
Jun. 30, 2015 | |
Commitments And Contingencies Disclosure [Abstract] | |
Commitments and Contingencies | 7. Commitments and Contingencies Pricing of Digital Music Downloads On December 20, 2005 and February 3, 2006, the Attorney General of the State of New York served the Company with requests for information in connection with an industry-wide investigation as to the pricing of digital music downloads. On February 28, 2006, the Antitrust Division of the U.S. Department of Justice served us with a Civil Investigative Demand, also seeking information relating to the pricing of digitally downloaded music. Both investigations were ultimately closed, but subsequent to the announcements of the investigations, more than thirty putative class action lawsuits were filed concerning the pricing of digital music downloads. The lawsuits were consolidated in the Southern District of New York. The consolidated amended complaint, filed on April 13, 2007, alleges conspiracy among record companies to delay the release of their content for digital distribution, inflate their pricing of CDs and fix prices for digital downloads. The complaint seeks unspecified compensatory, statutory and treble damages. On October 9, 2008, the District Court issued an order dismissing the case as to all defendants, including us. However, on January 12, 2010, the Second Circuit vacated the judgment of the District Court and remanded the case for further proceedings and on January 10, 2011, the Supreme Court denied the defendants’ petition for Certiorari. Upon remand to the District Court, all defendants, including the Company, filed a renewed motion to dismiss challenging, among other things, plaintiffs’ state law claims and standing to bring certain claims. The renewed motion was based mainly on arguments made in defendants’ original motion to dismiss, but not addressed by the District Court. On July 18, 2011, the District Court granted defendants’ motion in part, and denied it in part. Notably, all claims on behalf of the CD-purchaser class were dismissed with prejudice. However, a wide variety of state and federal claims remain for the class of internet download purchasers. Plaintiffs filed an operative consolidated amended complaint on August 31, 2011. Pursuant to the terms of an August 15, 2011 stipulation and order, the case is currently in discovery. Disputes regarding the scope of discovery are ongoing. Plaintiffs filed a Class Certification brief on March 14, 2014. The Company’s reply date has not yet been set. The Company intends to defend against these lawsuits vigorously, but is unable to predict the outcome of these suits. Regardless of the merits of the claims, this and any related litigation could continue to be costly, and divert the time and resources of management. The potential outcomes of these claims that are reasonably possible cannot be determined at this time and an estimate of the reasonably possible loss or range of loss cannot presently be made. Sirius XM On September 11, 2013, the Company joined with Capitol Records, LLC, Sony Music Entertainment, UMG Recordings, Inc. and ABKCO Music & Records, Inc. in a lawsuit brought in California Superior Court against Sirius XM Radio Inc., alleging copyright infringement for Sirius XM’s use of pre-1972 sound recordings under California law. A nation-wide settlement was reached on June 17, 2015 pursuant to which Sirius XM paid the plaintiffs, in the aggregate, $210 million on July 29, 2015 and the plaintiffs dismissed their lawsuit with prejudice. The settlement resolves all past claims as to Sirius XM’s use of pre-1972 recordings owned or controlled by the plaintiffs and enables Sirius XM, without any additional payment, to reproduce, perform and broadcast such recordings in the United States through December 31, 2017. As part of the settlement, Sirius XM has the right, to be exercised before December 31, 2017, to enter into a license with each plaintiff to reproduce, perform and broadcast its pre-1972 recordings from January 1, 2018 through December 31, 2022. The royalty rate for each such license will be determined by negotiation or, if the parties are unable to agree, binding arbitration on a willing buyer/willing seller standard. The allocation of the settlement proceeds among the plaintiffs has not yet been determined. The Company intends to share its allocation of the settlement proceeds with its artists on the same basis as statutory revenue from Sirius XM is shared, i.e., the artist share of the Company’s allocation will be paid to artists by SoundExchange. The Company will record the settlement in its financial statements once it is realized, which is expected to be at the time the allocation to the Company can be reasonably determined. Other Matters In addition to the matters discussed above, the Company is involved in various litigation and regulatory proceedings arising in the normal course of business. Where it is determined, in consultation with counsel based on litigation and settlement risks, that a loss is probable and estimable in a given matter, the Company establishes an accrual. In none of the currently pending proceedings is the amount of accrual material. An estimate of the reasonably possible loss or range of loss in excess of the amounts already accrued cannot be made at this time due to various factors typical in contested proceedings, including (1) the results of ongoing discovery; (2) uncertain damage theories and demands; (3) a less than complete factual record; (4) uncertainty concerning legal theories and their resolution by courts or regulators; and (5) the unpredictable nature of the opposing party and its demands. However, the Company cannot predict with certainty the outcome of any litigation or the potential for future litigation. As such, the Company continuously monitors these proceedings as they develop and adjusts any accrual or disclosure as needed. Regardless of the outcome, litigation could have an adverse impact on the Company, including the Company’s brand value, because of defense costs, diversion of management resources and other factors and it could have a material effect on the Company’s results of operations for a given reporting period. |
Derivative Financial Instrument
Derivative Financial Instruments | 9 Months Ended |
Jun. 30, 2015 | |
Derivative Instruments And Hedging Activities Disclosure [Abstract] | |
Derivative Financial Instruments | 8. Derivative Financial Instruments The Company uses derivative financial instruments, primarily foreign currency forward exchange contracts, for the purpose of managing foreign currency exchange risk by reducing the effects of fluctuations in foreign currency exchange rates. The Company enters into foreign currency forward exchange contracts primarily to hedge the risk that unremitted or future royalties and license fees owed to its domestic companies for the sale, or anticipated sale, of U.S.-copyrighted products abroad may be adversely affected by changes in foreign currency exchange rates. The Company focuses on managing the level of exposure to the risk of foreign currency exchange rate fluctuations on its major currencies, which include the Euro, British pound sterling, Japanese yen, Canadian dollar, Swedish krona and Australian dollar. The foreign currency forward exchange contracts related to royalties are designated and qualify as cash flow hedges under the criteria prescribed in ASC 815. The Company records these contracts at fair value on its balance sheet and gains or losses on these contracts are deferred in equity (as a component of comprehensive loss). These deferred gains and losses are recognized in income in the period in which the related royalties and license fees being hedged are received and recognized in income. However, to the extent that any of these contracts are not considered to be perfectly effective in offsetting the change in the value of the royalties and license fees being hedged, any changes in fair value relating to the ineffective portion of these contracts are immediately recognized in income. The Company may at times choose to hedge foreign currency risk associated with financing transactions such as third-party debt and other balance sheet items. The foreign currency forward exchange contracts related to balance sheet items denominated in foreign currency are reviewed on a contract-by-contract basis and are designated accordingly. If these foreign currency forward exchange contracts do not qualify for hedge accounting, then the Company records these contracts at fair value on its balance sheet and the related gains and losses are immediately recognized in the statement of operations where there is an equal and offsetting entry related to the underlying exposure. The fair value of foreign currency forward exchange contracts is determined by using observable market transactions of spot and forward rates (i.e., Level 2 inputs) which is discussed further in Note 11. Additionally, netting provisions are provided for in existing International Swap and Derivative Association Inc. agreements in situations where the Company executes multiple contracts with the same counterparty. As a result, net assets or liabilities resulting from foreign exchange derivatives subject to these netting agreements are classified within other current assets or other current liabilities in the Company’s consolidated balance sheets. The Company monitors its positions with, and the credit quality of, the financial institutions that are party to any of its financial transactions. As of June 30, 2015, the Company had outstanding hedge contracts for the sale of $103 million and the purchase of $63 million of foreign currencies at fixed rates that will be settled by June 2016. As of June 30, 2015, the Company had less than $1 million of deferred gains or losses in comprehensive loss related to foreign exchange hedging. As of September 30, 2014, the Company had outstanding hedge contracts for the sale of $7 million of foreign currencies at fixed rates. As of September 30, 2014, the Company had less than $1 million of deferred gains or losses in comprehensive loss related to foreign exchange hedging. The following is a summary of amounts recorded in the Consolidated Balance Sheet pertaining to the Company’s use of foreign currency derivatives at June 30, 2015 and September 30, 2014: June 30, September 30, 2015 (a) 2014 (b) (in millions) Other current assets $ — $ — Other current liabilities — — (a) Includes less than $1 million of foreign exchange derivative contracts in asset and liability positions. (b) Includes less than $1 million of foreign exchange derivative contracts in asset and liability positions. |
Segment Information
Segment Information | 9 Months Ended |
Jun. 30, 2015 | |
Segment Reporting [Abstract] | |
Segment Information | 9. Segment Information As discussed more fully in Note 1, based on the nature of its products and services, the Company classifies its business interests into two fundamental operations: Recorded Music and Music Publishing, which also represent the reportable segments of the Company. Information as to each of these operations is set forth below. The Company evaluates performance based on several factors, of which the primary financial measure is operating income (loss) before non-cash depreciation of tangible assets and non-cash amortization of intangible assets (“OIBDA”). The Company has supplemented its analysis of OIBDA results by segment with an analysis of operating income (loss) by segment. The accounting policies of the Company’s business segments are the same as those described in the summary of significant accounting policies included elsewhere herein. The Company accounts for intersegment sales at fair value as if the sales were to third parties. While intercompany transactions are treated like third-party transactions to determine segment performance, the revenues (and corresponding expenses recognized by the segment that is counterparty to the transaction) are eliminated in consolidation, and therefore, do not themselves impact consolidated results. Corporate Recorded Music expenses and Music Publishing eliminations Total Three Months Ended (in millions) June 30, 2015 Revenues $ 592 $ 123 $ (5 ) $ 710 OIBDA 100 20 (20 ) 100 Depreciation of property, plant and equipment (10 ) (1 ) (3 ) (14 ) Amortization of intangible assets (47 ) (16 ) — (63 ) Operating income (loss) 43 3 (23 ) 23 June 30, 2014 Revenues $ 656 $ 137 $ (5 ) $ 788 OIBDA 71 24 (29 ) 66 Depreciation of property, plant and equipment (9 ) (2 ) (3 ) (14 ) Amortization of intangible assets (51 ) (16 ) — (67 ) Operating income (loss) 11 6 (32 ) (15 ) Corporate Recorded Music expenses and Music Publishing eliminations Total Nine Months Ended (in millions) June 30, 2015 Revenues $ 1,870 $ 359 $ (13 ) $ 2,216 OIBDA 302 88 (67 ) 323 Depreciation of property, plant and equipment (29 ) (4 ) (9 ) (42 ) Amortization of intangible assets (143 ) (48 ) — (191 ) Operating income (loss) 130 36 (76 ) 90 June 30, 2014 Revenues $ 1,882 $ 387 $ (13 ) $ 2,256 OIBDA 203 98 (68 ) 233 Depreciation of property, plant and equipment (26 ) (4 ) (9 ) (39 ) Amortization of intangible assets (150 ) (49 ) — (199 ) Operating income (loss) 27 45 (77 ) (5 ) |
Additional Financial Informatio
Additional Financial Information | 9 Months Ended |
Jun. 30, 2015 | |
Additional Financial Information [Abstract] | |
Additional Financial Information | 10. Additional Financial Information Cash Interest and Taxes The Company made interest payments of approximately $53 million and $70 million during the three months ended June 30, 2015 and June 30, 2014, respectively. The Company made interest payments of approximately $140 million and $171 million during the nine months ended June 30, 2015 and June 30, 2014, respectively. The Company paid approximately $10 million and $6 million of income and withholding taxes, net of refunds, during the three months ended June 30, 2015 and June 30, 2014, respectively. The Company paid approximately $16 million and $14 million of income and withholding taxes, net of refunds, during the nine months ended June 30, 2015 and June 30, 2014, respectively. |
Fair Value Measurements
Fair Value Measurements | 9 Months Ended |
Jun. 30, 2015 | |
Fair Value Disclosures [Abstract] | |
Fair Value Measurements | 11. Fair Value Measurements ASC 820 defines fair value as the price that would be received upon sale of an asset or paid upon transfer of a liability in an orderly transaction between market participants at the measurement date and in the principal or most advantageous market for that asset or liability. The fair value should be calculated based on assumptions that market participants would use in pricing the asset or liability, not on assumptions specific to the entity. In addition to defining fair value, ASC 820 expands the disclosure requirements around fair value and establishes a fair value hierarchy for valuation inputs. The hierarchy prioritizes the inputs into three levels based on the extent to which inputs used in measuring fair value are observable in the market. Each fair value measurement is reported in one of the three levels which is determined by the lowest level input that is significant to the fair value measurement in its entirety. These levels are: Level 1—inputs are based upon unadjusted quoted prices for identical instruments traded in active markets. Level 2—inputs are based upon quoted prices for similar instruments in active markets, quoted prices for identical or similar instruments in markets that are not active and model-based valuation techniques for which all significant assumptions are observable in the market or can be corroborated by observable market data for substantially the full term of the assets or liabilities. Level 3—inputs are generally unobservable and typically reflect management’s estimates of assumptions that market participants would use in pricing the asset or liability. The fair values are therefore determined using model-based techniques that include option pricing models, discounted cash flow models and similar techniques. In accordance with the fair value hierarchy, described above, the following table shows the fair value of the Company’s financial instruments that are required to be measured at fair value as of June 30, 2015 and September 30, 2014. Fair Value Measurements as of June 30, 2015 (Level 1) (Level 2) (Level 3) Total (in millions) Other Current Liabilities: Contractual Obligations (a) — — (1 ) (1 ) Other Non-Current Liabilities: Contractual Obligations (a) — — — — Total $ — $ — $ (1 ) $ (1 ) Fair Value Measurements as of September 30, 2014 (Level 1) (Level 2) (Level 3) Total (in millions) Other Current Liabilities: Contractual Obligations (a) — — (2 ) (2 ) Other Non-Current Liabilities: Contractual Obligations (a) — — (1 ) (1 ) Total $ — $ — $ (3 ) $ (3 ) (a) This represents purchase obligations and contingent consideration related to the Company’s various acquisitions. This is based on a discounted cash flow approach and it is adjusted to fair value on a recurring basis and any adjustments are included as a component of operating income in the statement of operations. These amounts were mainly calculated using unobservable inputs such as future earnings performance of the Company’s various acquisitions and the expected timing of the payment. The following table reconciles the beginning and ending balances of net assets and liabilities classified as Level 3: Total (in millions) Balance at September 30, 2014 $ (3 ) Additions — Reductions — Payments 2 Balance at June 30, 2015 $ (1 ) The majority of the Company’s non-financial instruments, which include goodwill, intangible assets, inventories, and property, plant, and equipment, are not required to be re-measured to fair value on a recurring basis. These assets are evaluated for impairment if certain triggering events occur. If such evaluation indicates that impairment exists, the asset is written down to its fair value. In addition, an impairment analysis is performed at least annually for goodwill and indefinite-lived intangible assets. Fair Value of Debt Based on the level of interest rates prevailing at June 30, 2015, the fair value of the Company’s debt was $3.001 billion. Based on the level of interest rates prevailing at September 30, 2014, the fair value of the Company’s debt was $3.026 billion. The fair value of the Company’s debt instruments are determined using quoted market prices from less active markets or by using quoted market prices for instruments with identical terms and maturities; both approaches are considered a Level 2 measurement. |
Guarantor and Non-Guarantor Sub
Guarantor and Non-Guarantor Subsidiaries Financial Information | 9 Months Ended |
Jun. 30, 2015 | |
Condensed Financial Information Of Parent Company Only Disclosure [Abstract] | |
Guarantor and Non-Guarantor Subsidiaries Financial Information | WARNER MUSIC GROUP CORP. Supplementary Information Consolidating Financial Statements The Company is the direct parent of Holdings, which is the direct parent of Acquisition Corp. Holdings has issued and outstanding the 13.75% Senior Notes due 2019 (the “Holdings Notes”). In addition, Acquisition Corp. has issued and outstanding the 5.625% Senior Secured Notes due 2022, the 6.00% Senior Secured Notes due 2021, the 6.25% Senior Secured Notes due 2021, and the 6.75% Senior Notes due 2022 (together, the “Acquisition Corp. Notes”). The Holdings Notes are guaranteed by the Company. These guarantees are full, unconditional, joint and several. The following condensed consolidating financial statements are presented for the information of the holders of the Holdings Notes and present the results of operations, financial position and cash flows of (i) the Company, which is the guarantor of the Holdings Notes, (ii) Holdings, which is the issuer of the Holdings Notes, (iii) the subsidiaries of Holdings (Acquisition Corp. is the only direct subsidiary of Holdings) and (iv) the eliminations necessary to arrive at the information for the Company on a consolidated basis. Investments in consolidated or combined subsidiaries are presented under the equity method of accounting. The Acquisition Corp. Notes are also guaranteed by the Company and, in addition, are guaranteed by all of Acquisition Corp.’s domestic wholly-owned subsidiaries. The secured notes are guaranteed on a senior secured basis and the unsecured notes are guaranteed on an unsecured senior basis. The Company’s guarantee of the Acquisition Corp. Notes is full and unconditional. The guarantee of the Acquisition Corp. Notes by Acquisition Corp.’s domestic, wholly-owned subsidiaries are full, unconditional, joint and several. The following condensed consolidating financial statements are also presented for the information of the holders of the Acquisition Corp. Notes and present the results of operations, financial position and cash flows of (i) Acquisition Corp., which is the issuer of the Acquisition Corp. Notes, (ii) the guarantor subsidiaries of Acquisition Corp., (iii) the non-guarantor subsidiaries of Acquisition Corp. and (iv) the eliminations necessary to arrive at the information for Acquisition Corp. on a consolidated basis. Investments in consolidated subsidiaries are presented under the equity method of accounting. There are no restrictions on Acquisition Corp.’s ability to obtain funds from any of its wholly-owned subsidiaries through dividends, loans or advances. The Company and Holdings are holding companies that conduct substantially all of their business operations through Acquisition Corp. Accordingly, the ability of the Company and Holdings to obtain funds from their subsidiaries is restricted by the indentures for the Acquisition Corp. Notes and the credit agreements for the Acquisition Corp. Senior Credit Facilities, and, with respect to the Company, the indenture for the Holdings Notes. The Company has revised its presentation for the prior period Guarantor and Non-Guarantor Financial Information from what was filed in our Form 10-Q on August 7, 2014. The Company uses the guidance under ASC Subtopic 605-45, Principal Agent Considerations, to determine when to measure revenue on a “gross” or “net” basis depending on whether the Company is acting as the “principal” in the transaction or acting as an “agent” in the transaction. The revised Consolidating Statement of Operations presentation reflects adjustments to certain revenue and expense balances to properly reflect the impact of one of the Guarantor entities acting as the principal in our digital arrangements. We have also revised the presentation of our Consolidating Balance Sheet to reflect the adjusted investment and equity balances as a result of the changes noted above in the Consolidating Statement of Operations. The principal elimination entries eliminate investments in subsidiaries and intercompany balances. Consolidating Balance Sheet (Unaudited) June 30, 2015 WMG WMG WMG Warner Warner Acquisition Non- Acquisition Holdings Music Music Corp. Guarantor Guarantor Corp. Corp. Group Group Corp. (issuer) Subsidiaries Subsidiaries Eliminations Consolidated (issuer) Corp. Eliminations Consolidated (in millions) Assets: Current assets: Cash and equivalents $ — $ 24 $ 144 $ — $ 168 $ — $ — $ — $ 168 Accounts receivable, net — 156 187 — 343 — — — 343 Inventories — 14 25 — 39 — — — 39 Royalty advances expected to be recouped within one year — 69 50 — 119 — — — 119 Deferred tax assets — 21 25 — 46 — — — 46 Prepaid and other current assets 5 11 42 — 58 — — — 58 Total current assets 5 295 473 — 773 — — — 773 Due (to) from parent companies 897 (340 ) (557 ) — — — — — — Investments in and advances to (from) consolidated subsidiaries 2,353 1,218 — (3,571 ) — 404 254 (658 ) — Royalty advances expected to be recouped after one year — 126 93 — 219 — — — 219 Property, plant and equipment, net — 149 78 — 227 — — — 227 Goodwill — 1,379 254 — 1,633 — — — 1,633 Intangible assets subject to amortization, net — 1,294 1,303 — 2,597 — — — 2,597 Intangible assets not subject to amortization — 71 49 — 120 — — — 120 Other assets 41 33 16 — 90 5 — — 95 Total assets $ 3,296 $ 4,225 $ 1,709 $ (3,571 ) $ 5,659 $ 409 $ 254 $ (658 ) $ 5,664 Liabilities and Deficit: Current liabilities: Accounts payable $ — $ 73 $ 78 $ — $ 151 $ — $ — $ — $ 151 Accrued royalties — 476 635 — 1,111 — — — 1,111 Accrued liabilities — 82 153 — 235 — — — 235 Accrued interest 43 — — — 43 5 — — 48 Deferred revenue — 180 67 — 247 — — — 247 Current portion of long-term debt 13 — — — 13 — — — 13 Other current liabilities — 1 18 — 19 — — — 19 Total current liabilities 56 812 951 — 1,819 5 — — 1,824 Long-term debt 2,833 — — — 2,833 150 — — 2,983 Deferred tax liabilities, net — 128 217 — 345 — — — 345 Other noncurrent liabilities 3 116 118 2 239 — — — 239 Total liabilities 2,892 1,056 1,286 2 5,236 155 — — 5,391 Total Warner Music Group Corp. equity (deficit) 404 3,167 406 (3,573 ) 404 254 254 (658 ) 254 Noncontrolling interest — 2 17 — 19 — — — 19 Total equity (deficit) 404 3,169 423 (3,573 ) 423 254 254 (658 ) 273 Total liabilities and equity (deficit) $ 3,296 $ 4,225 $ 1,709 $ (3,571 ) $ 5,659 $ 409 $ 254 $ (658 ) $ 5,664 Consolidating Balance Sheet September 30, 2014 WMG WMG WMG Warner Warner Acquisition Non- Acquisition Holdings Music Music Corp. Guarantor Guarantor Corp. Corp. Group Group Corp. (issuer) Subsidiaries Subsidiaries Eliminations Consolidated (issuer) Corp. Eliminations Consolidated (in millions) Assets: Current assets: Cash and equivalents $ — $ 26 $ 131 $ — $ 157 $ — $ — $ — $ 157 Accounts receivable, net — 174 209 — 383 — — — 383 Inventories — 13 26 — 39 — — — 39 Royalty advances expected to be recouped within one year — 62 40 — 102 — — — 102 Deferred tax assets — 21 25 — 46 — — — 46 Prepaid and other current assets 5 10 40 — 55 — — — 55 Total current assets 5 306 471 — 782 — — — 782 Due (to) from parent companies 924 (242 ) (682 ) — — — — — — Investments in and advances to (from) consolidated subsidiaries 2,531 1,142 — (3,673 ) — 525 371 (896 ) — Royalty advances expected to be recouped after one year — 115 75 — 190 — — — 190 Property, plant and equipment, net — 143 84 — 227 — — — 227 Goodwill — 1,379 282 — 1,661 — — — 1,661 Intangible assets subject to amortization, net — 1,372 1,512 — 2,884 — — — 2,884 Intangible assets not subject to amortization — 75 45 — 120 — — — 120 Other assets 46 10 28 — 84 6 — — 90 Total assets $ 3,506 $ 4,300 $ 1,815 $ (3,673 ) $ 5,948 $ 531 $ 371 $ (896 ) $ 5,954 Liabilities and Deficit: Current liabilities: Accounts payable $ 38 $ 91 $ 86 $ — $ 215 $ — $ — $ — $ 215 Accrued royalties — 531 601 — 1,132 — — — 1,132 Accrued liabilities — 64 179 — 243 — — — 243 Accrued interest 50 — — — 50 10 — — 60 Deferred revenue — 167 52 — 219 — — — 219 Current portion of long-term debt 13 — — — 13 — — — 13 Other current liabilities — 1 2 — 3 — — — 3 Total current liabilities 101 854 920 — 1,875 10 — — 1,885 Long-term debt 2,867 — — — 2,867 150 — — 3,017 Deferred tax liabilities, net — 128 255 — 383 — — — 383 Other noncurrent liabilities 13 124 142 — 279 — — — 279 Total liabilities 2,981 1,106 1,317 — 5,404 160 — — 5,564 Total Warner Music Group Corp. equity (deficit) 525 3,192 481 (3,673 ) 525 371 371 (896 ) 371 Noncontrolling interest — 2 17 — 19 — — — 19 Total equity (deficit) 525 3,194 498 (3,673 ) 544 371 371 (896 ) 390 Total liabilities and equity (deficit) $ 3,506 $ 4,300 $ 1,815 $ (3,673 ) $ 5,948 $ 531 $ 371 $ (896 ) $ 5,954 Consolidating Statement of Operations (Unaudited) For The Three Months Ended June 30, 2015 WMG WMG WMG Warner Warner Acquisition Non- Acquisition Holdings Music Music Corp. Guarantor Guarantor Corp. Corp. Group Group Corp. (issuer) Subsidiaries Subsidiaries Eliminations Consolidated (issuer) Corp. Eliminations Consolidated (in millions) Revenues $ — $ 419 $ 428 $ (137 ) $ 710 $ — $ — $ — $ 710 Costs and expenses: Cost of revenue — (208 ) (208 ) 43 (373 ) — — — (373 ) Selling, general and administrative expenses — (215 ) (130 ) 94 (251 ) — — — (251 ) Amortization of intangible assets — (31 ) (32 ) — (63 ) — — — (63 ) Total costs and expenses — (454 ) (370 ) 137 (687 ) — — — (687 ) Operating (loss) income — (35 ) 58 — 23 — — — 23 Interest income (expense), net (22 ) 1 (19 ) — (40 ) (5 ) — — (45 ) Equity gains (losses) from equity method investments (9 ) (52 ) — 61 — (39 ) (44 ) 83 — Other income (expense), net (4 ) — (13 ) — (17 ) — — — (17 ) Income (loss) before income taxes (35 ) (86 ) 26 61 (34 ) (44 ) (44 ) 83 (39 ) Income tax benefit (expense) (4 ) (9 ) 2 7 (4 ) — — — (4 ) Net income (loss) (39 ) (95 ) 28 68 (38 ) (44 ) (44 ) 83 (43 ) Less: income attributable to noncontrolling interest — (1 ) — — (1 ) — — — (1 ) Net income (loss) attributable to Warner Music Group Corp. $ (39 ) $ (96 ) $ 28 $ 68 $ (39 ) $ (44 ) $ (44 ) $ 83 $ (44 ) Consolidating Statement of Operations (Unaudited) For The Three Months Ended June 30, 2014 WMG WMG WMG Warner Warner Acquisition Non- Acquisition Holdings Music Music Corp. Guarantor Guarantor Corp. Corp. Group Group Corp. (issuer) Subsidiaries Subsidiaries Eliminations Consolidated (issuer) Corp. Eliminations Consolidated (in millions) Revenues $ — $ 408 $ 534 $ (154 ) $ 788 $ — $ — $ — $ 788 Costs and expenses: Cost of revenue — (188 ) (280 ) 51 (417 ) — — — (417 ) Selling, general and administrative expenses — (267 ) (155 ) 103 (319 ) — — — (319 ) Amortization of intangible assets — (30 ) (37 ) — (67 ) — — — (67 ) Total costs and expenses — (485 ) (472 ) 154 (803 ) — — — (803 ) Operating income (loss) — (77 ) 62 — (15 ) — — — (15 ) Loss on extinguishment of debt (141 ) — — — (141 ) — — — (141 ) Interest income (expense), net (23 ) 2 (22 ) — (43 ) (5 ) — — (48 ) Equity gains (losses) from equity method investments (32 ) 31 — 1 — (180 ) (185 ) 365 — Other income (expense), net — 1 3 — 4 — — — 4 Income (loss) before income taxes (196 ) (43 ) 43 1 (195 ) (185 ) (185 ) 365 (200 ) Income tax benefit (expense) 16 2 22 (24 ) 16 — — — 16 Net income (loss) (180 ) (41 ) 65 (23 ) (179 ) (185 ) (185 ) 365 (184 ) Less: income attributable to noncontrolling interest — (1 ) — — (1 ) — — — (1 ) Net income (loss) attributable to Warner Music Group Corp. $ (180 ) $ (42 ) $ 65 $ (23 ) $ (180 ) $ (185 ) $ (185 ) $ 365 $ (185 ) Consolidating Statement of Operations (Unaudited) For The Nine Months Ended June 30, 2015 WMG WMG WMG Warner Warner Acquisition Non- Acquisition Holdings Music Music Corp. Guarantor Guarantor Corp. Corp. Group Group Corp. (issuer) Subsidiaries Subsidiaries Eliminations Consolidated (issuer) Corp. Eliminations Consolidated (in millions) Revenues $ — $ 1,195 $ 1,238 $ (217 ) $ 2,216 $ — $ — $ — $ 2,216 Costs and expenses: Cost of revenue — (578 ) (671 ) 113 (1,136 ) — — — (1,136 ) Selling, general and administrative expenses 1 (477 ) (427 ) 104 (799 ) — — — (799 ) Amortization of intangible assets — (91 ) (100 ) — (191 ) — — — (191 ) Total costs and expenses 1 (1,146 ) (1,198 ) 217 (2,126 ) — — — (2,126 ) Operating (loss) income 1 49 40 — 90 — — — 90 Interest income (expense), net (62 ) 5 (63 ) — (120 ) (16 ) — — (136 ) Equity gains (losses) from equity method investments 26 (63 ) — 38 1 (52 ) (68 ) 120 1 Other income (expense), net (10 ) — (3 ) — (13 ) — — — (13 ) Income (loss) before income taxes (45 ) (9 ) (26 ) 38 (42 ) (68 ) (68 ) 120 (58 ) Income tax benefit (expense) (7 ) (14 ) 1 13 (7 ) — — — (7 ) Net income (loss) (52 ) (23 ) (25 ) 51 (49 ) (68 ) (68 ) 120 (65 ) Less: income attributable to noncontrolling interest — (1 ) (2 ) — (3 ) — — — (3 ) Net income (loss) attributable to Warner Music Group Corp. $ (52 ) $ (24 ) $ (27 ) $ 51 $ (52 ) $ (68 ) $ (68 ) $ 120 $ (68 ) Consolidating Statement of Operations (Unaudited) For The Nine Months Ended June 30, 2014 WMG WMG WMG Warner Warner Acquisition Non- Acquisition Holdings Music Music Corp. Guarantor Guarantor Corp. Corp. Group Group Corp. (issuer) Subsidiaries Subsidiaries Eliminations Consolidated (issuer) Corp. Eliminations Consolidated (in millions) Revenues $ — $ 1,115 $ 1,377 $ (236 ) $ 2,256 $ — $ — $ — $ 2,256 Costs and expenses: Cost of revenue — (479 ) (823 ) 125 (1,177 ) — — — (1,177 ) Selling, general and administrative expenses — (503 ) (493 ) 111 (885 ) — — — (885 ) Amortization of intangible assets — (90 ) (109 ) — (199 ) — — — (199 ) Total costs and expenses — (1,072 ) (1,425 ) 236 (2,261 ) — — — (2,261 ) Operating income (loss) — 43 (48 ) — (5 ) — — — (5 ) Loss on extinguishment of debt (141 ) — — — (141 ) — — — (141 ) Interest income (expense), net (82 ) 6 (65 ) — (141 ) (16 ) — — (157 ) Equity gains (losses) from equity method investments (85 ) 17 — 68 — (266 ) (282 ) 548 — Other income (expense), net 15 (18 ) — — (3 ) — — — (3 ) Income (loss) before income taxes (293 ) 48 (113 ) 68 (290 ) (282 ) (282 ) 548 (306 ) Income tax benefit (expense) 27 (6 ) 32 (26 ) 27 — — — 27 Net income (loss) (266 ) 42 (81 ) 42 (263 ) (282 ) (282 ) 548 (279 ) Less: income attributable to noncontrolling interest — (1 ) (2 ) — (3 ) — — — (3 ) Net income (loss) attributable to Warner Music Group Corp. $ (266 ) $ 41 $ (83 ) $ 42 $ (266 ) $ (282 ) $ (282 ) $ 548 $ (282 ) Consolidating Statement of Comprehensive Income (Unaudited) For The Three Months Ended June 30, 2015 WMG WMG WMG Warner Warner Acquisition Non- Acquisition Holdings Music Music Corp. Guarantor Guarantor Corp. Corp. Group Group Corp. (issuer) Subsidiaries Subsidiaries Eliminations Consolidated (issuer) Corp. Eliminations Consolidated (in millions) Net (loss) income $ (39 ) $ (95 ) $ 28 $ 68 $ (38 ) $ (44 ) $ (44 ) $ 83 $ (43 ) Other comprehensive income (loss), net of tax: Foreign currency adjustment 41 — 41 (41 ) 41 41 41 (82 ) 41 Other comprehensive income (loss), net of tax: 41 — 41 (41 ) 41 41 41 (82 ) 41 Total comprehensive (loss) income 2 (95 ) 69 27 3 (3 ) (3 ) 1 (2 ) Less: income attributable to noncontrolling interest — (1 ) — — (1 ) — — — (1 ) Comprehensive (loss) income attributable to Warner Music Group Corp. $ 2 $ (96 ) $ 69 $ 27 $ 2 $ (3 ) $ (3 ) $ 1 $ (3 ) Consolidating Statement of Comprehensive Income (Unaudited) For The Three Months Ended June 30, 2014 WMG WMG WMG Warner Warner Acquisition Non- Acquisition Holdings Music Music Corp. Guarantor Guarantor Corp. Corp. Group Group Corp. (issuer) Subsidiaries Subsidiaries Eliminations Consolidated (issuer) Corp. Eliminations Consolidated (in millions) Net (loss) income $ (180 ) $ (41 ) $ 65 $ (23 ) $ (179 ) $ (185 ) $ (185 ) $ 365 $ (184 ) Other comprehensive income (loss), net of tax: Foreign currency adjustment 4 — 4 (4 ) 4 4 4 (8 ) 4 Other comprehensive income (loss), net of tax: 4 — 4 (4 ) 4 4 4 (8 ) 4 Total comprehensive (loss) income (176 ) (41 ) 69 (27 ) (175 ) (181 ) (181 ) 357 (180 ) Less: income attributable to noncontrolling interest — (1 ) — — (1 ) — — — (1 ) Comprehensive (loss) income attributable to Warner Music Group Corp. $ (176 ) $ (42 ) $ 69 $ (27 ) $ (176 ) $ (181 ) $ (181 ) $ 357 $ (181 ) Consolidating Statement of Comprehensive Income (Unaudited) For The Nine Months Ended June 30, 2015 WMG WMG WMG Warner Warner Acquisition Non- Acquisition Holdings Music Music Corp. Guarantor Guarantor Corp. Corp. Group Group Corp. (issuer) Subsidiaries Subsidiaries Eliminations Consolidated (issuer) Corp. Eliminations Consolidated (in millions) Net (loss) income $ (52 ) $ (23 ) $ (25 ) $ 51 $ (49 ) $ (68 ) $ (68 ) $ 120 $ (65 ) Other comprehensive income (loss), net of tax: Foreign currency adjustment (49 ) — (49 ) 49 (49 ) (49 ) (49 ) 98 (49 ) Other comprehensive income (loss), net of tax: (49 ) — (49 ) 49 (49 ) (49 ) (49 ) 98 (49 ) Total comprehensive (loss) income (101 ) (23 ) (74 ) 100 (98 ) (117 ) (117 ) 218 (114 ) Less: income attributable to noncontrolling interest — (1 ) (2 ) — (3 ) — — — (3 ) Comprehensive (loss) income attributable to Warner Music Group Corp. $ (101 ) $ (24 ) $ (76 ) $ 100 $ (101 ) $ (117 ) $ (117 ) $ 218 $ (117 ) Consolidating Statement of Comprehensive Income (Unaudited) For The Nine Months Ended June 30, 2014 WMG WMG WMG Warner Warner Acquisition Non- Acquisition Holdings Music Music Corp. Guarantor Guarantor Corp. Corp. Group Group Corp. (issuer) Subsidiaries Subsidiaries Eliminations Consolidated (issuer) Corp. Eliminations Consolidated (in millions) Net (loss) income $ (266 ) $ 42 $ (81 ) $ 42 $ (263 ) $ (282 ) $ (282 ) $ 548 $ (279 ) Other comprehensive income (loss), net of tax: Foreign currency adjustment (2 ) — (2 ) 2 (2 ) (2 ) (2 ) 4 (2 ) Other comprehensive income (loss), net of tax: (2 ) — (2 ) 2 (2 ) (2 ) (2 ) 4 (2 ) Total comprehensive (loss) income (268 ) 42 (83 ) 44 (265 ) (284 ) (284 ) 552 (281 ) Less: income attributable to noncontrolling interest — (1 ) (2 ) — (3 ) — — — (3 ) Comprehensive (loss) income attributable to Warner Music Group Corp. $ (268 ) $ 41 $ (85 ) $ 44 $ (268 ) $ (284 ) $ (284 ) $ 552 $ (284 ) Consolidating Statement of Cash Flows (Unaudited) For The Nine Months Ended June 30, 2015 WMG WMG WMG Warner Warner Acquisition Non- Acquisition Holdings Music Music Corp. Guarantor Guarantor Corp. Corp. Group Group Corp. (issuer) Subsidiaries Subsidiaries Eliminations Consolidated (issuer) Corp. Eliminations Consolidated (in millions) Cash flows from operating activities Net (loss) income $ (52 ) $ (23 ) $ (25 ) $ 51 $ (49 ) $ (68 ) $ (68 ) $ 120 $ (65 ) Adjustments to reconcile net (loss) income to net cash provided by operating activities: Depreciation and amortization — 121 112 — 233 — — — 233 Unrealized gains/losses and remeasurement of foreign denominated loans 93 46 (120 ) — 19 — — — 19 Deferred income taxes — — (17 ) — (17 ) — — — (17 ) Non-cash interest expense 7 — — — 7 1 — — 8 Non-cash share-based compensation expense — — — — — — — — — Equity losses (gains), including distributions (26 ) 63 — (38 ) (1 ) 52 68 (120 ) (1 ) Changes in operating assets and liabilities: Accounts receivable — 18 (2 ) — 16 — — — 16 Inventories — (1 ) (2 ) — (3 ) — — — (3 ) Royalty advances — (18 ) (37 ) — (55 ) — — — (55 ) Accounts payable and accrued liabilities — (93 ) 20 (13 ) (86 ) — — — (86 ) Royalty payables — (55 ) 90 — 35 — — — 35 Accrued interest (7 ) — — — (7 ) (5 ) — — (12 ) Deferred revenue — 18 21 — 39 — — — 39 Other balance sheet changes (1 ) (6 ) 14 — 7 — — — 7 Net cash provided by (used in) operating activities 14 70 54 — 138 (20 ) — — 118 Cash flows from investing activities Acquisition of music publishing rights, net — (8 ) (4 ) — (12 ) — — — (12 ) Capital expenditures — (38 ) (13 ) — (51 ) — — — (51 ) Investments and acquisitions of businesses, net — (9 ) (7 ) — (16 ) — — — (16 ) Advances to issuer 16 — — (16 ) — — — — — Net cash provided by (used in) investing activities 16 (55 ) (24 ) (16 ) (79 ) — — — (79 ) Cash flows from financing activities Dividend by Acquisition Corp. to Holdings Corp. (20 ) — — — (20 ) 20 — — — Proceeds from the Revolving Credit Facility 258 — — — 258 — — — 258 Repayment of the Revolving Credit Facility (258 ) — — — (258 ) — — — (258 ) Repayment of Acquisition Corp. Senior Term Loan Facility (10 ) — — — (10 ) — — — (10 ) Distribution to noncontrolling interest holder — (1 ) (2 ) — (3 ) — — — (3 ) Repayment of capital lease obligations — — (2 ) — (2 ) — — — (2 ) Change in due to (from) issuer — (16 ) — 16 — — — — — Net cash provided by (used in) financing activities (30 ) (17 ) (4 ) 16 (35 ) 20 — — (15 ) Effect of exchange rate changes on cash and equivalents — — (13 ) — (13 ) — — — (13 ) Net increase (decrease) in cash and equivalents — (2 ) 13 — 11 — — — 11 Cash and equivalents at beginning of period — 26 131 — 157 — — — 157 Cash and equivalents at end of period $ — $ 24 $ 144 $ — $ 168 $ — $ — $ — $ 168 Consolidating Statement of Cash Flows (Unaudited) For The Nine Months Ended June 30, 2014 WMG WMG WMG Warner Warner Acquisition Non- Acquisition Holdings Music Music Corp. Guarantor Guarantor Corp. Corp. Group Group Corp. (issuer) Subsidiaries Subsidiaries Eliminations Consolidated (issuer) Corp. Eliminations Consolidated (in millions) Cash flows from operating activities Net (loss) income $ (266 ) $ 42 $ (81 ) $ 42 $ (263 ) $ (282 ) $ (282 ) $ 548 $ (279 ) Adjustments to reconcile net (loss) income to net cash provided by operating activities: Loss on extinguishment of debt 141 — — — 141 — — — 141 Depreciation and amortization — 117 121 — 238 — — — 238 Unrealized gains/losses and remeasurement of foreign denominated loans 1 (22 ) (20 ) — (41 ) — — — (41 ) Deferred income taxes — — (47 ) — (47 ) — — — (47 ) Non-cash interest expense 10 — — — 10 1 — — 11 Non-cash share-based compensation expense — 5 — — 5 — — — 5 Equity losses (gains), including distributions 85 (17 ) — (68 ) — 266 282 (548 ) — Changes in operating assets and liabilities: Accounts receivable — 24 43 — 67 — — — 67 Inventories — — (4 ) — (4 ) — — — (4 ) Royalty advances — 5 (29 ) — (24 ) — — — (24 ) Accounts payable and accrued liabilities — (90 ) (32 ) 26 (96 ) — — — (96 ) Royalty payables — (52 ) 63 — 11 — — — 11 Accrued interest (20 ) — — — (20 ) (5 ) — — (25 ) Deferred revenue — 84 9 — 93 — — — 93 Other balance sheet changes — (2 ) (7 ) — (9 ) — — — (9 ) Net cash provided by (used in) operating activities (49 ) 94 16 — 61 (20 ) — — 41 Cash flows from investing activities Acquisition of music publishing rights, net — (13 ) (7 ) — (20 ) — — — (20 ) Capital expenditures — (31 ) (15 ) — (46 ) — — — (46 ) Investments and acquisitions of businesses, net — (10 ) (16 ) — (26 ) — — — (26 ) Advances to issuer 22 — — (22 ) — — — — — Net cash provided by (used in) investing activities 22 (54 ) (38 ) (22 ) (92 ) — — — (92 ) Cash flows from financing activities Dividend by Acquisition Corp. to Holdings Corp. (20 ) — — — (20 ) 20 — — — Proceeds from the Revolving Credit Facility 490 — — — 490 — — — 490 Repayment of the Revolving Credit Facility (490 ) — — — (490 ) — — — (490 ) Proceeds from issuance of Acquisition Corp. 5.625% Senior Secured Notes 275 — — — 275 — — — 275 Proceeds from issuance of Acquisition Corp. 6.75% Senior Notes 660 — — — 660 — — — 660 Repayment of Acquisition Corp. 11.5% Senior Notes (765 ) — — — (765 ) — — — (765 ) Financing costs paid (104 ) — — — (104 ) — — — (104 ) Deferred financing costs paid (12 ) — — — (12 ) — — — (12 ) Repayment of Term Loan (7 ) — — — (7 ) — — — (7 ) Repayment of capital lease obligations — — (2 ) — (2 ) — — — (2 ) Distribution to noncontrolling interest holder — — (2 ) — (2 ) — — — (2 ) Change in due to (from) issuer — (22 ) — 22 — — — — — Net cash provided by (used in) financing activities 27 (22 ) (4 ) 22 23 20 — — 43 Effect of exchange rate changes on cash and equivalents — — (5 ) — (5 ) — — — (5 ) Net increase (decrease) in cash and equivalents — 18 (31 ) — (13 ) — — — (13 ) Cash and equivalents at beginning of period — 16 139 — 155 — — — 155 Cash and equivalents at end of period $ — $ 34 $ 108 $ — $ 142 $ — $ — $ — $ 142 |
Summary of Significant Accoun21
Summary of Significant Accounting Policies (Policies) | 9 Months Ended |
Jun. 30, 2015 | |
Accounting Policies [Abstract] | |
Interim Financial Statements | Interim Financial Statements The accompanying unaudited consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States (“U.S. GAAP”) for interim financial information and with the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all of the information and notes required by U.S. GAAP for complete financial statements. In the opinion of management, all adjustments (consisting of normal recurring accruals) considered necessary for a fair presentation have been included. Operating results for the three and nine month periods ended June 30, 2015 are not necessarily indicative of the results that may be expected for the fiscal year ended September 30, 2015. The consolidated balance sheet at September 30, 2014 has been derived from the audited consolidated financial statements at that date but does not include all of the information and notes required by U.S. GAAP for complete financial statements. For further information, refer to the consolidated financial statements and notes thereto included in our Annual Report on Form 10-K for the fiscal year ended September 30, 2014 (File No. 001-32502). |
Basis of Consolidation | Basis of Consolidation The accompanying financial statements present the consolidated accounts of all entities in which the Company has a controlling voting interest and/or variable interest required to be consolidated in accordance with U.S. GAAP. All intercompany balances and transactions have been eliminated. Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) Topic 810, Consolidation (“ASC 810”) requires the Company first evaluate its investments to determine if any investments qualify as a variable interest entity (“VIE”). A VIE is consolidated if the Company is deemed to be the primary beneficiary of the VIE, which is the party involved with the VIE that has both (i) the power to control the most significant activities of the VIE and (ii) either the obligation to absorb losses or the right to receive benefits that could potentially be significant to the VIE. If an entity is not deemed to be a VIE, the Company consolidates the entity if the Company has a controlling voting interest. The Company maintains a 52-53 week fiscal year ending on the last Friday in each reporting period. As such, all references to June 30, 2015 and June 30, 2014 relate to the periods ended June 26, 2015 and June 27, 2014, respectively. For convenience purposes, the Company continues to date its financial statements as of June 30. The fiscal year ended September 30, 2014 ended on September 26, 2014. For convenience purposes, the Company continues to date its balance sheet as of September 30. The Company has performed a review of all subsequent events through the date the financial statements were issued, and has determined that no additional disclosures are necessary. |
New Accounting Pronouncements | New Accounting Pronouncements During the first quarter of fiscal 2015, the Company adopted Accounting Standards Update (“ASU”) 2013-11, Presentation of an Unrecognized Tax Benefit When a Net Operating Loss Carryforward, a Similar Tax Loss, or a Tax Credit Carryforward Exists (“ASU 2013-11”). ASU 2013-11 requires an unrecognized tax benefit, or a portion of an unrecognized tax benefit, to be presented in the financial statements as a reduction to a deferred tax asset for a net operating loss carryforward, a similar tax loss, or a tax credit carryforward. The adoption of this standard did not have an impact on the Company’s financial statements, other than presentation. During the first quarter of fiscal 2015, the Company adopted ASU 2014-17, Business Combinations (Topic 805): Pushdown Accounting (“ASU 2014-17”). This ASU provides acquired entities the option to apply pushdown accounting in their separate financial statements when an acquirer obtains control of them. ASU 2014-17 was effective upon issuance. This election to apply pushdown accounting is made for each individual change-in-control event. The adoption of this standard did not have an impact on the Company’s financial statements. In May 2014, the FASB issued guidance codified in ASC 606, Revenue Recognition – Revenue from Contracts with Customers (“ASC 606”), which replaces the guidance in former ASC 605, Revenue Recognition and ASC 928, Entertainment – Music. The amendment was the result of a joint effort by the FASB and the International Accounting Standards Board to improve financial reporting by creating common revenue recognition guidance for U.S. GAAP and international financial reporting standards ("IFRS"). The joint project clarifies the principles for recognizing revenue and develops a common revenue standard for U.S. GAAP and IFRS. ASC 606 is effective for annual periods beginning after December 15, 2016, and interim periods within those years. Early application is not permitted. The update may be applied using one of two methods: retrospective application to each prior reporting period presented, or retrospective application with the cumulative effect of initially applying the update recognized at the date of initial application. The Company is currently evaluating the transition method that will be elected and the impact of the update on its financial statements and disclosures. In August 2014, the FASB issued ASU 2014-15, Disclosure of Uncertainties about an Entity’s Ability to Continue as a Going Concern (“ASU 2014-15”). This ASU will explicitly require management to assess an entity’s ability to continue as a going concern, and to provide related disclosure when substantial doubt exists. ASU 2014-15 will be effective in the first annual period ending after December 15, 2016, and interim periods thereafter. Earlier adoption is permitted. The adoption of this standard is not expected to have a significant impact on the Company’s financial statements, other than disclosure. In April 2015, the FASB issued ASU 2015-03, Simplifying the Presentation of Debt Issuance Costs (“ASU 2015-03”). This ASU will require that debt issuance costs are presented as a direct deduction to the related debt in the liability section of the balance sheet, rather than presented as an asset. ASU 2015-03 will be effective for annual periods beginning after December 15, 2015, and interim periods within those years. Earlier adoption is permitted. The adoption of this standard is not expected to have a significant impact on the Company’s financial statements, other than presentation. |
Comprehensive Loss (Tables)
Comprehensive Loss (Tables) | 9 Months Ended |
Jun. 30, 2015 | |
Equity [Abstract] | |
Schedule of Accumulated Other Comprehensive Loss | Comprehensive loss, which is reported in the accompanying consolidated statements of equity, consists of net (loss) income and other gains and losses affecting equity that, under U.S. GAAP, are excluded from net (loss) income. For the Company, the components of other comprehensive loss primarily consist of foreign currency translation losses and minimum pension liabilities. The following summary sets forth the changes in the components of accumulated other comprehensive loss, net of related taxes: Foreign Minimum Accumulated Currency Pension Other Translation Liability Comprehensive Loss Adjustment Loss, net (in millions) Balance at September 30, 2014 $ (98 ) $ (10 ) $ (108 ) Other comprehensive loss (a) (49 ) — (49 ) Amounts reclassified from accumulated other comprehensive income — — — Balance at June 30, 2015 $ (147 ) $ (10 ) $ (157 ) (a) Foreign currency translation adjustments include intra-entity foreign currency transactions that are of a long-term investment nature of $32.2 million |
Goodwill and Intangible Assets
Goodwill and Intangible Assets (Tables) | 9 Months Ended |
Jun. 30, 2015 | |
Goodwill And Intangible Assets Disclosure [Abstract] | |
Changes in Goodwill for Each Reportable Segment | The following analysis details the changes in goodwill for each reportable segment: Recorded Music Music Publishing Total (in millions) Balance at September 30, 2014 $ 1,197 $ 464 $ 1,661 Acquisitions 3 — 3 Dispositions — — — Other adjustments (31 ) — (31 ) Balance at June 30, 2015 $ 1,169 $ 464 $ 1,633 |
Schedule of Intangible Assets | Intangible assets consist of the following: Weighted Average June 30, September 30, Useful Life 2015 2014 (in millions) Intangible assets subject to amortization: Recorded music catalog 11 years $ 1,004 $ 1,040 Music publishing copyrights 27 years 1,500 1,550 Artist and songwriter contracts 13 years 936 975 Trademarks 7 years 7 7 Total gross intangible asset subject to amortization 3,447 3,572 Accumulated amortization (850 ) (688 ) Total net intangible assets subject to amortization 2,597 2,884 Intangible assets not subject to amortization: Trademarks and tradenames Indefinite 120 120 Total net other intangible assets $ 2,717 $ 3,004 |
Debt (Tables)
Debt (Tables) | 9 Months Ended |
Jun. 30, 2015 | |
Debt Disclosure [Abstract] | |
Long-term Debt | Long-term debt, including the current portion, consists of the following: June 30, September 30, 2015 2014 (in millions) Revolving Credit Facility—Acquisition Corp. (a) $ — $ — Senior Term Loan Facility due 2020—Acquisition Corp. (b) 1,285 1,294 5.625% Senior Secured Notes due 2022—Acquisition Corp. 275 275 6.00% Senior Secured Notes due 2021—Acquisition Corp. 450 450 6.25% Senior Secured Notes due 2021—Acquisition Corp. (c) 176 201 6.75% Senior Notes due 2022—Acquisition Corp. 660 660 13.75% Senior Notes due 2019—Holdings 150 150 Total debt 2,996 3,030 Less: current portion 13 13 Total long-term debt $ 2,983 $ 3,017 ( a ) Reflects $150 million of commitments under the Revolving Credit Facility, less letters of credit outstanding of approximately $5 million and $11 million at June 30, 2015 and September 30, 2014, respectively. There were no loans outstanding under the Revolving Credit Facility at June 30, 2015 or September 30, 2014. (b) Principal amount of $1.290 billion and $1.300 billion less unamortized discount of $5 million and $6 million at June 30, 2015 and September 30, 2014, respectively. Of this amount, $13 million, representing the scheduled amortization of the Senior Term Loan Facility, was included in the current portion of long-term debt at June 30, 2015 and September 30, 2014. (c) Face amount of €158 million. Above amounts represent the dollar equivalent of such notes at June 30, 2015 and September 30, 2014. |
Restructuring (Tables)
Restructuring (Tables) | 9 Months Ended |
Jun. 30, 2015 | |
Restructuring Cost And Reserve [Line Items] | |
Summary of Charges in Consolidated Statement of Operations | Total restructuring activity is as follows: Employee- Real related Costs Estate Costs Other Total (in millions) Balance at September 30, 2014 $ 12 $ 1 $ — $ 13 Restructuring costs 1 1 — 2 Cash payments (10 ) (2 ) — (12 ) Balance at June 30, 2015 $ 3 $ — $ — $ 3 |
Selling, General and Administrative Expenses | |
Restructuring Cost And Reserve [Line Items] | |
Summary of Charges in Consolidated Statement of Operations | A summary of the charges in the consolidated statements of operations resulting from the Restructuring Plan is shown below: Three Months Ended Nine Months Ended June 30, June 30, 2015 2014 2015 2014 (in millions) Selling, general and administrative expenses $ — $ 18 $ 2 $ 42 Total restructuring expense $ — $ 18 $ 2 $ 42 |
Derivative Financial Instrume26
Derivative Financial Instruments (Tables) | 9 Months Ended |
Jun. 30, 2015 | |
Derivative Instruments And Hedging Activities Disclosure [Abstract] | |
Summary of Amounts Recorded in Consolidated Balance Sheet | The following is a summary of amounts recorded in the Consolidated Balance Sheet pertaining to the Company’s use of foreign currency derivatives at June 30, 2015 and September 30, 2014: June 30, September 30, 2015 (a) 2014 (b) (in millions) Other current assets $ — $ — Other current liabilities — — (a) Includes less than $1 million of foreign exchange derivative contracts in asset and liability positions. (b) Includes less than $1 million of foreign exchange derivative contracts in asset and liability positions. |
Segment Information (Tables)
Segment Information (Tables) | 9 Months Ended |
Jun. 30, 2015 | |
Segment Reporting [Abstract] | |
Schedule of Segment Information | The accounting policies of the Company’s business segments are the same as those described in the summary of significant accounting policies included elsewhere herein. The Company accounts for intersegment sales at fair value as if the sales were to third parties. While intercompany transactions are treated like third-party transactions to determine segment performance, the revenues (and corresponding expenses recognized by the segment that is counterparty to the transaction) are eliminated in consolidation, and therefore, do not themselves impact consolidated results. Corporate Recorded Music expenses and Music Publishing eliminations Total Three Months Ended (in millions) June 30, 2015 Revenues $ 592 $ 123 $ (5 ) $ 710 OIBDA 100 20 (20 ) 100 Depreciation of property, plant and equipment (10 ) (1 ) (3 ) (14 ) Amortization of intangible assets (47 ) (16 ) — (63 ) Operating income (loss) 43 3 (23 ) 23 June 30, 2014 Revenues $ 656 $ 137 $ (5 ) $ 788 OIBDA 71 24 (29 ) 66 Depreciation of property, plant and equipment (9 ) (2 ) (3 ) (14 ) Amortization of intangible assets (51 ) (16 ) — (67 ) Operating income (loss) 11 6 (32 ) (15 ) Corporate Recorded Music expenses and Music Publishing eliminations Total Nine Months Ended (in millions) June 30, 2015 Revenues $ 1,870 $ 359 $ (13 ) $ 2,216 OIBDA 302 88 (67 ) 323 Depreciation of property, plant and equipment (29 ) (4 ) (9 ) (42 ) Amortization of intangible assets (143 ) (48 ) — (191 ) Operating income (loss) 130 36 (76 ) 90 June 30, 2014 Revenues $ 1,882 $ 387 $ (13 ) $ 2,256 OIBDA 203 98 (68 ) 233 Depreciation of property, plant and equipment (26 ) (4 ) (9 ) (39 ) Amortization of intangible assets (150 ) (49 ) — (199 ) Operating income (loss) 27 45 (77 ) (5 ) |
Fair Value Measurements (Tables
Fair Value Measurements (Tables) | 9 Months Ended |
Jun. 30, 2015 | |
Fair Value Disclosures [Abstract] | |
Schedule of Fair Value of Financial Instruments | In accordance with the fair value hierarchy, described above, the following table shows the fair value of the Company’s financial instruments that are required to be measured at fair value as of June 30, 2015 and September 30, 2014. Fair Value Measurements as of June 30, 2015 (Level 1) (Level 2) (Level 3) Total (in millions) Other Current Liabilities: Contractual Obligations (a) — — (1 ) (1 ) Other Non-Current Liabilities: Contractual Obligations (a) — — — — Total $ — $ — $ (1 ) $ (1 ) Fair Value Measurements as of September 30, 2014 (Level 1) (Level 2) (Level 3) Total (in millions) Other Current Liabilities: Contractual Obligations (a) — — (2 ) (2 ) Other Non-Current Liabilities: Contractual Obligations (a) — — (1 ) (1 ) Total $ — $ — $ (3 ) $ (3 ) (a) This represents purchase obligations and contingent consideration related to the Company’s various acquisitions. This is based on a discounted cash flow approach and it is adjusted to fair value on a recurring basis and any adjustments are included as a component of operating income in the statement of operations. These amounts were mainly calculated using unobservable inputs such as future earnings performance of the Company’s various acquisitions and the expected timing of the payment. |
Reconciliation of Net Liabilities Classified as Level 3 | The following table reconciles the beginning and ending balances of net assets and liabilities classified as Level 3: Total (in millions) Balance at September 30, 2014 $ (3 ) Additions — Reductions — Payments 2 Balance at June 30, 2015 $ (1 ) |
Guarantor and Non-Guarantor S29
Guarantor and Non-Guarantor Subsidiaries Financial Information (Tables) | 9 Months Ended |
Jun. 30, 2015 | |
Condensed Financial Information Of Parent Company Only Disclosure [Abstract] | |
Schedule of Consolidating Balance Sheet (Unaudited) | Consolidating Balance Sheet (Unaudited) June 30, 2015 WMG WMG WMG Warner Warner Acquisition Non- Acquisition Holdings Music Music Corp. Guarantor Guarantor Corp. Corp. Group Group Corp. (issuer) Subsidiaries Subsidiaries Eliminations Consolidated (issuer) Corp. Eliminations Consolidated (in millions) Assets: Current assets: Cash and equivalents $ — $ 24 $ 144 $ — $ 168 $ — $ — $ — $ 168 Accounts receivable, net — 156 187 — 343 — — — 343 Inventories — 14 25 — 39 — — — 39 Royalty advances expected to be recouped within one year — 69 50 — 119 — — — 119 Deferred tax assets — 21 25 — 46 — — — 46 Prepaid and other current assets 5 11 42 — 58 — — — 58 Total current assets 5 295 473 — 773 — — — 773 Due (to) from parent companies 897 (340 ) (557 ) — — — — — — Investments in and advances to (from) consolidated subsidiaries 2,353 1,218 — (3,571 ) — 404 254 (658 ) — Royalty advances expected to be recouped after one year — 126 93 — 219 — — — 219 Property, plant and equipment, net — 149 78 — 227 — — — 227 Goodwill — 1,379 254 — 1,633 — — — 1,633 Intangible assets subject to amortization, net — 1,294 1,303 — 2,597 — — — 2,597 Intangible assets not subject to amortization — 71 49 — 120 — — — 120 Other assets 41 33 16 — 90 5 — — 95 Total assets $ 3,296 $ 4,225 $ 1,709 $ (3,571 ) $ 5,659 $ 409 $ 254 $ (658 ) $ 5,664 Liabilities and Deficit: Current liabilities: Accounts payable $ — $ 73 $ 78 $ — $ 151 $ — $ — $ — $ 151 Accrued royalties — 476 635 — 1,111 — — — 1,111 Accrued liabilities — 82 153 — 235 — — — 235 Accrued interest 43 — — — 43 5 — — 48 Deferred revenue — 180 67 — 247 — — — 247 Current portion of long-term debt 13 — — — 13 — — — 13 Other current liabilities — 1 18 — 19 — — — 19 Total current liabilities 56 812 951 — 1,819 5 — — 1,824 Long-term debt 2,833 — — — 2,833 150 — — 2,983 Deferred tax liabilities, net — 128 217 — 345 — — — 345 Other noncurrent liabilities 3 116 118 2 239 — — — 239 Total liabilities 2,892 1,056 1,286 2 5,236 155 — — 5,391 Total Warner Music Group Corp. equity (deficit) 404 3,167 406 (3,573 ) 404 254 254 (658 ) 254 Noncontrolling interest — 2 17 — 19 — — — 19 Total equity (deficit) 404 3,169 423 (3,573 ) 423 254 254 (658 ) 273 Total liabilities and equity (deficit) $ 3,296 $ 4,225 $ 1,709 $ (3,571 ) $ 5,659 $ 409 $ 254 $ (658 ) $ 5,664 Consolidating Balance Sheet September 30, 2014 WMG WMG WMG Warner Warner Acquisition Non- Acquisition Holdings Music Music Corp. Guarantor Guarantor Corp. Corp. Group Group Corp. (issuer) Subsidiaries Subsidiaries Eliminations Consolidated (issuer) Corp. Eliminations Consolidated (in millions) Assets: Current assets: Cash and equivalents $ — $ 26 $ 131 $ — $ 157 $ — $ — $ — $ 157 Accounts receivable, net — 174 209 — 383 — — — 383 Inventories — 13 26 — 39 — — — 39 Royalty advances expected to be recouped within one year — 62 40 — 102 — — — 102 Deferred tax assets — 21 25 — 46 — — — 46 Prepaid and other current assets 5 10 40 — 55 — — — 55 Total current assets 5 306 471 — 782 — — — 782 Due (to) from parent companies 924 (242 ) (682 ) — — — — — — Investments in and advances to (from) consolidated subsidiaries 2,531 1,142 — (3,673 ) — 525 371 (896 ) — Royalty advances expected to be recouped after one year — 115 75 — 190 — — — 190 Property, plant and equipment, net — 143 84 — 227 — — — 227 Goodwill — 1,379 282 — 1,661 — — — 1,661 Intangible assets subject to amortization, net — 1,372 1,512 — 2,884 — — — 2,884 Intangible assets not subject to amortization — 75 45 — 120 — — — 120 Other assets 46 10 28 — 84 6 — — 90 Total assets $ 3,506 $ 4,300 $ 1,815 $ (3,673 ) $ 5,948 $ 531 $ 371 $ (896 ) $ 5,954 Liabilities and Deficit: Current liabilities: Accounts payable $ 38 $ 91 $ 86 $ — $ 215 $ — $ — $ — $ 215 Accrued royalties — 531 601 — 1,132 — — — 1,132 Accrued liabilities — 64 179 — 243 — — — 243 Accrued interest 50 — — — 50 10 — — 60 Deferred revenue — 167 52 — 219 — — — 219 Current portion of long-term debt 13 — — — 13 — — — 13 Other current liabilities — 1 2 — 3 — — — 3 Total current liabilities 101 854 920 — 1,875 10 — — 1,885 Long-term debt 2,867 — — — 2,867 150 — — 3,017 Deferred tax liabilities, net — 128 255 — 383 — — — 383 Other noncurrent liabilities 13 124 142 — 279 — — — 279 Total liabilities 2,981 1,106 1,317 — 5,404 160 — — 5,564 Total Warner Music Group Corp. equity (deficit) 525 3,192 481 (3,673 ) 525 371 371 (896 ) 371 Noncontrolling interest — 2 17 — 19 — — — 19 Total equity (deficit) 525 3,194 498 (3,673 ) 544 371 371 (896 ) 390 Total liabilities and equity (deficit) $ 3,506 $ 4,300 $ 1,815 $ (3,673 ) $ 5,948 $ 531 $ 371 $ (896 ) $ 5,954 |
Schedule of Consolidating Statement of Operations (Unaudited) | Consolidating Statement of Operations (Unaudited) For The Three Months Ended June 30, 2015 WMG WMG WMG Warner Warner Acquisition Non- Acquisition Holdings Music Music Corp. Guarantor Guarantor Corp. Corp. Group Group Corp. (issuer) Subsidiaries Subsidiaries Eliminations Consolidated (issuer) Corp. Eliminations Consolidated (in millions) Revenues $ — $ 419 $ 428 $ (137 ) $ 710 $ — $ — $ — $ 710 Costs and expenses: Cost of revenue — (208 ) (208 ) 43 (373 ) — — — (373 ) Selling, general and administrative expenses — (215 ) (130 ) 94 (251 ) — — — (251 ) Amortization of intangible assets — (31 ) (32 ) — (63 ) — — — (63 ) Total costs and expenses — (454 ) (370 ) 137 (687 ) — — — (687 ) Operating (loss) income — (35 ) 58 — 23 — — — 23 Interest income (expense), net (22 ) 1 (19 ) — (40 ) (5 ) — — (45 ) Equity gains (losses) from equity method investments (9 ) (52 ) — 61 — (39 ) (44 ) 83 — Other income (expense), net (4 ) — (13 ) — (17 ) — — — (17 ) Income (loss) before income taxes (35 ) (86 ) 26 61 (34 ) (44 ) (44 ) 83 (39 ) Income tax benefit (expense) (4 ) (9 ) 2 7 (4 ) — — — (4 ) Net income (loss) (39 ) (95 ) 28 68 (38 ) (44 ) (44 ) 83 (43 ) Less: income attributable to noncontrolling interest — (1 ) — — (1 ) — — — (1 ) Net income (loss) attributable to Warner Music Group Corp. $ (39 ) $ (96 ) $ 28 $ 68 $ (39 ) $ (44 ) $ (44 ) $ 83 $ (44 ) Consolidating Statement of Operations (Unaudited) For The Three Months Ended June 30, 2014 WMG WMG WMG Warner Warner Acquisition Non- Acquisition Holdings Music Music Corp. Guarantor Guarantor Corp. Corp. Group Group Corp. (issuer) Subsidiaries Subsidiaries Eliminations Consolidated (issuer) Corp. Eliminations Consolidated (in millions) Revenues $ — $ 408 $ 534 $ (154 ) $ 788 $ — $ — $ — $ 788 Costs and expenses: Cost of revenue — (188 ) (280 ) 51 (417 ) — — — (417 ) Selling, general and administrative expenses — (267 ) (155 ) 103 (319 ) — — — (319 ) Amortization of intangible assets — (30 ) (37 ) — (67 ) — — — (67 ) Total costs and expenses — (485 ) (472 ) 154 (803 ) — — — (803 ) Operating income (loss) — (77 ) 62 — (15 ) — — — (15 ) Loss on extinguishment of debt (141 ) — — — (141 ) — — — (141 ) Interest income (expense), net (23 ) 2 (22 ) — (43 ) (5 ) — — (48 ) Equity gains (losses) from equity method investments (32 ) 31 — 1 — (180 ) (185 ) 365 — Other income (expense), net — 1 3 — 4 — — — 4 Income (loss) before income taxes (196 ) (43 ) 43 1 (195 ) (185 ) (185 ) 365 (200 ) Income tax benefit (expense) 16 2 22 (24 ) 16 — — — 16 Net income (loss) (180 ) (41 ) 65 (23 ) (179 ) (185 ) (185 ) 365 (184 ) Less: income attributable to noncontrolling interest — (1 ) — — (1 ) — — — (1 ) Net income (loss) attributable to Warner Music Group Corp. $ (180 ) $ (42 ) $ 65 $ (23 ) $ (180 ) $ (185 ) $ (185 ) $ 365 $ (185 ) Consolidating Statement of Operations (Unaudited) For The Nine Months Ended June 30, 2015 WMG WMG WMG Warner Warner Acquisition Non- Acquisition Holdings Music Music Corp. Guarantor Guarantor Corp. Corp. Group Group Corp. (issuer) Subsidiaries Subsidiaries Eliminations Consolidated (issuer) Corp. Eliminations Consolidated (in millions) Revenues $ — $ 1,195 $ 1,238 $ (217 ) $ 2,216 $ — $ — $ — $ 2,216 Costs and expenses: Cost of revenue — (578 ) (671 ) 113 (1,136 ) — — — (1,136 ) Selling, general and administrative expenses 1 (477 ) (427 ) 104 (799 ) — — — (799 ) Amortization of intangible assets — (91 ) (100 ) — (191 ) — — — (191 ) Total costs and expenses 1 (1,146 ) (1,198 ) 217 (2,126 ) — — — (2,126 ) Operating (loss) income 1 49 40 — 90 — — — 90 Interest income (expense), net (62 ) 5 (63 ) — (120 ) (16 ) — — (136 ) Equity gains (losses) from equity method investments 26 (63 ) — 38 1 (52 ) (68 ) 120 1 Other income (expense), net (10 ) — (3 ) — (13 ) — — — (13 ) Income (loss) before income taxes (45 ) (9 ) (26 ) 38 (42 ) (68 ) (68 ) 120 (58 ) Income tax benefit (expense) (7 ) (14 ) 1 13 (7 ) — — — (7 ) Net income (loss) (52 ) (23 ) (25 ) 51 (49 ) (68 ) (68 ) 120 (65 ) Less: income attributable to noncontrolling interest — (1 ) (2 ) — (3 ) — — — (3 ) Net income (loss) attributable to Warner Music Group Corp. $ (52 ) $ (24 ) $ (27 ) $ 51 $ (52 ) $ (68 ) $ (68 ) $ 120 $ (68 ) Consolidating Statement of Operations (Unaudited) For The Nine Months Ended June 30, 2014 WMG WMG WMG Warner Warner Acquisition Non- Acquisition Holdings Music Music Corp. Guarantor Guarantor Corp. Corp. Group Group Corp. (issuer) Subsidiaries Subsidiaries Eliminations Consolidated (issuer) Corp. Eliminations Consolidated (in millions) Revenues $ — $ 1,115 $ 1,377 $ (236 ) $ 2,256 $ — $ — $ — $ 2,256 Costs and expenses: Cost of revenue — (479 ) (823 ) 125 (1,177 ) — — — (1,177 ) Selling, general and administrative expenses — (503 ) (493 ) 111 (885 ) — — — (885 ) Amortization of intangible assets — (90 ) (109 ) — (199 ) — — — (199 ) Total costs and expenses — (1,072 ) (1,425 ) 236 (2,261 ) — — — (2,261 ) Operating income (loss) — 43 (48 ) — (5 ) — — — (5 ) Loss on extinguishment of debt (141 ) — — — (141 ) — — — (141 ) Interest income (expense), net (82 ) 6 (65 ) — (141 ) (16 ) — — (157 ) Equity gains (losses) from equity method investments (85 ) 17 — 68 — (266 ) (282 ) 548 — Other income (expense), net 15 (18 ) — — (3 ) — — — (3 ) Income (loss) before income taxes (293 ) 48 (113 ) 68 (290 ) (282 ) (282 ) 548 (306 ) Income tax benefit (expense) 27 (6 ) 32 (26 ) 27 — — — 27 Net income (loss) (266 ) 42 (81 ) 42 (263 ) (282 ) (282 ) 548 (279 ) Less: income attributable to noncontrolling interest — (1 ) (2 ) — (3 ) — — — (3 ) Net income (loss) attributable to Warner Music Group Corp. $ (266 ) $ 41 $ (83 ) $ 42 $ (266 ) $ (282 ) $ (282 ) $ 548 $ (282 ) |
Schedule of Consolidating Statement of Comprehensive Income (Unaudited) | Consolidating Statement of Comprehensive Income (Unaudited) For The Three Months Ended June 30, 2015 WMG WMG WMG Warner Warner Acquisition Non- Acquisition Holdings Music Music Corp. Guarantor Guarantor Corp. Corp. Group Group Corp. (issuer) Subsidiaries Subsidiaries Eliminations Consolidated (issuer) Corp. Eliminations Consolidated (in millions) Net (loss) income $ (39 ) $ (95 ) $ 28 $ 68 $ (38 ) $ (44 ) $ (44 ) $ 83 $ (43 ) Other comprehensive income (loss), net of tax: Foreign currency adjustment 41 — 41 (41 ) 41 41 41 (82 ) 41 Other comprehensive income (loss), net of tax: 41 — 41 (41 ) 41 41 41 (82 ) 41 Total comprehensive (loss) income 2 (95 ) 69 27 3 (3 ) (3 ) 1 (2 ) Less: income attributable to noncontrolling interest — (1 ) — — (1 ) — — — (1 ) Comprehensive (loss) income attributable to Warner Music Group Corp. $ 2 $ (96 ) $ 69 $ 27 $ 2 $ (3 ) $ (3 ) $ 1 $ (3 ) Consolidating Statement of Comprehensive Income (Unaudited) For The Three Months Ended June 30, 2014 WMG WMG WMG Warner Warner Acquisition Non- Acquisition Holdings Music Music Corp. Guarantor Guarantor Corp. Corp. Group Group Corp. (issuer) Subsidiaries Subsidiaries Eliminations Consolidated (issuer) Corp. Eliminations Consolidated (in millions) Net (loss) income $ (180 ) $ (41 ) $ 65 $ (23 ) $ (179 ) $ (185 ) $ (185 ) $ 365 $ (184 ) Other comprehensive income (loss), net of tax: Foreign currency adjustment 4 — 4 (4 ) 4 4 4 (8 ) 4 Other comprehensive income (loss), net of tax: 4 — 4 (4 ) 4 4 4 (8 ) 4 Total comprehensive (loss) income (176 ) (41 ) 69 (27 ) (175 ) (181 ) (181 ) 357 (180 ) Less: income attributable to noncontrolling interest — (1 ) — — (1 ) — — — (1 ) Comprehensive (loss) income attributable to Warner Music Group Corp. $ (176 ) $ (42 ) $ 69 $ (27 ) $ (176 ) $ (181 ) $ (181 ) $ 357 $ (181 ) Consolidating Statement of Comprehensive Income (Unaudited) For The Nine Months Ended June 30, 2015 WMG WMG WMG Warner Warner Acquisition Non- Acquisition Holdings Music Music Corp. Guarantor Guarantor Corp. Corp. Group Group Corp. (issuer) Subsidiaries Subsidiaries Eliminations Consolidated (issuer) Corp. Eliminations Consolidated (in millions) Net (loss) income $ (52 ) $ (23 ) $ (25 ) $ 51 $ (49 ) $ (68 ) $ (68 ) $ 120 $ (65 ) Other comprehensive income (loss), net of tax: Foreign currency adjustment (49 ) — (49 ) 49 (49 ) (49 ) (49 ) 98 (49 ) Other comprehensive income (loss), net of tax: (49 ) — (49 ) 49 (49 ) (49 ) (49 ) 98 (49 ) Total comprehensive (loss) income (101 ) (23 ) (74 ) 100 (98 ) (117 ) (117 ) 218 (114 ) Less: income attributable to noncontrolling interest — (1 ) (2 ) — (3 ) — — — (3 ) Comprehensive (loss) income attributable to Warner Music Group Corp. $ (101 ) $ (24 ) $ (76 ) $ 100 $ (101 ) $ (117 ) $ (117 ) $ 218 $ (117 ) Consolidating Statement of Comprehensive Income (Unaudited) For The Nine Months Ended June 30, 2014 WMG WMG WMG Warner Warner Acquisition Non- Acquisition Holdings Music Music Corp. Guarantor Guarantor Corp. Corp. Group Group Corp. (issuer) Subsidiaries Subsidiaries Eliminations Consolidated (issuer) Corp. Eliminations Consolidated (in millions) Net (loss) income $ (266 ) $ 42 $ (81 ) $ 42 $ (263 ) $ (282 ) $ (282 ) $ 548 $ (279 ) Other comprehensive income (loss), net of tax: Foreign currency adjustment (2 ) — (2 ) 2 (2 ) (2 ) (2 ) 4 (2 ) Other comprehensive income (loss), net of tax: (2 ) — (2 ) 2 (2 ) (2 ) (2 ) 4 (2 ) Total comprehensive (loss) income (268 ) 42 (83 ) 44 (265 ) (284 ) (284 ) 552 (281 ) Less: income attributable to noncontrolling interest — (1 ) (2 ) — (3 ) — — — (3 ) Comprehensive (loss) income attributable to Warner Music Group Corp. $ (268 ) $ 41 $ (85 ) $ 44 $ (268 ) $ (284 ) $ (284 ) $ 552 $ (284 ) |
Schedule of Consolidating Statement of Cash Flows (Unaudited) | Consolidating Statement of Cash Flows (Unaudited) For The Nine Months Ended June 30, 2015 WMG WMG WMG Warner Warner Acquisition Non- Acquisition Holdings Music Music Corp. Guarantor Guarantor Corp. Corp. Group Group Corp. (issuer) Subsidiaries Subsidiaries Eliminations Consolidated (issuer) Corp. Eliminations Consolidated (in millions) Cash flows from operating activities Net (loss) income $ (52 ) $ (23 ) $ (25 ) $ 51 $ (49 ) $ (68 ) $ (68 ) $ 120 $ (65 ) Adjustments to reconcile net (loss) income to net cash provided by operating activities: Depreciation and amortization — 121 112 — 233 — — — 233 Unrealized gains/losses and remeasurement of foreign denominated loans 93 46 (120 ) — 19 — — — 19 Deferred income taxes — — (17 ) — (17 ) — — — (17 ) Non-cash interest expense 7 — — — 7 1 — — 8 Non-cash share-based compensation expense — — — — — — — — — Equity losses (gains), including distributions (26 ) 63 — (38 ) (1 ) 52 68 (120 ) (1 ) Changes in operating assets and liabilities: Accounts receivable — 18 (2 ) — 16 — — — 16 Inventories — (1 ) (2 ) — (3 ) — — — (3 ) Royalty advances — (18 ) (37 ) — (55 ) — — — (55 ) Accounts payable and accrued liabilities — (93 ) 20 (13 ) (86 ) — — — (86 ) Royalty payables — (55 ) 90 — 35 — — — 35 Accrued interest (7 ) — — — (7 ) (5 ) — — (12 ) Deferred revenue — 18 21 — 39 — — — 39 Other balance sheet changes (1 ) (6 ) 14 — 7 — — — 7 Net cash provided by (used in) operating activities 14 70 54 — 138 (20 ) — — 118 Cash flows from investing activities Acquisition of music publishing rights, net — (8 ) (4 ) — (12 ) — — — (12 ) Capital expenditures — (38 ) (13 ) — (51 ) — — — (51 ) Investments and acquisitions of businesses, net — (9 ) (7 ) — (16 ) — — — (16 ) Advances to issuer 16 — — (16 ) — — — — — Net cash provided by (used in) investing activities 16 (55 ) (24 ) (16 ) (79 ) — — — (79 ) Cash flows from financing activities Dividend by Acquisition Corp. to Holdings Corp. (20 ) — — — (20 ) 20 — — — Proceeds from the Revolving Credit Facility 258 — — — 258 — — — 258 Repayment of the Revolving Credit Facility (258 ) — — — (258 ) — — — (258 ) Repayment of Acquisition Corp. Senior Term Loan Facility (10 ) — — — (10 ) — — — (10 ) Distribution to noncontrolling interest holder — (1 ) (2 ) — (3 ) — — — (3 ) Repayment of capital lease obligations — — (2 ) — (2 ) — — — (2 ) Change in due to (from) issuer — (16 ) — 16 — — — — — Net cash provided by (used in) financing activities (30 ) (17 ) (4 ) 16 (35 ) 20 — — (15 ) Effect of exchange rate changes on cash and equivalents — — (13 ) — (13 ) — — — (13 ) Net increase (decrease) in cash and equivalents — (2 ) 13 — 11 — — — 11 Cash and equivalents at beginning of period — 26 131 — 157 — — — 157 Cash and equivalents at end of period $ — $ 24 $ 144 $ — $ 168 $ — $ — $ — $ 168 Consolidating Statement of Cash Flows (Unaudited) For The Nine Months Ended June 30, 2014 WMG WMG WMG Warner Warner Acquisition Non- Acquisition Holdings Music Music Corp. Guarantor Guarantor Corp. Corp. Group Group Corp. (issuer) Subsidiaries Subsidiaries Eliminations Consolidated (issuer) Corp. Eliminations Consolidated (in millions) Cash flows from operating activities Net (loss) income $ (266 ) $ 42 $ (81 ) $ 42 $ (263 ) $ (282 ) $ (282 ) $ 548 $ (279 ) Adjustments to reconcile net (loss) income to net cash provided by operating activities: Loss on extinguishment of debt 141 — — — 141 — — — 141 Depreciation and amortization — 117 121 — 238 — — — 238 Unrealized gains/losses and remeasurement of foreign denominated loans 1 (22 ) (20 ) — (41 ) — — — (41 ) Deferred income taxes — — (47 ) — (47 ) — — — (47 ) Non-cash interest expense 10 — — — 10 1 — — 11 Non-cash share-based compensation expense — 5 — — 5 — — — 5 Equity losses (gains), including distributions 85 (17 ) — (68 ) — 266 282 (548 ) — Changes in operating assets and liabilities: Accounts receivable — 24 43 — 67 — — — 67 Inventories — — (4 ) — (4 ) — — — (4 ) Royalty advances — 5 (29 ) — (24 ) — — — (24 ) Accounts payable and accrued liabilities — (90 ) (32 ) 26 (96 ) — — — (96 ) Royalty payables — (52 ) 63 — 11 — — — 11 Accrued interest (20 ) — — — (20 ) (5 ) — — (25 ) Deferred revenue — 84 9 — 93 — — — 93 Other balance sheet changes — (2 ) (7 ) — (9 ) — — — (9 ) Net cash provided by (used in) operating activities (49 ) 94 16 — 61 (20 ) — — 41 Cash flows from investing activities Acquisition of music publishing rights, net — (13 ) (7 ) — (20 ) — — — (20 ) Capital expenditures — (31 ) (15 ) — (46 ) — — — (46 ) Investments and acquisitions of businesses, net — (10 ) (16 ) — (26 ) — — — (26 ) Advances to issuer 22 — — (22 ) — — — — — Net cash provided by (used in) investing activities 22 (54 ) (38 ) (22 ) (92 ) — — — (92 ) Cash flows from financing activities Dividend by Acquisition Corp. to Holdings Corp. (20 ) — — — (20 ) 20 — — — Proceeds from the Revolving Credit Facility 490 — — — 490 — — — 490 Repayment of the Revolving Credit Facility (490 ) — — — (490 ) — — — (490 ) Proceeds from issuance of Acquisition Corp. 5.625% Senior Secured Notes 275 — — — 275 — — — 275 Proceeds from issuance of Acquisition Corp. 6.75% Senior Notes 660 — — — 660 — — — 660 Repayment of Acquisition Corp. 11.5% Senior Notes (765 ) — — — (765 ) — — — (765 ) Financing costs paid (104 ) — — — (104 ) — — — (104 ) Deferred financing costs paid (12 ) — — — (12 ) — — — (12 ) Repayment of Term Loan (7 ) — — — (7 ) — — — (7 ) Repayment of capital lease obligations — — (2 ) — (2 ) — — — (2 ) Distribution to noncontrolling interest holder — — (2 ) — (2 ) — — — (2 ) Change in due to (from) issuer — (22 ) — 22 — — — — — Net cash provided by (used in) financing activities 27 (22 ) (4 ) 22 23 20 — — 43 Effect of exchange rate changes on cash and equivalents — — (5 ) — (5 ) — — — (5 ) Net increase (decrease) in cash and equivalents — 18 (31 ) — (13 ) — — — (13 ) Cash and equivalents at beginning of period — 16 139 — 155 — — — 155 Cash and equivalents at end of period $ — $ 34 $ 108 $ — $ 142 $ — $ — $ — $ 142 |
Description of Business - Addit
Description of Business - Additional Information (Detail) - Jun. 30, 2015 | OperationsCountrysongwriters |
Description Of Business [Line Items] | |
Number of fundamental operations | 2 |
Number of countries in which Recorded Music activity conducted | Country | 50 |
Number of songwriters and composers | songwriters | 65,000 |
Word | |
Description Of Business [Line Items] | |
Percentage of ownership | 80.00% |
Parlophone Label Group | |
Description Of Business [Line Items] | |
Acquisition date | Jul. 1, 2013 |
Comprehensive Loss - Schedule o
Comprehensive Loss - Schedule of Accumulated Other Comprehensive Loss (Detail) $ in Millions | 9 Months Ended | |
Jun. 30, 2015USD ($) | ||
Accumulated Other Comprehensive Income Loss [Line Items] | ||
Beginning balance | $ (108) | |
Other comprehensive loss | [1] | (49) |
Ending balance | (157) | |
Foreign Currency Translation Loss | ||
Accumulated Other Comprehensive Income Loss [Line Items] | ||
Beginning balance | (98) | |
Other comprehensive loss | [1] | (49) |
Ending balance | (147) | |
Minimum Pension Liability Adjustment | ||
Accumulated Other Comprehensive Income Loss [Line Items] | ||
Beginning balance | (10) | |
Ending balance | $ (10) | |
[1] | Foreign currency translation adjustments include intra-entity foreign currency transactions that are of a long-term investment nature of $32.2 million |
Comprehensive Loss - Schedule32
Comprehensive Loss - Schedule of Accumulated Other Comprehensive Loss (Parenthetical) (Detail) $ in Millions | 9 Months Ended |
Jun. 30, 2015USD ($) | |
Equity [Abstract] | |
Intra-entity foreign currency transaction adjustments | $ (32.2) |
Goodwill and Intangible Asset33
Goodwill and Intangible Assets - Changes in Goodwill for Each Reportable Segment (Detail) $ in Millions | 9 Months Ended |
Jun. 30, 2015USD ($) | |
Goodwill [Line Items] | |
Beginning balance | $ 1,661 |
Acquisitions | 3 |
Other adjustments | (31) |
Ending balance | 1,633 |
Recorded Music | |
Goodwill [Line Items] | |
Beginning balance | 1,197 |
Acquisitions | 3 |
Other adjustments | (31) |
Ending balance | 1,169 |
Music Publishing | |
Goodwill [Line Items] | |
Beginning balance | 464 |
Ending balance | $ 464 |
Goodwill and Intangible Asset34
Goodwill and Intangible Assets - Schedule of Intangible Assets (Detail) - USD ($) $ in Millions | 9 Months Ended | |
Jun. 30, 2015 | Sep. 30, 2014 | |
Finite Lived And Indefinite Lived Intangible Assets [Line Items] | ||
Total gross intangible asset subject to amortization | $ 3,447 | $ 3,572 |
Accumulated amortization | (850) | (688) |
Total net intangible assets subject to amortization | 2,597 | 2,884 |
Intangible assets not subject to amortization | 120 | 120 |
Total net other intangible assets | 2,717 | 3,004 |
Trademarks and tradenames | ||
Finite Lived And Indefinite Lived Intangible Assets [Line Items] | ||
Intangible assets not subject to amortization | $ 120 | 120 |
Recorded music catalog | ||
Finite Lived And Indefinite Lived Intangible Assets [Line Items] | ||
Intangible assets, Useful Life | 11 years | |
Total gross intangible asset subject to amortization | $ 1,004 | 1,040 |
Music publishing copyrights | ||
Finite Lived And Indefinite Lived Intangible Assets [Line Items] | ||
Intangible assets, Useful Life | 27 years | |
Total gross intangible asset subject to amortization | $ 1,500 | 1,550 |
Artist and songwriter contracts | ||
Finite Lived And Indefinite Lived Intangible Assets [Line Items] | ||
Intangible assets, Useful Life | 13 years | |
Total gross intangible asset subject to amortization | $ 936 | 975 |
Trademarks | ||
Finite Lived And Indefinite Lived Intangible Assets [Line Items] | ||
Intangible assets, Useful Life | 7 years | |
Total gross intangible asset subject to amortization | $ 7 | $ 7 |
Debt - Long-term Debt (Detail)
Debt - Long-term Debt (Detail) - USD ($) $ in Millions | Jun. 30, 2015 | Sep. 30, 2014 | |
Debt Instrument [Line Items] | |||
Total debt | $ 2,996 | $ 3,030 | |
Less: current portion | 13 | 13 | |
Total long-term debt | 2,983 | 3,017 | |
Acquisition Corp. | Senior Term Loan Facility due 2020 | |||
Debt Instrument [Line Items] | |||
Total debt | [1] | 1,285 | 1,294 |
Less: current portion | 13 | 13 | |
Acquisition Corp. | 5.625% Senior Secured Notes | |||
Debt Instrument [Line Items] | |||
Total debt | 275 | 275 | |
Acquisition Corp. | 6.00% Senior Secured Notes due 2021 | |||
Debt Instrument [Line Items] | |||
Total debt | 450 | 450 | |
Acquisition Corp. | 6.25% Senior Secured Notes due 2021 | |||
Debt Instrument [Line Items] | |||
Total debt | [2] | 176 | 201 |
Acquisition Corp. | 6.75% Senior Notes due 2022 | |||
Debt Instrument [Line Items] | |||
Total debt | 660 | 660 | |
Holdings Company | 13.75% Notes due 2019 | |||
Debt Instrument [Line Items] | |||
Total debt | $ 150 | $ 150 | |
[1] | Principal amount of $1.290 billion and $1.300 billion less unamortized discount of $5 million and $6 million at June 30, 2015 and September 30, 2014, respectively. Of this amount, $13 million, representing the scheduled amortization of the Senior Term Loan Facility, was included in the current portion of long-term debt at June 30, 2015 and September 30, 2014. | ||
[2] | Face amount of €158 million. Above amounts represent the dollar equivalent of such notes at June 30, 2015 and September 30, 2014. |
Debt - Long-term Debt (Parenthe
Debt - Long-term Debt (Parenthetical) (Detail) € in Millions, $ in Millions | 9 Months Ended | 12 Months Ended | |||
Jun. 30, 2015USD ($) | Sep. 30, 2014USD ($) | Jun. 30, 2015EUR (€) | Sep. 30, 2014EUR (€) | Jun. 30, 2014 | |
Debt Instrument [Line Items] | |||||
Current portion of long-term debt | $ 13 | $ 13 | |||
Senior Term Loan Facility due 2020 | Acquisition Corp. | |||||
Debt Instrument [Line Items] | |||||
Maturity date | 2,020 | 2,020 | |||
Face or principal amount of debt instrument | $ 1,290 | $ 1,300 | |||
Unamortized discount | 5 | 6 | |||
Current portion of long-term debt | $ 13 | $ 13 | |||
5.625% Senior Secured Notes | |||||
Debt Instrument [Line Items] | |||||
Interest rate | 5.625% | 5.625% | 5.625% | ||
5.625% Senior Secured Notes | Acquisition Corp. | |||||
Debt Instrument [Line Items] | |||||
Maturity date | 2,022 | 2,022 | |||
Interest rate | 5.625% | 5.625% | 5.625% | 5.625% | |
6.00% Senior Secured Notes due 2021 | Acquisition Corp. | |||||
Debt Instrument [Line Items] | |||||
Maturity date | 2,021 | 2,021 | |||
Interest rate | 6.00% | 6.00% | 6.00% | 6.00% | |
6.25% Senior Secured Notes due 2021 | |||||
Debt Instrument [Line Items] | |||||
Face or principal amount of debt instrument | € | € 158 | € 158 | |||
6.25% Senior Secured Notes due 2021 | Acquisition Corp. | |||||
Debt Instrument [Line Items] | |||||
Maturity date | 2,021 | 2,021 | |||
Interest rate | 6.25% | 6.25% | 6.25% | 6.25% | |
6.75% Senior Notes due 2022 | Acquisition Corp. | |||||
Debt Instrument [Line Items] | |||||
Maturity date | 2,022 | 2,022 | |||
Interest rate | 6.75% | 6.75% | 6.75% | 6.75% | |
13.75% Notes due 2019 | Holdings Company | |||||
Debt Instrument [Line Items] | |||||
Maturity date | 2,019 | 2,019 | |||
Interest rate | 13.75% | 13.75% | 13.75% | 13.75% | |
Revolving Credit Facility | |||||
Debt Instrument [Line Items] | |||||
Commitments under revolving credit facility | $ 150 | ||||
Letters of credit outstanding | 5 | $ 11 | |||
Revolving Credit Facility Outstanding | $ 0 | $ 0 |
Debt - 2014 Debt Refinancing -
Debt - 2014 Debt Refinancing - Additional Information (Detail) - USD ($) $ in Millions | Apr. 09, 2014 | Jun. 30, 2015 | Jun. 30, 2014 | Jun. 30, 2015 | Jun. 30, 2014 |
Debt Instrument [Line Items] | |||||
Accrued interest paid | $ 53 | $ 70 | $ 140 | $ 171 | |
Loss on extinguishment of debt | $ (141) | (141) | |||
2014 Debt Refinancing | |||||
Debt Instrument [Line Items] | |||||
Face or principal amount of debt instrument | $ 765 | ||||
Loss on extinguishment of debt | $ (141) | ||||
Unamortized discount | 13 | ||||
Unamortized debt issuance costs | 24 | ||||
2014 Debt Refinancing | Debt Refinancing Transaction | |||||
Debt Instrument [Line Items] | |||||
Redemption payment | 869 | ||||
Repayments of secured debt outstanding | 765 | ||||
Tender/Call premium on redemption of debt | 85 | ||||
Secured Notes consent fees | 19 | ||||
Accrued interest paid | 3 | ||||
2014 Debt Refinancing | 5.625% Senior Secured Notes | |||||
Debt Instrument [Line Items] | |||||
Face or principal amount of debt instrument | $ 275 | ||||
Due date of Senior Secured Notes | 2,022 | ||||
2014 Debt Refinancing | 6.750% Senior Notes | |||||
Debt Instrument [Line Items] | |||||
Face or principal amount of debt instrument | $ 660 | ||||
Due date of Senior Secured Notes | 2,022 |
Debt - Interest Rates - Additio
Debt - Interest Rates - Additional Information (Detail) - Jun. 30, 2015 | Total |
Senior Term Loan Facility due 2020 | |
Debt Instrument [Line Items] | |
Interest rate applicable to overdue principal | 2.00% |
Description of variable rate basis | The loans under the Senior Term Loan Facility bear interest at Acquisition Corp.’s election at a rate equal to (i) the rate for deposits in U.S. dollars in the London interbank market (adjusted for maximum reserves) for the applicable interest period (“Term Loan LIBOR”), plus 2.75% per annum, or (ii) the base rate, which is the highest of (x) the corporate base rate established by the administrative agent as its prime rate in effect at its principal office in New York City from time to time, (y) 0.50% in excess of the overnight federal funds rate and (z) one-month Term Loan LIBOR, plus 1.00% per annum, plus, in each case, 1.75% per annum. |
Term loan Base rate plus Election Rate | 1.00% |
Senior Term Loan Facility due 2020 | London Interbank Offered Rate (LIBOR) | |
Debt Instrument [Line Items] | |
Debt instrument, marginal interest rate | 2.75% |
Senior Term Loan Facility due 2020 | Base Rate | |
Debt Instrument [Line Items] | |
Debt instrument, marginal interest rate | 1.75% |
Revolver Libor rate plus Election Rate | 2.00% |
Senior Term Loan Facility due 2020 | Federal Funds Effective Swap Rate | |
Debt Instrument [Line Items] | |
Debt instrument, marginal interest rate | 0.50% |
Revolving Credit Facility | |
Debt Instrument [Line Items] | |
Debt instrument, marginal interest rate | 1.00% |
Interest rate applicable to overdue principal | 2.00% |
Description of variable rate basis | The loans under the Revolving Credit Facility bear interest at Acquisition Corp.’s election at a rate equal to (i) the rate for deposits in the borrowing currency in the London interbank market (adjusted for maximum reserves) for the applicable interest period (“Revolving LIBOR”), plus 2.00% per annum, or (ii) the base rate, which is the highest of (x) the corporate base rate established by the administrative agent from time to time, (y) 0.50% in excess of the overnight federal funds rate and (z) the one-month Revolving LIBOR plus 1.0% per annum, plus, in each case, 1.00% per annum. If there is a payment default at any time, then the interest rate applicable to overdue principal will be the rate otherwise applicable to such loan plus 2.0% per annum. |
Revolving Credit Facility | London Interbank Offered Rate (LIBOR) | |
Debt Instrument [Line Items] | |
Debt instrument, marginal interest rate | 2.00% |
Revolving Credit Facility | Base Rate | |
Debt Instrument [Line Items] | |
Debt instrument, marginal interest rate | 1.00% |
Revolver Libor rate plus Election Rate | 2.00% |
Revolving Credit Facility | Federal Funds Effective Swap Rate | |
Debt Instrument [Line Items] | |
Debt instrument, marginal interest rate | 0.50% |
Debt - Additional Information (
Debt - Additional Information (Detail) - USD ($) $ in Millions | 3 Months Ended | 9 Months Ended | |||
Jun. 30, 2015 | Jun. 30, 2014 | Jun. 30, 2015 | Jun. 30, 2014 | Sep. 30, 2014 | |
Debt Instrument [Line Items] | |||||
Annual Amortization of original principal on term loan | 1.00% | ||||
Interest expense, net | $ (45) | $ (48) | $ (136) | $ (157) | |
Weighted-average interest rate of total debt | 5.60% | 5.60% | 5.60% | 5.60% | 5.60% |
Senior Notes | |||||
Debt Instrument [Line Items] | |||||
Scheduled maturities of long-term debt in 2019 | $ 150 | $ 150 | |||
Scheduled to mature | 1,561 | $ 1,561 | |||
Revolving Credit Facility | |||||
Debt Instrument [Line Items] | |||||
Extended maturity date of credit facility | Apr. 1, 2019 | ||||
Term Loan Facility | |||||
Debt Instrument [Line Items] | |||||
Credit Facility maturity date | Jul. 1, 2020 | ||||
Annual amortization amount of original principal on term loan | $ 13 | $ 13 |
Restructuring - Additional Info
Restructuring - Additional Information (Detail) - Restructuring Plan - USD ($) | 3 Months Ended | 9 Months Ended | ||
Jun. 30, 2015 | Jun. 30, 2014 | Jun. 30, 2015 | Jun. 30, 2014 | |
Restructuring Cost And Reserve [Line Items] | ||||
Restructuring costs | $ 2,000,000 | |||
Cash payments | 12,000,000 | |||
Employee-Related Costs | ||||
Restructuring Cost And Reserve [Line Items] | ||||
Restructuring costs | 1,000,000 | |||
Cash payments | 10,000,000 | |||
Real Estate Costs | ||||
Restructuring Cost And Reserve [Line Items] | ||||
Restructuring costs | 1,000,000 | |||
Cash payments | 2,000,000 | |||
Restructuring costs, estimated | $ 75,000,000 | 75,000,000 | ||
Restructuring costs | 0 | $ 18,000,000 | 2,000,000 | $ 42,000,000 |
Restructuring cost incurred to date | 74,000,000 | 74,000,000 | ||
Cash payments | 71,000,000 | |||
Employee-Related Costs | ||||
Restructuring Cost And Reserve [Line Items] | ||||
Restructuring costs, estimated | 68,000,000 | 68,000,000 | ||
Restructuring costs | 15,000,000 | 1,000,000 | 37,000,000 | |
Real Estate Costs | ||||
Restructuring Cost And Reserve [Line Items] | ||||
Restructuring costs, estimated | 5,000,000 | 5,000,000 | ||
Restructuring costs | $ 3,000,000 | 1,000,000 | 4,000,000 | |
Other Costs | ||||
Restructuring Cost And Reserve [Line Items] | ||||
Restructuring costs, estimated | $ 2,000,000 | $ 2,000,000 | ||
Restructuring costs | $ 1,000,000 |
Restructuring - Summary of Rest
Restructuring - Summary of Restructuring Activity (Detail) - Jun. 30, 2015 - USD ($) $ in Millions | Total |
Restructuring Cost And Reserve [Line Items] | |
Beginning balance | $ 13 |
Restructuring costs | 2 |
Cash payments | (12) |
Ending balance | 3 |
Employee-Related Costs | |
Restructuring Cost And Reserve [Line Items] | |
Beginning balance | 12 |
Restructuring costs | 1 |
Cash payments | (10) |
Ending balance | 3 |
Real Estate Costs | |
Restructuring Cost And Reserve [Line Items] | |
Beginning balance | 1 |
Restructuring costs | 1 |
Cash payments | $ (2) |
Restructuring - Summary of Char
Restructuring - Summary of Charges in Consolidated Statement of Operations (Detail) - USD ($) $ in Millions | 3 Months Ended | 9 Months Ended | |
Jun. 30, 2014 | Jun. 30, 2015 | Jun. 30, 2014 | |
Restructuring Cost And Reserve [Line Items] | |||
Total restructuring expense | $ 2 | ||
Recorded Music | |||
Restructuring Cost And Reserve [Line Items] | |||
Total restructuring expense | $ 18 | 2 | $ 42 |
Recorded Music | Selling, General and Administrative Expenses | |||
Restructuring Cost And Reserve [Line Items] | |||
Total restructuring expense | $ 18 | $ 2 | $ 42 |
Commitments and Contingencies (
Commitments and Contingencies (Detail) $ in Millions | Jul. 29, 2015USD ($) |
Sirius XM | Settled Litigation | |
Gain Contingencies [Line Items] | |
Receipts from plaintiff | $ 210 |
Derivative Financial Instrume44
Derivative Financial Instruments - Additional Information (Detail) - USD ($) | 9 Months Ended | |
Jun. 30, 2015 | Sep. 30, 2014 | |
Foreign Currency Risk Management | ||
Derivatives Fair Value [Line Items] | ||
Hedge contracts settlement date | 2016-06 | |
Foreign Currency Risk Management | Sale | ||
Derivatives Fair Value [Line Items] | ||
Outstanding hedge contracts | $ 103,000,000 | $ 7,000,000 |
Foreign Currency Risk Management | Purchase | ||
Derivatives Fair Value [Line Items] | ||
Outstanding hedge contracts | 63,000,000 | |
Maximum | ||
Derivatives Fair Value [Line Items] | ||
Deferred gains or losses in comprehensive loss related to foreign exchange hedging | $ 1,000,000 | $ 1,000,000 |
Derivative Financial Instrume45
Derivative Financial Instruments - Summary of Amounts Recorded in Consolidated Balance Sheet (Parenthetical) (Detail) - Maximum $ in Millions | Jun. 30, 2015USD ($) |
Derivatives Fair Value [Line Items] | |
Foreign exchange derivative contracts in asset | $ 1 |
Foreign exchange derivative contracts in liability | $ 1 |
Segment Information - Additiona
Segment Information - Additional Information (Detail) | 9 Months Ended |
Jun. 30, 2015Operations | |
Segment Reporting [Abstract] | |
Number of fundamental operations | 2 |
Segment Information - Schedule
Segment Information - Schedule of Segment Information (Detail) - USD ($) $ in Millions | 3 Months Ended | 9 Months Ended | ||
Jun. 30, 2015 | Jun. 30, 2014 | Jun. 30, 2015 | Jun. 30, 2014 | |
Segment Reporting Information [Line Items] | ||||
Revenues | $ 710 | $ 788 | $ 2,216 | $ 2,256 |
OIBDA | 100 | 66 | 323 | 233 |
Depreciation of property, plant and equipment | (14) | (14) | (42) | (39) |
Amortization of intangible assets | (63) | (67) | (191) | (199) |
Operating income (loss) | 23 | (15) | 90 | (5) |
Operating Segments | Recorded Music | ||||
Segment Reporting Information [Line Items] | ||||
Revenues | 592 | 656 | 1,870 | 1,882 |
OIBDA | 100 | 71 | 302 | 203 |
Depreciation of property, plant and equipment | (10) | (9) | (29) | (26) |
Amortization of intangible assets | (47) | (51) | (143) | (150) |
Operating income (loss) | 43 | 11 | 130 | 27 |
Operating Segments | Music Publishing | ||||
Segment Reporting Information [Line Items] | ||||
Revenues | 123 | 137 | 359 | 387 |
OIBDA | 20 | 24 | 88 | 98 |
Depreciation of property, plant and equipment | (1) | (2) | (4) | (4) |
Amortization of intangible assets | (16) | (16) | (48) | (49) |
Operating income (loss) | 3 | 6 | 36 | 45 |
Corporate Expenses and Eliminations | ||||
Segment Reporting Information [Line Items] | ||||
Revenues | (5) | (5) | (13) | (13) |
OIBDA | (20) | (29) | (67) | (68) |
Depreciation of property, plant and equipment | (3) | (3) | (9) | (9) |
Operating income (loss) | $ (23) | $ (32) | $ (76) | $ (77) |
Additional Financial Informat48
Additional Financial Information - Additional Information (Detail) - USD ($) $ in Millions | 3 Months Ended | 9 Months Ended | ||
Jun. 30, 2015 | Jun. 30, 2014 | Jun. 30, 2015 | Jun. 30, 2014 | |
Supplemental Cash Flow Information [Abstract] | ||||
Accrued interest paid | $ 53 | $ 70 | $ 140 | $ 171 |
Income Taxes Paid Net of refunds | $ 10 | $ 6 | $ 16 | $ 14 |
Fair Value Measurements - Sched
Fair Value Measurements - Schedule of Fair Value of Financial Instruments (Detail) - USD ($) $ in Millions | Jun. 30, 2015 | Sep. 30, 2014 | |
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items] | |||
Contractual Obligations | $ (1) | $ (3) | |
Other Current Liabilities | |||
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items] | |||
Contractual Obligations | [1] | (1) | (2) |
Other Non-Current Liabilities | |||
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items] | |||
Contractual Obligations | [1] | (1) | |
Level 3 | |||
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items] | |||
Contractual Obligations | (1) | (3) | |
Level 3 | Other Current Liabilities | |||
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items] | |||
Contractual Obligations | [1] | $ (1) | (2) |
Level 3 | Other Non-Current Liabilities | |||
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items] | |||
Contractual Obligations | [1] | $ (1) | |
[1] | This represents purchase obligations and contingent consideration related to the Company’s various acquisitions. This is based on a discounted cash flow approach and it is adjusted to fair value on a recurring basis and any adjustments are included as a component of operating income in the statement of operations. These amounts were mainly calculated using unobservable inputs such as future earnings performance of the Company’s various acquisitions and the expected timing of the payment. |
Fair Value Measurements - Recon
Fair Value Measurements - Reconciliation of Net Liabilities Classified as Level 3 (Detail) - Level 3 $ in Millions | 9 Months Ended |
Jun. 30, 2015USD ($) | |
Fair Value Liabilities Measured On Recurring Basis Unobservable Input Reconciliation [Line Items] | |
Balance at September 30, 2014 | $ (3) |
Additions | 0 |
Reductions | 0 |
Payments | 2 |
Balance at June 30, 2015 | $ (1) |
Fair Value Measurements - Addit
Fair Value Measurements - Additional Information (Detail) - USD ($) $ in Millions | Jun. 30, 2015 | Sep. 30, 2014 |
Level 2 measurement | ||
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items] | ||
Debt Instrument, Fair Value Disclosure | $ 3,001 | $ 3,026 |
Guarantor and Non-Guarantor S52
Guarantor and Non-Guarantor Subsidiaries Financial Information - Additional Information (Detail) | 9 Months Ended | 12 Months Ended | |
Jun. 30, 2015 | Sep. 30, 2014 | Jun. 30, 2014 | |
13.75% Notes due 2019 | Holdings Notes | |||
Condensed Financial Statements Captions [Line Items] | |||
Interest rate | 13.75% | 13.75% | |
Maturity date | 2,019 | 2,019 | |
5.625% Senior Secured Notes due 2022 | |||
Condensed Financial Statements Captions [Line Items] | |||
Interest rate | 5.625% | 5.625% | |
5.625% Senior Secured Notes due 2022 | Acquisition Corp. | |||
Condensed Financial Statements Captions [Line Items] | |||
Interest rate | 5.625% | 5.625% | |
Maturity date | 2,022 | 2,022 | |
6.00% Senior Secured Notes due 2021 | Acquisition Corp. | |||
Condensed Financial Statements Captions [Line Items] | |||
Interest rate | 6.00% | 6.00% | |
Maturity date | 2,021 | 2,021 | |
6.25% Senior Secured Notes due 2021 | Acquisition Corp. | |||
Condensed Financial Statements Captions [Line Items] | |||
Interest rate | 6.25% | 6.25% | |
Maturity date | 2,021 | 2,021 | |
6.75% Senior Notes due 2022 | Acquisition Corp. | |||
Condensed Financial Statements Captions [Line Items] | |||
Interest rate | 6.75% | 6.75% | |
Maturity date | 2,022 | 2,022 |
Guarantor and Non-Guarantor S53
Guarantor and Non-Guarantor Subsidiaries Financial Information - Consolidating Balance Sheet (Detail) - USD ($) $ in Millions | Jun. 30, 2015 | Sep. 30, 2014 | Jun. 30, 2014 | Sep. 30, 2013 |
Current assets: | ||||
Cash and equivalents | $ 168 | $ 157 | $ 142 | $ 155 |
Accounts receivable, net | 343 | 383 | ||
Inventories | 39 | 39 | ||
Royalty advances expected to be recouped within one year | 119 | 102 | ||
Deferred tax assets | 46 | 46 | ||
Prepaid and other current assets | 58 | 55 | ||
Total current assets | 773 | 782 | ||
Royalty advances expected to be recouped after one year | 219 | 190 | ||
Property, plant and equipment, net | 227 | 227 | ||
Goodwill | 1,633 | 1,661 | ||
Intangible assets subject to amortization, net | 2,597 | 2,884 | ||
Intangible assets not subject to amortization | 120 | 120 | ||
Other assets | 95 | 90 | ||
Total assets | 5,664 | 5,954 | ||
Current liabilities: | ||||
Accounts payable | 151 | 215 | ||
Accrued royalties | 1,111 | 1,132 | ||
Accrued liabilities | 235 | 243 | ||
Accrued interest | 48 | 60 | ||
Deferred revenue | 247 | 219 | ||
Current portion of long-term debt | 13 | 13 | ||
Other current liabilities | 19 | 3 | ||
Total current liabilities | 1,824 | 1,885 | ||
Long-term debt | 2,983 | 3,017 | ||
Deferred tax liabilities, net | 345 | 383 | ||
Other noncurrent liabilities | 239 | 279 | ||
Total liabilities | 5,391 | 5,564 | ||
Total Warner Music Group Corp. equity (deficit) | 254 | 371 | ||
Noncontrolling interest | 19 | 19 | ||
Total equity | 273 | 390 | ||
Total liabilities and equity | 5,664 | 5,954 | ||
Eliminations | ||||
Current assets: | ||||
Investments in and advances to (from) consolidated subsidiaries | (3,571) | (3,673) | ||
Total assets | (3,571) | (3,673) | ||
Current liabilities: | ||||
Other noncurrent liabilities | 2 | |||
Total liabilities | 2 | |||
Total Warner Music Group Corp. equity (deficit) | (3,573) | (3,673) | ||
Total equity | (3,573) | (3,673) | ||
Total liabilities and equity | (3,571) | (3,673) | ||
Eliminations | ||||
Current assets: | ||||
Investments in and advances to (from) consolidated subsidiaries | (658) | (896) | ||
Total assets | (658) | (896) | ||
Current liabilities: | ||||
Total Warner Music Group Corp. equity (deficit) | (658) | (896) | ||
Total equity | (658) | (896) | ||
Total liabilities and equity | (658) | (896) | ||
WMG Acquisition Corp. (issuer) | Reportable Legal Entities | ||||
Current assets: | ||||
Prepaid and other current assets | 5 | 5 | ||
Total current assets | 5 | 5 | ||
Due (to) from parent companies | 897 | 924 | ||
Investments in and advances to (from) consolidated subsidiaries | 2,353 | 2,531 | ||
Other assets | 41 | 46 | ||
Total assets | 3,296 | 3,506 | ||
Current liabilities: | ||||
Accounts payable | 38 | |||
Accrued interest | 43 | 50 | ||
Current portion of long-term debt | 13 | 13 | ||
Total current liabilities | 56 | 101 | ||
Long-term debt | 2,833 | 2,867 | ||
Other noncurrent liabilities | 3 | 13 | ||
Total liabilities | 2,892 | 2,981 | ||
Total Warner Music Group Corp. equity (deficit) | 404 | 525 | ||
Total equity | 404 | 525 | ||
Total liabilities and equity | 3,296 | 3,506 | ||
Guarantor Subsidiaries | Reportable Legal Entities | ||||
Current assets: | ||||
Cash and equivalents | 24 | 26 | 34 | 16 |
Accounts receivable, net | 156 | 174 | ||
Inventories | 14 | 13 | ||
Royalty advances expected to be recouped within one year | 69 | 62 | ||
Deferred tax assets | 21 | 21 | ||
Prepaid and other current assets | 11 | 10 | ||
Total current assets | 295 | 306 | ||
Due (to) from parent companies | (340) | (242) | ||
Investments in and advances to (from) consolidated subsidiaries | 1,218 | 1,142 | ||
Royalty advances expected to be recouped after one year | 126 | 115 | ||
Property, plant and equipment, net | 149 | 143 | ||
Goodwill | 1,379 | 1,379 | ||
Intangible assets subject to amortization, net | 1,294 | 1,372 | ||
Intangible assets not subject to amortization | 71 | 75 | ||
Other assets | 33 | 10 | ||
Total assets | 4,225 | 4,300 | ||
Current liabilities: | ||||
Accounts payable | 73 | 91 | ||
Accrued royalties | 476 | 531 | ||
Accrued liabilities | 82 | 64 | ||
Deferred revenue | 180 | 167 | ||
Other current liabilities | 1 | 1 | ||
Total current liabilities | 812 | 854 | ||
Deferred tax liabilities, net | 128 | 128 | ||
Other noncurrent liabilities | 116 | 124 | ||
Total liabilities | 1,056 | 1,106 | ||
Total Warner Music Group Corp. equity (deficit) | 3,167 | 3,192 | ||
Noncontrolling interest | 2 | 2 | ||
Total equity | 3,169 | 3,194 | ||
Total liabilities and equity | 4,225 | 4,300 | ||
Non-Guarantor Subsidiaries | Reportable Legal Entities | ||||
Current assets: | ||||
Cash and equivalents | 144 | 131 | 108 | 139 |
Accounts receivable, net | 187 | 209 | ||
Inventories | 25 | 26 | ||
Royalty advances expected to be recouped within one year | 50 | 40 | ||
Deferred tax assets | 25 | 25 | ||
Prepaid and other current assets | 42 | 40 | ||
Total current assets | 473 | 471 | ||
Due (to) from parent companies | (557) | (682) | ||
Royalty advances expected to be recouped after one year | 93 | 75 | ||
Property, plant and equipment, net | 78 | 84 | ||
Goodwill | 254 | 282 | ||
Intangible assets subject to amortization, net | 1,303 | 1,512 | ||
Intangible assets not subject to amortization | 49 | 45 | ||
Other assets | 16 | 28 | ||
Total assets | 1,709 | 1,815 | ||
Current liabilities: | ||||
Accounts payable | 78 | 86 | ||
Accrued royalties | 635 | 601 | ||
Accrued liabilities | 153 | 179 | ||
Deferred revenue | 67 | 52 | ||
Other current liabilities | 18 | 2 | ||
Total current liabilities | 951 | 920 | ||
Deferred tax liabilities, net | 217 | 255 | ||
Other noncurrent liabilities | 118 | 142 | ||
Total liabilities | 1,286 | 1,317 | ||
Total Warner Music Group Corp. equity (deficit) | 406 | 481 | ||
Noncontrolling interest | 17 | 17 | ||
Total equity | 423 | 498 | ||
Total liabilities and equity | 1,709 | 1,815 | ||
WMG Acquisition Corp. Consolidated | Reportable Legal Entities | ||||
Current assets: | ||||
Cash and equivalents | 168 | 157 | $ 142 | $ 155 |
Accounts receivable, net | 343 | 383 | ||
Inventories | 39 | 39 | ||
Royalty advances expected to be recouped within one year | 119 | 102 | ||
Deferred tax assets | 46 | 46 | ||
Prepaid and other current assets | 58 | 55 | ||
Total current assets | 773 | 782 | ||
Royalty advances expected to be recouped after one year | 219 | 190 | ||
Property, plant and equipment, net | 227 | 227 | ||
Goodwill | 1,633 | 1,661 | ||
Intangible assets subject to amortization, net | 2,597 | 2,884 | ||
Intangible assets not subject to amortization | 120 | 120 | ||
Other assets | 90 | 84 | ||
Total assets | 5,659 | 5,948 | ||
Current liabilities: | ||||
Accounts payable | 151 | 215 | ||
Accrued royalties | 1,111 | 1,132 | ||
Accrued liabilities | 235 | 243 | ||
Accrued interest | 43 | 50 | ||
Deferred revenue | 247 | 219 | ||
Current portion of long-term debt | 13 | 13 | ||
Other current liabilities | 19 | 3 | ||
Total current liabilities | 1,819 | 1,875 | ||
Long-term debt | 2,833 | 2,867 | ||
Deferred tax liabilities, net | 345 | 383 | ||
Other noncurrent liabilities | 239 | 279 | ||
Total liabilities | 5,236 | 5,404 | ||
Total Warner Music Group Corp. equity (deficit) | 404 | 525 | ||
Noncontrolling interest | 19 | 19 | ||
Total equity | 423 | 544 | ||
Total liabilities and equity | 5,659 | 5,948 | ||
Holdings Company | Reportable Legal Entities | ||||
Current assets: | ||||
Investments in and advances to (from) consolidated subsidiaries | 404 | 525 | ||
Other assets | 5 | 6 | ||
Total assets | 409 | 531 | ||
Current liabilities: | ||||
Accrued interest | 5 | 10 | ||
Total current liabilities | 5 | 10 | ||
Long-term debt | 150 | 150 | ||
Total liabilities | 155 | 160 | ||
Total Warner Music Group Corp. equity (deficit) | 254 | 371 | ||
Total equity | 254 | 371 | ||
Total liabilities and equity | 409 | 531 | ||
Warner Music Group Corp. | Reportable Legal Entities | ||||
Current assets: | ||||
Investments in and advances to (from) consolidated subsidiaries | 254 | 371 | ||
Total assets | 254 | 371 | ||
Current liabilities: | ||||
Total Warner Music Group Corp. equity (deficit) | 254 | 371 | ||
Total equity | 254 | 371 | ||
Total liabilities and equity | $ 254 | $ 371 |
Guarantor and Non-Guarantor S54
Guarantor and Non-Guarantor Subsidiaries Financial Information - Consolidating Statement of Operations (Detail) - USD ($) $ in Millions | 3 Months Ended | 9 Months Ended | |||
Jun. 30, 2015 | Jun. 30, 2014 | Jun. 30, 2015 | Jun. 30, 2014 | ||
Condensed Income Statements Captions [Line Items] | |||||
Revenues | $ 710 | $ 788 | $ 2,216 | $ 2,256 | |
Costs and expenses: | |||||
Cost of revenue | (373) | (417) | (1,136) | (1,177) | |
Selling, general and administrative expenses | [1] | (251) | (319) | (799) | (885) |
Amortization of intangible assets | (63) | (67) | (191) | (199) | |
Total costs and expenses | (687) | (803) | (2,126) | (2,261) | |
Operating income (loss) | 23 | (15) | 90 | (5) | |
Loss on extinguishment of debt | (141) | (141) | |||
Interest income (expense), net | (45) | (48) | (136) | (157) | |
Equity gains (losses) from equity method investments | 1 | ||||
Other income (expense), net | (17) | 4 | (13) | (3) | |
Loss before income taxes | (39) | (200) | (58) | (306) | |
Income tax (expense) benefit | (4) | 16 | (7) | 27 | |
Net loss | (43) | (184) | (65) | (279) | |
Less: Income attributable to noncontrolling interest | (1) | (1) | (3) | (3) | |
Net loss attributable to Warner Music Group Corp. | (44) | (185) | (68) | (282) | |
Eliminations | |||||
Condensed Income Statements Captions [Line Items] | |||||
Revenues | (137) | (154) | (217) | (236) | |
Costs and expenses: | |||||
Cost of revenue | 43 | 51 | 113 | 125 | |
Selling, general and administrative expenses | 94 | 103 | 104 | 111 | |
Total costs and expenses | 137 | 154 | 217 | 236 | |
Equity gains (losses) from equity method investments | 61 | 1 | 38 | 68 | |
Loss before income taxes | 61 | 1 | 38 | 68 | |
Income tax (expense) benefit | 7 | (24) | 13 | (26) | |
Net loss | 68 | (23) | 51 | 42 | |
Net loss attributable to Warner Music Group Corp. | 68 | (23) | 51 | 42 | |
Eliminations | |||||
Costs and expenses: | |||||
Equity gains (losses) from equity method investments | 83 | 365 | 120 | 548 | |
Loss before income taxes | 83 | 365 | 120 | 548 | |
Net loss | 83 | 365 | 120 | 548 | |
Net loss attributable to Warner Music Group Corp. | 83 | 365 | 120 | 548 | |
WMG Acquisition Corp. (issuer) | Reportable Legal Entities | |||||
Costs and expenses: | |||||
Selling, general and administrative expenses | 1 | ||||
Total costs and expenses | 1 | ||||
Operating income (loss) | 1 | ||||
Loss on extinguishment of debt | (141) | (141) | |||
Interest income (expense), net | (22) | (23) | (62) | (82) | |
Equity gains (losses) from equity method investments | (9) | (32) | 26 | (85) | |
Other income (expense), net | (4) | (10) | 15 | ||
Loss before income taxes | (35) | (196) | (45) | (293) | |
Income tax (expense) benefit | (4) | 16 | (7) | 27 | |
Net loss | (39) | (180) | (52) | (266) | |
Net loss attributable to Warner Music Group Corp. | (39) | (180) | (52) | (266) | |
Guarantor Subsidiaries | Reportable Legal Entities | |||||
Condensed Income Statements Captions [Line Items] | |||||
Revenues | 419 | 408 | 1,195 | 1,115 | |
Costs and expenses: | |||||
Cost of revenue | (208) | (188) | (578) | (479) | |
Selling, general and administrative expenses | (215) | (267) | (477) | (503) | |
Amortization of intangible assets | (31) | (30) | (91) | (90) | |
Total costs and expenses | (454) | (485) | (1,146) | (1,072) | |
Operating income (loss) | (35) | (77) | 49 | 43 | |
Interest income (expense), net | 1 | 2 | 5 | 6 | |
Equity gains (losses) from equity method investments | (52) | 31 | (63) | 17 | |
Other income (expense), net | 1 | (18) | |||
Loss before income taxes | (86) | (43) | (9) | 48 | |
Income tax (expense) benefit | (9) | 2 | (14) | (6) | |
Net loss | (95) | (41) | (23) | 42 | |
Less: Income attributable to noncontrolling interest | (1) | (1) | (1) | (1) | |
Net loss attributable to Warner Music Group Corp. | (96) | (42) | (24) | 41 | |
Non-Guarantor Subsidiaries | Reportable Legal Entities | |||||
Condensed Income Statements Captions [Line Items] | |||||
Revenues | 428 | 534 | 1,238 | 1,377 | |
Costs and expenses: | |||||
Cost of revenue | (208) | (280) | (671) | (823) | |
Selling, general and administrative expenses | (130) | (155) | (427) | (493) | |
Amortization of intangible assets | (32) | (37) | (100) | (109) | |
Total costs and expenses | (370) | (472) | (1,198) | (1,425) | |
Operating income (loss) | 58 | 62 | 40 | (48) | |
Interest income (expense), net | (19) | (22) | (63) | (65) | |
Other income (expense), net | (13) | 3 | (3) | ||
Loss before income taxes | 26 | 43 | (26) | (113) | |
Income tax (expense) benefit | 2 | 22 | 1 | 32 | |
Net loss | 28 | 65 | (25) | (81) | |
Less: Income attributable to noncontrolling interest | (2) | (2) | |||
Net loss attributable to Warner Music Group Corp. | 28 | 65 | (27) | (83) | |
WMG Acquisition Corp. Consolidated | Reportable Legal Entities | |||||
Condensed Income Statements Captions [Line Items] | |||||
Revenues | 710 | 788 | 2,216 | 2,256 | |
Costs and expenses: | |||||
Cost of revenue | (373) | (417) | (1,136) | (1,177) | |
Selling, general and administrative expenses | (251) | (319) | (799) | (885) | |
Amortization of intangible assets | (63) | (67) | (191) | (199) | |
Total costs and expenses | (687) | (803) | (2,126) | (2,261) | |
Operating income (loss) | 23 | (15) | 90 | (5) | |
Loss on extinguishment of debt | (141) | (141) | |||
Interest income (expense), net | (40) | (43) | (120) | (141) | |
Equity gains (losses) from equity method investments | 1 | ||||
Other income (expense), net | (17) | 4 | (13) | (3) | |
Loss before income taxes | (34) | (195) | (42) | (290) | |
Income tax (expense) benefit | (4) | 16 | (7) | 27 | |
Net loss | (38) | (179) | (49) | (263) | |
Less: Income attributable to noncontrolling interest | (1) | (1) | (3) | (3) | |
Net loss attributable to Warner Music Group Corp. | (39) | (180) | (52) | (266) | |
Holdings Company | Reportable Legal Entities | |||||
Costs and expenses: | |||||
Interest income (expense), net | (5) | (5) | (16) | (16) | |
Equity gains (losses) from equity method investments | (39) | (180) | (52) | (266) | |
Loss before income taxes | (44) | (185) | (68) | (282) | |
Net loss | (44) | (185) | (68) | (282) | |
Net loss attributable to Warner Music Group Corp. | (44) | (185) | (68) | (282) | |
Warner Music Group Corp. | Reportable Legal Entities | |||||
Costs and expenses: | |||||
Equity gains (losses) from equity method investments | (44) | (185) | (68) | (282) | |
Loss before income taxes | (44) | (185) | (68) | (282) | |
Net loss | (44) | (185) | (68) | (282) | |
Net loss attributable to Warner Music Group Corp. | $ (44) | $ (185) | $ (68) | $ (282) | |
[1] | (a) Includes depreciation expense of: $(14) $(14) $(42) $(39) |
Guarantor and Non-Guarantor S55
Guarantor and Non-Guarantor Subsidiaries Financial Information - Consolidating Statement of Comprehensive Income (Detail) - USD ($) $ in Millions | 3 Months Ended | 9 Months Ended | ||
Jun. 30, 2015 | Jun. 30, 2014 | Jun. 30, 2015 | Jun. 30, 2014 | |
Condensed Statement Of Income Captions [Line Items] | ||||
Net (loss) income | $ (43) | $ (184) | $ (65) | $ (279) |
Other comprehensive income (loss), net of tax: | ||||
Foreign currency adjustment | 41 | 4 | (49) | (2) |
Other comprehensive income (loss), net of tax | 41 | 4 | (49) | (2) |
Total comprehensive loss | (2) | (180) | (114) | (281) |
Less: Income attributable to noncontrolling interest | (1) | (1) | (3) | (3) |
Comprehensive loss attributable to Warner Music Group Corp. | (3) | (181) | (117) | (284) |
Eliminations | ||||
Condensed Statement Of Income Captions [Line Items] | ||||
Net (loss) income | 68 | (23) | 51 | 42 |
Other comprehensive income (loss), net of tax: | ||||
Foreign currency adjustment | (41) | (4) | 49 | 2 |
Other comprehensive income (loss), net of tax | (41) | (4) | 49 | 2 |
Total comprehensive loss | 27 | (27) | 100 | 44 |
Comprehensive loss attributable to Warner Music Group Corp. | 27 | (27) | 100 | 44 |
Eliminations | ||||
Condensed Statement Of Income Captions [Line Items] | ||||
Net (loss) income | 83 | 365 | 120 | 548 |
Other comprehensive income (loss), net of tax: | ||||
Foreign currency adjustment | (82) | (8) | 98 | 4 |
Other comprehensive income (loss), net of tax | (82) | (8) | 98 | 4 |
Total comprehensive loss | 1 | 357 | 218 | 552 |
Comprehensive loss attributable to Warner Music Group Corp. | 1 | 357 | 218 | 552 |
WMG Acquisition Corp. (issuer) | Reportable Legal Entities | ||||
Condensed Statement Of Income Captions [Line Items] | ||||
Net (loss) income | (39) | (180) | (52) | (266) |
Other comprehensive income (loss), net of tax: | ||||
Foreign currency adjustment | 41 | 4 | (49) | (2) |
Other comprehensive income (loss), net of tax | 41 | 4 | (49) | (2) |
Total comprehensive loss | 2 | (176) | (101) | (268) |
Comprehensive loss attributable to Warner Music Group Corp. | 2 | (176) | (101) | (268) |
Guarantor Subsidiaries | Reportable Legal Entities | ||||
Condensed Statement Of Income Captions [Line Items] | ||||
Net (loss) income | (95) | (41) | (23) | 42 |
Other comprehensive income (loss), net of tax: | ||||
Total comprehensive loss | (95) | (41) | (23) | 42 |
Less: Income attributable to noncontrolling interest | (1) | (1) | (1) | (1) |
Comprehensive loss attributable to Warner Music Group Corp. | (96) | (42) | (24) | 41 |
Non-Guarantor Subsidiaries | Reportable Legal Entities | ||||
Condensed Statement Of Income Captions [Line Items] | ||||
Net (loss) income | 28 | 65 | (25) | (81) |
Other comprehensive income (loss), net of tax: | ||||
Foreign currency adjustment | 41 | 4 | (49) | (2) |
Other comprehensive income (loss), net of tax | 41 | 4 | (49) | (2) |
Total comprehensive loss | 69 | 69 | (74) | (83) |
Less: Income attributable to noncontrolling interest | (2) | (2) | ||
Comprehensive loss attributable to Warner Music Group Corp. | 69 | 69 | (76) | (85) |
WMG Acquisition Corp. Consolidated | Reportable Legal Entities | ||||
Condensed Statement Of Income Captions [Line Items] | ||||
Net (loss) income | (38) | (179) | (49) | (263) |
Other comprehensive income (loss), net of tax: | ||||
Foreign currency adjustment | 41 | 4 | (49) | (2) |
Other comprehensive income (loss), net of tax | 41 | 4 | (49) | (2) |
Total comprehensive loss | 3 | (175) | (98) | (265) |
Less: Income attributable to noncontrolling interest | (1) | (1) | (3) | (3) |
Comprehensive loss attributable to Warner Music Group Corp. | 2 | (176) | (101) | (268) |
Holdings Company | Reportable Legal Entities | ||||
Condensed Statement Of Income Captions [Line Items] | ||||
Net (loss) income | (44) | (185) | (68) | (282) |
Other comprehensive income (loss), net of tax: | ||||
Foreign currency adjustment | 41 | 4 | (49) | (2) |
Other comprehensive income (loss), net of tax | 41 | 4 | (49) | (2) |
Total comprehensive loss | (3) | (181) | (117) | (284) |
Comprehensive loss attributable to Warner Music Group Corp. | (3) | (181) | (117) | (284) |
Warner Music Group Corp. | Reportable Legal Entities | ||||
Condensed Statement Of Income Captions [Line Items] | ||||
Net (loss) income | (44) | (185) | (68) | (282) |
Other comprehensive income (loss), net of tax: | ||||
Foreign currency adjustment | 41 | 4 | (49) | (2) |
Other comprehensive income (loss), net of tax | 41 | 4 | (49) | (2) |
Total comprehensive loss | (3) | (181) | (117) | (284) |
Comprehensive loss attributable to Warner Music Group Corp. | $ (3) | $ (181) | $ (117) | $ (284) |
Guarantor and Non-Guarantor S56
Guarantor and Non-Guarantor Subsidiaries Financial Information - Consolidating Statement of Cash Flows (Detail) - USD ($) $ in Millions | 3 Months Ended | 9 Months Ended | ||
Jun. 30, 2015 | Jun. 30, 2014 | Jun. 30, 2015 | Jun. 30, 2014 | |
Cash flows from operating activities | ||||
Net (loss) income | $ (43) | $ (184) | $ (65) | $ (279) |
Adjustments to reconcile net (loss) income to net cash provided by operating activities: | ||||
Loss on extinguishment of debt | 141 | 141 | ||
Depreciation and amortization | 233 | 238 | ||
Unrealized gains/losses and remeasurement of foreign denominated loans | 19 | (41) | ||
Deferred income taxes | (17) | (47) | ||
Non-cash interest expense | 8 | 11 | ||
Non-cash share-based compensation expense | 5 | |||
Equity losses (gains), including distributions | (1) | |||
Changes in operating assets and liabilities: | ||||
Accounts receivable | 16 | 67 | ||
Inventories | (3) | (4) | ||
Royalty advances | (55) | (24) | ||
Accounts payable and accrued liabilities | (86) | (96) | ||
Royalty payables | 35 | 11 | ||
Accrued interest | (12) | (25) | ||
Deferred revenue | 39 | 93 | ||
Other balance sheet changes | 7 | (9) | ||
Net cash provided by operating activities | 118 | 41 | ||
Cash flows from investing activities | ||||
Acquisition of music publishing rights, net | (12) | (20) | ||
Capital expenditures | (51) | (46) | ||
Investments and acquisitions of businesses, net | (16) | (26) | ||
Net cash used in investing activities | (79) | (92) | ||
Cash flows from financing activities | ||||
Proceeds from the Revolving Credit Facility | 258 | 490 | ||
Repayment of the Revolving Credit Facility | (258) | (490) | ||
Financing costs paid | (104) | |||
Deferred financing costs paid | (12) | |||
Repayment of Acquisition Corp. Senior Term Loan Facility | (10) | (7) | ||
Distribution to noncontrolling interest holder | (3) | (2) | ||
Repayment of capital lease obligations | (2) | (2) | ||
Net cash (used in) provided by financing activities | (15) | 43 | ||
Effect of exchange rate changes on cash and equivalents | (13) | (5) | ||
Net increase (decrease) in cash and equivalents | 11 | (13) | ||
Cash and equivalents at beginning of period | 157 | 155 | ||
Cash and equivalents at end of period | 168 | 142 | 168 | 142 |
5.625% Senior Secured Notes | ||||
Cash flows from financing activities | ||||
Proceeds from issuance of Acquisition Corp | 275 | |||
6.75% Senior Notes | ||||
Cash flows from financing activities | ||||
Proceeds from issuance of Acquisition Corp Senior Notes | 660 | |||
11.5% Senior Notes | ||||
Cash flows from financing activities | ||||
Repayment of Acquisition Corp. Senior Unsecured Notes | (765) | |||
Eliminations | ||||
Cash flows from operating activities | ||||
Net (loss) income | 68 | (23) | 51 | 42 |
Adjustments to reconcile net (loss) income to net cash provided by operating activities: | ||||
Equity losses (gains), including distributions | (61) | (1) | (38) | (68) |
Changes in operating assets and liabilities: | ||||
Accounts payable and accrued liabilities | (13) | 26 | ||
Cash flows from investing activities | ||||
Advances to issuer | (16) | (22) | ||
Net cash used in investing activities | (16) | (22) | ||
Cash flows from financing activities | ||||
Change in due to (from) issuer | 16 | 22 | ||
Net cash (used in) provided by financing activities | 16 | 22 | ||
Eliminations | ||||
Cash flows from operating activities | ||||
Net (loss) income | 83 | 365 | 120 | 548 |
Adjustments to reconcile net (loss) income to net cash provided by operating activities: | ||||
Equity losses (gains), including distributions | (83) | (365) | (120) | (548) |
WMG Acquisition Corp. (issuer) | Reportable Legal Entities | ||||
Cash flows from operating activities | ||||
Net (loss) income | (39) | (180) | (52) | (266) |
Adjustments to reconcile net (loss) income to net cash provided by operating activities: | ||||
Loss on extinguishment of debt | 141 | 141 | ||
Unrealized gains/losses and remeasurement of foreign denominated loans | 93 | 1 | ||
Non-cash interest expense | 7 | 10 | ||
Equity losses (gains), including distributions | 9 | 32 | (26) | 85 |
Changes in operating assets and liabilities: | ||||
Accrued interest | (7) | (20) | ||
Other balance sheet changes | (1) | |||
Net cash provided by operating activities | 14 | (49) | ||
Cash flows from investing activities | ||||
Advances to issuer | 16 | 22 | ||
Net cash used in investing activities | 16 | 22 | ||
Cash flows from financing activities | ||||
Dividend by Acquisition Corp. to Holdings Corp. | (20) | (20) | ||
Proceeds from the Revolving Credit Facility | 258 | 490 | ||
Repayment of the Revolving Credit Facility | (258) | (490) | ||
Financing costs paid | (104) | |||
Deferred financing costs paid | (12) | |||
Repayment of Acquisition Corp. Senior Term Loan Facility | (10) | (7) | ||
Net cash (used in) provided by financing activities | (30) | 27 | ||
WMG Acquisition Corp. (issuer) | Reportable Legal Entities | 5.625% Senior Secured Notes | ||||
Cash flows from financing activities | ||||
Proceeds from issuance of Acquisition Corp | 275 | |||
WMG Acquisition Corp. (issuer) | Reportable Legal Entities | 6.75% Senior Notes | ||||
Cash flows from financing activities | ||||
Proceeds from issuance of Acquisition Corp Senior Notes | 660 | |||
WMG Acquisition Corp. (issuer) | Reportable Legal Entities | 11.5% Senior Notes | ||||
Cash flows from financing activities | ||||
Repayment of Acquisition Corp. Senior Unsecured Notes | (765) | |||
Guarantor Subsidiaries | Reportable Legal Entities | ||||
Cash flows from operating activities | ||||
Net (loss) income | (95) | (41) | (23) | 42 |
Adjustments to reconcile net (loss) income to net cash provided by operating activities: | ||||
Depreciation and amortization | 121 | 117 | ||
Unrealized gains/losses and remeasurement of foreign denominated loans | 46 | (22) | ||
Non-cash share-based compensation expense | 5 | |||
Equity losses (gains), including distributions | 52 | (31) | 63 | (17) |
Changes in operating assets and liabilities: | ||||
Accounts receivable | 18 | 24 | ||
Inventories | (1) | |||
Royalty advances | (18) | 5 | ||
Accounts payable and accrued liabilities | (93) | (90) | ||
Royalty payables | (55) | (52) | ||
Deferred revenue | 18 | 84 | ||
Other balance sheet changes | (6) | (2) | ||
Net cash provided by operating activities | 70 | 94 | ||
Cash flows from investing activities | ||||
Acquisition of music publishing rights, net | (8) | (13) | ||
Capital expenditures | (38) | (31) | ||
Investments and acquisitions of businesses, net | (9) | (10) | ||
Net cash used in investing activities | (55) | (54) | ||
Cash flows from financing activities | ||||
Distribution to noncontrolling interest holder | (1) | |||
Change in due to (from) issuer | (16) | (22) | ||
Net cash (used in) provided by financing activities | (17) | (22) | ||
Net increase (decrease) in cash and equivalents | (2) | 18 | ||
Cash and equivalents at beginning of period | 26 | 16 | ||
Cash and equivalents at end of period | 24 | 34 | 24 | 34 |
Non-Guarantor Subsidiaries | Reportable Legal Entities | ||||
Cash flows from operating activities | ||||
Net (loss) income | 28 | 65 | (25) | (81) |
Adjustments to reconcile net (loss) income to net cash provided by operating activities: | ||||
Depreciation and amortization | 112 | 121 | ||
Unrealized gains/losses and remeasurement of foreign denominated loans | (120) | (20) | ||
Deferred income taxes | (17) | (47) | ||
Changes in operating assets and liabilities: | ||||
Accounts receivable | (2) | 43 | ||
Inventories | (2) | (4) | ||
Royalty advances | (37) | (29) | ||
Accounts payable and accrued liabilities | 20 | (32) | ||
Royalty payables | 90 | 63 | ||
Deferred revenue | 21 | 9 | ||
Other balance sheet changes | 14 | (7) | ||
Net cash provided by operating activities | 54 | 16 | ||
Cash flows from investing activities | ||||
Acquisition of music publishing rights, net | (4) | (7) | ||
Capital expenditures | (13) | (15) | ||
Investments and acquisitions of businesses, net | (7) | (16) | ||
Net cash used in investing activities | (24) | (38) | ||
Cash flows from financing activities | ||||
Distribution to noncontrolling interest holder | (2) | (2) | ||
Repayment of capital lease obligations | (2) | (2) | ||
Net cash (used in) provided by financing activities | (4) | (4) | ||
Effect of exchange rate changes on cash and equivalents | (13) | (5) | ||
Net increase (decrease) in cash and equivalents | 13 | (31) | ||
Cash and equivalents at beginning of period | 131 | 139 | ||
Cash and equivalents at end of period | 144 | 108 | 144 | 108 |
WMG Acquisition Corp. Consolidated | Reportable Legal Entities | ||||
Cash flows from operating activities | ||||
Net (loss) income | (38) | (179) | (49) | (263) |
Adjustments to reconcile net (loss) income to net cash provided by operating activities: | ||||
Loss on extinguishment of debt | 141 | 141 | ||
Depreciation and amortization | 233 | 238 | ||
Unrealized gains/losses and remeasurement of foreign denominated loans | 19 | (41) | ||
Deferred income taxes | (17) | (47) | ||
Non-cash interest expense | 7 | 10 | ||
Non-cash share-based compensation expense | 5 | |||
Equity losses (gains), including distributions | (1) | |||
Changes in operating assets and liabilities: | ||||
Accounts receivable | 16 | 67 | ||
Inventories | (3) | (4) | ||
Royalty advances | (55) | (24) | ||
Accounts payable and accrued liabilities | (86) | (96) | ||
Royalty payables | 35 | 11 | ||
Accrued interest | (7) | (20) | ||
Deferred revenue | 39 | 93 | ||
Other balance sheet changes | 7 | (9) | ||
Net cash provided by operating activities | 138 | 61 | ||
Cash flows from investing activities | ||||
Acquisition of music publishing rights, net | (12) | (20) | ||
Capital expenditures | (51) | (46) | ||
Investments and acquisitions of businesses, net | (16) | (26) | ||
Net cash used in investing activities | (79) | (92) | ||
Cash flows from financing activities | ||||
Dividend by Acquisition Corp. to Holdings Corp. | (20) | (20) | ||
Proceeds from the Revolving Credit Facility | 258 | 490 | ||
Repayment of the Revolving Credit Facility | (258) | (490) | ||
Financing costs paid | (104) | |||
Deferred financing costs paid | (12) | |||
Repayment of Acquisition Corp. Senior Term Loan Facility | (10) | (7) | ||
Distribution to noncontrolling interest holder | (3) | (2) | ||
Repayment of capital lease obligations | (2) | (2) | ||
Net cash (used in) provided by financing activities | (35) | 23 | ||
Effect of exchange rate changes on cash and equivalents | (13) | (5) | ||
Net increase (decrease) in cash and equivalents | 11 | (13) | ||
Cash and equivalents at beginning of period | 157 | 155 | ||
Cash and equivalents at end of period | 168 | 142 | 168 | 142 |
WMG Acquisition Corp. Consolidated | Reportable Legal Entities | 5.625% Senior Secured Notes | ||||
Cash flows from financing activities | ||||
Proceeds from issuance of Acquisition Corp | 275 | |||
WMG Acquisition Corp. Consolidated | Reportable Legal Entities | 6.75% Senior Notes | ||||
Cash flows from financing activities | ||||
Proceeds from issuance of Acquisition Corp Senior Notes | 660 | |||
WMG Acquisition Corp. Consolidated | Reportable Legal Entities | 11.5% Senior Notes | ||||
Cash flows from financing activities | ||||
Repayment of Acquisition Corp. Senior Unsecured Notes | (765) | |||
Holdings Company | Reportable Legal Entities | ||||
Cash flows from operating activities | ||||
Net (loss) income | (44) | (185) | (68) | (282) |
Adjustments to reconcile net (loss) income to net cash provided by operating activities: | ||||
Non-cash interest expense | 1 | 1 | ||
Equity losses (gains), including distributions | 39 | 180 | 52 | 266 |
Changes in operating assets and liabilities: | ||||
Accrued interest | (5) | (5) | ||
Net cash provided by operating activities | (20) | (20) | ||
Cash flows from financing activities | ||||
Dividend by Acquisition Corp. to Holdings Corp. | 20 | 20 | ||
Net cash (used in) provided by financing activities | 20 | 20 | ||
Warner Music Group Corp. | Reportable Legal Entities | ||||
Cash flows from operating activities | ||||
Net (loss) income | (44) | (185) | (68) | (282) |
Adjustments to reconcile net (loss) income to net cash provided by operating activities: | ||||
Equity losses (gains), including distributions | $ 44 | $ 185 | $ 68 | $ 282 |
Guarantor and Non-Guarantor S57
Guarantor and Non-Guarantor Subsidiaries Financial Information - Consolidating Statement of Cash Flows (Parenthetical) (Detail) | Jun. 30, 2015 | Jun. 30, 2014 |
5.625% Senior Secured Notes | ||
Condensed Cash Flow Statements Captions [Line Items] | ||
Interest rate | 5.625% | |
6.750% Senior Notes | ||
Condensed Cash Flow Statements Captions [Line Items] | ||
Interest rate | 6.75% | 6.75% |
11.5% Senior Notes | ||
Condensed Cash Flow Statements Captions [Line Items] | ||
Interest rate | 11.50% |