Document and Entity Information
Document and Entity Information - USD ($) | 12 Months Ended | ||
Sep. 30, 2015 | Dec. 10, 2015 | Mar. 31, 2015 | |
Document And Entity Information [Abstract] | |||
Document Type | 10-K | ||
Amendment Flag | false | ||
Document Period End Date | Sep. 30, 2015 | ||
Document Fiscal Year Focus | 2,015 | ||
Document Fiscal Period Focus | FY | ||
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 Well-known Seasoned Issuer | No | ||
Entity Current Reporting Status | No | ||
Entity Voluntary Filers | Yes | ||
Entity Filer Category | Non-accelerated Filer | ||
Entity Common Stock, Shares Outstanding | 1,055 | ||
Entity Public Float | $ 0 |
Consolidated Balance Sheets
Consolidated Balance Sheets - USD ($) $ in Millions | Sep. 30, 2015 | Sep. 30, 2014 |
Current assets: | ||
Cash and equivalents | $ 246 | $ 157 |
Accounts receivable, net of allowances of $56 million and $65 million | 349 | 383 |
Inventories | 42 | 39 |
Royalty advances expected to be recouped within one year | 130 | 102 |
Deferred tax assets | 52 | 46 |
Prepaid and other current assets | 60 | 55 |
Total current assets | 879 | 782 |
Royalty advances expected to be recouped after one year | 195 | 190 |
Property, plant and equipment, net | 220 | 227 |
Goodwill | 1,632 | 1,661 |
Intangible assets subject to amortization, net | 2,514 | 2,884 |
Intangible assets not subject to amortization | 119 | 120 |
Other assets | 112 | 90 |
Total assets | 5,671 | 5,954 |
Current liabilities: | ||
Accounts payable | 173 | 215 |
Accrued royalties | 1,087 | 1,132 |
Accrued liabilities | 296 | 243 |
Accrued interest | 58 | 60 |
Deferred revenue | 206 | 219 |
Current portion of long-term debt | 13 | 13 |
Other current liabilities | 24 | 3 |
Total current liabilities | 1,857 | 1,885 |
Long-term debt | 2,981 | 3,017 |
Deferred tax liabilities, net | 352 | 383 |
Other noncurrent liabilities | 242 | 279 |
Total liabilities | 5,432 | 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 | (740) | (649) |
Accumulated other comprehensive loss, net | (167) | (108) |
Total Warner Music Group Corp. equity | 221 | 371 |
Noncontrolling interest | 18 | 19 |
Total equity | 239 | 390 |
Total liabilities and equity | $ 5,671 | $ 5,954 |
Consolidated Balance Sheets (Pa
Consolidated Balance Sheets (Parenthetical) - USD ($) $ in Millions | Sep. 30, 2015 | Sep. 30, 2014 |
Statement Of Financial Position [Abstract] | ||
Accounts receivable, allowances | $ 56 | $ 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 - USD ($) $ in Millions | 3 Months Ended | 12 Months Ended | ||||||||||||||||||||
Sep. 30, 2015 | Jun. 30, 2015 | Mar. 31, 2015 | Dec. 31, 2014 | Sep. 30, 2014 | Jun. 30, 2014 | Mar. 31, 2014 | Dec. 31, 2013 | Sep. 30, 2015 | Sep. 30, 2014 | Sep. 30, 2013 | ||||||||||||
Income Statement [Abstract] | ||||||||||||||||||||||
Revenues | $ 750 | $ 710 | $ 677 | $ 829 | $ 771 | $ 788 | $ 653 | $ 815 | $ 2,966 | $ 3,027 | $ 2,871 | |||||||||||
Costs and expenses: | ||||||||||||||||||||||
Cost of revenue | (375) | (373) | (318) | (445) | (393) | (417) | (319) | (441) | (1,511) | (1,570) | (1,492) | |||||||||||
Selling, general and administrative expenses | (274) | [1] | (251) | [1] | (252) | [1] | (296) | [1] | (287) | [2] | (319) | [2] | (273) | [2] | (293) | [2] | (1,073) | [3] | (1,172) | [3] | (1,097) | [3] |
Amortization expense | (64) | (63) | (63) | (65) | (67) | (67) | (66) | (66) | (255) | (266) | (207) | |||||||||||
Total costs and expenses | (713) | (687) | (633) | (806) | (747) | (803) | (658) | (800) | (2,839) | (3,008) | (2,796) | |||||||||||
Operating income | 37 | 23 | 44 | 23 | 24 | (15) | (5) | 15 | 127 | 19 | 75 | |||||||||||
Loss on extinguishment of debt | (141) | (141) | (85) | |||||||||||||||||||
Interest expense, net | (45) | (45) | (45) | (46) | (46) | (48) | (54) | (55) | (181) | (203) | (203) | |||||||||||
Other expense | (9) | (17) | 14 | (9) | (1) | 4 | (3) | (4) | (21) | (4) | (12) | |||||||||||
Loss before income taxes | (17) | (39) | 13 | (32) | (23) | (200) | (62) | (44) | (75) | (329) | (225) | |||||||||||
Income tax (expense) benefit | (6) | (4) | 6 | (9) | (1) | 16 | 3 | 8 | (13) | 26 | 31 | |||||||||||
Net (loss) income | (23) | (43) | 19 | (41) | (24) | (184) | (59) | (36) | (88) | (303) | (194) | |||||||||||
Less: Income attributable to noncontrolling interest | (1) | (1) | (1) | (2) | (1) | (1) | (1) | (3) | (5) | (4) | ||||||||||||
Net loss attributable to Warner Music Group Corp. | $ (23) | $ (44) | $ 18 | $ (42) | $ (26) | $ (185) | $ (60) | $ (37) | $ (91) | $ (308) | $ (198) | |||||||||||
[1] | (a) Includes depreciation expense of: $(12) $(14) $(14) $(14) | |||||||||||||||||||||
[2] | (a) Includes depreciation expense of: $(16) $(14) $(13) $(12) | |||||||||||||||||||||
[3] | (a) Includes depreciation expense of: $(54) $(55) $(51) |
Consolidated Statements of Ope5
Consolidated Statements of Operations (Parenthetical) - USD ($) $ in Millions | 3 Months Ended | 12 Months Ended | |||||||||
Sep. 30, 2015 | Jun. 30, 2015 | Mar. 31, 2015 | Dec. 31, 2014 | Sep. 30, 2014 | Jun. 30, 2014 | Mar. 31, 2014 | Dec. 31, 2013 | Sep. 30, 2015 | Sep. 30, 2014 | Sep. 30, 2013 | |
Income Statement [Abstract] | |||||||||||
Depreciation expense | $ (12) | $ (14) | $ (14) | $ (14) | $ (16) | $ (14) | $ (13) | $ (12) | $ (54) | $ (55) | $ (51) |
Consolidated Statements of Comp
Consolidated Statements of Comprehensive Loss - USD ($) $ in Millions | 3 Months Ended | 12 Months Ended | |||||||||
Sep. 30, 2015 | Jun. 30, 2015 | Mar. 31, 2015 | Dec. 31, 2014 | Sep. 30, 2014 | Jun. 30, 2014 | Mar. 31, 2014 | Dec. 31, 2013 | Sep. 30, 2015 | Sep. 30, 2014 | Sep. 30, 2013 | |
Statement Of Income And Comprehensive Income [Abstract] | |||||||||||
Net (loss) income | $ (23) | $ (43) | $ 19 | $ (41) | $ (24) | $ (184) | $ (59) | $ (36) | $ (88) | $ (303) | $ (194) |
Other comprehensive loss, net of tax | |||||||||||
Foreign currency adjustment | (59) | (41) | (3) | ||||||||
Minimum pension liability | (6) | 2 | |||||||||
Deferred losses on derivative financial instruments | (1) | ||||||||||
Other comprehensive loss, net of tax | (59) | (47) | (2) | ||||||||
Total comprehensive loss | (147) | (350) | (196) | ||||||||
Less: Income attributable to noncontrolling interest | (3) | (5) | (4) | ||||||||
Comprehensive loss attributable to Warner Music Group Corp. | $ (150) | $ (355) | $ (200) |
Consolidated Statements of Cash
Consolidated Statements of Cash Flows $ in Millions | 12 Months Ended |
Sep. 30, 2013USD ($) | |
Cash flows from operating activities | |
Net (loss) income | $ (194) |
Adjustments to reconcile net loss to net cash provided by operating activities: | |
Loss on extinguishment of debt | 85 |
Depreciation and amortization | 258 |
Unrealized gains/losses and remeasurement of foreign denominated loans | (4) |
Deferred income taxes | (73) |
Non-cash interest expense | 13 |
Non-cash share-based compensation expense | 19 |
Changes in operating assets and liabilities: | |
Accounts receivable | (15) |
Inventories | (5) |
Royalty advances | (1) |
Accounts payable and accrued liabilities | 73 |
Royalty payables | 6 |
Accrued interest | (14) |
Deferred revenue | 14 |
Other balance sheet changes | (3) |
Net cash provided by operating activities | 159 |
Cash flows from investing activities | |
Acquisition of music publishing rights, net | (37) |
Capital expenditures | (34) |
Investments and acquisitions of businesses, net | (737) |
Net cash used in investing activities | (808) |
Cash flows from financing activities | |
Proceeds from the Revolving Credit Facility | 136 |
Repayment of the Revolving Credit Facility | (136) |
Proceeds from Acquisition Corp. Senior Term Loan Facility | 1,412 |
Repayment of Acquisition Corp. Senior Term Loan Facility | (110) |
Financing costs paid | (129) |
Deferred financing costs paid | (62) |
Distribution to noncontrolling interest holder | (4) |
Net cash (used in) provided by financing activities | 511 |
Effect of exchange rate changes on cash and equivalents | (9) |
Net increase (decrease) in cash and equivalents | (147) |
Cash and equivalents at beginning of period | 302 |
Cash and equivalents at end of period | 155 |
6.00% Senior Secured Notes | |
Cash flows from financing activities | |
Proceeds from issuance of Acquisition Corp | 500 |
Repayment of Acquisition Corp Senior Secured Notes | (50) |
6.25% Senior Secured Notes | |
Cash flows from financing activities | |
Proceeds from issuance of Acquisition Corp | 227 |
Repayment of Acquisition Corp Senior Secured Notes | (23) |
9.5% Senior Secured Notes | |
Cash flows from financing activities | |
Repayment of Acquisition Corp Senior Secured Notes | $ (1,250) |
Consolidated Statements of Cas8
Consolidated Statements of Cash Flows (Parenthetical) | Sep. 30, 2015 | Sep. 30, 2014 | Sep. 30, 2013 |
5.625% Senior Secured Notes | |||
Interest rate | 5.625% | 5.625% | 5.625% |
6.00% Senior Secured Notes | |||
Interest rate | 6.00% | 6.00% | 6.00% |
6.25% Senior Secured Notes | |||
Interest rate | 6.25% | 6.25% | 6.25% |
6.750% Senior Notes | |||
Interest rate | 6.75% | 6.75% | 6.75% |
9.5% Senior Secured Notes | |||
Interest rate | 9.50% | 9.50% | 9.50% |
11.5% Senior Unsecured Notes | |||
Interest rate | 11.50% | 11.50% | 11.50% |
Consolidated Statement of Equit
Consolidated Statement of Equity - 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 at Sep. 30, 2012 | $ 944 | $ 1,129 | $ (143) | $ (59) | $ 927 | $ 17 | |
Beginning balance, shares at Sep. 30, 2012 | 1,000 | ||||||
Net (loss) income | (194) | (198) | (198) | 4 | |||
Other comprehensive loss, net of tax | (2) | (2) | (2) | ||||
Distribution to noncontrolling interest holders | (4) | (4) | |||||
Deconsolidation of entity | (1) | (1) | (1) | ||||
Stock dividend, shares | 55 | ||||||
Ending balance at Sep. 30, 2013 | 743 | 1,128 | (341) | (61) | 726 | 17 | |
Ending balance, shares at Sep. 30, 2013 | 1,055 | ||||||
Net (loss) income | (303) | (308) | (308) | 5 | |||
Other comprehensive loss, net of tax | (47) | (47) | (47) | ||||
Distribution to noncontrolling interest holders | (3) | (3) | |||||
Ending balance at Sep. 30, 2014 | $ 390 | 1,128 | (649) | (108) | 371 | 19 | |
Ending balance, shares at Sep. 30, 2014 | 1,055 | 1,055 | |||||
Net (loss) income | $ (88) | (91) | (91) | 3 | |||
Other comprehensive loss, net of tax | (59) | (59) | (59) | ||||
Distribution to noncontrolling interest holders | (4) | (4) | |||||
Ending balance at Sep. 30, 2015 | $ 239 | $ 1,128 | $ (740) | $ (167) | $ 221 | $ 18 | |
Ending balance, shares at Sep. 30, 2015 | 1,055 | 1,055 |
Description of Business
Description of Business | 12 Months Ended |
Sep. 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 instruments covering its outstanding indebtedness. Acquisition of Parlophone Label Group On July 1, 2013, the Company completed its acquisition of Parlophone Label Group. See Note 4 for a further discussion. 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, Eastwest, Elektra, Erato, FFRR, Fueled by Ramen, Nonesuch, Parlophone, Reprise, Roadrunner, 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, Pandora and Sirius XM. 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 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 permitted 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, resulting in Warner/Chappell being awarded ASCAP’s Top Publisher of the Year for Latin Music in 2015, to add to the successes of Top Publisher in each of Pop, Country and Urban categories in 2014. The Company has an extensive production music library collectively branded as Warner/Chappell Production Music. |
Summary of Significant Accounti
Summary of Significant Accounting Policies | 12 Months Ended |
Sep. 30, 2015 | |
Accounting Policies [Abstract] | |
Summary of Significant Accounting Policies | 2. Summary of Significant Accounting Policies Basis of Presentation The accompanying consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States (“U.S. GAAP”). In the opinion of management, all adjustments (consisting of normal recurring accruals) considered necessary for a fair presentation have been included. The Company maintains a 52-53 week fiscal year ending on the last Friday in each reporting period. The fiscal year ended September 30, 2015 ended on September 25, 2015, the fiscal year ended September 30, 2014 ended on September 26, 2014, and the fiscal year ended September 30, 2013 ended on September 27, 2013. For convenience purposes, the Company continues to date its financial statements as of September 30. 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. Reclassifications Certain reclassifications have been made to the prior fiscal years’ consolidated financial statements to conform with the current fiscal-year presentation. Use of Estimates The preparation of consolidated financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the amounts reported in the Consolidated Financial Statements and the accompanying notes. Actual results could differ from those estimates. Business Combinations The Company accounts for its business acquisitions under the FASB ASC Topic 805, Business Combinations (“ASC 805”) guidance for business combinations. The total cost of acquisitions is allocated to the underlying identifiable net assets based on their respective estimated fair values. The excess of the purchase price over the estimated fair values of the net assets acquired is recorded as goodwill. Determining the fair value of assets acquired and liabilities assumed requires management’s judgment and often involves the use of significant estimates and assumptions, including assumptions with respect to future cash inflows and outflows, discount rates, asset lives and market multiples, among other items. Cash and Equivalents The Company considers all highly liquid investments with maturities of three months or less at the date of purchase to be cash equivalents. The Company includes checks outstanding at year end as a component of accounts payable, instead of a reduction in its cash balance where there is not a right of offset in the related bank accounts. Accounts Receivable Credit is extended to customers based upon an evaluation of the customer’s financial condition. Accounts receivable are recorded at net realizable value. Sales Returns and Allowance for Doubtful Accounts Management’s estimate of physical recorded music products that will be returned, and the amount of receivables that will ultimately be collected is an area of judgment affecting reported revenues and operating income. In determining the estimate of physical product sales that will be returned, management analyzes vendor sales of product, historical return trends, current economic conditions, changes in customer demand and commercial acceptance of our products. Based on this information, management reserves a percentage of each dollar of physical product sales that provide the customer with the right of return. The provision for such sales returns is reflected as a reduction in the revenues from the related sale. Similarly, the Company monitors customer credit risk related to accounts receivable. Significant judgments and estimates are involved in evaluating if such amounts will ultimately be fully collected. On an ongoing basis, the Company tracks customer exposure based on news reports, ratings agency information, reviews of customer financial data and direct dialogue with customers. Counterparties that are determined to be of a higher risk are evaluated to assess whether the payment terms previously granted to them should be modified. The Company also monitors payment levels from customers, and a provision for estimated uncollectible amounts is maintained based on such payment levels, historical experience, management’s views on trends in the overall receivable agings and, for larger accounts, analyses of specific risks on a customer specific basis. Concentration of Credit Risk Customer credit risk represents the potential for financial loss if a customer is unwilling or unable to meet its agreed upon contractual payment obligations. The Company has no Recorded Music customers that individually represent more than 10% of the Company’s consolidated gross accounts receivable. As such, the Company does not believe there is any significant collection risk. In the Music Publishing business, the Company collects a significant portion of its royalties from copyright collection societies around the world. Collection societies and associations generally are not-for-profit organizations that represent composers, songwriters and music publishers. These organizations seek to protect the rights of their members by licensing, collecting license fees and distributing royalties for the use of the members’ works. Accordingly, the Company does not believe there is any significant collection risk from such societies. Inventories Inventories consist of DVDs, CDs, Vinyl and related music products. Inventories are stated at the lower of cost or estimated realizable value. Cost is determined using first-in, first-out (“FIFO”) and average cost methods, which approximate cost under the FIFO method. Returned goods included in inventory are valued at estimated realizable value, but not in excess of cost. Derivative and Financial Instruments The Company accounts for these investments as required by the FASB ASC Topic 815, Derivatives and Hedging (“ASC 815”), which requires that all derivative instruments be recognized on the balance sheet at fair value. ASC 815 also provides that, for derivative instruments that qualify for hedge accounting, changes in the fair value are either (a) offset against the change in fair value of the hedged assets, liabilities, or firm commitments through earnings or (b) recognized in equity until the hedged item is recognized in earnings, depending on whether the derivative is being used to hedge changes in fair value or cash flows. In addition, the ineffective portion of a derivative’s change in fair value is immediately recognized in earnings. The carrying value of the Company’s financial instruments approximates fair value, except for certain differences relating to long-term, fixed-rate debt (see Note 17) and other financial instruments that are not significant. The fair value of financial instruments is generally determined by reference to market values resulting from trading on a national securities exchange or an over-the-counter market. In cases where quoted market prices are not available, fair value is based on estimates using present value or other valuation techniques. Property, Plant and Equipment Property, plant and equipment existing at the date of the Merger or acquired in conjunction with subsequent business combinations are recorded at fair value. All other additions are recorded at historical cost. Depreciation is calculated using the straight-line method based upon the estimated useful lives of depreciable assets as follows: five to seven years for furniture and fixtures, periods of up to five years for computer equipment and periods of up to five years for machinery and equipment. Buildings are depreciated over periods of up to forty years. Leasehold improvements are depreciated over the life of the lease or estimated useful lives of the improvements, whichever period is shorter. Internal-Use Software Development Costs As required by FASB ASC Subtopic 350-40, Internal-Use Software (“ASC 350-40”), the Company capitalizes certain external and internal computer software costs incurred during the application development stage. The application development stage generally includes software design and configuration, coding, testing and installation activities. Training and maintenance costs are expensed as incurred, while upgrades and enhancements are capitalized if it is probable that such expenditures will result in additional functionality. Capitalized software costs are depreciated over the estimated useful life of the underlying project on a straight-line basis, generally not exceeding five years and are recorded as a component of depreciation expense. Accounting for Goodwill and Other Intangible Assets In accordance with FASB ASC Topic 350, Intangibles-Goodwill and Other (“ASC 350”), the Company accounts for business combinations using the acquisition method of accounting and accordingly, the assets and liabilities of the acquired entities are recorded at their estimated fair values at the acquisition date. Goodwill represents the excess of the purchase price over the fair value of net assets, including the amount assigned to identifiable intangible assets. Pursuant to this guidance, the Company does not amortize the goodwill balance and instead, performs an annual impairment test to assess the fair value of goodwill over its carrying value. Identifiable intangible assets with finite lives are amortized over their useful lives. Goodwill impairment is determined using a two-step process. The first step involves a comparison of the estimated fair value of the reporting unit to its carrying amount, including goodwill. If the estimated fair value of the reporting unit exceeds its carrying amount, its goodwill is not impaired and the second step of the impairment test is not necessary. If the carrying amount of the reporting unit exceeds its estimated fair value, then the second step of the goodwill impairment test must be performed. The second step of the goodwill impairment test compares the implied fair value of the reporting unit goodwill with its carrying amount to measure the amount of impairment, if any. The implied fair value of goodwill is determined in the same manner as the amount of goodwill recognized in a business combination. If the carrying amount of the reporting unit goodwill exceeds the implied fair value of that goodwill, an impairment is recognized in an amount equal to that excess. Goodwill is tested annually for impairment during the fourth quarter of each fiscal year as of July 1 or earlier upon the occurrence of certain events or substantive changes in circumstances. The Company performs an annual impairment test of its indefinite-lived intangible assets as of July 1 of each fiscal year, unless events occur which trigger the need for an earlier impairment test. The impairment test involves a comparison of the estimated fair value of the intangible asset with its carrying value. If the carrying value of the intangible asset exceeds its fair value, an impairment loss is recognized in an amount equal to that excess. The estimates of fair value of intangible assets not subject to amortization are determined using a DCF analysis. Common among such an approach is the “relief from royalty” methodology, which is used in estimating the fair value of the Company’s trademarks. Discount rate assumptions are based on an assessment of the risk inherent in the projected future cash flows generated by the respective intangible assets. Also subject to judgment are assumptions about royalty rates, which are based on the estimated rates at which similar trademarks are being licensed in the marketplace. The impairment tests require management to make assumptions about future conditions impacting the value of the indefinite-lived intangible assets, including projected growth rates, cost of capital, effective tax rates, tax amortization periods, royalty rates, market share and others. Valuation of Long-Lived Assets The Company periodically reviews the carrying value of its long-lived assets, including finite lived intangibles, property, plant and equipment and amortizable intangible assets, whenever events or changes in circumstances indicate that the carrying value may not be recoverable or that the lives assigned may no longer be appropriate. To the extent the estimated future cash inflows attributable to the asset, less estimated future cash outflows, are less than the carrying amount, an impairment loss is recognized in an amount equal to the difference between the carrying value of such asset and its fair value. Assets to be disposed of and for which there is a committed plan to dispose of the assets, whether through sale or abandonment, are reported at the lower of carrying value or fair value less costs to sell. If it is determined that events and circumstances warrant a revision to the remaining period of amortization, an asset’s remaining useful life would be changed, and the remaining carrying amount of the asset would be amortized prospectively over that revised remaining useful life. Foreign Currency Translation The financial position and operating results of substantially all foreign operations are consolidated using the local currency as the functional currency. Local currency assets and liabilities are translated at the rates of exchange on the balance sheet date, and local currency revenues and expenses are translated at average rates of exchange during the period. Resulting translation gains or losses are included in the accompanying consolidated statements of equity as a component of accumulated other comprehensive loss. Revenues Recorded Music As required by FASB ASC Topic 605, Revenue Recognition (“ASC 605”), the Company recognizes revenue when persuasive evidence of an arrangement exists, delivery has occurred, the sales price is fixed or determinable and collection is probable. Revenues from the sale of physical Recorded Music products are recognized upon delivery, which occurs once the product has been shipped and title and risk of loss have been transferred. In accordance with industry practice and as is customary in many territories, certain products, such as CDs and DVDs, are sold to customers with the right to return unsold items. Revenues from such sales are generally recognized upon shipment based on gross sales less a provision for future estimated returns. Revenues from the sale of Recorded Music products through digital distribution channels are recognized when the products are sold and related sales accounting reports are delivered by the providers. Music Publishing Music Publishing revenues are earned from the receipt of royalties relating to the licensing of rights in musical compositions, and the sale of published sheet music and songbooks. The receipt of royalties principally relates to amounts earned from the public performance of copyrighted material, the mechanical reproduction of copyrighted material on recorded media including digital formats, and the use of copyrighted material in synchronization with visual images. Consistent with industry practice, music publishing royalties, except for synchronization royalties, generally are recognized as revenue when cash is received. Synchronization revenue is recognized as revenue on an accrual basis when all revenue recognition criteria are met in accordance with ASC 605. Gross Versus Net Revenue Classification In the normal course of business, the Company acts as an intermediary or agent with respect to certain payments received from third parties. For example, the Company distributes music product on behalf of third-party record labels. As required by FASB ASC Subtopic 605-45, Principal Agent Considerations, such transactions are recorded 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 Company serves as the principal in transactions in which it has substantial risks and rewards of ownership and, accordingly, revenues are recorded on a gross basis. For those transactions in which the Company does not have substantial risks and rewards of ownership, the Company is considered an agent and, accordingly, revenues are recorded on a net basis. To the extent revenues are recorded on a gross basis, any participations and royalties paid to third parties are recorded as expenses so that the net amount (gross revenues less expenses) flows through operating income. To the extent revenues are recorded on a net basis, revenues are reported based on the amounts received, less participations and royalties paid to third parties. In both cases, the impact on operating income is the same whether the Company records the revenues on a gross or net basis. Based on an evaluation of the individual terms of each contract and whether the Company is acting as principal or agent, the Company generally records revenues from the distribution of recorded music product on behalf of third-party record labels on a gross basis. However, revenues are recorded on a net basis for recorded music compilations distributed by other record companies where the Company has a right to participate in the profits. Royalty Advances and Royalty Costs The Company regularly commits to and pays royalty advances to its recording artists and songwriters in respect of future sales. The Company accounts for these advances under the related guidance in FASB ASC Topic 928, Entertainment—Music (“ASC 928”). Under ASC 928, the Company capitalizes as assets certain advances that it believes are recoverable from future royalties to be earned by the recording artist or songwriter. Advances vary in both amount and expected life based on the underlying recording artist or songwriter. The Company’s decision to capitalize an advance to a recording artist or songwriter as an asset requires significant judgment as to the recoverability of the advance. The recoverability is assessed upon initial commitment of the advance based upon the Company’s forecast of anticipated revenue from the sale of future and existing albums or songs. In determining whether the advance is recoverable, the Company evaluates the current and past popularity of the recording artist or songwriter, the sales history of the recording artist or songwriter, the initial or expected commercial acceptability of the product, the current and past popularity of the genre of music that the product is designed to appeal to, and other relevant factors. Based upon this information, the Company expenses the portion of any advance that it believes is not recoverable. In most cases, advances to recording artists or songwriters without a history of success and evidence of current or past popularity will be expensed immediately. Significant advances are individually assessed for recoverability continuously and at minimum on a quarterly basis. As part of the ongoing assessment of recoverability, the Company monitors the projection of future sales based on the current environment, the recording artist’s or songwriter’s ability to meet their contractual obligations as well as the Company’s intent to support future album releases or songs from the recording artist or songwriter. To the extent that a portion of an outstanding advance is no longer deemed recoverable, that amount will be expensed in the period the determination is made. Advertising As required by the FASB ASC Subtopic 720-35, Advertising Costs (“ASC 720-35”), advertising costs, including costs to produce music videos used for promotional purposes, are expensed as incurred. Advertising expense amounted to approximately $88 million, $83 million, and $70 million for the fiscal years ended September 30, 2015, 2014 and 2013, respectively. Deferred advertising costs, which principally relate to advertisements that have been paid for but not been exhibited or services that have not been received, were not material for all periods presented. Shipping and Handling The costs associated with shipping goods to customers are recorded as cost of revenues. Shipping and handling charges billed to customers are included in revenues. Share-Based Compensation The Company accounts for share-based payments as required by FASB ASC Topic 718, Compensation-Stock Compensation (“ASC 718”). ASC 718 requires all share-based payments to employees, including grants of employee stock options, to be recognized as compensation expense. Under the fair value recognition provision of ASC 718, equity classified share-based compensation cost is measured at the grant date based on the fair value of the award and is recognized as expense over the vesting period. Under the recognition provision of ASC 718, liability classified share-based compensation costs are measured each reporting date until settlement. The Company’s policy is to measure share-based compensation costs using the intrinsic value method instead of fair value as it is not practical to estimate the volatility of its share price. During fiscal year 2013, the Company initiated a long term incentive plan that has liability classification for share-based compensation awards. The plan was in place during fiscal years 2014 and 2015. Income Taxes Income taxes are provided using the asset and liability method presented by FASB ASC Topic 740, Income Taxes (“ASC 740”). Under this method, income taxes (i.e., deferred tax assets, deferred tax liabilities, taxes currently payable/refunds receivable and tax expense) are recorded based on amounts refundable or payable in the current fiscal year and include the results of any differences between U.S. GAAP and tax reporting. Deferred income taxes reflect the tax effect of net operating loss, capital loss and general business credit carry forwards and the net tax effects of temporary differences between the carrying amount of assets and liabilities for financial statements and income tax purposes, as determined under enacted tax laws and rates. Valuation allowances are established when management determines that it is more likely than not that some portion or the entire deferred tax asset will not be realized. The financial effect of changes in tax laws or rates is accounted for in the period of enactment. From time to time, the Company engages in transactions in which the tax consequences may be subject to uncertainty. Significant judgment is required in assessing and estimating the tax consequences of these transactions. The Company prepares and files tax returns based on its interpretation of tax laws and regulations. In the normal course of business, the Company’s tax returns are subject to examination by various taxing authorities. Such examinations may result in future tax and interest assessments by these taxing authorities. In determining the Company’s tax provision for financial reporting purposes, the Company establishes a reserve for uncertain tax positions unless such positions are determined to be more likely than not of being sustained upon examination based on their technical merits. There is considerable judgment involved in determining whether positions taken on the Company’s tax returns are more likely than not of being sustained. 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, 2017, and interim periods within those years. Early adoption is permitted only as of annual reporting periods beginning after December 15, 2016, including interim reporting periods within that reporting period. 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 Company does not expect the adoption of this guidance to have a material effect on our consolidated financial statements. 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 Income (Loss)
Comprehensive Income (Loss) | 12 Months Ended |
Sep. 30, 2015 | |
Equity [Abstract] | |
Comprehensive Income (Loss) | 3. Comprehensive Income (Loss) Comprehensive income (loss), which is reported in the accompanying consolidated statements of equity, consists of net income (loss) and other gains and losses affecting equity that, under U.S. GAAP, are excluded from net income (loss). For the Company, the components of other comprehensive loss primarily consist of foreign currency translation losses, minimum pension liabilities, and deferred gains and losses on financial instruments designated as hedges under ASC 815, which include foreign exchange contracts. The following summary sets forth the changes in the components of accumulated other comprehensive loss, net of related taxes: Deferred Gains Foreign Minimum (Losses) Accumulated Currency Pension On Derivative Other Translation Liability Financial Comprehensive Loss Adjustment Instruments Loss, net (in millions) Balance at September 30, 2012 $ (54 ) $ (6 ) $ 1 $ (59 ) Other comprehensive loss (a) (3 ) 3 — — Amounts reclassified from accumulated other comprehensive income — (1 ) (1 ) (2 ) Balance at September 30, 2013 $ (57 ) $ (4 ) $ — $ (61 ) Other comprehensive loss (a) (41 ) (6 ) — (47 ) Amounts reclassified from accumulated other comprehensive income — — — — Balance at September 30, 2014 $ (98 ) $ (10 ) $ — $ (108 ) Other comprehensive loss (a) (59 ) — — (59 ) Amounts reclassified from accumulated other comprehensive income — — — — Balance at September 30, 2015 $ (157 ) $ (10 ) $ — $ (167 ) (a) Foreign currency translation adjustments include intra-entity foreign currency transactions that are of a long-term investment nature of $(63) million, $(13) million and $(4) million |
Acquisition of Parlophone Label
Acquisition of Parlophone Label Group | 12 Months Ended |
Sep. 30, 2015 | |
Business Combinations [Abstract] | |
Acquisition of Parlophone Label Group | 4. Acquisition of Parlophone Label Group On July 1, 2013, the Company completed the acquisition of Parlophone Label Group (“PLG”) from Universal Music for £487 million in an all-cash transaction (the “PLG Acquisition”). The PLG Acquisition was accounted for in accordance with ASC 805, using the acquisition method of accounting. The assets acquired and liabilities assumed in connection with the PLG Acquisition, including identifiable intangible assets, have been measured at their fair value primarily using Level 3 inputs (see Note 17 for additional information on fair value inputs). Determining the fair value of the assets acquired and liabilities assumed requires judgment and involved the use of significant estimates and assumptions, including assumptions with respect to future cash inflows and outflows, discount rates, asset useful lives and market multiples, among other items. The use of different estimates and judgments could yield materially different results. In connection with the PLG Acquisition, the Company incurred $5 million in professional fees and integration costs during the fiscal year ended September 30, 2015, $59 million in professional fees and integration costs during the fiscal year ended September 30, 2014 and $43 million in professional fees and integration costs, as well as an $11 million fee under the Management Agreement (defined below), during the fiscal year ended September 30, 2013. The allocation of the purchase price was completed as of June 30, 2014 and any adjustments to goodwill made up to that date were recorded in the Company’s balance sheet as of June 30, 2014. The table below presents (i) the estimate of the PLG Acquisition consideration as it relates to the acquisition of PLG by the Buyers and (ii) the final allocation of the purchase price to the estimated fair values of the assets acquired and liabilities assumed on the closing date of July 1, 2013 (in millions): Purchase Price £ 487 Preliminary Working Capital Adjustment 13 Adjusted Purchase Price £ 500 Foreign Exchange Rate at July 1, 2013 1.53 Adjusted Purchase Price in U.S. dollars $ 765 Fair Value of assets acquired and liabilities assumed: Cash 46 Accounts receivable* 83 Other current assets 8 Property, plant and equipment 39 Intangible assets 764 Accounts payable (83 ) Royalties payable (147 ) Other current liabilities (21 ) Deferred revenue (25 ) Deferred tax liabilities* (140 ) Other noncurrent liabilities * (27 ) Fair value of net assets acquired 497 Goodwill recorded * 268 Total purchase price allocated $ 765 * Preliminary amounts were adjusted in the first and third quarters of fiscal 2014 based on new information obtained during the measurement period. On November 21, 2014, the Company received the final completion statement from Universal Music establishing the final purchase price of PLG. The final working capital adjustment of $38 million was determined and paid to Universal Music on December 8, 2014. We accrued for the impact of this in our results for the year ended September 30, 2014 as it represents the culmination of our previously estimated adjusted purchase price for PLG. The final working capital adjustment is reflected in the statement of operations as the measurement period for this acquisition has closed. The impact of this has been offset by the release of various net liability balances as they are settled as a result of the final completion statement. The excess of the Adjusted Purchase Price, over the fair value of net assets acquired, including the amount assigned to identifiable intangible assets and deferred tax adjustments, has been recorded to goodwill. The goodwill recorded as part of the PLG Acquisition reflects the expected value to be generated from the continuing transition of the music industry and the expected resulting cost savings, cost and revenue synergies to be realized, as well as any intangible assets that do not qualify for separate recognition. The resulting goodwill has been allocated to our Recorded Music reportable segment. The goodwill recognized is not deductible for income tax purposes. Any impairment charges made in future periods associated with goodwill will not be tax deductible. The components of the intangible assets identified in the table above and the related useful lives, allocated to the Company’s Recorded Music reportable segment, are as follows: Value Useful Life (in millions) Trademark and trade name $ 17 Indefinite Catalog 442 13 years Artist contracts 305 10 years Total intangible assets $ 764 Pro Forma Financial Information (unaudited) The following unaudited pro forma information has been presented as if the PLG Acquisition occurred on October 1, 2011. This information is based on historical results of operations, adjusted to give effect to pro forma events that are (i) directly attributable to the PLG Acquisition; (ii) factually supportable; and (iii) expected to have a continuing impact on the Company’s combined results. Additionally, certain pro forma adjustments have been made to the historical results of PLG in order to (i) convert them to U.S. GAAP; (ii) conform their accounting policies to those applied by the Company; (iii) present them in U.S. dollars; (iv) align accounting periods; (v) eliminate revenue and expenses and related assets and liabilities for international licensing agreements to sell repertoire owned by non-acquired entities that have been terminated as a result of the PLG Acquisition; and (vi) exclude assets not acquired by the Company. The unaudited pro forma results do not reflect the realization of any cost savings as a result of restructuring activities and other cost savings initiatives planned subsequent to the PLG Acquisition or the related estimated restructuring charges contemplated in association with any such expected cost savings. Such charges will be expensed in the appropriate accounting periods. The unaudited pro forma results for the fiscal year ended September 30, 2013 include the licensing income remitted to the repertoire owner by the selling territory, but do not reflect the licensing fee retained and related direct costs incurred by the selling territory. For the fiscal years ended September 30, 2015 and September 30, 2014, where the Company is the selling territory, the licensing fee and direct costs are included in our consolidated results. The pro forma information as presented below is for informational purposes only and is not indicative of the results of operations that would have been achieved if the PLG Acquisition had taken place at the beginning of fiscal 2013. September 30, 2013 (in millions) Revenue $ 3,131 Operating income 135 Net loss attributable to Warner Music Group Corp. (154 ) Actual results related to PLG included in the Consolidated Statements of Operations for the fiscal year ended September 30, 2015 consist of revenues of $410 million and operating income of $40 million including restructuring charges and integration costs. Actual results related to PLG included in the Consolidated Statements of Operations for the fiscal year ended September 30, 2014 consist of revenues of $322 million and operating loss of $103 million including restructuring charges and integration costs. Actual results related to PLG included in the Consolidated Statements of Operations for the fiscal year ended September 30, 2013 relate to the transition period from July 1, 2013 to September 30, 2013 and consist of revenues of $59 million and operating loss of $32 million including restructuring charges and integration costs. |
Property, Plant and Equipment
Property, Plant and Equipment | 12 Months Ended |
Sep. 30, 2015 | |
Property Plant And Equipment [Abstract] | |
Property, Plant and Equipment | 5. Property, Plant and Equipment Property, plant and equipment consist of the following: September 30, September 30, 2015 2014 (in millions) Land $ 15 $ 16 Buildings and improvements 98 109 Furniture and fixtures 10 16 Computer hardware and software 203 191 Construction in progress 20 28 Machinery and equipment 11 11 Gross Property, Plant and Equipment $ 357 $ 371 Less accumulated depreciation (137 ) (144 ) Net Property, Plant and Equipment $ 220 $ 227 |
Goodwill and Intangible Assets
Goodwill and Intangible Assets | 12 Months Ended |
Sep. 30, 2015 | |
Goodwill And Intangible Assets Disclosure [Abstract] | |
Goodwill and Intangible Assets | 6. 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, 2013 $ 1,204 $ 464 $ 1,668 Acquisitions 9 — 9 Dispositions — — — Other adjustments (16 ) — (16 ) Balance at September 30, 2014 $ 1,197 $ 464 $ 1,661 Acquisitions 3 — 3 Dispositions — — — Other adjustments (32 ) — (32 ) Balance at September 30, 2015 $ 1,168 $ 464 $ 1,632 The increase in goodwill during the fiscal year ended September 30, 2015 includes goodwill associated with immaterial acquisitions. The increase in goodwill during the fiscal year ended September 30, 2014 primarily includes an adjustment to preliminary amounts recorded in the prior period as a result of the PLG Acquisition based on new information obtained during the measurement period and goodwill associated with the Gold Typhoon acquisition in July 2014. The other adjustments during both the fiscal year ended September 30, 2015 and 2014 primarily represent foreign currency movements. The Company performs its annual goodwill impairment test in accordance with 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. The performance of the annual fiscal 2015 impairment analysis did not result in an impairment of the Company’s goodwill. Intangible Assets Intangible assets consist of the following: Weighted Average September 30, September 30, Useful Life 2015 2014 (in millions) Intangible assets subject to amortization: Recorded music catalog 10 years $ 992 $ 1,040 Music publishing copyrights 27 years 1,497 1,550 Artist and songwriter contracts 13 years 926 975 Trademarks 7 years 7 7 Total gross intangible asset subject to amortization 3,422 3,572 Accumulated amortization (908 ) (688 ) Total net intangible assets subject to amortization 2,514 2,884 Intangible assets not subject to amortization: Trademarks and tradenames Indefinite 119 120 Total net other intangible assets $ 2,633 $ 3,004 Amortization Based on the amount of intangible assets subject to amortization at September 30, 2015, the expected amortization for each of the next five fiscal years and thereafter are as follows: Fiscal Years Ended September 30, (in millions) 2016 $ 248 2017 208 2018 208 2019 201 2020 176 Thereafter 1,473 $ 2,514 The life of all acquired intangible assets is evaluated based on the expected future cash flows associated with the asset. The expected amortization expense above reflects estimated useful lives assigned to the Company’s identifiable, finite-lived intangible assets established in the accounting for the Merger and the PLG Acquisition. |
Debt
Debt | 12 Months Ended |
Sep. 30, 2015 | |
Debt Disclosure [Abstract] | |
Debt | 7. Debt Debt Capitalization Long-term debt, including the current portion, consists of the following: September 30, September 30, 2015 2014 (in millions) Revolving Credit Facility—Acquisition Corp. (a) $ — $ — Senior Term Loan Facility due 2020—Acquisition Corp. (b) 1,282 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) 177 201 6.75% Senior Notes due 2022—Acquisition Corp. 660 660 13.75% Senior Notes due 2019—Holdings 150 150 Total debt 2,994 3,030 Less: current portion 13 13 Total long-term debt $ 2,981 $ 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 September 30, 2015 and September 30, 2014, respectively. There were no loans outstanding under the Revolving Credit Facility at September 30, 2015 or September 30, 2014. (b) Principal amount of $1.287 billion and $1.300 billion less unamortized discount of $5 million and $6 million at September 30, 2015 and September 30, 2014, respectively. Of this amount, $13 million, representing the scheduled amortization of the Term Loan, was included in the current portion of long term debt at September 30, 2015 and September 30, 2014. (c) Face amount of €158 million. Above amounts represent the dollar equivalent of such notes at September 30, 2015 and September 30, 2014. 2012 Debt Refinancing On November 1, 2012, the Company completed a refinancing (the “2012 Refinancing”) of its then outstanding senior secured notes due 2016. In connection with the 2012 Refinancing, the Company issued new senior secured notes consisting of $500 million aggregate principal amount of 6.00% Senior Secured Notes due 2021 (“the Dollar Notes”) and €175 million aggregate principal amount of 6.25% Senior Secured Notes due 2021 (the “Euro Notes” and together with the Dollar Notes, the “Existing Senior Secured Notes”) and entered into new senior secured credit facilities consisting of a $600 million term loan facility (the “Senior Term Loan Facility”) and a $150 million revolving credit facility (the “Revolving Credit Facility” and, together with the Senior Term Loan Facility, the “Senior Credit Facilities”). Acquisition Corp. is the borrower under the Revolving Credit Facility (the “Revolving Borrower”) and under the Senior Term Loan Facility (the “Term Loan Borrower”). The proceeds from the 2012 Refinancing, together with $101 million of the Company’s available cash, were used to pay the total consideration due in connection with the tender offers for all of the Company’s previously outstanding $1.250 billion 9.50% senior secured notes due 2016 (the “Old Secured Notes”) as well as associated fees and expenses and to redeem all of the remaining notes not tendered in the tender offers. The Company also retired its existing $60 million revolving credit facility (the “Old Revolving Credit Facility”) in connection with the 2012 Refinancing, replacing it with the Revolving Credit Facility. In connection with the 2012 Refinancing, the Company made a redemption payment of $1.377 billion, which included the repayment of the Company’s previously outstanding $1.250 billion Old Secured Notes, tender/call premiums of $93 million and consent fees of approximately $34 million. The Company also paid approximately $45 million in accrued interest through the closing date. The Company recorded a loss on extinguishment of debt of approximately $83 million in connection with the 2012 Refinancing in the fiscal year ended September 30, 2013, which represents the difference between the redemption payment and the carrying value of the debt at the refinancing date, which included the principal value of $1.250 billion, plus unamortized premiums of $55 million, less unamortized debt issuance costs of $11 million related to the Old Secured Notes. Modification of Senior Term Loan Facility and Drawdown of Incremental Term Loan Facility On May 9, 2013, Acquisition Corp. prepaid $102.5 million in aggregate principal amount of term loans under the Senior Term Loan Facility (the “Term Loan Repayment”). Also on May 9, 2013, the Term Loan Borrower entered into an amendment to the Senior Term Loan Facility among the Term Loan Borrower, Holdings, the subsidiaries of the Term Loan Borrower party thereto, Credit Suisse AG, as administrative agent, and the other financial institutions and lenders from time to time party thereto, providing for the refinancing of the then outstanding term loan and for a $820 million senior secured incremental term loan facility (the “Incremental Term Loan Facility”). As part of the amendment to the Senior Term Loan Facility, the interest rate, maturity date, and scheduled amortization were changed. On July 1, 2013, Acquisition Corp. drew down the $820 million Incremental Term Loan Facility to fund the PLG Acquisition, pay fees, costs and expenses related to the PLG Acquisition and for general corporate purposes of Acquisition Corp. and its subsidiaries. Initially, the Senior Term Loan Facility provided for term loans thereunder (the “Term Loans”) in an amount of up to $1.310 billion. Debt Redemptions On June 21, 2013, Acquisition Corp. redeemed 10% of its Senior Secured Notes due 2021, representing repayment of $50 million in aggregate principal amount of its outstanding 6.00% Senior Secured Notes due 2021 and €17.5 million in aggregate principal amount of its outstanding 6.25% Senior Secured Notes due 2021. The Company recorded a loss on extinguishment of debt of approximately $2 million in the fiscal year ended September 30, 2013, which represents the premium paid on early redemption. 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 fiscal year ended September 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 Revolving Borrower’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 Term Loan Borrower’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 Credit Agreement 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 On March 25, 2014, Acquisition Corp. received lender consent to an amendment to the credit agreement for its Revolving Credit Facility. The amendment became effective on April 9, 2014 and extended the maturity date of the Revolving Credit Facility to April 1, 2019. Maturities of Senior Notes and Senior Secured Notes As of September 30, 2015, there are no scheduled maturities of notes until 2019, when $150 million is scheduled to mature. Thereafter, $1.562 billion is scheduled to mature. Interest Expense, net Total interest expense, net, was $181 million, $203 million, and $203 million for the fiscal years ended September 30, 2015, 2014 and 2013, respectively. The weighted-average interest rate of the Company’s total debt was 5.6% at September 30, 2015, 5.6% at September 30, 2014 and 6.9% at September 30, 2013. |
Income Taxes
Income Taxes | 12 Months Ended |
Sep. 30, 2015 | |
Income Tax Disclosure [Abstract] | |
Income Taxes | 8. Income Taxes The domestic and foreign pretax (loss) income from continuing operations is as follows: Fiscal Year Ended Fiscal Year Ended Fiscal Year Ended September 30, September 30, September 30, 2015 2014 2013 (in millions) Domestic $ (18 ) $ (153 ) $ (73 ) Foreign (57 ) (176 ) (152 ) Total $ (75 ) $ (329 ) $ (225 ) Current and deferred income taxes (tax benefits) provided are as follows: Fiscal Year Ended Fiscal Year Ended Fiscal Year Ended September 30, September 30, September 30, 2015 2014 2013 (in millions) Federal: Current $ — $ — $ — Deferred 4 (7 ) (6 ) Foreign: Current (a) 40 35 25 Deferred (33 ) (55 ) (54 ) U.S. State: Current 3 (6 ) 13 Deferred (1 ) 7 (9 ) Total $ 13 $ (26 ) $ (31 ) (a) Includes withholding taxes of $13 million, $11 million and $9 million for the fiscal year ended September 30, 2015, for the fiscal year ended September 30, 2014, and for the fiscal year ended September 30, 2013, respectively. The differences between the U.S. federal statutory income tax rate of 35% and income taxes provided are as follows: Fiscal Year Ended Fiscal Year Ended Fiscal Year Ended September 30, September 30, September 30, 2015 2014 2013 (in millions) Taxes on income at the U.S. federal statutory rate $ (26 ) $ (115 ) $ (79 ) U.S. state and local taxes 2 1 4 Foreign income taxed at different rates, including withholding taxes 11 (15 ) 15 Increase in valuation allowance 34 101 36 Release of valuation allowance (5 ) (3 ) (1 ) Change in tax rates (2 ) 1 (20 ) Nondeductible transaction costs — — 13 Other (1 ) 4 1 Total income tax (benefit) expense $ 13 $ (26 ) $ (31 ) For the fiscal year ended September 30, 2015 and for the fiscal year ended September 30, 2014, the Company incurred losses in the U.S. and certain foreign territories and has offset the tax benefit associated with these losses with a valuation allowance as the Company has determined that it is more likely than not that these losses will not be utilized. The balance of the U.S. tax attributes remaining at September 30, 2015 continues to be offset by a full valuation allowance as the Company has determined that it is more likely than not that these attributes will not be realized. Significant components of the Company’s net deferred tax assets/(liabilities) are summarized below: September 30, September 30, 2015 2014 (in millions) Deferred tax assets: Allowances and reserves $ 40 $ 43 Employee benefits and compensation 47 43 Other accruals 76 72 Tax attribute carry forwards 552 619 Other 2 3 Total deferred tax assets 717 780 Valuation allowance (344 ) (394 ) Net deferred tax assets 373 386 Deferred tax liabilities: Depreciation, amortization and artist advances (23 ) (9 ) Intangible assets (650 ) (714 ) Total deferred tax liabilities (673 ) (723 ) Net deferred tax liabilities $ (300 ) $ (337 ) During the fiscal year ended September 30, 2015, the Company’s tax attribute decreased with a corresponding decrease to the valuation allowance primarily in connection with an inter-company transfer. At September 30, 2015, the Company has U.S. federal tax net operating loss carry-forwards of $662 million, which will begin to expire in fiscal year 2024. The Company also has tax net operating loss carry-forwards, with no expiration date, in the United Kingdom, France and Spain of $165 million, $132 million and $49 million, respectively, and other tax net operating loss carry forwards in state, local and foreign jurisdictions that expire in various periods. In addition, the Company has foreign tax credit carry-forwards for U.S. tax purposes of $158 million. During the year ended September 30, 2014 the Company converted $20 million of expiring foreign tax credits to deductions. The remaining foreign tax credits will begin to expire in 2016. U.S. income and foreign withholding taxes have not been recorded on indefinitely reinvested earnings of certain foreign subsidiaries of approximately $213 million at September 30, 2015. As such, no deferred income taxes have been provided for these undistributed earnings. Should these earnings be distributed, foreign tax credits and net operating losses may be available to reduce the additional federal income tax that would be payable. However, availability of these foreign tax credits is subject to limitations which make it impracticable to estimate the amount of the ultimate tax liability, if any, on these accumulated foreign earnings. The Company classifies interest and penalties related to uncertain tax positions as a component of income tax expense. As of September 30, 2015 and September 30, 2014, the Company had accrued $3 million and $4 million of interest and penalties, respectively. A reconciliation of the beginning and ending amount of unrecognized tax benefits, including interest and penalties, are as follows (in millions): Balance at September 30, 2012 $ 14 Additions for current year tax positions 5 Additions for prior year tax positions 11 Subtractions for prior year tax positions — Balance at September 30, 2013 $ 30 Additions for current year tax positions 10 Additions for prior year tax positions 1 Subtractions for prior year tax positions (14 ) Balance at September 30, 2014 $ 27 Additions for current year tax positions 8 Additions for prior year tax positions 9 Subtractions for prior year tax positions (9 ) Balance at September 30, 2015 $ 35 Included in the total unrecognized tax benefits at September 30, 2015 and 2014 are $35 million and $27 million, respectively, that if recognized, would favorably affect the effective income tax rate. The Company has determined that is reasonably possible that its existing reserve for uncertain tax positions as of September 30, 2015 could decrease by up to approximately $8 million related to various ongoing audits and settlement discussions in various foreign jurisdictions. The Company and its subsidiaries file income tax returns in the U.S. and various foreign jurisdictions. The Company has completed tax audits in the U.S. for tax years ended through September 30, 2008, in the U.K. for the tax years ending through September 30, 2011, in Canada for tax years ended through September 30, 2006, in Germany for the tax years ending through September 30, 2009 and in Japan for the tax years ending through September 30, 2007. The Company is at various stages in the tax audit process in certain foreign and local jurisdictions. |
Employee Benefit Plans
Employee Benefit Plans | 12 Months Ended |
Sep. 30, 2015 | |
Compensation And Retirement Disclosure [Abstract] | |
Employee Benefit Plans | 9. Employee Benefit Plans Certain international employees, such as those in Germany and Japan, participate in locally sponsored defined benefit plans, which are not considered to be material either individually or in the aggregate and have a combined projected benefit obligation of approximately $69 million and $75 million as of September 30, 2015 and 2014, respectively. Pension benefits under the plans are based on formulas that reflect the employees’ years of service and compensation levels during their employment period. The Company had unfunded pension liabilities relating to these plans of approximately $45 million and $50 million recorded in its balance sheets as of September 30, 2015 and 2014, respectively. The Company uses a September 30 measurement date for its plans. For the fiscal year ended September 30, 2015, September 30, 2014, and September 30, 2013, pension expense amounted to $4 million, $4 million, and $4 million, respectively. Certain employees also participate in defined contribution plans. The Company’s contributions to the defined contribution plans are based upon a percentage of the employees’ elected contributions. The Company’s defined contribution plan expense amounted to approximately $4 million for the fiscal year ended September 30, 2015, $5 million for the fiscal year ended September 30, 2014, and $4 million for the fiscal year ended September 30, 2013. |
Restructuring
Restructuring | 12 Months Ended |
Sep. 30, 2015 | |
Restructuring And Related Activities [Abstract] | |
Restructuring | 10. 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. As of September 30, 2015, the Restructuring Plan was complete and resulted in approximately $74 million in restructuring charges, which were made up of employee-related costs of $67 million, real estate costs of $6 million and other costs of $1 million. Total restructuring costs of $2 million were incurred in the fiscal year ended September 30, 2015 with respect to these actions, which consist of $2 million of real estate costs. Total restructuring costs of $50 million were incurred in the fiscal year ended September 30, 2014 with respect to these actions, which consisted of $45 million of employee-related costs, $4 million of real estate costs and $1 million of other costs. Total cash payments of $72 million to date have been made under the Restructuring Plan. 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. Total restructuring activity is as follows: Employee- Real related Costs Estate Costs Other Total (in millions) Balance at September 30, 2013 $ 10 $ — $ — $ 10 Restructuring expense 45 4 1 50 Cash payments (43 ) (3 ) (1 ) (47 ) Balance at September 30, 2014 $ 12 $ 1 $ — $ 13 Restructuring expense — 2 — 2 Cash payments (10 ) (3 ) — (13 ) Balance at September 30, 2015 $ 2 $ — $ — $ 2 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: Fiscal Year Ended Fiscal Year Ended September 30, September 30, 2015 2014 (in millions) Selling, general and administrative expenses $ 2 $ 50 Total restructuring expense $ 2 $ 50 All of the above expenses were recorded in the Recorded Music reportable segment. |
Share-Based Compensation Plans
Share-Based Compensation Plans | 12 Months Ended |
Sep. 30, 2015 | |
Disclosure Of Compensation Related Costs Sharebased Payments [Abstract] | |
Share-Based Compensation Plans | 11. Share-Based Compensation Plans Effective January 1, 2013, eligible individuals were invited to participate in the Senior Management Free Cash Flow Plan (the “Plan”). Eligible individuals include any employee, consultant or officer of the Company or any of its affiliates, who is selected by the Company’s Compensation Committee to participate in the Plan. Under the Plan, participants are allocated a specific portion of the Company’s free cash flow to use to purchase the equivalent of Company stock through the acquisition of deferred equity units. Participants also receive a grant of profit interests in a purposely established LLC holding company (the “LLC”) that represent an economic entitlement to future appreciation over an equivalent number of shares of Company stock (“matching units”). The Company’s Board of Directors authorized the issuance of up to 82.1918 shares of the Company’s common stock pursuant to the Plan, 41.0959 in respect of deferred equity units and 41.0959 in respect of matching units. The LLC currently owns 55 issued and outstanding shares. Each deferred equity unit is equivalent to 1/10,000 of a share of Company stock. The Company will allocate units to active participants each Plan year at the time that annual free cash flow bonuses for such Plan year are determined and may grant unallocated units under the Plan to certain members of current or future management. At the time that annual free cash flow bonuses for such Plan year are determined, a participant shall be credited a number of deferred equity units based on their respective allocation divided by $107.13 (the grant date intrinsic value) and an equal number of the related matching units will be allocated. The redemption price of the deferred equity units will equal the fair market value of a fractional share of the Company’s stock on the date of the settlement and the redemption price for the matching units will equal the excess, if any, of the then fair market value of one Company fractional share over the grant date intrinsic value of one fractional share. The Company accounts for share-based payments as required by ASC 718. ASC 718 requires all share-based payments to employees to be recognized as compensation expense. Under the recognition provision of ASC 718, liability classified share-based compensation costs are measured each reporting date until settlement. The Company’s policy is to measure share-based compensation costs to employees using the intrinsic value method instead of fair value as it is not practical to estimate the volatility of its share price. In accordance with ASC 718, the Company measures share-based compensation costs to non-employees at fair value under ASC 820, which does not allow for use of the intrinsic method. For accounting purposes, the grant date was established at the point the Company and the participant reached a mutual understanding of the key terms and conditions, in this case the date at which the participant accepted the invitation to participate in the Plan. For accounting purposes, deferred equity units are deemed to generally vest between one and seven years and matching equity units granted under the Plan are deemed to vest two years after the allocation to the participant’s account. All deferred and matching equity units will be settled in three installments in December 2018, 2019, and 2020. The deferred units will be settled at the participant’s election for cash equal to the fair market value or one fractional company share. The matching units will be settled for cash equal to the redemption price. In December 2020, all outstanding units become mandatorily redeemable at the then redemption price. Due to this mandatory redemption clause, the Company has classified the awards under the Plan as liability awards. Dividend distributions, if any, are also paid out on vested deferred equity units and are calculated on the same basis as the Company’s common shares. The Company has applied a graded (tranche-by-tranche) attribution method and expenses share-based compensation on an accelerated basis over the vesting period of the share award. The following is a summary of the Company’s share awards: Matching Deferred Equity Matching Equity Deferred Equity Units Units Weighted- Units Weighted- Equity Units Weighted- Average Average Weighted- Average Grant-Date Grant-Date Deferred Matching Average Intrinsic Intrinsic Intrinsic Equity Units Equity Units Fair Value Value Value Value Unvested units at September 30, 2013 24 24 $ 134.62 $ 27.49 $ 107.13 $ — Granted 2 2 134.62 — 107.13 — Vested (5 ) — 134.62 27.49 107.13 — Forfeited (2 ) (2 ) 134.62 27.49 107.13 — Unvested units at September 30, 2014 19 24 $ 132.92 $ 25.79 $ 107.13 $ — Granted 3 3 132.92 — 107.13 — Vested (2 ) — 132.92 25.79 107.13 — Forfeited (2 ) (2 ) 132.92 25.79 107.13 — Unvested units at September 30, 2015 18 25 $ 135.00 $ 27.87 $ 107.13 $ — The weighted-average grant date intrinsic value of deferred equity unit awards for the fiscal year ended September 30, 2015 was $107.13. The fair value of these deferred equity units at September 30, 2015 was $135.00. The weighted-average grant date intrinsic value of deferred equity unit awards for the period ended September 30, 2014 was $107.13. The fair value of these deferred equity units at September 30, 2014 was $132.92. The weighted-average grant date intrinsic value of deferred equity unit awards for the period ended September 30, 2013 was $107.13. The fair value of these deferred equity units at September 30, 2013 was $134.62. Compensation Expense The Company recognized non-cash share-based compensation expense of $3 million for the fiscal year ended September 30, 2015. Of the $3 million, $1 million related to awards for employees and $2 million related to awards for non-employees for the fiscal year ended September 30, 2015. The Company recognized non-cash share-based compensation of $8 million for the fiscal year ended September 30, 2014. Of the $8 million, $5 million related to awards for employees and $3 million related to awards for non-employees for the fiscal year ended September 30, 2014. The Company recognized non-cash share-based compensation of $19 million for the fiscal year ended September 30, 2013. Of the $19 million, $12 million related to awards for employees and $7 million related to awards for non-employees for the fiscal year ended September 30, 2013. In addition, at September 30, 2015, September 30, 2014 and September 30, 2013, the Company had approximately $7 million, $12 million and $20 million, respectively, of unrecognized compensation costs related to its unvested share awards. As of September 30, 2015, the remaining weighted average period over which total compensation related to unvested awards is expected to be recognized is 2 years. |
Related Party Transactions
Related Party Transactions | 12 Months Ended |
Sep. 30, 2015 | |
Related Party Transactions [Abstract] | |
Related Party Transactions | 12. Related Party Transactions Management Agreement Upon completion of the Merger, the Company and Holdings entered into a management agreement with Access, dated as of the Merger Closing Date (the “Management Agreement”), pursuant to which Access will provide the Company and its subsidiaries, with financial, investment banking, management, advisory and other services. Pursuant to the Management Agreement, the Company, or one or more of its subsidiaries, will pay Access a specified annual fee equal to approximately $9 million based on a formula contained in the agreement and reimburse Access for certain expenses incurred performing services under the agreement. The annual fee is payable quarterly. The Company also paid Access an $11 million transaction fee related to the PLG Acquisition in fiscal 2013. The Company and Holdings agreed to indemnify Access and certain of its affiliates against all liabilities arising out of performance of the Management Agreement. Such costs incurred by the Company were approximately $9 million, $8 million and $19 million for the fiscal years ended September 30, 2015, 2014 and 2013, respectively, which includes the annual fee, an $11 million transaction fee related to the PLG Acquisition in the fiscal year ended September 30, 2013, but excludes $2 million of expenses reimbursed related to certain consultants with full time roles at the Company for each of the fiscal years ended September 30, 2015, 2014 and 2013. Such amounts have been included as a component of selling, general and administrative expense in the accompanying statements of operations. Lease Arrangements with Related Party On July 29, 2014, AI Wrights Holdings Limited, an affiliate of Access, entered into a lease and related agreements with Warner/Chappell Music Limited and WMG Acquisition (UK) Limited, subsidiaries of the Company, for the lease of 27 Wrights Lane, Kensington, London. The Company had been the tenant of the building, which Access acquired during the year. Subsequent to the change in ownership, the Company entered into the new lease arrangements. Pursuant to the agreements, on January 1, 2015, the rent in the lease was increased to £3,460,250 per year, the term was extended five years and the Company received certain rights to extend the term for an additional five years following a market rate rent review. On September 27, 2011, Access Industries (UK) Limited, an affiliate of Access, entered into a License to Occupy on a Short Term Basis agreement with Warner Music UK Limited, one of the Company’s subsidiaries, for the license of office space in the Company’s building at 28 Kensington Church Street, Kensington, London. The license fee of £15,839 per month (exclusive of VAT) was based on the per foot lease costs to the Company. For the fiscal years ended September 30, 2014, 2013 and 2012, an immaterial amount was recorded as a reduction of rent expense in the accompanying statements of operations. The license agreement was terminated on October 13, 2014. On August 13, 2015, a subsidiary of the Company, Warner Music Inc., entered into a license agreement with Access Industries, Inc., an affiliate of Access, for the use of office space in our corporate headquarters at 1633 Broadway, New York, New York. The license fee of $2,775 per month, plus an IT support fee of $1,000 per month, was based on the per foot lease costs to the Company of its headquarters space, which represented market terms. For the fiscal year ended September 30, 2015, an immaterial amount was recorded as rental income. The space is occupied by The Blavatnik Archive, which is dedicated to the discovery and preservation of historically distinctive and visually compelling artifacts, images and stories that contribute to the study of 20th century Jewish, WWI and WWII history. Deezer Access owns a minority equity interest in Deezer S.A., which was formerly known as Odyssey Music Group (“Odyssey”), a French company that controls and operates a digital music streaming service, formerly through Odyssey’s subsidiary, Blogmusik SAS (“Blogmusik”), under the name Deezer (“Deezer”), and is represented on Deezer S.A.’s Board of Directors. On September 4, 2015, Blogmusik, as absorbed company, was merged into Odyssey, an absorbing company. Immediately following such merger, Odyssey was renamed “Deezer S.A.” Subsidiaries of the Company, Warner Music Inc. and WEA International Inc. have been a party to license arrangements with Deezer since 2008 (Warner Music Inc. was added as a party to the license in 2014 in respect of the U.S.), which provide for the use of the Company’s sound recording content on Deezer’s ad-supported and subscription streaming services worldwide (excluding Japan) in exchange for fees paid by Deezer. Warner Music Inc. and WEA International Inc. have also authorized Deezer to include Warner content in Deezer’s streaming services where such services are offered as a bundle with third-party services or products (e.g., telco services or hardware products), for which Deezer is also required to make payments to Warner Music Inc. and WEA International Inc. Deezer paid to WEA International Inc. an aggregate amount of approximately $25 million and $21 million in connection with the foregoing arrangements during the fiscal year ended September 30, 2015 and 2014, respectively. In addition, in connection with these arrangements, the Company was issued, and currently holds, warrants to purchase shares of Deezer S.A. representing a small minority interest in Deezer S.A. Equity Investment In fiscal 2014, the Company made an investment in a company in which Access was a minority owner, which was subsequently sold during fiscal 2014. As a result of the sale transaction, the Company recognized a gain of $2 million. Southside Earn-Out In December 2010, the Company acquired Southside Independent Music Publishing, LLC and contractually agreed to provide contingent earn-out payments to Cameron Strang, the former owner of Southside and currently the Chairman and CEO of Warner Bros. Records, the Chairman of Warner/Chappell Music and one of the Company’s directors, provided specified performance goals were achieved. The goals relate to achievement of specified NPS (“net publishers share,” a measure of earnings) requirements by the acquired assets during the five-year period following closing of the acquisition. The Company had a $6 million liability recorded as of September 30, 2013 based on the fair value of the expected earn-out payments. The Company concluded that it was no longer likely that the specified performance goals would be achieved. As such, the liability was reversed, and no liability was recorded on the balance sheet at September 30, 2015 or September 30, 2014. The Company was also required to pay Mr. Strang certain monies that might be received and applied by the Company in recoupment of advance payments made by Southside prior to the acquisition in an amount not to exceed approximately $0.8 million, all of which has been paid since the acquisition. Record Industry In February 2015, WEA and Record Industry entered into an agreement for vinyl record manufacturing. In fiscal year 2015, WEA paid to Record Industry an aggregate amount of $4 million in connection with the foregoing arrangements. Mr. Mohaupt, currently one of the Company’s directors, owns a minority interest in Record Industry. |
Commitments and Contingencies
Commitments and Contingencies | 12 Months Ended |
Sep. 30, 2015 | |
Commitments And Contingencies Disclosure [Abstract] | |
Commitments and Contingencies | 13. Commitments and Contingencies Leases The Company occupies various facilities and uses certain equipment under both capital and operating leases. Net rent expense was approximately $66 million, $82 million and $61 million for the fiscal years ended September 30, 2015, 2014 and 2013, respectively. At September 30, 2015, future minimum payments under non-cancelable operating leases (net of sublease income) are as follows: Operating Years Leases (in millions) 2016 $ 57 2017 49 2018 42 2019 40 2020 34 Thereafter 210 Total $ 432 The future minimum payments reflect the amounts owed under lease arrangements and do not include any fair market value adjustments that may have been recorded as a result of the Merger. Talent Advances The Company routinely enters into long-term commitments with artists, songwriters and publishers for the future delivery of music product. Such commitments generally become due only upon delivery and Company acceptance of albums from the artists or future musical compositions by songwriters and publishers. Additionally, such commitments are typically cancelable at the Company’s discretion, generally without penalty. Based on contractual obligations and the Company’s expected release schedule, aggregate firm commitments to such talent approximated $318 million and $190 million as of September 30, 2015 and September 30, 2014, respectively. Other Other off-balance sheet, firm commitments, which primarily include minimum funding commitments to investees, amounted to approximately $5 million and $5 million at September 30, 2015 and September 30, 2014, respectively. Litigation 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 and an amended Class Certification brief on October 12, 2015. The Company’s opposition to the amended brief is due February 9, 2016 and the plaintiffs’ reply in support of the brief is due June 8, 2016. The Company filed its answer to the fourth amended complaint on October 9, 2015. 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. 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 | 12 Months Ended |
Sep. 30, 2015 | |
Derivative Instruments And Hedging Activities Disclosure [Abstract] | |
Derivative Financial Instruments | 14. 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 the statement of operations. The Company may at times choose to hedge foreign currency risk associated with financing transactions such as third-party and intercompany 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 17. 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 September 30, 2015, the Company had no outstanding hedge contracts and no 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, and the company had less than $1 million of deferred gains or losses in comprehensive loss related to foreign exchange hedging. |
Segment Information
Segment Information | 12 Months Ended |
Sep. 30, 2015 | |
Segment Reporting [Abstract] | |
Segment Information | 15. 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 (in millions) 2015 Revenues $ 2,501 $ 482 $ (17 ) $ 2,966 OIBDA 379 146 (89 ) 436 Depreciation of property, plant and equipment (36 ) (6 ) (12 ) (54 ) Amortization of intangible assets (192 ) (63 ) — (255 ) Operating income (loss) 151 77 (101 ) 127 Total assets 2,868 2,408 395 5,671 Capital expenditures 19 7 37 63 2014 Revenues $ 2,526 $ 517 $ (16 ) $ 3,027 OIBDA 267 166 (93 ) 340 Depreciation of property, plant and equipment (35 ) (7 ) (13 ) (55 ) Amortization of intangible assets (201 ) (65 ) — (266 ) Operating income (loss) 31 94 (106 ) 19 Total assets 3,273 2,393 288 5,954 Capital expenditures 27 8 41 76 2013 Revenues $ 2,389 $ 503 $ (21 ) $ 2,871 OIBDA 270 148 (85 ) 333 Depreciation of property, plant and equipment (32 ) (6 ) (13 ) (51 ) Amortization of intangible assets (146 ) (61 ) — (207 ) Operating income (loss) 92 81 (98 ) 75 Capital expenditures 12 3 19 34 Revenues relating to operations in different geographical areas are set forth below for the fiscal years ended September 30, 2015, 2014 and 2013. Total assets relating to operations in different geographical areas are set forth below as of September 30, 2015 and September 30, 2014. 2015 2014 2013 Long-lived Long-lived Revenue Assets Revenue Assets Revenue (in millions) United States $ 1,171 $ 149 $ 1,141 $ 148 $ 1,161 United Kingdom 477 30 467 30 383 All other territories 1,318 41 1,419 49 1,327 Total $ 2,966 $ 220 $ 3,027 $ 227 $ 2,871 Customer Concentration In the fiscal years ended September 30, 2015, 2014 and 2013, one customer represented 13%, 16% and 18% of total revenues, respectively. This customer’s revenues are included in the Recorded Music segment. |
Additional Financial Informatio
Additional Financial Information | 12 Months Ended |
Sep. 30, 2015 | |
Additional Financial Information [Abstract] | |
Additional Financial Information | 16. Additional Financial Information Cash Interest and Taxes The Company made interest payments of approximately $171 million, $204 million and $206 million during the fiscal years ended September 30, 2015, 2014 and 2013, respectively. The Company paid approximately $25 million, $22 million and $26 million of foreign income and withholding taxes, net of refunds, for the fiscal years ended September 30, 2015, 2014 and 2013, respectively. |
Fair Value Measurements
Fair Value Measurements | 12 Months Ended |
Sep. 30, 2015 | |
Fair Value Disclosures [Abstract] | |
Fair Value Measurements | 17. 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 September 30, 2015 and September 30, 2014. Fair Value Measurements as of September 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 September 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 September 30, 2015, the fair value of the Company’s debt was $2.976 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. |
Quarterly Financial Information
Quarterly Financial Information | 12 Months Ended |
Sep. 30, 2015 | |
Quarterly Financial Information Disclosure [Abstract] | |
Quarterly Financial Information | WARNER MUSIC GROUP CORP. 2015 QUARTERLY FINANCIAL INFORMATION (unaudited) The following table sets forth the quarterly information for Warner Music Group Corp. Three months ended September 30, June 30, March 31, December 31, 2015 2015 2015 2014 (in millions) Revenues $ 750 $ 710 $ 677 $ 829 Costs and expenses: Cost of revenue (375 ) (373 ) (318 ) (445 ) Selling, general and administrative expenses (a) (274 ) (251 ) (252 ) (296 ) Amortization expense (64 ) (63 ) (63 ) (65 ) Total costs and expenses (713 ) (687 ) (633 ) (806 ) Operating income 37 23 44 23 Interest expense, net (45 ) (45 ) (45 ) (46 ) Other income (expense) (9 ) (17 ) 14 (9 ) Loss (income) before income taxes (17 ) (39 ) 13 (32 ) Income tax (expense) benefit (6 ) (4 ) 6 (9 ) Net (loss) income (23 ) (43 ) 19 (41 ) Less: income attributable to noncontrolling interest — (1 ) (1 ) (1 ) Net (loss) income attributable to Warner Music Group Corp. $ (23 ) $ (44 ) $ 18 $ (42 ) (a) Includes depreciation expense of: $ (12 ) $ (14 ) $ (14 ) $ (14 ) Quarterly operating results can be disproportionately affected by a particularly strong or weak quarter. Therefore, these quarterly operating results are not necessarily indicative of the results that may be expected for the full fiscal year. WARNER MUSIC GROUP CORP. 2014 QUARTERLY FINANCIAL INFORMATION (unaudited) The following table sets forth the quarterly information for Warner Music Group Corp. Three months ended September 30, June 30, March 31, December 31, 2014 2014 2014 2013 (in millions) Revenues $ 771 $ 788 $ 653 $ 815 Costs and expenses: Cost of revenue (393 ) (417 ) (319 ) (441 ) Selling, general and administrative expenses (a) (287 ) (319 ) (273 ) (293 ) Amortization expense (67 ) (67 ) (66 ) (66 ) Total costs and expenses (747 ) (803 ) (658 ) (800 ) Operating income (loss) 24 (15 ) (5 ) 15 Loss on extinguishment of debt — (141 ) — — Interest expense, net (46 ) (48 ) (54 ) (55 ) Other (expense) income (1 ) 4 (3 ) (4 ) Loss before income taxes (23 ) (200 ) (62 ) (44 ) Income tax (expense) benefit (1 ) 16 3 8 Net loss (24 ) (184 ) (59 ) (36 ) Less: income attributable to noncontrolling interest (2 ) (1 ) (1 ) (1 ) Net loss attributable to Warner Music Group Corp. $ (26 ) $ (185 ) $ (60 ) $ (37 ) (a) Includes depreciation expense of: $ (16 ) $ (14 ) $ (13 ) $ (12 ) Quarterly operating results can be disproportionately affected by a particularly strong or weak quarter. Therefore, these quarterly operating results are not necessarily indicative of the results that may be expected for the full fiscal year. |
Guarantor and Non-Guarantor Sub
Guarantor and Non-Guarantor Subsidiaries Financial Information | 12 Months Ended |
Sep. 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, or were, 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 New Senior Secured Notes and the New Unsecured Notes are also guaranteed by the Company and, in addition, are guaranteed by all of Acquisition Corp.’s domestic wholly owned subsidiaries. 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. Consolidating Balance Sheet September 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 $ — $ 73 $ 173 $ — $ 246 $ — $ — $ — $ 246 Accounts receivable, net — 170 179 — 349 — — — 349 Inventories — 15 27 — 42 — — — 42 Royalty advances expected to be recouped within one year — 80 50 — 130 — — — 130 Deferred tax assets — 32 20 — 52 — — — 52 Prepaid and other current assets 5 9 46 — 60 — — — 60 Total current assets 5 379 495 — 879 — — — 879 Due (to) from parent companies 863 (174 ) (689 ) — — — — — — Investments in and advances to (from) consolidated subsidiaries 2,365 1,187 — (3,552 ) — 376 221 (597 ) — Royalty advances expected to be recouped after one year — 120 75 — 195 — — — 195 Property, plant and equipment, net — 145 75 — 220 — — — 220 Goodwill — 1,379 253 — 1,632 — — — 1,632 Intangible assets subject to amortization, net — 1,271 1,243 — 2,514 — — — 2,514 Intangible assets not subject to amortization — 71 48 — 119 — — — 119 Other assets 39 53 15 — 107 5 — — 112 Total assets $ 3,272 $ 4,431 $ 1,515 $ (3,552 ) $ 5,666 $ 381 $ 221 $ (597 ) $ 5,671 Liabilities and Deficit: Current liabilities: Accounts payable $ — $ 79 $ 94 $ — $ 173 $ — $ — $ — $ 173 Accrued royalties — 513 574 — 1,087 — — — 1,087 Accrued liabilities 1 269 26 — 296 — — — 296 Accrued interest 48 — — — 48 10 — — 58 Deferred revenue — 140 66 — 206 — — — 206 Current portion of long-term debt 13 — — — 13 — — — 13 Other current liabilities — 7 18 (1 ) 24 — — — 24 Total current liabilities 62 1,008 778 (1 ) 1,847 10 — — 1,857 Long-term debt 2,831 — — — 2,831 150 — — 2,981 Deferred tax liabilities, net — 142 210 — 352 — — — 352 Other noncurrent liabilities 3 131 105 3 242 — — — 242 Total liabilities 2,896 1,281 1,093 2 5,272 160 — — 5,432 Total Warner Music Group Corp. equity (deficit) 376 3,149 405 (3,554 ) 376 221 221 (597 ) 221 Noncontrolling interest — 1 17 — 18 — — — 18 Total equity (deficit) 376 3,150 422 (3,554 ) 394 221 221 (597 ) 239 Total liabilities and equity (deficit) $ 3,272 $ 4,431 $ 1,515 $ (3,552 ) $ 5,666 $ 381 $ 221 $ (597 ) $ 5,671 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 For The Fiscal Year Ended September 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 $ — $ 1,632 $ 1,588 $ (254 ) $ 2,966 $ — $ — $ — $ 2,966 Costs and expenses: Cost of revenue — (788 ) (866 ) 143 (1,511 ) — — — (1,511 ) Selling, general and administrative expenses 1 (675 ) (509 ) 110 (1,073 ) — — — (1,073 ) Amortization of intangible assets — (122 ) (133 ) — (255 ) — — — (255 ) Total costs and expenses 1 (1,585 ) (1,508 ) 253 (2,839 ) — — — (2,839 ) Operating (loss) income 1 47 80 (1 ) 127 — — — 127 Loss on extinguishment of debt — — — — — — — — — Interest income (expense), net (82 ) 6 (83 ) — (159 ) (22 ) — — (181 ) Equity gains (losses) from consolidated subsidiaries 35 (67 ) — 32 — (69 ) (91 ) 160 — Other income (expense), net (10 ) 1 (12 ) — (21 ) — — — (21 ) Income (loss) before income taxes (56 ) (13 ) (15 ) 31 (53 ) (91 ) (91 ) 160 (75 ) Income tax benefit (expense) (13 ) (29 ) — 29 (13 ) — — — (13 ) Net income (loss) (69 ) (42 ) (15 ) 60 (66 ) (91 ) (91 ) 160 (88 ) Less: income attributable to noncontrolling interest — (1 ) (2 ) — (3 ) — — — (3 ) Net income (loss) attributable to Warner Music Group Corp. $ (69 ) $ (43 ) $ (17 ) $ 60 $ (69 ) $ (91 ) $ (91 ) $ 160 $ (91 ) Consolidating Statement of Operations For The Fiscal Year Ended 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) Revenues $ — $ 1,498 $ 1,804 $ (275 ) $ 3,027 $ — $ — $ — $ 3,027 Costs and expenses: Cost of revenue — (639 ) (1,089 ) 158 (1,570 ) — — — (1,570 ) Selling, general and administrative expenses (1 ) (633 ) (655 ) 117 (1,172 ) — — — (1,172 ) Amortization of intangible assets — (120 ) (146 ) — (266 ) — — — (266 ) Total costs and expenses (1 ) (1,392 ) (1,890 ) 275 (3,008 ) — — — (3,008 ) Operating income (loss) (1 ) 106 (86 ) — 19 — — — 19 Loss on extinguishment of debt (141 ) — — — (141 ) — — — (141 ) Interest income (expense), net (102 ) 9 (88 ) — (181 ) (22 ) — — (203 ) Equity gains (losses) from consolidated subsidiaries (80 ) 113 — (33 ) — (286 ) (308 ) 594 — Other income (expense), net 12 (18 ) 2 — (4 ) — — — (4 ) Income (loss) before income taxes (312 ) 210 (172 ) (33 ) (307 ) (308 ) (308 ) 594 (329 ) Income tax benefit (expense) 26 (9 ) 26 (17 ) 26 — — — 26 Net income (loss) (286 ) 201 (146 ) (50 ) (281 ) (308 ) (308 ) 594 (303 ) Less: income attributable to noncontrolling interest — (1 ) (4 ) — (5 ) — — — (5 ) Net income (loss) attributable to Warner Music Group Corp. $ (286 ) $ 200 $ (150 ) $ (50 ) $ (286 ) $ (308 ) $ (308 ) $ 594 $ (308 ) Consolidating Statement of Operations For The Fiscal Year Ended September 30, 2013 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 $ — $ 1,637 $ 1,511 $ (277 ) $ 2,871 $ — $ — $ — $ 2,871 Costs and expenses: Cost of revenue — (782 ) (905 ) 195 (1,492 ) — — — (1,492 ) Selling, general and administrative expenses (1 ) (578 ) (600 ) 82 (1,097 ) — — — (1,097 ) Amortization of intangible assets — (118 ) (89 ) — (207 ) — — — (207 ) Total costs and expenses (1 ) (1,478 ) (1,594 ) 277 (2,796 ) — — — (2,796 ) Operating income (loss) (1 ) 159 (83 ) — 75 — — — 75 Loss on extinguishment of debt (85 ) — — — (85 ) — — — (85 ) Interest income (expense), net (154 ) 6 (33 ) — (181 ) (22 ) — — (203 ) Equity gains (losses) from consolidated subsidiaries (10 ) (40 ) — 50 — (176 ) (198 ) 374 — Other income (expense), net 43 (29 ) (26 ) — (12 ) — — — (12 ) Income (loss) before income taxes (207 ) 96 (142 ) 50 (203 ) (198 ) (198 ) 374 (225 ) Income tax benefit (expense) 31 — 34 (34 ) 31 — — — 31 Net income (loss) (176 ) 96 (108 ) 16 (172 ) (198 ) (198 ) 374 (194 ) Less: income attributable to noncontrolling interest — (2 ) (2 ) — (4 ) — — — (4 ) Net income (loss) attributable to Warner Music Group Corp. $ (176 ) $ 94 $ (110 ) $ 16 $ (176 ) $ (198 ) $ (198 ) $ 374 $ (198 ) Consolidating Statement of Comprehensive Income For The Fiscal Year Ended September 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 $ (69 ) $ (42 ) $ (15 ) $ 60 $ (66 ) $ (91 ) $ (91 ) $ 160 $ (88 ) Other comprehensive income (loss), net of tax: Foreign currency adjustment (59 ) — (59 ) 59 (59 ) (59 ) (59 ) 118 (59 ) Minimum pension liability — — — — — — — — — Other comprehensive income (loss), net of tax: (59 ) — (59 ) 59 (59 ) (59 ) (59 ) 118 (59 ) Total comprehensive (loss) income (128 ) (42 ) (74 ) 119 (125 ) (150 ) (150 ) 278 (147 ) Less: income attributable to noncontrolling interest — (1 ) (2 ) — (3 ) — — — (3 ) Comprehensive (loss) income attributable to Warner Music Group Corp. $ (128 ) $ (43 ) $ (76 ) $ 119 $ (128 ) $ (150 ) $ (150 ) $ 278 $ (150 ) Consolidating Statement of Comprehensive Income For The Fiscal Year Ended 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) Net (loss) income $ (286 ) $ 201 $ (146 ) $ (50 ) $ (281 ) $ (308 ) $ (308 ) $ 594 $ (303 ) Other comprehensive income (loss), net of tax: Foreign currency adjustment (41 ) — (41 ) 41 (41 ) (41 ) (41 ) 82 (41 ) Minimum Pension Liability (6 ) — (6 ) 6 (6 ) (6 ) (6 ) 12 (6 ) Other comprehensive income (loss), net of tax: (47 ) — (47 ) 47 (47 ) (47 ) (47 ) 94 (47 ) Total comprehensive (loss) income (333 ) 201 (193 ) (3 ) (328 ) (355 ) (355 ) 688 (350 ) Less: income attributable to noncontrolling interest — (1 ) (4 ) — (5 ) — — — (5 ) Comprehensive (loss) income attributable to Warner Music Group Corp. $ (333 ) $ 200 $ (197 ) $ (3 ) $ (333 ) $ (355 ) $ (355 ) $ 688 $ (355 ) Consolidating Statement of Comprehensive Income For The Fiscal Year Ended September 30, 2013 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 $ (176 ) $ 96 $ (108 ) $ 16 $ (172 ) $ (198 ) $ (198 ) $ 374 $ (194 ) Other comprehensive income (loss), net of tax: Foreign currency adjustment (3 ) — (3 ) 3 (3 ) (3 ) (3 ) 6 (3 ) Minimum Pension Liability 2 — 2 (2 ) 2 2 2 (4 ) 2 Deferred (losses) gains on derivative financial instruments (1 ) — (1 ) 1 (1 ) (1 ) (1 ) 2 (1 ) Other comprehensive income (loss), net of tax: (2 ) — (2 ) 2 (2 ) (2 ) (2 ) 4 (2 ) Total comprehensive (loss) income (178 ) 96 (110 ) 18 (174 ) (200 ) (200 ) 378 (196 ) Less: income attributable to noncontrolling interest — (2 ) (2 ) — (4 ) — — — (4 ) Comprehensive (loss) income attributable to Warner Music Group Corp. $ (178 ) $ 94 $ (112 ) $ 18 $ (178 ) $ (200 ) $ (200 ) $ 378 $ (200 ) Consolidating Statement of Cash Flows For The Fiscal Year Ended September 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 $ (69 ) $ (42 ) $ (15 ) $ 60 $ (66 ) $ (91 ) $ (91 ) $ 160 $ (88 ) Adjustments to reconcile net (loss) income to net cash provided by operating activities: Loss on extinguishment of debt — — — — — — — — — Depreciation and amortization (1 ) 162 148 — 309 — — — 309 Unrealized gains/losses and remeasurement of foreign denominated loans 21 55 (48 ) — 28 — — — 28 Deferred income taxes — — (11 ) — (11 ) — — — (11 ) Gain on sale of assets — — — — — — — — — Non-cash interest expense 10 — — — 10 1 — — 11 Non-cash share-based compensation expense — 3 — — 3 — — — 3 Equity losses (gains), including distributions (35 ) 67 — (32 ) — 69 91 (160 ) — Changes in operating assets and liabilities: Accounts receivable — 4 2 — 6 — — — 6 Inventories — (1 ) (5 ) — (6 ) — — — (6 ) Royalty advances — (23 ) (23 ) — (46 ) — — — (46 ) Accounts payable and accrued liabilities — 26 (15 ) (28 ) (17 ) — — — (17 ) Royalty payables — (19 ) 46 — 27 — — — 27 Accrued interest (2 ) — — — (2 ) — — — (2 ) Deferred revenue — (9 ) 21 — 12 — — — 12 Other balance sheet changes — 3 (7 ) — (4 ) — — — (4 ) Net cash provided by (used in) operating activities (76 ) 226 93 — 243 (21 ) — — 222 Cash flows from investing activities Acquisition of music publishing rights, net — (9 ) (7 ) — (16 ) — — — (16 ) Capital expenditures — (48 ) (15 ) — (63 ) — — — (63 ) Investments and acquisitions of businesses, net — (11 ) (5 ) — (16 ) — — — (16 ) Advances to issuer 110 — — (110 ) — — — — — Net cash provided by (used in) investing activities 110 (68 ) (27 ) (110 ) (95 ) — — — (95 ) Cash flows from financing activities Dividend by Acquisition Corp. to Holdings Corp. (21 ) — — — (21 ) 21 — — — 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 (13 ) — — — (13 ) — — — (13 ) Proceeds from issuance of Acquisition Corp. 5.625% Senior Secured Notes — — — — — — — — — Proceeds from issuance of Acquisition Corp. 6.750% Senior Notes — — — — — — — — — Repayment of Acquisition Corp. 11.5% Senior Notes — — — — — — — — — Financing costs paid — — — — — — — — — Deferred financing costs paid — — — — — — — — — Distribution to noncontrolling interest holder — (1 ) (2 ) — (3 ) — — — (3 ) Repayment of capital lease obligations — — (3 ) — (3 ) — — — (3 ) Change in due to (from) issuer — (110 ) — 110 — — — — — Net cash provided by (used in) financing activities (34 ) (111 ) (5 ) 110 (40 ) 21 — — (19 ) Effect of exchange rate changes on cash and equivalents — — (19 ) — (19 ) — — — (19 ) Net increase (decrease) in cash and equivalents — 47 42 — 89 — — — 89 Cash and equivalents at beginning of period — 26 131 — 157 — — — 157 Cash and equivalents at end of period $ — $ 73 $ 173 $ — $ 246 $ — $ — $ — $ 246 Consolidating Statement of Cash Flows For The Fiscal Year Ended 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) Cash flows from operating activities Net (loss) income $ (286 ) $ 201 $ (146 ) $ (50 ) $ (281 ) $ (308 ) $ (308 ) $ 594 $ (303 ) Adjustments to reconcile net (loss) income to net cash provided by operating activities: Loss on extinguishment of debt 141 — — — 141 — — — 141 Depreciation and amortization — 160 161 — 321 — — — 321 Unrealized gains/losses and remeasurement of foreign denominated loans (12 ) (23 ) (4 ) — (39 ) (39 ) Deferred income taxes — — (55 ) — (55 ) — — — (55 ) Gain on sale of assets — (2 ) — — (2 ) — — — (2 ) Non-cash interest expense 12 — — — 12 1 — — 13 Non-cash share-based compensation expense — 8 — — 8 — — — 8 Equity losses (gains), including distributions 80 (113 ) — 33 — 286 308 (594 ) — Changes in operating assets and liabilities: Accounts receivable — 10 62 — 72 — — — 72 Inventories — (3 ) (4 ) — (7 ) — — — (7 ) Royalty advances — (9 ) (23 ) — (32 ) — — — (32 ) Accounts payable and accrued liabilities — (162 ) 75 — (87 ) — — — (87 ) Royalty payables — (38 ) 63 — 25 — — — 25 Accrued interest (15 ) — — — (15 ) — — — (15 ) Deferred revenue — 107 (12 ) — 95 — — — 95 Other balance sheet changes — 2 (22 ) 15 (5 ) — — — (5 ) Net cash provided by (used in) operating activities (80 ) 138 95 (2 ) 151 (21 ) — — 130 Cash flows from investing activities Acquisition of music publishing rights, net — (16 ) (10 ) — (26 ) — — — (26 ) Capital expenditures — (53 ) (23 ) — (76 ) — — — (76 ) Investments and acquisitions of businesses, net — 2 (55 ) — (53 ) — — — (53 ) Advances to issuer 58 — — (58 ) — — — — — Net cash provided by (used in) investing activities 58 (67 ) (88 ) (58 ) (155 ) — — — (155 ) Cash flows from financing activities Dividend by Acquisition Corp. to Holdings Corp. (21 ) — — — (21 ) 21 — — — Proceeds from the Revolving Credit Facility 600 — — — 600 — — — 600 Repayment of the Revolving Credit Facility (600 ) — — — (600 ) — — — (600 ) Repayment of Acquisition Corp. Senior Term Loan Facility (10 ) — — — (10 ) — — — (10 ) Proceeds from issuance of Acquisition Corp. 5.625% Senior Secured Notes 275 — — — 275 — — — 275 Proceeds from issuance of Acquisition Corp. 6.750% 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 (13 ) — — — (13 ) — — — (13 ) Distribution to noncontrolling interest holder — (1 ) (2 ) — (3 ) — — — (3 ) Repayment of capital lease obligations — — (3 ) — (3 ) — — — (3 ) Change in due to (from) issuer — (60 ) — 60 — — — — — Net cash provided by (used in) financing activities 22 (61 ) (5 ) 60 16 21 — — 37 Effect of exchange rate changes on cash and equivalents — — (10 ) — (10 ) — — — (10 ) Net increase (decrease) in cash and equivalents — 10 (8 ) — 2 — — — 2 Cash and equivalents at beginning of period — 16 139 — 155 — — — 155 Cash and equivalents at end of period $ — $ 26 $ 131 $ — $ 157 $ — $ — $ — $ 157 Consolidating Statement of Cash Flows For The Fiscal Year Ended September 30, 2013 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 $ (176 ) $ 96 $ (108 ) $ 16 $ (172 ) $ (198 ) $ (198 ) $ 374 $ (194 ) Adjustments to reconcile net (loss) income to net cash provided by operating activities: Loss on extinguishment of debt 85 — — — 85 — — — 85 Depreciation and amortization — 155 103 — 258 — — — 258 Unrealized gains/losses and remeasurement of foreign denominated loans 9 23 (31 ) (5 ) (4 ) — — — (4 ) Deferred income taxes — — (73 ) — (73 ) — — — (73 ) Non-cash interest expense 11 — — — 11 2 — — 13 Non-cash share-based compensation expense — 19 — — 19 — — — 19 Equity losses (gains), including distributions 10 40 — (50 ) — 176 198 (374 ) — Changes in operating assets and liabilities: Accounts receivable — (28 ) 13 — (15 ) — — — (15 ) Inventories — — (5 ) — (5 ) — — — (5 ) Royalty advances — (18 ) 17 — (1 ) — — — (1 ) Accounts payable and accrued liabilities — (22 ) 95 — 73 — — — 73 Royalty payables — (22 ) 28 — 6 — — — 6 Accrued interest (14 ) — — — (14 ) — — — (14 ) Deferred revenue — (1 ) 15 — 14 — — — 14 Other balance sheet changes — (19 ) (23 ) 39 (3 ) — — — (3 ) Net cash provided by (used in) operating activities (75 ) 223 31 — 179 (20 ) — — 159 Cash flows from investing activities Acquisition of music publishing rights, net — (33 ) (4 ) — (37 ) — — — (37 ) Capital expenditures — (25 ) (9 ) — (34 ) — — — (34 ) Investments and acquisitions of businesses, net (719 ) (9 ) (9 ) — (737 ) — — — (737 ) Advances to issuer 245 — — (245 ) — — — — — Net cash provided by (used in) investing activities (474 ) (67 ) (22 ) (245 ) (808 ) — — — (808 ) Cash flows from financing activities Dividend by Acquisition Corp. to Holdings Corp. (12 ) — — — (12 ) 12 — — — Proceeds from the Revolving Credit Facility 136 — — — 136 — — — 136 Repayment of the Revolving Credit Facility (136 ) — — — (136 ) — — — (136 ) Proceeds from Acquisition Corp. Senior Term Loan Facility 1,412 — — — 1,412 — — — 1,412 Repayment of Acquisition Corp. Senior Term Loan Facility (110 ) — — — (110 ) — — — (110 ) Proceeds from issuance of Acquisition Corp. 6.00% Senior Secured Notes 500 — — — 500 — — — 500 Repayment of Acquisition Corp. 6.00% Senior Secured Notes (50 ) — — — (50 ) — — — (50 ) Proceeds from issuance of Acquisition Corp. 6.25% Senior Secured Notes 227 — — — 227 — — — 227 Repayment of Acquisition Corp. 6.25% Senior Secured Notes (23 ) — — — (23 ) — — — (23 ) Repayment of Acquisition Corp. 9.5% Senior Secured Notes (1,250 ) — — — (1,250 ) — — — (1,250 ) Financing costs paid (129 ) — — — (129 ) — — — (129 ) Deferred financing costs paid (60 ) — — — (60 ) (2 ) — — (62 ) Distribution to noncontrolling interest holder — — (4 ) — (4 ) — — — (4 ) Change in due to (from) issuer — (245 ) — 245 — — — — — Net cash provided by (used in) financing activities 505 (245 ) (4 ) 245 501 10 — — 511 Effect of exchange rate changes on cash and equivalents — — (9 ) — (9 ) — — — (9 ) Net increase (decrease) in cash and equivalents (44 ) (89 ) (4 ) — (137 ) (10 ) — — (147 ) Cash and equivalents at beginning of period 44 105 143 — 292 10 — — 302 Cash and equivalents at end of period $ — $ 16 $ 139 $ — $ 155 $ — $ — $ — $ 155 |
Schedule II - Valuation and Qua
Schedule II - Valuation and Qualifying Accounts | 12 Months Ended |
Sep. 30, 2015 | |
Valuation And Qualifying Accounts [Abstract] | |
Schedule II - Valuation and Qualifying Accounts | WARNER MUSIC GROUP CORP. Schedule II — Valuation and Qualifying Accounts Additions Balance at Charged to Balance at Beginning Cost and End of Description of Period Expenses Deductions Other (a) Period (in millions) Year Ended September 30, 2015 Allowance for doubtful accounts $ 11 $ 7 $ (6 ) $ — $ 12 Reserves for sales returns 54 161 (171 ) — $ 44 Allowance for deferred tax asset 394 34 (84 ) — $ 344 Year Ended September 30, 2014 Allowance for doubtful accounts $ 2 $ 2 $ — $ 7 $ 11 Reserves for sales returns 53 194 (193 ) — 54 Allowance for deferred tax asset 296 101 (3 ) — 394 Year Ended September 30, 2013 Allowance for doubtful accounts $ 5 $ 3 $ (6 ) $ — $ 2 Reserves for sales returns 58 166 (171 ) — 53 Allowance for deferred tax asset 244 53 (1 ) — 296 (a) Other changes due to acquisitions and dispositions. |
Summary of Significant Accoun30
Summary of Significant Accounting Policies (Policies) | 12 Months Ended |
Sep. 30, 2015 | |
Accounting Policies [Abstract] | |
Basis of Presentation | Basis of Presentation The accompanying consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States (“U.S. GAAP”). In the opinion of management, all adjustments (consisting of normal recurring accruals) considered necessary for a fair presentation have been included. The Company maintains a 52-53 week fiscal year ending on the last Friday in each reporting period. The fiscal year ended September 30, 2015 ended on September 25, 2015, the fiscal year ended September 30, 2014 ended on September 26, 2014, and the fiscal year ended September 30, 2013 ended on September 27, 2013. For convenience purposes, the Company continues to date its financial statements as of September 30. |
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. |
Reclassifications | Reclassifications Certain reclassifications have been made to the prior fiscal years’ consolidated financial statements to conform with the current fiscal-year presentation. |
Use of Estimates | Use of Estimates The preparation of consolidated financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the amounts reported in the Consolidated Financial Statements and the accompanying notes. Actual results could differ from those estimates. |
Business Combinations | Business Combinations The Company accounts for its business acquisitions under the FASB ASC Topic 805, Business Combinations (“ASC 805”) guidance for business combinations. The total cost of acquisitions is allocated to the underlying identifiable net assets based on their respective estimated fair values. The excess of the purchase price over the estimated fair values of the net assets acquired is recorded as goodwill. Determining the fair value of assets acquired and liabilities assumed requires management’s judgment and often involves the use of significant estimates and assumptions, including assumptions with respect to future cash inflows and outflows, discount rates, asset lives and market multiples, among other items. |
Cash and Equivalents | Cash and Equivalents The Company considers all highly liquid investments with maturities of three months or less at the date of purchase to be cash equivalents. The Company includes checks outstanding at year end as a component of accounts payable, instead of a reduction in its cash balance where there is not a right of offset in the related bank accounts. |
Accounts Receivable | Accounts Receivable Credit is extended to customers based upon an evaluation of the customer’s financial condition. Accounts receivable are recorded at net realizable value. Sales Returns and Allowance for Doubtful Accounts Management’s estimate of physical recorded music products that will be returned, and the amount of receivables that will ultimately be collected is an area of judgment affecting reported revenues and operating income. In determining the estimate of physical product sales that will be returned, management analyzes vendor sales of product, historical return trends, current economic conditions, changes in customer demand and commercial acceptance of our products. Based on this information, management reserves a percentage of each dollar of physical product sales that provide the customer with the right of return. The provision for such sales returns is reflected as a reduction in the revenues from the related sale. Similarly, the Company monitors customer credit risk related to accounts receivable. Significant judgments and estimates are involved in evaluating if such amounts will ultimately be fully collected. On an ongoing basis, the Company tracks customer exposure based on news reports, ratings agency information, reviews of customer financial data and direct dialogue with customers. Counterparties that are determined to be of a higher risk are evaluated to assess whether the payment terms previously granted to them should be modified. The Company also monitors payment levels from customers, and a provision for estimated uncollectible amounts is maintained based on such payment levels, historical experience, management’s views on trends in the overall receivable agings and, for larger accounts, analyses of specific risks on a customer specific basis. |
Concentration of Credit Risk | Concentration of Credit Risk Customer credit risk represents the potential for financial loss if a customer is unwilling or unable to meet its agreed upon contractual payment obligations. The Company has no Recorded Music customers that individually represent more than 10% of the Company’s consolidated gross accounts receivable. As such, the Company does not believe there is any significant collection risk. In the Music Publishing business, the Company collects a significant portion of its royalties from copyright collection societies around the world. Collection societies and associations generally are not-for-profit organizations that represent composers, songwriters and music publishers. These organizations seek to protect the rights of their members by licensing, collecting license fees and distributing royalties for the use of the members’ works. Accordingly, the Company does not believe there is any significant collection risk from such societies. |
Inventories | Inventories Inventories consist of DVDs, CDs, Vinyl and related music products. Inventories are stated at the lower of cost or estimated realizable value. Cost is determined using first-in, first-out (“FIFO”) and average cost methods, which approximate cost under the FIFO method. Returned goods included in inventory are valued at estimated realizable value, but not in excess of cost. |
Derivative and Financial Instruments | Derivative and Financial Instruments The Company accounts for these investments as required by the FASB ASC Topic 815, Derivatives and Hedging (“ASC 815”), which requires that all derivative instruments be recognized on the balance sheet at fair value. ASC 815 also provides that, for derivative instruments that qualify for hedge accounting, changes in the fair value are either (a) offset against the change in fair value of the hedged assets, liabilities, or firm commitments through earnings or (b) recognized in equity until the hedged item is recognized in earnings, depending on whether the derivative is being used to hedge changes in fair value or cash flows. In addition, the ineffective portion of a derivative’s change in fair value is immediately recognized in earnings. The carrying value of the Company’s financial instruments approximates fair value, except for certain differences relating to long-term, fixed-rate debt (see Note 17) and other financial instruments that are not significant. The fair value of financial instruments is generally determined by reference to market values resulting from trading on a national securities exchange or an over-the-counter market. In cases where quoted market prices are not available, fair value is based on estimates using present value or other valuation techniques. |
Property, Plant and Equipment | Property, Plant and Equipment Property, plant and equipment existing at the date of the Merger or acquired in conjunction with subsequent business combinations are recorded at fair value. All other additions are recorded at historical cost. Depreciation is calculated using the straight-line method based upon the estimated useful lives of depreciable assets as follows: five to seven years for furniture and fixtures, periods of up to five years for computer equipment and periods of up to five years for machinery and equipment. Buildings are depreciated over periods of up to forty years. Leasehold improvements are depreciated over the life of the lease or estimated useful lives of the improvements, whichever period is shorter. |
Internal-Use Software Development Costs | Internal-Use Software Development Costs As required by FASB ASC Subtopic 350-40, Internal-Use Software (“ASC 350-40”), the Company capitalizes certain external and internal computer software costs incurred during the application development stage. The application development stage generally includes software design and configuration, coding, testing and installation activities. Training and maintenance costs are expensed as incurred, while upgrades and enhancements are capitalized if it is probable that such expenditures will result in additional functionality. Capitalized software costs are depreciated over the estimated useful life of the underlying project on a straight-line basis, generally not exceeding five years and are recorded as a component of depreciation expense. |
Accounting for Goodwill and Other Intangible Assets | Accounting for Goodwill and Other Intangible Assets In accordance with FASB ASC Topic 350, Intangibles-Goodwill and Other (“ASC 350”), the Company accounts for business combinations using the acquisition method of accounting and accordingly, the assets and liabilities of the acquired entities are recorded at their estimated fair values at the acquisition date. Goodwill represents the excess of the purchase price over the fair value of net assets, including the amount assigned to identifiable intangible assets. Pursuant to this guidance, the Company does not amortize the goodwill balance and instead, performs an annual impairment test to assess the fair value of goodwill over its carrying value. Identifiable intangible assets with finite lives are amortized over their useful lives. Goodwill impairment is determined using a two-step process. The first step involves a comparison of the estimated fair value of the reporting unit to its carrying amount, including goodwill. If the estimated fair value of the reporting unit exceeds its carrying amount, its goodwill is not impaired and the second step of the impairment test is not necessary. If the carrying amount of the reporting unit exceeds its estimated fair value, then the second step of the goodwill impairment test must be performed. The second step of the goodwill impairment test compares the implied fair value of the reporting unit goodwill with its carrying amount to measure the amount of impairment, if any. The implied fair value of goodwill is determined in the same manner as the amount of goodwill recognized in a business combination. If the carrying amount of the reporting unit goodwill exceeds the implied fair value of that goodwill, an impairment is recognized in an amount equal to that excess. Goodwill is tested annually for impairment during the fourth quarter of each fiscal year as of July 1 or earlier upon the occurrence of certain events or substantive changes in circumstances. The Company performs an annual impairment test of its indefinite-lived intangible assets as of July 1 of each fiscal year, unless events occur which trigger the need for an earlier impairment test. The impairment test involves a comparison of the estimated fair value of the intangible asset with its carrying value. If the carrying value of the intangible asset exceeds its fair value, an impairment loss is recognized in an amount equal to that excess. The estimates of fair value of intangible assets not subject to amortization are determined using a DCF analysis. Common among such an approach is the “relief from royalty” methodology, which is used in estimating the fair value of the Company’s trademarks. Discount rate assumptions are based on an assessment of the risk inherent in the projected future cash flows generated by the respective intangible assets. Also subject to judgment are assumptions about royalty rates, which are based on the estimated rates at which similar trademarks are being licensed in the marketplace. The impairment tests require management to make assumptions about future conditions impacting the value of the indefinite-lived intangible assets, including projected growth rates, cost of capital, effective tax rates, tax amortization periods, royalty rates, market share and others. |
Valuation of Long-Lived Assets | Valuation of Long-Lived Assets The Company periodically reviews the carrying value of its long-lived assets, including finite lived intangibles, property, plant and equipment and amortizable intangible assets, whenever events or changes in circumstances indicate that the carrying value may not be recoverable or that the lives assigned may no longer be appropriate. To the extent the estimated future cash inflows attributable to the asset, less estimated future cash outflows, are less than the carrying amount, an impairment loss is recognized in an amount equal to the difference between the carrying value of such asset and its fair value. Assets to be disposed of and for which there is a committed plan to dispose of the assets, whether through sale or abandonment, are reported at the lower of carrying value or fair value less costs to sell. If it is determined that events and circumstances warrant a revision to the remaining period of amortization, an asset’s remaining useful life would be changed, and the remaining carrying amount of the asset would be amortized prospectively over that revised remaining useful life. |
Foreign Currency Translation | Foreign Currency Translation The financial position and operating results of substantially all foreign operations are consolidated using the local currency as the functional currency. Local currency assets and liabilities are translated at the rates of exchange on the balance sheet date, and local currency revenues and expenses are translated at average rates of exchange during the period. Resulting translation gains or losses are included in the accompanying consolidated statements of equity as a component of accumulated other comprehensive loss. |
Revenues | Revenues Recorded Music As required by FASB ASC Topic 605, Revenue Recognition (“ASC 605”), the Company recognizes revenue when persuasive evidence of an arrangement exists, delivery has occurred, the sales price is fixed or determinable and collection is probable. Revenues from the sale of physical Recorded Music products are recognized upon delivery, which occurs once the product has been shipped and title and risk of loss have been transferred. In accordance with industry practice and as is customary in many territories, certain products, such as CDs and DVDs, are sold to customers with the right to return unsold items. Revenues from such sales are generally recognized upon shipment based on gross sales less a provision for future estimated returns. Revenues from the sale of Recorded Music products through digital distribution channels are recognized when the products are sold and related sales accounting reports are delivered by the providers. Music Publishing Music Publishing revenues are earned from the receipt of royalties relating to the licensing of rights in musical compositions, and the sale of published sheet music and songbooks. The receipt of royalties principally relates to amounts earned from the public performance of copyrighted material, the mechanical reproduction of copyrighted material on recorded media including digital formats, and the use of copyrighted material in synchronization with visual images. Consistent with industry practice, music publishing royalties, except for synchronization royalties, generally are recognized as revenue when cash is received. Synchronization revenue is recognized as revenue on an accrual basis when all revenue recognition criteria are met in accordance with ASC 605. Gross Versus Net Revenue Classification In the normal course of business, the Company acts as an intermediary or agent with respect to certain payments received from third parties. For example, the Company distributes music product on behalf of third-party record labels. As required by FASB ASC Subtopic 605-45, Principal Agent Considerations, such transactions are recorded 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 Company serves as the principal in transactions in which it has substantial risks and rewards of ownership and, accordingly, revenues are recorded on a gross basis. For those transactions in which the Company does not have substantial risks and rewards of ownership, the Company is considered an agent and, accordingly, revenues are recorded on a net basis. To the extent revenues are recorded on a gross basis, any participations and royalties paid to third parties are recorded as expenses so that the net amount (gross revenues less expenses) flows through operating income. To the extent revenues are recorded on a net basis, revenues are reported based on the amounts received, less participations and royalties paid to third parties. In both cases, the impact on operating income is the same whether the Company records the revenues on a gross or net basis. Based on an evaluation of the individual terms of each contract and whether the Company is acting as principal or agent, the Company generally records revenues from the distribution of recorded music product on behalf of third-party record labels on a gross basis. However, revenues are recorded on a net basis for recorded music compilations distributed by other record companies where the Company has a right to participate in the profits. |
Royalty Advances and Royalty Costs | Royalty Advances and Royalty Costs The Company regularly commits to and pays royalty advances to its recording artists and songwriters in respect of future sales. The Company accounts for these advances under the related guidance in FASB ASC Topic 928, Entertainment—Music (“ASC 928”). Under ASC 928, the Company capitalizes as assets certain advances that it believes are recoverable from future royalties to be earned by the recording artist or songwriter. Advances vary in both amount and expected life based on the underlying recording artist or songwriter. The Company’s decision to capitalize an advance to a recording artist or songwriter as an asset requires significant judgment as to the recoverability of the advance. The recoverability is assessed upon initial commitment of the advance based upon the Company’s forecast of anticipated revenue from the sale of future and existing albums or songs. In determining whether the advance is recoverable, the Company evaluates the current and past popularity of the recording artist or songwriter, the sales history of the recording artist or songwriter, the initial or expected commercial acceptability of the product, the current and past popularity of the genre of music that the product is designed to appeal to, and other relevant factors. Based upon this information, the Company expenses the portion of any advance that it believes is not recoverable. In most cases, advances to recording artists or songwriters without a history of success and evidence of current or past popularity will be expensed immediately. Significant advances are individually assessed for recoverability continuously and at minimum on a quarterly basis. As part of the ongoing assessment of recoverability, the Company monitors the projection of future sales based on the current environment, the recording artist’s or songwriter’s ability to meet their contractual obligations as well as the Company’s intent to support future album releases or songs from the recording artist or songwriter. To the extent that a portion of an outstanding advance is no longer deemed recoverable, that amount will be expensed in the period the determination is made. |
Advertising | Advertising As required by the FASB ASC Subtopic 720-35, Advertising Costs (“ASC 720-35”), advertising costs, including costs to produce music videos used for promotional purposes, are expensed as incurred. Advertising expense amounted to approximately $88 million, $83 million, and $70 million for the fiscal years ended September 30, 2015, 2014 and 2013, respectively. Deferred advertising costs, which principally relate to advertisements that have been paid for but not been exhibited or services that have not been received, were not material for all periods presented. |
Shipping and Handling | Shipping and Handling The costs associated with shipping goods to customers are recorded as cost of revenues. Shipping and handling charges billed to customers are included in revenues. |
Share-Based Compensation | Share-Based Compensation The Company accounts for share-based payments as required by FASB ASC Topic 718, Compensation-Stock Compensation (“ASC 718”). ASC 718 requires all share-based payments to employees, including grants of employee stock options, to be recognized as compensation expense. Under the fair value recognition provision of ASC 718, equity classified share-based compensation cost is measured at the grant date based on the fair value of the award and is recognized as expense over the vesting period. Under the recognition provision of ASC 718, liability classified share-based compensation costs are measured each reporting date until settlement. The Company’s policy is to measure share-based compensation costs using the intrinsic value method instead of fair value as it is not practical to estimate the volatility of its share price. During fiscal year 2013, the Company initiated a long term incentive plan that has liability classification for share-based compensation awards. The plan was in place during fiscal years 2014 and 2015. |
Income Taxes | Income Taxes Income taxes are provided using the asset and liability method presented by FASB ASC Topic 740, Income Taxes (“ASC 740”). Under this method, income taxes (i.e., deferred tax assets, deferred tax liabilities, taxes currently payable/refunds receivable and tax expense) are recorded based on amounts refundable or payable in the current fiscal year and include the results of any differences between U.S. GAAP and tax reporting. Deferred income taxes reflect the tax effect of net operating loss, capital loss and general business credit carry forwards and the net tax effects of temporary differences between the carrying amount of assets and liabilities for financial statements and income tax purposes, as determined under enacted tax laws and rates. Valuation allowances are established when management determines that it is more likely than not that some portion or the entire deferred tax asset will not be realized. The financial effect of changes in tax laws or rates is accounted for in the period of enactment. From time to time, the Company engages in transactions in which the tax consequences may be subject to uncertainty. Significant judgment is required in assessing and estimating the tax consequences of these transactions. The Company prepares and files tax returns based on its interpretation of tax laws and regulations. In the normal course of business, the Company’s tax returns are subject to examination by various taxing authorities. Such examinations may result in future tax and interest assessments by these taxing authorities. In determining the Company’s tax provision for financial reporting purposes, the Company establishes a reserve for uncertain tax positions unless such positions are determined to be more likely than not of being sustained upon examination based on their technical merits. There is considerable judgment involved in determining whether positions taken on the Company’s tax returns are more likely than not of being sustained. |
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, 2017, and interim periods within those years. Early adoption is permitted only as of annual reporting periods beginning after December 15, 2016, including interim reporting periods within that reporting period. 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 Company does not expect the adoption of this guidance to have a material effect on our consolidated financial statements. 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 Income (Loss) (Ta
Comprehensive Income (Loss) (Tables) | 12 Months Ended |
Sep. 30, 2015 | |
Equity [Abstract] | |
Schedule of Accumulated Other Comprehensive Loss | Comprehensive income (loss), which is reported in the accompanying consolidated statements of equity, consists of net income (loss) and other gains and losses affecting equity that, under U.S. GAAP, are excluded from net income (loss). For the Company, the components of other comprehensive loss primarily consist of foreign currency translation losses, minimum pension liabilities, and deferred gains and losses on financial instruments designated as hedges under ASC 815, which include foreign exchange contracts. The following summary sets forth the changes in the components of accumulated other comprehensive loss, net of related taxes: Deferred Gains Foreign Minimum (Losses) Accumulated Currency Pension On Derivative Other Translation Liability Financial Comprehensive Loss Adjustment Instruments Loss, net (in millions) Balance at September 30, 2012 $ (54 ) $ (6 ) $ 1 $ (59 ) Other comprehensive loss (a) (3 ) 3 — — Amounts reclassified from accumulated other comprehensive income — (1 ) (1 ) (2 ) Balance at September 30, 2013 $ (57 ) $ (4 ) $ — $ (61 ) Other comprehensive loss (a) (41 ) (6 ) — (47 ) Amounts reclassified from accumulated other comprehensive income — — — — Balance at September 30, 2014 $ (98 ) $ (10 ) $ — $ (108 ) Other comprehensive loss (a) (59 ) — — (59 ) Amounts reclassified from accumulated other comprehensive income — — — — Balance at September 30, 2015 $ (157 ) $ (10 ) $ — $ (167 ) (a) Foreign currency translation adjustments include intra-entity foreign currency transactions that are of a long-term investment nature of $(63) million, $(13) million and $(4) million |
Acquisition of Parlophone Lab32
Acquisition of Parlophone Label Group (Tables) | 12 Months Ended |
Sep. 30, 2015 | |
Preliminary Estimate of Acquisition Consideration and Preliminary Purchase Price Allocation to Estimated Fair Value of Assets Acquired and Liabilities Assumed | The allocation of the purchase price was completed as of June 30, 2014 and any adjustments to goodwill made up to that date were recorded in the Company’s balance sheet as of June 30, 2014. The table below presents (i) the estimate of the PLG Acquisition consideration as it relates to the acquisition of PLG by the Buyers and (ii) the final allocation of the purchase price to the estimated fair values of the assets acquired and liabilities assumed on the closing date of July 1, 2013 (in millions): Purchase Price £ 487 Preliminary Working Capital Adjustment 13 Adjusted Purchase Price £ 500 Foreign Exchange Rate at July 1, 2013 1.53 Adjusted Purchase Price in U.S. dollars $ 765 Fair Value of assets acquired and liabilities assumed: Cash 46 Accounts receivable* 83 Other current assets 8 Property, plant and equipment 39 Intangible assets 764 Accounts payable (83 ) Royalties payable (147 ) Other current liabilities (21 ) Deferred revenue (25 ) Deferred tax liabilities* (140 ) Other noncurrent liabilities * (27 ) Fair value of net assets acquired 497 Goodwill recorded * 268 Total purchase price allocated $ 765 * Preliminary amounts were adjusted in the first and third quarters of fiscal 2014 based on new information obtained during the measurement period. |
Parlophone Label Group | |
Components of Intangible Assets Identified and Useful Lives | The components of the intangible assets identified in the table above and the related useful lives, allocated to the Company’s Recorded Music reportable segment, are as follows: Value Useful Life (in millions) Trademark and trade name $ 17 Indefinite Catalog 442 13 years Artist contracts 305 10 years Total intangible assets $ 764 |
Business Acquisition Pro Forma Financial Information | The pro forma information as presented below is for informational purposes only and is not indicative of the results of operations that would have been achieved if the PLG Acquisition had taken place at the beginning of fiscal 2013. September 30, 2013 (in millions) Revenue $ 3,131 Operating income 135 Net loss attributable to Warner Music Group Corp. (154 ) |
Property, Plant and Equipment (
Property, Plant and Equipment (Tables) | 12 Months Ended |
Sep. 30, 2015 | |
Property Plant And Equipment [Abstract] | |
Schedule of Property, Plant and Equipment | Property, plant and equipment consist of the following: September 30, September 30, 2015 2014 (in millions) Land $ 15 $ 16 Buildings and improvements 98 109 Furniture and fixtures 10 16 Computer hardware and software 203 191 Construction in progress 20 28 Machinery and equipment 11 11 Gross Property, Plant and Equipment $ 357 $ 371 Less accumulated depreciation (137 ) (144 ) Net Property, Plant and Equipment $ 220 $ 227 |
Goodwill and Intangible Assets
Goodwill and Intangible Assets (Tables) | 12 Months Ended |
Sep. 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, 2013 $ 1,204 $ 464 $ 1,668 Acquisitions 9 — 9 Dispositions — — — Other adjustments (16 ) — (16 ) Balance at September 30, 2014 $ 1,197 $ 464 $ 1,661 Acquisitions 3 — 3 Dispositions — — — Other adjustments (32 ) — (32 ) Balance at September 30, 2015 $ 1,168 $ 464 $ 1,632 |
Schedule of Intangible Assets | Intangible assets consist of the following: Weighted Average September 30, September 30, Useful Life 2015 2014 (in millions) Intangible assets subject to amortization: Recorded music catalog 10 years $ 992 $ 1,040 Music publishing copyrights 27 years 1,497 1,550 Artist and songwriter contracts 13 years 926 975 Trademarks 7 years 7 7 Total gross intangible asset subject to amortization 3,422 3,572 Accumulated amortization (908 ) (688 ) Total net intangible assets subject to amortization 2,514 2,884 Intangible assets not subject to amortization: Trademarks and tradenames Indefinite 119 120 Total net other intangible assets $ 2,633 $ 3,004 |
Expected Amortization of Intangible Assets | Based on the amount of intangible assets subject to amortization at September 30, 2015, the expected amortization for each of the next five fiscal years and thereafter are as follows: Fiscal Years Ended September 30, (in millions) 2016 $ 248 2017 208 2018 208 2019 201 2020 176 Thereafter 1,473 $ 2,514 |
Debt (Tables)
Debt (Tables) | 12 Months Ended |
Sep. 30, 2015 | |
Debt Disclosure [Abstract] | |
Long-term Debt | Long-term debt, including the current portion, consists of the following: September 30, September 30, 2015 2014 (in millions) Revolving Credit Facility—Acquisition Corp. (a) $ — $ — Senior Term Loan Facility due 2020—Acquisition Corp. (b) 1,282 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) 177 201 6.75% Senior Notes due 2022—Acquisition Corp. 660 660 13.75% Senior Notes due 2019—Holdings 150 150 Total debt 2,994 3,030 Less: current portion 13 13 Total long-term debt $ 2,981 $ 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 September 30, 2015 and September 30, 2014, respectively. There were no loans outstanding under the Revolving Credit Facility at September 30, 2015 or September 30, 2014. (b) Principal amount of $1.287 billion and $1.300 billion less unamortized discount of $5 million and $6 million at September 30, 2015 and September 30, 2014, respectively. Of this amount, $13 million, representing the scheduled amortization of the Term Loan, was included in the current portion of long term debt at September 30, 2015 and September 30, 2014. (c) Face amount of €158 million. Above amounts represent the dollar equivalent of such notes at September 30, 2015 and September 30, 2014. |
Income Taxes (Tables)
Income Taxes (Tables) | 12 Months Ended |
Sep. 30, 2015 | |
Income Tax Disclosure [Abstract] | |
Schedule of Domestic and Foreign Pretax (Loss) Income from Continuing Operations | The domestic and foreign pretax (loss) income from continuing operations is as follows: Fiscal Year Ended Fiscal Year Ended Fiscal Year Ended September 30, September 30, September 30, 2015 2014 2013 (in millions) Domestic $ (18 ) $ (153 ) $ (73 ) Foreign (57 ) (176 ) (152 ) Total $ (75 ) $ (329 ) $ (225 ) |
Current and Deferred Income Taxes | Current and deferred income taxes (tax benefits) provided are as follows: Fiscal Year Ended Fiscal Year Ended Fiscal Year Ended September 30, September 30, September 30, 2015 2014 2013 (in millions) Federal: Current $ — $ — $ — Deferred 4 (7 ) (6 ) Foreign: Current (a) 40 35 25 Deferred (33 ) (55 ) (54 ) U.S. State: Current 3 (6 ) 13 Deferred (1 ) 7 (9 ) Total $ 13 $ (26 ) $ (31 ) (a) Includes withholding taxes of $13 million, $11 million and $9 million for the fiscal year ended September 30, 2015, for the fiscal year ended September 30, 2014, and for the fiscal year ended September 30, 2013, respectively. |
Differences between U.S. Federal Statutory Income Tax Rate of 35% and Income Taxes Provided | The differences between the U.S. federal statutory income tax rate of 35% and income taxes provided are as follows: Fiscal Year Ended Fiscal Year Ended Fiscal Year Ended September 30, September 30, September 30, 2015 2014 2013 (in millions) Taxes on income at the U.S. federal statutory rate $ (26 ) $ (115 ) $ (79 ) U.S. state and local taxes 2 1 4 Foreign income taxed at different rates, including withholding taxes 11 (15 ) 15 Increase in valuation allowance 34 101 36 Release of valuation allowance (5 ) (3 ) (1 ) Change in tax rates (2 ) 1 (20 ) Nondeductible transaction costs — — 13 Other (1 ) 4 1 Total income tax (benefit) expense $ 13 $ (26 ) $ (31 ) |
Significant Components of Company's Net Deferred Tax Assets/(Liabilities) | Significant components of the Company’s net deferred tax assets/(liabilities) are summarized below: September 30, September 30, 2015 2014 (in millions) Deferred tax assets: Allowances and reserves $ 40 $ 43 Employee benefits and compensation 47 43 Other accruals 76 72 Tax attribute carry forwards 552 619 Other 2 3 Total deferred tax assets 717 780 Valuation allowance (344 ) (394 ) Net deferred tax assets 373 386 Deferred tax liabilities: Depreciation, amortization and artist advances (23 ) (9 ) Intangible assets (650 ) (714 ) Total deferred tax liabilities (673 ) (723 ) Net deferred tax liabilities $ (300 ) $ (337 ) |
Reconciliation of Unrecognized Tax Benefits Including Interest and Penalties | A reconciliation of the beginning and ending amount of unrecognized tax benefits, including interest and penalties, are as follows (in millions): Balance at September 30, 2012 $ 14 Additions for current year tax positions 5 Additions for prior year tax positions 11 Subtractions for prior year tax positions — Balance at September 30, 2013 $ 30 Additions for current year tax positions 10 Additions for prior year tax positions 1 Subtractions for prior year tax positions (14 ) Balance at September 30, 2014 $ 27 Additions for current year tax positions 8 Additions for prior year tax positions 9 Subtractions for prior year tax positions (9 ) Balance at September 30, 2015 $ 35 |
Restructuring (Tables)
Restructuring (Tables) | 12 Months Ended |
Sep. 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, 2013 $ 10 $ — $ — $ 10 Restructuring expense 45 4 1 50 Cash payments (43 ) (3 ) (1 ) (47 ) Balance at September 30, 2014 $ 12 $ 1 $ — $ 13 Restructuring expense — 2 — 2 Cash payments (10 ) (3 ) — (13 ) Balance at September 30, 2015 $ 2 $ — $ — $ 2 |
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: Fiscal Year Ended Fiscal Year Ended September 30, September 30, 2015 2014 (in millions) Selling, general and administrative expenses $ 2 $ 50 Total restructuring expense $ 2 $ 50 |
Share-Based Compensation Plans
Share-Based Compensation Plans (Tables) | 12 Months Ended |
Sep. 30, 2015 | |
Disclosure Of Compensation Related Costs Sharebased Payments [Abstract] | |
Summary of Company's Share Awards | The following is a summary of the Company’s share awards: Matching Deferred Equity Matching Equity Deferred Equity Units Units Weighted- Units Weighted- Equity Units Weighted- Average Average Weighted- Average Grant-Date Grant-Date Deferred Matching Average Intrinsic Intrinsic Intrinsic Equity Units Equity Units Fair Value Value Value Value Unvested units at September 30, 2013 24 24 $ 134.62 $ 27.49 $ 107.13 $ — Granted 2 2 134.62 — 107.13 — Vested (5 ) — 134.62 27.49 107.13 — Forfeited (2 ) (2 ) 134.62 27.49 107.13 — Unvested units at September 30, 2014 19 24 $ 132.92 $ 25.79 $ 107.13 $ — Granted 3 3 132.92 — 107.13 — Vested (2 ) — 132.92 25.79 107.13 — Forfeited (2 ) (2 ) 132.92 25.79 107.13 — Unvested units at September 30, 2015 18 25 $ 135.00 $ 27.87 $ 107.13 $ — |
Commitments and Contingencies (
Commitments and Contingencies (Tables) | 12 Months Ended |
Sep. 30, 2015 | |
Commitments And Contingencies Disclosure [Abstract] | |
Future Minimum Payments Under Non-Cancelable Operating Leases (Net of Sublease Income) | At September 30, 2015, future minimum payments under non-cancelable operating leases (net of sublease income) are as follows: Operating Years Leases (in millions) 2016 $ 57 2017 49 2018 42 2019 40 2020 34 Thereafter 210 Total $ 432 |
Segment Information (Tables)
Segment Information (Tables) | 12 Months Ended |
Sep. 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 (in millions) 2015 Revenues $ 2,501 $ 482 $ (17 ) $ 2,966 OIBDA 379 146 (89 ) 436 Depreciation of property, plant and equipment (36 ) (6 ) (12 ) (54 ) Amortization of intangible assets (192 ) (63 ) — (255 ) Operating income (loss) 151 77 (101 ) 127 Total assets 2,868 2,408 395 5,671 Capital expenditures 19 7 37 63 2014 Revenues $ 2,526 $ 517 $ (16 ) $ 3,027 OIBDA 267 166 (93 ) 340 Depreciation of property, plant and equipment (35 ) (7 ) (13 ) (55 ) Amortization of intangible assets (201 ) (65 ) — (266 ) Operating income (loss) 31 94 (106 ) 19 Total assets 3,273 2,393 288 5,954 Capital expenditures 27 8 41 76 2013 Revenues $ 2,389 $ 503 $ (21 ) $ 2,871 OIBDA 270 148 (85 ) 333 Depreciation of property, plant and equipment (32 ) (6 ) (13 ) (51 ) Amortization of intangible assets (146 ) (61 ) — (207 ) Operating income (loss) 92 81 (98 ) 75 Capital expenditures 12 3 19 34 |
Long-Lived Assets and Revenue by Geographical Areas | Revenues relating to operations in different geographical areas are set forth below for the fiscal years ended September 30, 2015, 2014 and 2013. Total assets relating to operations in different geographical areas are set forth below as of September 30, 2015 and September 30, 2014. 2015 2014 2013 Long-lived Long-lived Revenue Assets Revenue Assets Revenue (in millions) United States $ 1,171 $ 149 $ 1,141 $ 148 $ 1,161 United Kingdom 477 30 467 30 383 All other territories 1,318 41 1,419 49 1,327 Total $ 2,966 $ 220 $ 3,027 $ 227 $ 2,871 |
Fair Value Measurements (Tables
Fair Value Measurements (Tables) | 12 Months Ended |
Sep. 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 September 30, 2015 and September 30, 2014. Fair Value Measurements as of September 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 September 30, 2015 $ (1 ) |
Quarterly Financial Informati42
Quarterly Financial Information (Tables) | 12 Months Ended |
Sep. 30, 2015 | |
Quarterly Financial Information Disclosure [Abstract] | |
Schedule of Quarterly Financial Information | The following table sets forth the quarterly information for Warner Music Group Corp. Three months ended September 30, June 30, March 31, December 31, 2015 2015 2015 2014 (in millions) Revenues $ 750 $ 710 $ 677 $ 829 Costs and expenses: Cost of revenue (375 ) (373 ) (318 ) (445 ) Selling, general and administrative expenses (a) (274 ) (251 ) (252 ) (296 ) Amortization expense (64 ) (63 ) (63 ) (65 ) Total costs and expenses (713 ) (687 ) (633 ) (806 ) Operating income 37 23 44 23 Interest expense, net (45 ) (45 ) (45 ) (46 ) Other income (expense) (9 ) (17 ) 14 (9 ) Loss (income) before income taxes (17 ) (39 ) 13 (32 ) Income tax (expense) benefit (6 ) (4 ) 6 (9 ) Net (loss) income (23 ) (43 ) 19 (41 ) Less: income attributable to noncontrolling interest — (1 ) (1 ) (1 ) Net (loss) income attributable to Warner Music Group Corp. $ (23 ) $ (44 ) $ 18 $ (42 ) (a) Includes depreciation expense of: $ (12 ) $ (14 ) $ (14 ) $ (14 ) Quarterly operating results can be disproportionately affected by a particularly strong or weak quarter. Therefore, these quarterly operating results are not necessarily indicative of the results that may be expected for the full fiscal year. WARNER MUSIC GROUP CORP. 2014 QUARTERLY FINANCIAL INFORMATION (unaudited) The following table sets forth the quarterly information for Warner Music Group Corp. Three months ended September 30, June 30, March 31, December 31, 2014 2014 2014 2013 (in millions) Revenues $ 771 $ 788 $ 653 $ 815 Costs and expenses: Cost of revenue (393 ) (417 ) (319 ) (441 ) Selling, general and administrative expenses (a) (287 ) (319 ) (273 ) (293 ) Amortization expense (67 ) (67 ) (66 ) (66 ) Total costs and expenses (747 ) (803 ) (658 ) (800 ) Operating income (loss) 24 (15 ) (5 ) 15 Loss on extinguishment of debt — (141 ) — — Interest expense, net (46 ) (48 ) (54 ) (55 ) Other (expense) income (1 ) 4 (3 ) (4 ) Loss before income taxes (23 ) (200 ) (62 ) (44 ) Income tax (expense) benefit (1 ) 16 3 8 Net loss (24 ) (184 ) (59 ) (36 ) Less: income attributable to noncontrolling interest (2 ) (1 ) (1 ) (1 ) Net loss attributable to Warner Music Group Corp. $ (26 ) $ (185 ) $ (60 ) $ (37 ) (a) Includes depreciation expense of: $ (16 ) $ (14 ) $ (13 ) $ (12 ) Quarterly operating results can be disproportionately affected by a particularly strong or weak quarter. Therefore, these quarterly operating results are not necessarily indicative of the results that may be expected for the full fiscal year. |
Guarantor and Non-Guarantor S43
Guarantor and Non-Guarantor Subsidiaries Financial Information (Tables) | 12 Months Ended |
Sep. 30, 2015 | |
Condensed Financial Information Of Parent Company Only Disclosure [Abstract] | |
Schedule of Consolidating Balance Sheet | Consolidating Balance Sheet September 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 $ — $ 73 $ 173 $ — $ 246 $ — $ — $ — $ 246 Accounts receivable, net — 170 179 — 349 — — — 349 Inventories — 15 27 — 42 — — — 42 Royalty advances expected to be recouped within one year — 80 50 — 130 — — — 130 Deferred tax assets — 32 20 — 52 — — — 52 Prepaid and other current assets 5 9 46 — 60 — — — 60 Total current assets 5 379 495 — 879 — — — 879 Due (to) from parent companies 863 (174 ) (689 ) — — — — — — Investments in and advances to (from) consolidated subsidiaries 2,365 1,187 — (3,552 ) — 376 221 (597 ) — Royalty advances expected to be recouped after one year — 120 75 — 195 — — — 195 Property, plant and equipment, net — 145 75 — 220 — — — 220 Goodwill — 1,379 253 — 1,632 — — — 1,632 Intangible assets subject to amortization, net — 1,271 1,243 — 2,514 — — — 2,514 Intangible assets not subject to amortization — 71 48 — 119 — — — 119 Other assets 39 53 15 — 107 5 — — 112 Total assets $ 3,272 $ 4,431 $ 1,515 $ (3,552 ) $ 5,666 $ 381 $ 221 $ (597 ) $ 5,671 Liabilities and Deficit: Current liabilities: Accounts payable $ — $ 79 $ 94 $ — $ 173 $ — $ — $ — $ 173 Accrued royalties — 513 574 — 1,087 — — — 1,087 Accrued liabilities 1 269 26 — 296 — — — 296 Accrued interest 48 — — — 48 10 — — 58 Deferred revenue — 140 66 — 206 — — — 206 Current portion of long-term debt 13 — — — 13 — — — 13 Other current liabilities — 7 18 (1 ) 24 — — — 24 Total current liabilities 62 1,008 778 (1 ) 1,847 10 — — 1,857 Long-term debt 2,831 — — — 2,831 150 — — 2,981 Deferred tax liabilities, net — 142 210 — 352 — — — 352 Other noncurrent liabilities 3 131 105 3 242 — — — 242 Total liabilities 2,896 1,281 1,093 2 5,272 160 — — 5,432 Total Warner Music Group Corp. equity (deficit) 376 3,149 405 (3,554 ) 376 221 221 (597 ) 221 Noncontrolling interest — 1 17 — 18 — — — 18 Total equity (deficit) 376 3,150 422 (3,554 ) 394 221 221 (597 ) 239 Total liabilities and equity (deficit) $ 3,272 $ 4,431 $ 1,515 $ (3,552 ) $ 5,666 $ 381 $ 221 $ (597 ) $ 5,671 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 | Consolidating Statement of Operations For The Fiscal Year Ended September 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 $ — $ 1,632 $ 1,588 $ (254 ) $ 2,966 $ — $ — $ — $ 2,966 Costs and expenses: Cost of revenue — (788 ) (866 ) 143 (1,511 ) — — — (1,511 ) Selling, general and administrative expenses 1 (675 ) (509 ) 110 (1,073 ) — — — (1,073 ) Amortization of intangible assets — (122 ) (133 ) — (255 ) — — — (255 ) Total costs and expenses 1 (1,585 ) (1,508 ) 253 (2,839 ) — — — (2,839 ) Operating (loss) income 1 47 80 (1 ) 127 — — — 127 Loss on extinguishment of debt — — — — — — — — — Interest income (expense), net (82 ) 6 (83 ) — (159 ) (22 ) — — (181 ) Equity gains (losses) from consolidated subsidiaries 35 (67 ) — 32 — (69 ) (91 ) 160 — Other income (expense), net (10 ) 1 (12 ) — (21 ) — — — (21 ) Income (loss) before income taxes (56 ) (13 ) (15 ) 31 (53 ) (91 ) (91 ) 160 (75 ) Income tax benefit (expense) (13 ) (29 ) — 29 (13 ) — — — (13 ) Net income (loss) (69 ) (42 ) (15 ) 60 (66 ) (91 ) (91 ) 160 (88 ) Less: income attributable to noncontrolling interest — (1 ) (2 ) — (3 ) — — — (3 ) Net income (loss) attributable to Warner Music Group Corp. $ (69 ) $ (43 ) $ (17 ) $ 60 $ (69 ) $ (91 ) $ (91 ) $ 160 $ (91 ) Consolidating Statement of Operations For The Fiscal Year Ended 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) Revenues $ — $ 1,498 $ 1,804 $ (275 ) $ 3,027 $ — $ — $ — $ 3,027 Costs and expenses: Cost of revenue — (639 ) (1,089 ) 158 (1,570 ) — — — (1,570 ) Selling, general and administrative expenses (1 ) (633 ) (655 ) 117 (1,172 ) — — — (1,172 ) Amortization of intangible assets — (120 ) (146 ) — (266 ) — — — (266 ) Total costs and expenses (1 ) (1,392 ) (1,890 ) 275 (3,008 ) — — — (3,008 ) Operating income (loss) (1 ) 106 (86 ) — 19 — — — 19 Loss on extinguishment of debt (141 ) — — — (141 ) — — — (141 ) Interest income (expense), net (102 ) 9 (88 ) — (181 ) (22 ) — — (203 ) Equity gains (losses) from consolidated subsidiaries (80 ) 113 — (33 ) — (286 ) (308 ) 594 — Other income (expense), net 12 (18 ) 2 — (4 ) — — — (4 ) Income (loss) before income taxes (312 ) 210 (172 ) (33 ) (307 ) (308 ) (308 ) 594 (329 ) Income tax benefit (expense) 26 (9 ) 26 (17 ) 26 — — — 26 Net income (loss) (286 ) 201 (146 ) (50 ) (281 ) (308 ) (308 ) 594 (303 ) Less: income attributable to noncontrolling interest — (1 ) (4 ) — (5 ) — — — (5 ) Net income (loss) attributable to Warner Music Group Corp. $ (286 ) $ 200 $ (150 ) $ (50 ) $ (286 ) $ (308 ) $ (308 ) $ 594 $ (308 ) Consolidating Statement of Operations For The Fiscal Year Ended September 30, 2013 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 $ — $ 1,637 $ 1,511 $ (277 ) $ 2,871 $ — $ — $ — $ 2,871 Costs and expenses: Cost of revenue — (782 ) (905 ) 195 (1,492 ) — — — (1,492 ) Selling, general and administrative expenses (1 ) (578 ) (600 ) 82 (1,097 ) — — — (1,097 ) Amortization of intangible assets — (118 ) (89 ) — (207 ) — — — (207 ) Total costs and expenses (1 ) (1,478 ) (1,594 ) 277 (2,796 ) — — — (2,796 ) Operating income (loss) (1 ) 159 (83 ) — 75 — — — 75 Loss on extinguishment of debt (85 ) — — — (85 ) — — — (85 ) Interest income (expense), net (154 ) 6 (33 ) — (181 ) (22 ) — — (203 ) Equity gains (losses) from consolidated subsidiaries (10 ) (40 ) — 50 — (176 ) (198 ) 374 — Other income (expense), net 43 (29 ) (26 ) — (12 ) — — — (12 ) Income (loss) before income taxes (207 ) 96 (142 ) 50 (203 ) (198 ) (198 ) 374 (225 ) Income tax benefit (expense) 31 — 34 (34 ) 31 — — — 31 Net income (loss) (176 ) 96 (108 ) 16 (172 ) (198 ) (198 ) 374 (194 ) Less: income attributable to noncontrolling interest — (2 ) (2 ) — (4 ) — — — (4 ) Net income (loss) attributable to Warner Music Group Corp. $ (176 ) $ 94 $ (110 ) $ 16 $ (176 ) $ (198 ) $ (198 ) $ 374 $ (198 ) |
Schedule of Consolidating Statement of Comprehensive Income | Consolidating Statement of Comprehensive Income For The Fiscal Year Ended September 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 $ (69 ) $ (42 ) $ (15 ) $ 60 $ (66 ) $ (91 ) $ (91 ) $ 160 $ (88 ) Other comprehensive income (loss), net of tax: Foreign currency adjustment (59 ) — (59 ) 59 (59 ) (59 ) (59 ) 118 (59 ) Minimum pension liability — — — — — — — — — Other comprehensive income (loss), net of tax: (59 ) — (59 ) 59 (59 ) (59 ) (59 ) 118 (59 ) Total comprehensive (loss) income (128 ) (42 ) (74 ) 119 (125 ) (150 ) (150 ) 278 (147 ) Less: income attributable to noncontrolling interest — (1 ) (2 ) — (3 ) — — — (3 ) Comprehensive (loss) income attributable to Warner Music Group Corp. $ (128 ) $ (43 ) $ (76 ) $ 119 $ (128 ) $ (150 ) $ (150 ) $ 278 $ (150 ) Consolidating Statement of Comprehensive Income For The Fiscal Year Ended 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) Net (loss) income $ (286 ) $ 201 $ (146 ) $ (50 ) $ (281 ) $ (308 ) $ (308 ) $ 594 $ (303 ) Other comprehensive income (loss), net of tax: Foreign currency adjustment (41 ) — (41 ) 41 (41 ) (41 ) (41 ) 82 (41 ) Minimum Pension Liability (6 ) — (6 ) 6 (6 ) (6 ) (6 ) 12 (6 ) Other comprehensive income (loss), net of tax: (47 ) — (47 ) 47 (47 ) (47 ) (47 ) 94 (47 ) Total comprehensive (loss) income (333 ) 201 (193 ) (3 ) (328 ) (355 ) (355 ) 688 (350 ) Less: income attributable to noncontrolling interest — (1 ) (4 ) — (5 ) — — — (5 ) Comprehensive (loss) income attributable to Warner Music Group Corp. $ (333 ) $ 200 $ (197 ) $ (3 ) $ (333 ) $ (355 ) $ (355 ) $ 688 $ (355 ) Consolidating Statement of Comprehensive Income For The Fiscal Year Ended September 30, 2013 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 $ (176 ) $ 96 $ (108 ) $ 16 $ (172 ) $ (198 ) $ (198 ) $ 374 $ (194 ) Other comprehensive income (loss), net of tax: Foreign currency adjustment (3 ) — (3 ) 3 (3 ) (3 ) (3 ) 6 (3 ) Minimum Pension Liability 2 — 2 (2 ) 2 2 2 (4 ) 2 Deferred (losses) gains on derivative financial instruments (1 ) — (1 ) 1 (1 ) (1 ) (1 ) 2 (1 ) Other comprehensive income (loss), net of tax: (2 ) — (2 ) 2 (2 ) (2 ) (2 ) 4 (2 ) Total comprehensive (loss) income (178 ) 96 (110 ) 18 (174 ) (200 ) (200 ) 378 (196 ) Less: income attributable to noncontrolling interest — (2 ) (2 ) — (4 ) — — — (4 ) Comprehensive (loss) income attributable to Warner Music Group Corp. $ (178 ) $ 94 $ (112 ) $ 18 $ (178 ) $ (200 ) $ (200 ) $ 378 $ (200 ) |
Schedule of Consolidating Statement of Cash Flows | Consolidating Statement of Cash Flows For The Fiscal Year Ended September 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 $ (69 ) $ (42 ) $ (15 ) $ 60 $ (66 ) $ (91 ) $ (91 ) $ 160 $ (88 ) Adjustments to reconcile net (loss) income to net cash provided by operating activities: Loss on extinguishment of debt — — — — — — — — — Depreciation and amortization (1 ) 162 148 — 309 — — — 309 Unrealized gains/losses and remeasurement of foreign denominated loans 21 55 (48 ) — 28 — — — 28 Deferred income taxes — — (11 ) — (11 ) — — — (11 ) Gain on sale of assets — — — — — — — — — Non-cash interest expense 10 — — — 10 1 — — 11 Non-cash share-based compensation expense — 3 — — 3 — — — 3 Equity losses (gains), including distributions (35 ) 67 — (32 ) — 69 91 (160 ) — Changes in operating assets and liabilities: Accounts receivable — 4 2 — 6 — — — 6 Inventories — (1 ) (5 ) — (6 ) — — — (6 ) Royalty advances — (23 ) (23 ) — (46 ) — — — (46 ) Accounts payable and accrued liabilities — 26 (15 ) (28 ) (17 ) — — — (17 ) Royalty payables — (19 ) 46 — 27 — — — 27 Accrued interest (2 ) — — — (2 ) — — — (2 ) Deferred revenue — (9 ) 21 — 12 — — — 12 Other balance sheet changes — 3 (7 ) — (4 ) — — — (4 ) Net cash provided by (used in) operating activities (76 ) 226 93 — 243 (21 ) — — 222 Cash flows from investing activities Acquisition of music publishing rights, net — (9 ) (7 ) — (16 ) — — — (16 ) Capital expenditures — (48 ) (15 ) — (63 ) — — — (63 ) Investments and acquisitions of businesses, net — (11 ) (5 ) — (16 ) — — — (16 ) Advances to issuer 110 — — (110 ) — — — — — Net cash provided by (used in) investing activities 110 (68 ) (27 ) (110 ) (95 ) — — — (95 ) Cash flows from financing activities Dividend by Acquisition Corp. to Holdings Corp. (21 ) — — — (21 ) 21 — — — 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 (13 ) — — — (13 ) — — — (13 ) Proceeds from issuance of Acquisition Corp. 5.625% Senior Secured Notes — — — — — — — — — Proceeds from issuance of Acquisition Corp. 6.750% Senior Notes — — — — — — — — — Repayment of Acquisition Corp. 11.5% Senior Notes — — — — — — — — — Financing costs paid — — — — — — — — — Deferred financing costs paid — — — — — — — — — Distribution to noncontrolling interest holder — (1 ) (2 ) — (3 ) — — — (3 ) Repayment of capital lease obligations — — (3 ) — (3 ) — — — (3 ) Change in due to (from) issuer — (110 ) — 110 — — — — — Net cash provided by (used in) financing activities (34 ) (111 ) (5 ) 110 (40 ) 21 — — (19 ) Effect of exchange rate changes on cash and equivalents — — (19 ) — (19 ) — — — (19 ) Net increase (decrease) in cash and equivalents — 47 42 — 89 — — — 89 Cash and equivalents at beginning of period — 26 131 — 157 — — — 157 Cash and equivalents at end of period $ — $ 73 $ 173 $ — $ 246 $ — $ — $ — $ 246 Consolidating Statement of Cash Flows For The Fiscal Year Ended 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) Cash flows from operating activities Net (loss) income $ (286 ) $ 201 $ (146 ) $ (50 ) $ (281 ) $ (308 ) $ (308 ) $ 594 $ (303 ) Adjustments to reconcile net (loss) income to net cash provided by operating activities: Loss on extinguishment of debt 141 — — — 141 — — — 141 Depreciation and amortization — 160 161 — 321 — — — 321 Unrealized gains/losses and remeasurement of foreign denominated loans (12 ) (23 ) (4 ) — (39 ) (39 ) Deferred income taxes — — (55 ) — (55 ) — — — (55 ) Gain on sale of assets — (2 ) — — (2 ) — — — (2 ) Non-cash interest expense 12 — — — 12 1 — — 13 Non-cash share-based compensation expense — 8 — — 8 — — — 8 Equity losses (gains), including distributions 80 (113 ) — 33 — 286 308 (594 ) — Changes in operating assets and liabilities: Accounts receivable — 10 62 — 72 — — — 72 Inventories — (3 ) (4 ) — (7 ) — — — (7 ) Royalty advances — (9 ) (23 ) — (32 ) — — — (32 ) Accounts payable and accrued liabilities — (162 ) 75 — (87 ) — — — (87 ) Royalty payables — (38 ) 63 — 25 — — — 25 Accrued interest (15 ) — — — (15 ) — — — (15 ) Deferred revenue — 107 (12 ) — 95 — — — 95 Other balance sheet changes — 2 (22 ) 15 (5 ) — — — (5 ) Net cash provided by (used in) operating activities (80 ) 138 95 (2 ) 151 (21 ) — — 130 Cash flows from investing activities Acquisition of music publishing rights, net — (16 ) (10 ) — (26 ) — — — (26 ) Capital expenditures — (53 ) (23 ) — (76 ) — — — (76 ) Investments and acquisitions of businesses, net — 2 (55 ) — (53 ) — — — (53 ) Advances to issuer 58 — — (58 ) — — — — — Net cash provided by (used in) investing activities 58 (67 ) (88 ) (58 ) (155 ) — — — (155 ) Cash flows from financing activities Dividend by Acquisition Corp. to Holdings Corp. (21 ) — — — (21 ) 21 — — — Proceeds from the Revolving Credit Facility 600 — — — 600 — — — 600 Repayment of the Revolving Credit Facility (600 ) — — — (600 ) — — — (600 ) Repayment of Acquisition Corp. Senior Term Loan Facility (10 ) — — — (10 ) — — — (10 ) Proceeds from issuance of Acquisition Corp. 5.625% Senior Secured Notes 275 — — — 275 — — — 275 Proceeds from issuance of Acquisition Corp. 6.750% 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 (13 ) — — — (13 ) — — — (13 ) Distribution to noncontrolling interest holder — (1 ) (2 ) — (3 ) — — — (3 ) Repayment of capital lease obligations — — (3 ) — (3 ) — — — (3 ) Change in due to (from) issuer — (60 ) — 60 — — — — — Net cash provided by (used in) financing activities 22 (61 ) (5 ) 60 16 21 — — 37 Effect of exchange rate changes on cash and equivalents — — (10 ) — (10 ) — — — (10 ) Net increase (decrease) in cash and equivalents — 10 (8 ) — 2 — — — 2 Cash and equivalents at beginning of period — 16 139 — 155 — — — 155 Cash and equivalents at end of period $ — $ 26 $ 131 $ — $ 157 $ — $ — $ — $ 157 Consolidating Statement of Cash Flows For The Fiscal Year Ended September 30, 2013 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 $ (176 ) $ 96 $ (108 ) $ 16 $ (172 ) $ (198 ) $ (198 ) $ 374 $ (194 ) Adjustments to reconcile net (loss) income to net cash provided by operating activities: Loss on extinguishment of debt 85 — — — 85 — — — 85 Depreciation and amortization — 155 103 — 258 — — — 258 Unrealized gains/losses and remeasurement of foreign denominated loans 9 23 (31 ) (5 ) (4 ) — — — (4 ) Deferred income taxes — — (73 ) — (73 ) — — — (73 ) Non-cash interest expense 11 — — — 11 2 — — 13 Non-cash share-based compensation expense — 19 — — 19 — — — 19 Equity losses (gains), including distributions 10 40 — (50 ) — 176 198 (374 ) — Changes in operating assets and liabilities: Accounts receivable — (28 ) 13 — (15 ) — — — (15 ) Inventories — — (5 ) — (5 ) — — — (5 ) Royalty advances — (18 ) 17 — (1 ) — — — (1 ) Accounts payable and accrued liabilities — (22 ) 95 — 73 — — — 73 Royalty payables — (22 ) 28 — 6 — — — 6 Accrued interest (14 ) — — — (14 ) — — — (14 ) Deferred revenue — (1 ) 15 — 14 — — — 14 Other balance sheet changes — (19 ) (23 ) 39 (3 ) — — — (3 ) Net cash provided by (used in) operating activities (75 ) 223 31 — 179 (20 ) — — 159 Cash flows from investing activities Acquisition of music publishing rights, net — (33 ) (4 ) — (37 ) — — — (37 ) Capital expenditures — (25 ) (9 ) — (34 ) — — — (34 ) Investments and acquisitions of businesses, net (719 ) (9 ) (9 ) — (737 ) — — — (737 ) Advances to issuer 245 — — (245 ) — — — — — Net cash provided by (used in) investing activities (474 ) (67 ) (22 ) (245 ) (808 ) — — — (808 ) Cash flows from financing activities Dividend by Acquisition Corp. to Holdings Corp. (12 ) — — — (12 ) 12 — — — Proceeds from the Revolving Credit Facility 136 — — — 136 — — — 136 Repayment of the Revolving Credit Facility (136 ) — — — (136 ) — — — (136 ) Proceeds from Acquisition Corp. Senior Term Loan Facility 1,412 — — — 1,412 — — — 1,412 Repayment of Acquisition Corp. Senior Term Loan Facility (110 ) — — — (110 ) — — — (110 ) Proceeds from issuance of Acquisition Corp. 6.00% Senior Secured Notes 500 — — — 500 — — — 500 Repayment of Acquisition Corp. 6.00% Senior Secured Notes (50 ) — — — (50 ) — — — (50 ) Proceeds from issuance of Acquisition Corp. 6.25% Senior Secured Notes 227 — — — 227 — — — 227 Repayment of Acquisition Corp. 6.25% Senior Secured Notes (23 ) — — — (23 ) — — — (23 ) Repayment of Acquisition Corp. 9.5% Senior Secured Notes (1,250 ) — — — (1,250 ) — — — (1,250 ) Financing costs paid (129 ) — — — (129 ) — — — (129 ) Deferred financing costs paid (60 ) — — — (60 ) (2 ) — — (62 ) Distribution to noncontrolling interest holder — — (4 ) — (4 ) — — — (4 ) Change in due to (from) issuer — (245 ) — 245 — — — — — Net cash provided by (used in) financing activities 505 (245 ) (4 ) 245 501 10 — — 511 Effect of exchange rate changes on cash and equivalents — — (9 ) — (9 ) — — — (9 ) Net increase (decrease) in cash and equivalents (44 ) (89 ) (4 ) — (137 ) (10 ) — — (147 ) Cash and equivalents at beginning of period 44 105 143 — 292 10 — — 302 Cash and equivalents at end of period $ — $ 16 $ 139 $ — $ 155 $ — $ — $ — $ 155 |
Description of Business - Addit
Description of Business - Additional Information (Detail) | 12 Months Ended |
Sep. 30, 2015OperationsCountrysongwriters | |
Description Of Business [Line Items] | |
Number of fundamental operations | 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 |
Summary of Significant Accoun45
Summary of Significant Accounting Policies - Additional Information (Detail) $ in Millions | 12 Months Ended | ||
Sep. 30, 2015USD ($)Customer | Sep. 30, 2014USD ($) | Sep. 30, 2013USD ($) | |
Accounting Policies [Line Items] | |||
Number of significant gross accounts receivable Recorded Music customers | Customer | 0 | ||
Advertising expense | $ | $ 88 | $ 83 | $ 70 |
Furniture and Fixtures | Minimum | |||
Accounting Policies [Line Items] | |||
Property plant and equipment useful life | 5 years | ||
Furniture and Fixtures | Maximum | |||
Accounting Policies [Line Items] | |||
Property plant and equipment useful life | 7 years | ||
Computer Equipment | Maximum | |||
Accounting Policies [Line Items] | |||
Property plant and equipment useful life | 5 years | ||
Machinery and Equipment | Maximum | |||
Accounting Policies [Line Items] | |||
Property plant and equipment useful life | 5 years | ||
Building | Maximum | |||
Accounting Policies [Line Items] | |||
Property plant and equipment useful life | 40 years |
Comprehensive Income (Loss) - S
Comprehensive Income (Loss) - Schedule of Accumulated Other Comprehensive Loss (Detail) - USD ($) $ in Millions | 12 Months Ended | |||
Sep. 30, 2015 | Sep. 30, 2014 | Sep. 30, 2013 | ||
Accumulated Other Comprehensive Income Loss [Line Items] | ||||
Beginning balance | $ 390 | $ 743 | $ 944 | |
Ending balance | 239 | 390 | 743 | |
Foreign Currency Translation Loss | ||||
Accumulated Other Comprehensive Income Loss [Line Items] | ||||
Beginning balance | (98) | (57) | (54) | |
Other comprehensive loss | [1] | (59) | (41) | (3) |
Ending balance | (157) | (98) | (57) | |
Minimum Pension Liability Adjustment | ||||
Accumulated Other Comprehensive Income Loss [Line Items] | ||||
Beginning balance | (10) | (4) | (6) | |
Other comprehensive loss | [1] | (6) | 3 | |
Amounts reclassified from accumulated other comprehensive income | (1) | |||
Ending balance | (10) | (10) | (4) | |
Deferred Gains (Losses) On Derivative Financial Instruments | ||||
Accumulated Other Comprehensive Income Loss [Line Items] | ||||
Beginning balance | 1 | |||
Amounts reclassified from accumulated other comprehensive income | (1) | |||
Accumulated Other Comprehensive Loss | ||||
Accumulated Other Comprehensive Income Loss [Line Items] | ||||
Beginning balance | (108) | (61) | (59) | |
Other comprehensive loss | [1] | (59) | (47) | |
Amounts reclassified from accumulated other comprehensive income | (2) | |||
Ending balance | $ (167) | $ (108) | $ (61) | |
[1] | Foreign currency translation adjustments include intra-entity foreign currency transactions that are of a long-term investment nature of $(63) million, $(13) million and $(4) million during the fiscal year ended September 30, 2015, 2014 and 2013, respectively. |
Comprehensive Income (Loss) -47
Comprehensive Income (Loss) - Schedule of Accumulated Other Comprehensive Loss (Parenthetical) (Detail) - USD ($) $ in Millions | 12 Months Ended | ||
Sep. 30, 2015 | Sep. 30, 2014 | Sep. 30, 2013 | |
Equity [Abstract] | |||
Intra-entity foreign currency transaction adjustments | $ (63) | $ (13) | $ (4) |
Acquisition of Parlophone Lab48
Acquisition of Parlophone Label Group - Additional Information (Detail) £ in Millions, $ in Millions | Dec. 08, 2014USD ($) | Jun. 30, 2014GBP (£) | Sep. 30, 2015USD ($) | Sep. 30, 2014USD ($) | Sep. 30, 2013USD ($) |
Business Acquisition [Line Items] | |||||
Actual operating income (loss) of acquired entity | $ 40 | $ (103) | $ (32) | ||
Actual revenue of acquired entity since acquisition date | $ 410 | 322 | 59 | ||
Parlophone Label Group | |||||
Business Acquisition [Line Items] | |||||
Business acquisition, cash paid | £ | £ 487 | ||||
Acquisition date | Jul. 1, 2013 | ||||
Professional fees and integration costs related to Acquisition | $ 5 | $ 59 | 43 | ||
Transaction Fee Under Management Agreement In Relation To Acquisition | $ 11 | ||||
Final working capital adjustment | $ 38 | ||||
Final working capital adjustment paid | $ 38 |
Acquisition of Parlophone Lab49
Acquisition of Parlophone Label Group - Preliminary Estimate of Acquisition Consideration and Preliminary Purchase Price Allocation to Estimated Fair Value of Assets Acquired and Liabilities Assumed (Detail) £ in Millions, $ in Millions | Jun. 30, 2014GBP (£) | Jun. 30, 2013USD ($)£ / $ | Sep. 30, 2015USD ($) | Sep. 30, 2014USD ($) | Sep. 30, 2013USD ($) | |
Fair Value of assets acquired and liabilities assumed: | ||||||
Goodwill recorded | $ 1,632 | $ 1,661 | $ 1,668 | |||
Parlophone Label Group | ||||||
Business Acquisition [Line Items] | ||||||
Purchase Price | £ | £ 487 | |||||
Preliminary Working Capital Adjustment | £ | 13 | |||||
Adjusted Purchase Price | £ 500 | $ 765 | ||||
Foreign Exchange Rate at July 1, 2013 | £ / $ | 1.53 | |||||
Fair Value of assets acquired and liabilities assumed: | ||||||
Cash | $ 46 | |||||
Accounts receivable | [1] | 83 | ||||
Other current assets | 8 | |||||
Property, plant and equipment | 39 | |||||
Intangible assets | 764 | |||||
Accounts payable | (83) | |||||
Royalties payable | (147) | |||||
Other current liabilities | (21) | |||||
Deferred revenue | (25) | |||||
Deferred tax liabilities | [1] | (140) | ||||
Other noncurrent liabilities | [1] | (27) | ||||
Fair value of net assets acquired | 497 | |||||
Goodwill recorded | [1] | 268 | ||||
Total purchase price allocated | $ 765 | |||||
[1] | Preliminary amounts were adjusted in the first and third quarters of fiscal 2014 based on new information obtained during the measurement period. |
Acquisition of Parlophone Lab50
Acquisition of Parlophone Label Group - Components of Intangible Assets Identified and Useful Lives (Detail) - Recorded Music $ in Millions | 9 Months Ended |
Jun. 30, 2014USD ($) | |
Finite Lived And Indefinite Lived Intangible Assets [Line Items] | |
Total intangible assets | $ 764 |
Trademark and Trade Name | |
Finite Lived And Indefinite Lived Intangible Assets [Line Items] | |
Indefinite lived intangible assets, Value | 17 |
Catalog | |
Finite Lived And Indefinite Lived Intangible Assets [Line Items] | |
Finite lived intangible assets, Value | $ 442 |
Intangible assets, Useful Life | 13 years |
Artist Contracts | |
Finite Lived And Indefinite Lived Intangible Assets [Line Items] | |
Finite lived intangible assets, Value | $ 305 |
Intangible assets, Useful Life | 10 years |
Acquisition of Parlophone Lab51
Acquisition of Parlophone Label Group - Business Acquisition Pro Forma Financial Information (Detail) - Parlophone Label Group $ in Millions | 12 Months Ended |
Sep. 30, 2013USD ($) | |
Business Acquisition Pro Forma Information [Line Items] | |
Revenue | $ 3,131 |
Operating income | 135 |
Net loss attributable to Warner Music Group Corp. | $ (154) |
Property, Plant and Equipment -
Property, Plant and Equipment - Schedule of Property, Plant and Equipment (Detail) - USD ($) $ in Millions | Sep. 30, 2015 | Sep. 30, 2014 |
Property, Plant and Equipment [Line Items] | ||
Gross Property, Plant and Equipment | $ 357 | $ 371 |
Less accumulated depreciation | (137) | (144) |
Net Property, Plant and Equipment | 220 | 227 |
Land | ||
Property, Plant and Equipment [Line Items] | ||
Gross Property, Plant and Equipment | 15 | 16 |
Buildings and Improvements | ||
Property, Plant and Equipment [Line Items] | ||
Gross Property, Plant and Equipment | 98 | 109 |
Furniture and Fixtures | ||
Property, Plant and Equipment [Line Items] | ||
Gross Property, Plant and Equipment | 10 | 16 |
Computer Hardware and Software | ||
Property, Plant and Equipment [Line Items] | ||
Gross Property, Plant and Equipment | 203 | 191 |
Construction in Progress | ||
Property, Plant and Equipment [Line Items] | ||
Gross Property, Plant and Equipment | 20 | 28 |
Machinery and Equipment | ||
Property, Plant and Equipment [Line Items] | ||
Gross Property, Plant and Equipment | $ 11 | $ 11 |
Goodwill and Intangible Asset53
Goodwill and Intangible Assets - Changes in Goodwill for Each Reportable Segment (Detail) - USD ($) $ in Millions | 12 Months Ended | |
Sep. 30, 2015 | Sep. 30, 2014 | |
Goodwill [Line Items] | ||
Beginning balance | $ 1,661 | $ 1,668 |
Acquisitions | 3 | 9 |
Other adjustments | (32) | (16) |
Ending balance | 1,632 | 1,661 |
Recorded Music | ||
Goodwill [Line Items] | ||
Beginning balance | 1,197 | 1,204 |
Acquisitions | 3 | 9 |
Other adjustments | (32) | (16) |
Ending balance | 1,168 | 1,197 |
Music Publishing | ||
Goodwill [Line Items] | ||
Beginning balance | 464 | 464 |
Ending balance | $ 464 | $ 464 |
Goodwill and Intangible Asset54
Goodwill and Intangible Assets - Schedule of Intangible Assets (Detail) - USD ($) $ in Millions | 12 Months Ended | |
Sep. 30, 2015 | Sep. 30, 2014 | |
Finite Lived And Indefinite Lived Intangible Assets [Line Items] | ||
Total gross intangible asset subject to amortization | $ 3,422 | $ 3,572 |
Accumulated amortization | (908) | (688) |
Total net intangible assets subject to amortization | 2,514 | 2,884 |
Intangible assets not subject to amortization | 119 | 120 |
Total net other intangible assets | 2,633 | 3,004 |
Trademarks and tradenames | ||
Finite Lived And Indefinite Lived Intangible Assets [Line Items] | ||
Intangible assets not subject to amortization | $ 119 | 120 |
Recorded music catalog | ||
Finite Lived And Indefinite Lived Intangible Assets [Line Items] | ||
Intangible assets, Useful Life | 10 years | |
Total gross intangible asset subject to amortization | $ 992 | 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 | $ 1,497 | 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 | $ 926 | 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 |
Goodwill and Intangible Asset55
Goodwill and Intangible Assets - Expected Amortization of Intangible Assets (Detail) - USD ($) $ in Millions | Sep. 30, 2015 | Sep. 30, 2014 |
Goodwill And Intangible Assets Disclosure [Abstract] | ||
2,016 | $ 248 | |
2,017 | 208 | |
2,018 | 208 | |
2,019 | 201 | |
2,020 | 176 | |
Thereafter | 1,473 | |
Total net intangible assets subject to amortization | $ 2,514 | $ 2,884 |
Debt - Long-term Debt (Detail)
Debt - Long-term Debt (Detail) - USD ($) $ in Millions | Sep. 30, 2015 | Sep. 30, 2014 | |
Debt Instrument [Line Items] | |||
Total debt | $ 2,994 | $ 3,030 | |
Less: current portion | 13 | 13 | |
Total long-term debt | 2,981 | 3,017 | |
Acquisition Corp. | Senior Term Loan Facility due 2020 | |||
Debt Instrument [Line Items] | |||
Total debt | [1] | 1,282 | 1,294 |
Acquisition Corp. | 5.625% Senior Secured Notes due 2022 | |||
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] | 177 | 201 |
Acquisition Corp. | 6.75% Senior Notes due 2022 | |||
Debt Instrument [Line Items] | |||
Total debt | 660 | 660 | |
Holdings Company | 13.75% Holdings Notes due 2019 | |||
Debt Instrument [Line Items] | |||
Total debt | $ 150 | $ 150 | |
[1] | Principal amount of $1.287 billion and $1.300 billion less unamortized discount of $5 million and $6 million at September 30, 2015 and September 30, 2014, respectively. Of this amount, $13 million, representing the scheduled amortization of the Term Loan, was included in the current portion of long term debt at September 30, 2015 and September 30, 2014. | ||
[2] | Face amount of €158 million. Above amounts represent the dollar equivalent of such notes at September 30, 2015 and September 30, 2014. |
Debt - Long-term Debt (Parenthe
Debt - Long-term Debt (Parenthetical) (Detail) € in Millions | 12 Months Ended | ||||
Sep. 30, 2015USD ($) | Sep. 30, 2014USD ($) | Sep. 30, 2015EUR (€) | Sep. 30, 2014EUR (€) | Sep. 30, 2013USD ($) | |
Debt Instrument [Line Items] | |||||
Current portion of long-term debt | $ 13,000,000 | $ 13,000,000 | |||
Revolving Credit Facility | |||||
Debt Instrument [Line Items] | |||||
Commitments under revolving credit facility | 150,000,000 | ||||
Letters of credit outstanding | 5,000,000 | 11,000,000 | |||
Revolving Credit Facility Outstanding | $ 0 | $ 0 | |||
Senior Term Loan Facility due 2020 | |||||
Debt Instrument [Line Items] | |||||
Face or principal amount of debt instrument | $ 1,310,000,000 | ||||
Senior Term Loan Facility due 2020 | Acquisition Corp. | |||||
Debt Instrument [Line Items] | |||||
Due date of Senior Secured Notes | 2,020 | 2,020 | |||
Face or principal amount of debt instrument | $ 1,287,000,000 | $ 1,300,000,000 | |||
Unamortized discount | 5,000,000 | 6,000,000 | |||
Current portion of long-term debt | $ 13,000,000 | $ 13,000,000 | |||
5.625% Senior Secured Notes | |||||
Debt Instrument [Line Items] | |||||
Interest rate | 5.625% | 5.625% | 5.625% | 5.625% | 5.625% |
5.625% Senior Secured Notes | Acquisition Corp. | |||||
Debt Instrument [Line Items] | |||||
Due date of Senior Secured Notes | 2,022 | ||||
Interest rate | 5.625% | 5.625% | |||
6.00% Senior Secured Notes | |||||
Debt Instrument [Line Items] | |||||
Interest rate | 6.00% | 6.00% | 6.00% | 6.00% | 6.00% |
6.00% Senior Secured Notes | Acquisition Corp. | |||||
Debt Instrument [Line Items] | |||||
Due date of Senior Secured Notes | 2,021 | 2,021 | |||
Interest rate | 6.00% | 6.00% | 6.00% | 6.00% | |
6.25% Senior Secured Notes | |||||
Debt Instrument [Line Items] | |||||
Interest rate | 6.25% | 6.25% | 6.25% | 6.25% | 6.25% |
Face or principal amount of debt instrument | € | € 158 | € 158 | |||
6.25% Senior Secured Notes | Acquisition Corp. | |||||
Debt Instrument [Line Items] | |||||
Due date of Senior Secured Notes | 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] | |||||
Due date of Senior Secured Notes | 2,022 | ||||
Interest rate | 6.75% | 6.75% | |||
13.75% Notes due 2019 | Holdings Company | |||||
Debt Instrument [Line Items] | |||||
Due date of Senior Secured Notes | 2,019 | 2,019 | |||
Interest rate | 13.75% | 13.75% | 13.75% | 13.75% |
Debt - 2012 Debt Refinancing -
Debt - 2012 Debt Refinancing - Additional Information (Detail) € in Millions | May. 09, 2013USD ($) | Nov. 01, 2012USD ($) | Nov. 01, 2012EUR (€) | Jun. 30, 2013USD ($) | Jun. 30, 2014USD ($) | Sep. 30, 2015USD ($) | Sep. 30, 2014USD ($) | Sep. 30, 2013USD ($) | Sep. 30, 2013EUR (€) |
Debt Instrument [Line Items] | |||||||||
Accrued interest paid | $ 171,000,000 | $ 204,000,000 | $ 206,000,000 | ||||||
Loss on extinguishment of debt | $ (141,000,000) | (141,000,000) | (85,000,000) | ||||||
Prepaid term loans | $ 13,000,000 | $ 10,000,000 | 110,000,000 | ||||||
6.00% Senior Secured Notes due 2021 | |||||||||
Debt Instrument [Line Items] | |||||||||
Interest rate | 6.00% | ||||||||
6.25% Senior Secured Notes | |||||||||
Debt Instrument [Line Items] | |||||||||
Interest rate | 6.25% | ||||||||
Term Loan Facility due 2020 | |||||||||
Debt Instrument [Line Items] | |||||||||
Prepaid term loans | $ 102,500,000 | ||||||||
2012 Debt Refinancing | |||||||||
Debt Instrument [Line Items] | |||||||||
Loss on extinguishment of debt | (83,000,000) | ||||||||
2012 Debt Refinancing | Refinancing Transaction | |||||||||
Debt Instrument [Line Items] | |||||||||
Redemption payment | $ 1,377,000,000 | ||||||||
Repayments of secured debt outstanding | 1,250,000,000 | ||||||||
Tender/Call premium on redemption of debt | 93,000,000 | ||||||||
Secured Notes consent fees | 34,000,000 | ||||||||
Accrued interest paid | 45,000,000 | ||||||||
2012 Debt Refinancing | 6.00% Senior Secured Notes due 2021 | |||||||||
Debt Instrument [Line Items] | |||||||||
Face or principal amount of debt instrument | $ 500,000,000 | ||||||||
Due date of Senior Secured Notes | 2,021 | 2,021 | |||||||
2012 Debt Refinancing | 6.25% Senior Secured Notes | |||||||||
Debt Instrument [Line Items] | |||||||||
Face or principal amount of debt instrument | € | € 175 | ||||||||
Due date of Senior Secured Notes | 2,021 | 2,021 | |||||||
2012 Debt Refinancing | 9.5% Senior Secured Notes | |||||||||
Debt Instrument [Line Items] | |||||||||
Due date of Senior Secured Notes | 2,016 | 2,016 | |||||||
Repayments of debt, cash paid | $ 101,000,000 | ||||||||
Interest rate | 9.50% | ||||||||
Face or principal amount of debt instrument | $ 1,250,000,000 | ||||||||
Debt unamortized premium of Old Secured Notes | 55,000,000 | ||||||||
Unamortized debt issuance costs | 11,000,000 | ||||||||
2012 Debt Refinancing | Term Loan Facility | |||||||||
Debt Instrument [Line Items] | |||||||||
Issuance of term loan and credit facility | 600,000,000 | ||||||||
2012 Debt Refinancing | Revolving Credit Facility | |||||||||
Debt Instrument [Line Items] | |||||||||
Issuance of term loan and credit facility | 150,000,000 | ||||||||
Retired Revolving Credit Facility | $ 60,000,000 | ||||||||
Incremental Term Loan Facility | |||||||||
Debt Instrument [Line Items] | |||||||||
Face or principal amount of debt instrument | $ 820,000,000 | ||||||||
Incremental draw down of Term Loan Facility | $ 820,000,000 | ||||||||
Senior Term Loan Facility due 2020 | |||||||||
Debt Instrument [Line Items] | |||||||||
Face or principal amount of debt instrument | 1,310,000,000 | ||||||||
Debt Redemption | |||||||||
Debt Instrument [Line Items] | |||||||||
Loss on extinguishment of debt | (2,000,000) | ||||||||
Debt Redemption | 6.00% Senior Secured Notes due 2021 | |||||||||
Debt Instrument [Line Items] | |||||||||
Repayments of secured debt outstanding | $ 50,000,000 | ||||||||
Debt Redemption | 6.25% Senior Secured Notes | |||||||||
Debt Instrument [Line Items] | |||||||||
Repayments of secured debt outstanding | € | € 17.5 | ||||||||
Debt Redemption | Senior Secured Notes due 2021 | |||||||||
Debt Instrument [Line Items] | |||||||||
Percentage of senior secured notes redeemed | 10.00% | 10.00% |
Debt - 2014 Debt Refinancing -
Debt - 2014 Debt Refinancing - Additional Information (Detail) - USD ($) $ in Millions | Apr. 09, 2014 | Jun. 30, 2014 | Sep. 30, 2015 | Sep. 30, 2014 | Sep. 30, 2013 |
Debt Instrument [Line Items] | |||||
Accrued interest paid | $ 171 | $ 204 | $ 206 | ||
Loss on extinguishment of debt | $ (141) | (141) | $ (85) | ||
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 | 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 due 2022 | |||||
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) | 12 Months Ended |
Sep. 30, 2015 | |
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 Revolving Borrower’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% |
Additional Interest rate on other overdue amounts | 2.00% |
Revolving Credit Facility | Federal Funds Effective Swap Rate | |
Debt Instrument [Line Items] | |
Debt instrument, marginal interest rate | 0.50% |
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 Term Loan Borrower’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% |
Additional Interest rate on other overdue amounts | 2.00% |
Senior Term Loan Facility due 2020 | 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 | 12 Months Ended | |||||||||
Sep. 30, 2015 | Jun. 30, 2015 | Mar. 31, 2015 | Dec. 31, 2014 | Sep. 30, 2014 | Jun. 30, 2014 | Mar. 31, 2014 | Dec. 31, 2013 | Sep. 30, 2015 | Sep. 30, 2014 | Sep. 30, 2013 | |
Debt Instrument [Line Items] | |||||||||||
Annual Amortization of original principal on term loan | 1.00% | ||||||||||
Interest expense, net | $ (45) | $ (45) | $ (45) | $ (46) | $ (46) | $ (48) | $ (54) | $ (55) | $ (181) | $ (203) | $ (203) |
Weighted-average interest rate of total debt | 5.60% | 5.60% | 5.60% | 5.60% | 6.90% | ||||||
Senior Notes | |||||||||||
Debt Instrument [Line Items] | |||||||||||
Scheduled maturities of long-term debt in 2019 | $ 150 | $ 150 | |||||||||
Scheduled to mature | 1,562 | $ 1,562 | |||||||||
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 |
Income Taxes - Schedule of Dome
Income Taxes - Schedule of Domestic and Foreign Pretax (Loss) Income from Continuing Operations (Detail) - USD ($) $ in Millions | 3 Months Ended | 12 Months Ended | |||||||||
Sep. 30, 2015 | Jun. 30, 2015 | Mar. 31, 2015 | Dec. 31, 2014 | Sep. 30, 2014 | Jun. 30, 2014 | Mar. 31, 2014 | Dec. 31, 2013 | Sep. 30, 2015 | Sep. 30, 2014 | Sep. 30, 2013 | |
Income Tax Disclosure [Abstract] | |||||||||||
Domestic | $ (18) | $ (153) | $ (73) | ||||||||
Foreign | (57) | (176) | (152) | ||||||||
Loss before income taxes | $ (17) | $ (39) | $ 13 | $ (32) | $ (23) | $ (200) | $ (62) | $ (44) | $ (75) | $ (329) | $ (225) |
Income Taxes - Current and Defe
Income Taxes - Current and Deferred Income Taxes (Detail) - USD ($) $ in Millions | 3 Months Ended | 12 Months Ended | ||||||||||
Sep. 30, 2015 | Jun. 30, 2015 | Mar. 31, 2015 | Dec. 31, 2014 | Sep. 30, 2014 | Jun. 30, 2014 | Mar. 31, 2014 | Dec. 31, 2013 | Sep. 30, 2015 | Sep. 30, 2014 | Sep. 30, 2013 | ||
Federal: | ||||||||||||
Deferred | $ 4 | $ (7) | $ (6) | |||||||||
Foreign: | ||||||||||||
Current | [1] | 40 | 35 | 25 | ||||||||
Deferred | (33) | (55) | (54) | |||||||||
U.S. State: | ||||||||||||
Current | 3 | (6) | 13 | |||||||||
Deferred | (1) | 7 | (9) | |||||||||
Total | $ 6 | $ 4 | $ (6) | $ 9 | $ 1 | $ (16) | $ (3) | $ (8) | $ 13 | $ (26) | $ (31) | |
[1] | Includes withholding taxes of $13 million, $11 million and $9 million for the fiscal year ended September 30, 2015, for the fiscal year ended September 30, 2014, and for the fiscal year ended September 30, 2013, respectively. |
Income Taxes - Current and De64
Income Taxes - Current and Deferred Income Taxes (Parenthetical) (Detail) - USD ($) $ in Millions | 12 Months Ended | ||
Sep. 30, 2015 | Sep. 30, 2014 | Sep. 30, 2013 | |
Components Of Deferred Tax Assets And Liabilities [Abstract] | |||
Cash withholding taxes | $ 13 | $ 11 | $ 9 |
Income Taxes - Additional Infor
Income Taxes - Additional Information (Detail) - USD ($) $ in Millions | 12 Months Ended | |
Sep. 30, 2015 | Sep. 30, 2014 | |
Schedule Of Income Taxes [Line Items] | ||
U.S. federal statutory income tax rate | 35.00% | |
Converted expiring foreign tax credits to deductions | $ 20 | |
Reinvested Earnings at foreign subsidiaries | $ 213 | |
Accrued interest and penalties | 3 | 4 |
Uncertain income tax position not recognized | 35 | $ 27 |
Decrease in uncertain tax position | 8 | |
Domestic Tax Authority | ||
Schedule Of Income Taxes [Line Items] | ||
Net operating loss carry forward | $ 662 | |
Operating loss carry forwards, expiration year | 2,024 | |
Foreign Tax Authority | ||
Schedule Of Income Taxes [Line Items] | ||
Foreign tax credit carry forward | $ 158 | |
Tax credit carry forwards, expiration year | 2,016 | |
United Kingdom Tax Authority | ||
Schedule Of Income Taxes [Line Items] | ||
Net operating loss carry forward | $ 165 | |
France Tax Authority | ||
Schedule Of Income Taxes [Line Items] | ||
Net operating loss carry forward | 132 | |
Spain Tax Authority | ||
Schedule Of Income Taxes [Line Items] | ||
Net operating loss carry forward | $ 49 |
Income Taxes - Differences betw
Income Taxes - Differences between U.S. Federal Statutory Income Tax Rate of 35% and Income Taxes Provided (Detail) - USD ($) $ in Millions | 3 Months Ended | 12 Months Ended | |||||||||
Sep. 30, 2015 | Jun. 30, 2015 | Mar. 31, 2015 | Dec. 31, 2014 | Sep. 30, 2014 | Jun. 30, 2014 | Mar. 31, 2014 | Dec. 31, 2013 | Sep. 30, 2015 | Sep. 30, 2014 | Sep. 30, 2013 | |
Income Tax Disclosure [Abstract] | |||||||||||
Taxes on income at the U.S. federal statutory rate | $ (26) | $ (115) | $ (79) | ||||||||
U.S. state and local taxes | 2 | 1 | 4 | ||||||||
Foreign income taxed at different rates, including withholding taxes | 11 | (15) | 15 | ||||||||
Increase in valuation allowance | 34 | 101 | 36 | ||||||||
Release of valuation allowance | (5) | (3) | (1) | ||||||||
Change in tax rates | (2) | 1 | (20) | ||||||||
Nondeductible transaction costs | 13 | ||||||||||
Other | (1) | 4 | 1 | ||||||||
Total | $ 6 | $ 4 | $ (6) | $ 9 | $ 1 | $ (16) | $ (3) | $ (8) | $ 13 | $ (26) | $ (31) |
Income Taxes - Significant Comp
Income Taxes - Significant Components of Company's Net Deferred Tax Assets/(Liabilities) (Detail) - USD ($) $ in Millions | Sep. 30, 2015 | Sep. 30, 2014 |
Deferred tax assets: | ||
Allowances and reserves | $ 40 | $ 43 |
Employee benefits and compensation | 47 | 43 |
Other accruals | 76 | 72 |
Tax attribute carry forwards | 552 | 619 |
Other | 2 | 3 |
Total deferred tax assets | 717 | 780 |
Valuation allowance | (344) | (394) |
Net deferred tax assets | 373 | 386 |
Deferred tax liabilities: | ||
Depreciation, amortization and artist advances | (23) | (9) |
Intangible assets | (650) | (714) |
Total deferred tax liabilities | (673) | (723) |
Net deferred tax liabilities | $ (300) | $ (337) |
Income Taxes - Reconciliation o
Income Taxes - Reconciliation of Unrecognized Tax Benefits Including Interest and Penalties (Detail) - USD ($) $ in Millions | 12 Months Ended | ||
Sep. 30, 2015 | Sep. 30, 2014 | Sep. 30, 2013 | |
Income Tax Disclosure [Abstract] | |||
Beginning Balance | $ 27 | $ 30 | $ 14 |
Additions for current year tax positions | 8 | 10 | 5 |
Additions for prior year tax positions | 9 | 1 | 11 |
Subtractions for prior year tax positions | (9) | (14) | |
Ending Balance | $ 35 | $ 27 | $ 30 |
Employee Benefit Plans - Additi
Employee Benefit Plans - Additional Information (Detail) - USD ($) $ in Millions | 12 Months Ended | ||
Sep. 30, 2015 | Sep. 30, 2014 | Sep. 30, 2013 | |
Compensation And Retirement Disclosure [Abstract] | |||
Employee benefit plan obligation | $ 69 | $ 75 | |
Aggregate pension liability recorded in balance sheet | 45 | 50 | |
Pension expense | 4 | 4 | $ 4 |
Employers contribution plan expense | $ 4 | $ 5 | $ 4 |
Restructuring - Additional Info
Restructuring - Additional Information (Detail) - USD ($) $ in Millions | 12 Months Ended | |
Sep. 30, 2015 | Sep. 30, 2014 | |
Restructuring Cost And Reserve [Line Items] | ||
Restructuring costs | $ 2 | $ 50 |
Cash payments | 13 | 47 |
Employee-Related Costs | ||
Restructuring Cost And Reserve [Line Items] | ||
Restructuring costs | 45 | |
Cash payments | 10 | 43 |
Real Estate Costs | ||
Restructuring Cost And Reserve [Line Items] | ||
Restructuring costs | 2 | 4 |
Cash payments | 3 | 3 |
Other Costs | ||
Restructuring Cost And Reserve [Line Items] | ||
Restructuring costs | 1 | |
Cash payments | 1 | |
Restructuring Plan | ||
Restructuring Cost And Reserve [Line Items] | ||
Restructuring costs related to close of acquisition | 74 | |
Restructuring costs | 2 | 50 |
Cash payments | 72 | |
Restructuring Plan | Employee-Related Costs | ||
Restructuring Cost And Reserve [Line Items] | ||
Restructuring costs related to close of acquisition | 67 | |
Restructuring costs | 45 | |
Restructuring Plan | Real Estate Costs | ||
Restructuring Cost And Reserve [Line Items] | ||
Restructuring costs related to close of acquisition | 6 | |
Restructuring costs | 2 | 4 |
Restructuring Plan | Other Costs | ||
Restructuring Cost And Reserve [Line Items] | ||
Restructuring costs related to close of acquisition | $ 1 | |
Restructuring costs | $ 1 |
Restructuring - Summary of Rest
Restructuring - Summary of Restructuring Activity (Detail) - USD ($) $ in Millions | 12 Months Ended | |
Sep. 30, 2015 | Sep. 30, 2014 | |
Restructuring Cost And Reserve [Line Items] | ||
Beginning balance | $ 13 | $ 10 |
Restructuring costs | 2 | 50 |
Cash payments | (13) | (47) |
Ending balance | 2 | 13 |
Employee-Related Costs | ||
Restructuring Cost And Reserve [Line Items] | ||
Beginning balance | 12 | 10 |
Restructuring costs | 45 | |
Cash payments | (10) | (43) |
Ending balance | 2 | 12 |
Real Estate Costs | ||
Restructuring Cost And Reserve [Line Items] | ||
Beginning balance | 1 | |
Restructuring costs | 2 | 4 |
Cash payments | $ (3) | (3) |
Ending balance | 1 | |
Other Costs | ||
Restructuring Cost And Reserve [Line Items] | ||
Restructuring costs | 1 | |
Cash payments | $ (1) |
Restructuring - Summary of Char
Restructuring - Summary of Charges in Consolidated Statement of Operations (Detail) - USD ($) $ in Millions | 12 Months Ended | |
Sep. 30, 2015 | Sep. 30, 2014 | |
Restructuring Cost And Reserve [Line Items] | ||
Total restructuring expense | $ 2 | $ 50 |
Recorded Music | ||
Restructuring Cost And Reserve [Line Items] | ||
Total restructuring expense | 2 | 50 |
Recorded Music | Selling, General and Administrative Expenses | ||
Restructuring Cost And Reserve [Line Items] | ||
Total restructuring expense | $ 2 | $ 50 |
Share-Based Compensation Plan73
Share-Based Compensation Plans - Additional Information (Detail) $ / shares in Units, $ in Millions | 12 Months Ended | ||
Sep. 30, 2015USD ($)Installments$ / sharesshares | Sep. 30, 2014USD ($)$ / shares | Sep. 30, 2013USD ($)$ / shares | |
Share Based Compensation Arrangement By Share Based Payment Award [Line Items] | |||
Shares held in employee stock option plan, allocated | 82.1918 | ||
Shares issued and outstanding to LLC | 55 | ||
Deferred equity unit share | 0.0001 | ||
Weighted-average grant date intrinsic value of share awards | $ / shares | $ 107.13 | $ 107.13 | $ 107.13 |
Non-cash compensation expense | $ | $ 3 | $ 8 | $ 19 |
Unrecognized compensation costs | $ | $ 7 | 12 | 20 |
Total compensation of unvested awards expected to be recognized, weighted average period | 2 years | ||
Employees | |||
Share Based Compensation Arrangement By Share Based Payment Award [Line Items] | |||
Non-cash compensation expense | $ | $ 1 | 5 | 12 |
Non-Employees | |||
Share Based Compensation Arrangement By Share Based Payment Award [Line Items] | |||
Non-cash compensation expense | $ | $ 2 | $ 3 | $ 7 |
Deferred Equity Units, Minimum | |||
Share Based Compensation Arrangement By Share Based Payment Award [Line Items] | |||
Share awards vesting period | 1 year | ||
Deferred Equity Units, Maximum | |||
Share Based Compensation Arrangement By Share Based Payment Award [Line Items] | |||
Share awards vesting period | 7 years | ||
Matching Equity Units Vesting Years | |||
Share Based Compensation Arrangement By Share Based Payment Award [Line Items] | |||
Share awards vesting period | 2 years | ||
Deferred Equity Units | |||
Share Based Compensation Arrangement By Share Based Payment Award [Line Items] | |||
Shares held in employee stock option plan, allocated | 41.0959 | ||
Number of installments | Installments | 3 | ||
Fair value of deferred equity units | $ / shares | $ 135 | $ 132.92 | $ 134.62 |
Matching Equity Units | |||
Share Based Compensation Arrangement By Share Based Payment Award [Line Items] | |||
Shares held in employee stock option plan, allocated | 41.0959 |
Share-Based Compensation Plan74
Share-Based Compensation Plans - Summary of Company's Share Awards (Detail) - $ / shares | 12 Months Ended | ||
Sep. 30, 2015 | Sep. 30, 2014 | Sep. 30, 2013 | |
Share Based Compensation Arrangement By Share Based Payment Award [Line Items] | |||
Weighted-average grant date intrinsic value of share awards | $ 107.13 | $ 107.13 | $ 107.13 |
Deferred Equity Units | |||
Share Based Compensation Arrangement By Share Based Payment Award [Line Items] | |||
Unvested units | 19 | 24 | |
Units, Granted | 3 | 2 | |
Units, Vested | (2) | (5) | |
Units, Forfeited | (2) | (2) | |
Unvested units | 18 | 19 | 24 |
Unvested units, Fair Value | $ 132.92 | $ 134.62 | |
Fair Value, Granted | 132.92 | 134.62 | |
Fair Value, Vested | 132.92 | 134.62 | |
Fair Value, Forfeited | 132.92 | 134.62 | |
Unvested units, Fair Value | 135 | 132.92 | $ 134.62 |
Unvested units, Weighted-Average Grant-Date Intrinsic Value | 107.13 | 107.13 | |
Weighted-Average Grant-Date Intrinsic Value, Granted | 107.13 | 107.13 | |
Weighted-Average Grant-Date Intrinsic Value, Vested | 107.13 | 107.13 | |
Weighted-Average Grant-Date Intrinsic Value, Forfeited | 107.13 | 107.13 | |
Unvested units, Weighted-Average Grant-Date Intrinsic Value | $ 107.13 | $ 107.13 | $ 107.13 |
Matching Equity Units | |||
Share Based Compensation Arrangement By Share Based Payment Award [Line Items] | |||
Unvested units | 24 | 24 | |
Units, Granted | 3 | 2 | |
Units, Forfeited | (2) | (2) | |
Unvested units | 25 | 24 | 24 |
Unvested units, Intrinsic Value | $ 25.79 | $ 27.49 | |
Vested | 25.79 | 27.49 | |
Forfeited | 25.79 | 27.49 | |
Unvested units, Intrinsic Value | 27.87 | 25.79 | $ 27.49 |
Unvested units, Weighted-Average Grant-Date Intrinsic Value | 0 | 0 | |
Unvested units, Weighted-Average Grant-Date Intrinsic Value | $ 0 | $ 0 | $ 0 |
Related Party Transactions - Ad
Related Party Transactions - Additional Information (Detail) | Aug. 13, 2015USD ($) | Jan. 01, 2015GBP (£) | Sep. 27, 2011GBP (£) | Sep. 30, 2015USD ($) | Sep. 30, 2014USD ($) | Sep. 30, 2013USD ($) |
Related Party Transaction [Line Items] | ||||||
Lease arrangement with Related Party | $ 66,000,000 | $ 82,000,000 | $ 61,000,000 | |||
Gain on sale of investments | 2,000,000 | |||||
Parlophone Label Group | ||||||
Related Party Transaction [Line Items] | ||||||
Transaction Fee Under Management Agreement In Relation To Acquisition | 11,000,000 | |||||
Access Industries | ||||||
Related Party Transaction [Line Items] | ||||||
Management fee minimum | 9,000,000 | |||||
Management fees and reimbursed expenses | 9,000,000 | 8,000,000 | 19,000,000 | |||
Expenses reimbursed | $ 2,000,000 | 2,000,000 | 2,000,000 | |||
License fee | £ | £ 15,839 | |||||
License agreement termination period | Oct. 13, 2014 | |||||
Gain on sale of investments | 2,000,000 | |||||
Access Industries | Parlophone Label Group | ||||||
Related Party Transaction [Line Items] | ||||||
Transaction Fee Under Management Agreement In Relation To Acquisition | 11,000,000 | |||||
Warner and Chappell Music Limited and WMG Acquisition Limited | Scenario, Forecast | ||||||
Related Party Transaction [Line Items] | ||||||
Lease arrangement with Related Party | £ | £ 3,460,250 | |||||
Warner Music Inc | ||||||
Related Party Transaction [Line Items] | ||||||
License fee | $ 2,775 | |||||
IT support fee | $ 1,000 | |||||
Deezer | ||||||
Related Party Transaction [Line Items] | ||||||
Related party revenue | $ 25,000,000 | 21,000,000 | ||||
Southside | ||||||
Related Party Transaction [Line Items] | ||||||
Recorded liability related to acquisition | 800,000 | |||||
Payment to related parties | 800,000 | |||||
Southside | Earn Out Payment | ||||||
Related Party Transaction [Line Items] | ||||||
Recorded liability related to acquisition | $ 0 | $ 0 | $ 6,000,000 | |||
Achievement time period after acquisition | 5 years | |||||
WEA Corp | ||||||
Related Party Transaction [Line Items] | ||||||
Related party revenue | $ 4,000,000 |
Commitments and Contingencies -
Commitments and Contingencies - Additional Information (Detail) - USD ($) $ in Millions | 12 Months Ended | ||
Sep. 30, 2015 | Sep. 30, 2014 | Sep. 30, 2013 | |
Commitments And Contingencies Disclosure [Abstract] | |||
Net lease and rental expense | $ 66 | $ 82 | $ 61 |
Firm’s expected commitments | 318 | 190 | |
Other off-balance sheet commitments to investees | $ 5 | $ 5 |
Commitments and Contingencies77
Commitments and Contingencies - Future Minimum Payments Under Non-Cancelable Operating Leases (Net of Sublease Income) (Detail) $ in Millions | Sep. 30, 2015USD ($) |
Commitments And Contingencies Disclosure [Abstract] | |
Operating Leases in 2016 | $ 57 |
Operating Leases in 2017 | 49 |
Operating Leases in 2018 | 42 |
Operating Leases in 2019 | 40 |
Operating Leases in 2020 | 34 |
Operating Leases, Thereafter | 210 |
Operating Leases, Total | $ 432 |
Derivative Financial Instrume78
Derivative Financial Instruments - Additional Information (Detail) - USD ($) | Sep. 30, 2015 | Sep. 30, 2014 |
Derivatives Fair Value [Line Items] | ||
Outstanding hedge contracts | $ 0 | |
Deferred gains or losses in comprehensive loss related to foreign exchange hedging | $ 0 | |
Sale | ||
Derivatives Fair Value [Line Items] | ||
Outstanding hedge contracts | $ 7,000,000 | |
Maximum | ||
Derivatives Fair Value [Line Items] | ||
Deferred gains or losses in comprehensive loss related to foreign exchange hedging | $ 1,000,000 |
Segment Information - Additiona
Segment Information - Additional Information (Detail) - Operations | 12 Months Ended | ||
Sep. 30, 2015 | Sep. 30, 2014 | Sep. 30, 2013 | |
Segment Reporting Information [Line Items] | |||
Number of fundamental operations | 2 | ||
Sales Revenue, Net | Customer Concentration | |||
Segment Reporting Information [Line Items] | |||
Customer Concentration | 13.00% | 16.00% | 18.00% |
Segment Information - Schedule
Segment Information - Schedule of Segment Information (Detail) - USD ($) $ in Millions | 3 Months Ended | 12 Months Ended | |||||||||
Sep. 30, 2015 | Jun. 30, 2015 | Mar. 31, 2015 | Dec. 31, 2014 | Sep. 30, 2014 | Jun. 30, 2014 | Mar. 31, 2014 | Dec. 31, 2013 | Sep. 30, 2015 | Sep. 30, 2014 | Sep. 30, 2013 | |
Segment Reporting Information [Line Items] | |||||||||||
Revenues | $ 750 | $ 710 | $ 677 | $ 829 | $ 771 | $ 788 | $ 653 | $ 815 | $ 2,966 | $ 3,027 | $ 2,871 |
OIBDA | 436 | 340 | 333 | ||||||||
Depreciation of property, plant and equipment | (12) | (14) | (14) | (14) | (16) | (14) | (13) | (12) | (54) | (55) | (51) |
Amortization of intangible assets | (64) | (63) | (63) | (65) | (67) | (67) | (66) | (66) | (255) | (266) | (207) |
Operating income | 37 | $ 23 | $ 44 | $ 23 | 24 | $ (15) | $ (5) | $ 15 | 127 | 19 | 75 |
Total assets | 5,671 | 5,954 | 5,671 | 5,954 | |||||||
Capital expenditures | 63 | 76 | 34 | ||||||||
Operating Segments | Recorded Music | |||||||||||
Segment Reporting Information [Line Items] | |||||||||||
Revenues | 2,501 | 2,526 | 2,389 | ||||||||
OIBDA | 379 | 267 | 270 | ||||||||
Depreciation of property, plant and equipment | (36) | (35) | (32) | ||||||||
Amortization of intangible assets | (192) | (201) | (146) | ||||||||
Operating income | 151 | 31 | 92 | ||||||||
Total assets | 2,868 | 3,273 | 2,868 | 3,273 | |||||||
Capital expenditures | 19 | 27 | 12 | ||||||||
Operating Segments | Music Publishing | |||||||||||
Segment Reporting Information [Line Items] | |||||||||||
Revenues | 482 | 517 | 503 | ||||||||
OIBDA | 146 | 166 | 148 | ||||||||
Depreciation of property, plant and equipment | (6) | (7) | (6) | ||||||||
Amortization of intangible assets | (63) | (65) | (61) | ||||||||
Operating income | 77 | 94 | 81 | ||||||||
Total assets | 2,408 | 2,393 | 2,408 | 2,393 | |||||||
Capital expenditures | 7 | 8 | 3 | ||||||||
Corporate Expenses and Eliminations | |||||||||||
Segment Reporting Information [Line Items] | |||||||||||
Revenues | (17) | (16) | (21) | ||||||||
OIBDA | (89) | (93) | (85) | ||||||||
Depreciation of property, plant and equipment | (12) | (13) | (13) | ||||||||
Operating income | (101) | (106) | (98) | ||||||||
Total assets | $ 395 | $ 288 | 395 | 288 | |||||||
Capital expenditures | $ 37 | $ 41 | $ 19 |
Segment Information - Long-Live
Segment Information - Long-Lived Assets and Revenue by Geographical Areas (Detail) - USD ($) $ in Millions | 3 Months Ended | 12 Months Ended | |||||||||
Sep. 30, 2015 | Jun. 30, 2015 | Mar. 31, 2015 | Dec. 31, 2014 | Sep. 30, 2014 | Jun. 30, 2014 | Mar. 31, 2014 | Dec. 31, 2013 | Sep. 30, 2015 | Sep. 30, 2014 | Sep. 30, 2013 | |
Segment Reporting Information [Line Items] | |||||||||||
Revenues | $ 750 | $ 710 | $ 677 | $ 829 | $ 771 | $ 788 | $ 653 | $ 815 | $ 2,966 | $ 3,027 | $ 2,871 |
Long-lived Assets | 220 | 227 | 220 | 227 | |||||||
United States | |||||||||||
Segment Reporting Information [Line Items] | |||||||||||
Revenues | 1,171 | 1,141 | 1,161 | ||||||||
Long-lived Assets | 149 | 148 | 149 | 148 | |||||||
United Kingdom | |||||||||||
Segment Reporting Information [Line Items] | |||||||||||
Revenues | 477 | 467 | 383 | ||||||||
Long-lived Assets | 30 | 30 | 30 | 30 | |||||||
All Other Territories | |||||||||||
Segment Reporting Information [Line Items] | |||||||||||
Revenues | 1,318 | 1,419 | $ 1,327 | ||||||||
Long-lived Assets | $ 41 | $ 49 | $ 41 | $ 49 |
Additional Financial Informat82
Additional Financial Information - Additional Information (Detail) - USD ($) $ in Millions | 12 Months Ended | ||
Sep. 30, 2015 | Sep. 30, 2014 | Sep. 30, 2013 | |
Supplemental Cash Flow Information [Abstract] | |||
Accrued interest paid | $ 171 | $ 204 | $ 206 |
Income taxes paid net of refunds | $ 25 | $ 22 | $ 26 |
Fair Value Measurements - Sched
Fair Value Measurements - Schedule of Fair Value of Financial Instruments (Detail) - USD ($) $ in Millions | Sep. 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 | 12 Months Ended |
Sep. 30, 2015USD ($) | |
Fair Value Liabilities Measured On Recurring Basis Unobservable Input Reconciliation [Line Items] | |
Balance at September 30, 2014 | $ (3) |
Payments | 2 |
Balance at September 30, 2015 | $ (1) |
Fair Value Measurements - Addit
Fair Value Measurements - Additional Information (Detail) - USD ($) $ in Millions | Sep. 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 | $ 2,976 | $ 3,026 |
Quarterly Financial Informati86
Quarterly Financial Information - Quarterly Information (Detail) - USD ($) $ in Millions | 3 Months Ended | 12 Months Ended | ||||||||||||||||||||
Sep. 30, 2015 | Jun. 30, 2015 | Mar. 31, 2015 | Dec. 31, 2014 | Sep. 30, 2014 | Jun. 30, 2014 | Mar. 31, 2014 | Dec. 31, 2013 | Sep. 30, 2015 | Sep. 30, 2014 | Sep. 30, 2013 | ||||||||||||
Quarterly Financial Information Disclosure [Abstract] | ||||||||||||||||||||||
Revenues | $ 750 | $ 710 | $ 677 | $ 829 | $ 771 | $ 788 | $ 653 | $ 815 | $ 2,966 | $ 3,027 | $ 2,871 | |||||||||||
Costs and expenses: | ||||||||||||||||||||||
Cost of revenue | (375) | (373) | (318) | (445) | (393) | (417) | (319) | (441) | (1,511) | (1,570) | (1,492) | |||||||||||
Selling, general and administrative expenses | (274) | [1] | (251) | [1] | (252) | [1] | (296) | [1] | (287) | [2] | (319) | [2] | (273) | [2] | (293) | [2] | (1,073) | [3] | (1,172) | [3] | (1,097) | [3] |
Amortization expense | (64) | (63) | (63) | (65) | (67) | (67) | (66) | (66) | (255) | (266) | (207) | |||||||||||
Total costs and expenses | (713) | (687) | (633) | (806) | (747) | (803) | (658) | (800) | (2,839) | (3,008) | (2,796) | |||||||||||
Operating income | 37 | 23 | 44 | 23 | 24 | (15) | (5) | 15 | 127 | 19 | 75 | |||||||||||
Loss on extinguishment of debt | (141) | (141) | (85) | |||||||||||||||||||
Interest expense, net | (45) | (45) | (45) | (46) | (46) | (48) | (54) | (55) | (181) | (203) | (203) | |||||||||||
Other income (expense) | (9) | (17) | 14 | (9) | (1) | 4 | (3) | (4) | (21) | (4) | (12) | |||||||||||
Loss before income taxes | (17) | (39) | 13 | (32) | (23) | (200) | (62) | (44) | (75) | (329) | (225) | |||||||||||
Income tax (expense) benefit | (6) | (4) | 6 | (9) | (1) | 16 | 3 | 8 | (13) | 26 | 31 | |||||||||||
Net (loss) income | (23) | (43) | 19 | (41) | (24) | (184) | (59) | (36) | (88) | (303) | (194) | |||||||||||
Less: Income attributable to noncontrolling interest | (1) | (1) | (1) | (2) | (1) | (1) | (1) | (3) | (5) | (4) | ||||||||||||
Net loss attributable to Warner Music Group Corp. | $ (23) | $ (44) | $ 18 | $ (42) | $ (26) | $ (185) | $ (60) | $ (37) | $ (91) | $ (308) | $ (198) | |||||||||||
[1] | (a) Includes depreciation expense of: $(12) $(14) $(14) $(14) | |||||||||||||||||||||
[2] | (a) Includes depreciation expense of: $(16) $(14) $(13) $(12) | |||||||||||||||||||||
[3] | (a) Includes depreciation expense of: $(54) $(55) $(51) |
Quarterly Financial Informati87
Quarterly Financial Information - Quarterly Information (Parenthetical) (Detail) - USD ($) $ in Millions | 3 Months Ended | 12 Months Ended | |||||||||
Sep. 30, 2015 | Jun. 30, 2015 | Mar. 31, 2015 | Dec. 31, 2014 | Sep. 30, 2014 | Jun. 30, 2014 | Mar. 31, 2014 | Dec. 31, 2013 | Sep. 30, 2015 | Sep. 30, 2014 | Sep. 30, 2013 | |
Quarterly Financial Information Disclosure [Abstract] | |||||||||||
Depreciation expense | $ (12) | $ (14) | $ (14) | $ (14) | $ (16) | $ (14) | $ (13) | $ (12) | $ (54) | $ (55) | $ (51) |
Guarantor and Non-Guarantor S88
Guarantor and Non-Guarantor Subsidiaries Financial Information - Additional Information (Detail) | 12 Months Ended | ||
Sep. 30, 2015 | Sep. 30, 2014 | Sep. 30, 2013 | |
13.75% Notes due 2019 | Holdings Company | |||
Condensed Financial Statements Captions [Line Items] | |||
Interest rate | 13.75% | 13.75% | |
Due date of Senior Secured Notes | 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% |
5.625% Senior Secured Notes due 2022 | Acquisition Corp. | |||
Condensed Financial Statements Captions [Line Items] | |||
Interest rate | 5.625% | ||
Due date of Senior Secured Notes | 2,022 | ||
6.00% Senior Secured Notes due 2021 | |||
Condensed Financial Statements Captions [Line Items] | |||
Interest rate | 6.00% | 6.00% | 6.00% |
6.00% Senior Secured Notes due 2021 | Acquisition Corp. | |||
Condensed Financial Statements Captions [Line Items] | |||
Interest rate | 6.00% | 6.00% | |
Due date of Senior Secured Notes | 2,021 | 2,021 | |
6.25% Senior Secured Notes due 2021 | |||
Condensed Financial Statements Captions [Line Items] | |||
Interest rate | 6.25% | 6.25% | 6.25% |
6.25% Senior Secured Notes due 2021 | Acquisition Corp. | |||
Condensed Financial Statements Captions [Line Items] | |||
Interest rate | 6.25% | 6.25% | |
Due date of Senior Secured Notes | 2,021 | 2,021 | |
6.75% Senior Notes due 2022 | Acquisition Corp. | |||
Condensed Financial Statements Captions [Line Items] | |||
Interest rate | 6.75% | ||
Due date of Senior Secured Notes | 2,022 |
Guarantor and Non-Guarantor S89
Guarantor and Non-Guarantor Subsidiaries Financial Information - Consolidating Balance Sheet (Detail) - USD ($) $ in Millions | Sep. 30, 2015 | Sep. 30, 2014 | Sep. 30, 2013 | Sep. 30, 2012 |
Current assets: | ||||
Cash and equivalents | $ 246 | $ 157 | $ 155 | $ 302 |
Accounts receivable, net | 349 | 383 | ||
Inventories | 42 | 39 | ||
Royalty advances expected to be recouped within one year | 130 | 102 | ||
Deferred tax assets | 52 | 46 | ||
Prepaid and other current assets | 60 | 55 | ||
Total current assets | 879 | 782 | ||
Royalty advances expected to be recouped after one year | 195 | 190 | ||
Property, plant and equipment, net | 220 | 227 | ||
Goodwill | 1,632 | 1,661 | 1,668 | |
Intangible assets subject to amortization, net | 2,514 | 2,884 | ||
Intangible assets not subject to amortization | 119 | 120 | ||
Other assets | 112 | 90 | ||
Total assets | 5,671 | 5,954 | ||
Current liabilities: | ||||
Accounts payable | 173 | 215 | ||
Accrued royalties | 1,087 | 1,132 | ||
Accrued liabilities | 296 | 243 | ||
Accrued interest | 58 | 60 | ||
Deferred revenue | 206 | 219 | ||
Current portion of long-term debt | 13 | 13 | ||
Other current liabilities | 24 | 3 | ||
Total current liabilities | 1,857 | 1,885 | ||
Long-term debt | 2,981 | 3,017 | ||
Deferred tax liabilities, net | 352 | 383 | ||
Other noncurrent liabilities | 242 | 279 | ||
Total liabilities | 5,432 | 5,564 | ||
Total Warner Music Group Corp. equity (deficit) | 221 | 371 | ||
Noncontrolling interest | 18 | 19 | ||
Total equity | 239 | 390 | 743 | 944 |
Total liabilities and equity | 5,671 | 5,954 | ||
Eliminations | ||||
Current assets: | ||||
Investments in and advances to (from) consolidated subsidiaries | (3,552) | (3,673) | ||
Total assets | (3,552) | (3,673) | ||
Current liabilities: | ||||
Other current liabilities | (1) | |||
Total current liabilities | (1) | |||
Other noncurrent liabilities | 3 | |||
Total liabilities | 2 | |||
Total Warner Music Group Corp. equity (deficit) | (3,554) | (3,673) | ||
Total equity | (3,554) | (3,673) | ||
Total liabilities and equity | (3,552) | (3,673) | ||
Eliminations | ||||
Current assets: | ||||
Investments in and advances to (from) consolidated subsidiaries | (597) | (896) | ||
Total assets | (597) | (896) | ||
Current liabilities: | ||||
Total Warner Music Group Corp. equity (deficit) | (597) | (896) | ||
Total equity | (597) | (896) | ||
Total liabilities and equity | (597) | (896) | ||
WMG Acquisition Corp. (issuer) | Reportable Legal Entities | ||||
Current assets: | ||||
Cash and equivalents | 44 | |||
Prepaid and other current assets | 5 | 5 | ||
Total current assets | 5 | 5 | ||
Due (to) from parent companies | 863 | 924 | ||
Investments in and advances to (from) consolidated subsidiaries | 2,365 | 2,531 | ||
Other assets | 39 | 46 | ||
Total assets | 3,272 | 3,506 | ||
Current liabilities: | ||||
Accounts payable | 38 | |||
Accrued liabilities | 1 | |||
Accrued interest | 48 | 50 | ||
Current portion of long-term debt | 13 | 13 | ||
Total current liabilities | 62 | 101 | ||
Long-term debt | 2,831 | 2,867 | ||
Other noncurrent liabilities | 3 | 13 | ||
Total liabilities | 2,896 | 2,981 | ||
Total Warner Music Group Corp. equity (deficit) | 376 | 525 | ||
Total equity | 376 | 525 | ||
Total liabilities and equity | 3,272 | 3,506 | ||
Guarantor Subsidiaries | Reportable Legal Entities | ||||
Current assets: | ||||
Cash and equivalents | 73 | 26 | 16 | 105 |
Accounts receivable, net | 170 | 174 | ||
Inventories | 15 | 13 | ||
Royalty advances expected to be recouped within one year | 80 | 62 | ||
Deferred tax assets | 32 | 21 | ||
Prepaid and other current assets | 9 | 10 | ||
Total current assets | 379 | 306 | ||
Due (to) from parent companies | (174) | (242) | ||
Investments in and advances to (from) consolidated subsidiaries | 1,187 | 1,142 | ||
Royalty advances expected to be recouped after one year | 120 | 115 | ||
Property, plant and equipment, net | 145 | 143 | ||
Goodwill | 1,379 | 1,379 | ||
Intangible assets subject to amortization, net | 1,271 | 1,372 | ||
Intangible assets not subject to amortization | 71 | 75 | ||
Other assets | 53 | 10 | ||
Total assets | 4,431 | 4,300 | ||
Current liabilities: | ||||
Accounts payable | 79 | 91 | ||
Accrued royalties | 513 | 531 | ||
Accrued liabilities | 269 | 64 | ||
Deferred revenue | 140 | 167 | ||
Other current liabilities | 7 | 1 | ||
Total current liabilities | 1,008 | 854 | ||
Deferred tax liabilities, net | 142 | 128 | ||
Other noncurrent liabilities | 131 | 124 | ||
Total liabilities | 1,281 | 1,106 | ||
Total Warner Music Group Corp. equity (deficit) | 3,149 | 3,192 | ||
Noncontrolling interest | 1 | 2 | ||
Total equity | 3,150 | 3,194 | ||
Total liabilities and equity | 4,431 | 4,300 | ||
Non-Guarantor Subsidiaries | Reportable Legal Entities | ||||
Current assets: | ||||
Cash and equivalents | 173 | 131 | 139 | 143 |
Accounts receivable, net | 179 | 209 | ||
Inventories | 27 | 26 | ||
Royalty advances expected to be recouped within one year | 50 | 40 | ||
Deferred tax assets | 20 | 25 | ||
Prepaid and other current assets | 46 | 40 | ||
Total current assets | 495 | 471 | ||
Due (to) from parent companies | (689) | (682) | ||
Royalty advances expected to be recouped after one year | 75 | 75 | ||
Property, plant and equipment, net | 75 | 84 | ||
Goodwill | 253 | 282 | ||
Intangible assets subject to amortization, net | 1,243 | 1,512 | ||
Intangible assets not subject to amortization | 48 | 45 | ||
Other assets | 15 | 28 | ||
Total assets | 1,515 | 1,815 | ||
Current liabilities: | ||||
Accounts payable | 94 | 86 | ||
Accrued royalties | 574 | 601 | ||
Accrued liabilities | 26 | 179 | ||
Deferred revenue | 66 | 52 | ||
Other current liabilities | 18 | 2 | ||
Total current liabilities | 778 | 920 | ||
Deferred tax liabilities, net | 210 | 255 | ||
Other noncurrent liabilities | 105 | 142 | ||
Total liabilities | 1,093 | 1,317 | ||
Total Warner Music Group Corp. equity (deficit) | 405 | 481 | ||
Noncontrolling interest | 17 | 17 | ||
Total equity | 422 | 498 | ||
Total liabilities and equity | 1,515 | 1,815 | ||
WMG Acquisition Corp. Consolidated | Reportable Legal Entities | ||||
Current assets: | ||||
Cash and equivalents | 246 | 157 | $ 155 | 292 |
Accounts receivable, net | 349 | 383 | ||
Inventories | 42 | 39 | ||
Royalty advances expected to be recouped within one year | 130 | 102 | ||
Deferred tax assets | 52 | 46 | ||
Prepaid and other current assets | 60 | 55 | ||
Total current assets | 879 | 782 | ||
Royalty advances expected to be recouped after one year | 195 | 190 | ||
Property, plant and equipment, net | 220 | 227 | ||
Goodwill | 1,632 | 1,661 | ||
Intangible assets subject to amortization, net | 2,514 | 2,884 | ||
Intangible assets not subject to amortization | 119 | 120 | ||
Other assets | 107 | 84 | ||
Total assets | 5,666 | 5,948 | ||
Current liabilities: | ||||
Accounts payable | 173 | 215 | ||
Accrued royalties | 1,087 | 1,132 | ||
Accrued liabilities | 296 | 243 | ||
Accrued interest | 48 | 50 | ||
Deferred revenue | 206 | 219 | ||
Current portion of long-term debt | 13 | 13 | ||
Other current liabilities | 24 | 3 | ||
Total current liabilities | 1,847 | 1,875 | ||
Long-term debt | 2,831 | 2,867 | ||
Deferred tax liabilities, net | 352 | 383 | ||
Other noncurrent liabilities | 242 | 279 | ||
Total liabilities | 5,272 | 5,404 | ||
Total Warner Music Group Corp. equity (deficit) | 376 | 525 | ||
Noncontrolling interest | 18 | 19 | ||
Total equity | 394 | 544 | ||
Total liabilities and equity | 5,666 | 5,948 | ||
Holdings Company | Reportable Legal Entities | ||||
Current assets: | ||||
Cash and equivalents | $ 10 | |||
Investments in and advances to (from) consolidated subsidiaries | 376 | 525 | ||
Other assets | 5 | 6 | ||
Total assets | 381 | 531 | ||
Current liabilities: | ||||
Accrued interest | 10 | 10 | ||
Total current liabilities | 10 | 10 | ||
Long-term debt | 150 | 150 | ||
Total liabilities | 160 | 160 | ||
Total Warner Music Group Corp. equity (deficit) | 221 | 371 | ||
Total equity | 221 | 371 | ||
Total liabilities and equity | 381 | 531 | ||
Warner Music Group Corp. | Reportable Legal Entities | ||||
Current assets: | ||||
Investments in and advances to (from) consolidated subsidiaries | 221 | 371 | ||
Total assets | 221 | 371 | ||
Current liabilities: | ||||
Total Warner Music Group Corp. equity (deficit) | 221 | 371 | ||
Total equity | 221 | 371 | ||
Total liabilities and equity | $ 221 | $ 371 |
Guarantor and Non-Guarantor S90
Guarantor and Non-Guarantor Subsidiaries Financial Information - Consolidating Statement of Operations (Detail) - USD ($) $ in Millions | 3 Months Ended | 12 Months Ended | |||||||||
Sep. 30, 2015 | Jun. 30, 2015 | Mar. 31, 2015 | Dec. 31, 2014 | Sep. 30, 2014 | Jun. 30, 2014 | Mar. 31, 2014 | Dec. 31, 2013 | Sep. 30, 2015 | Sep. 30, 2014 | Sep. 30, 2013 | |
Condensed Income Statements Captions [Line Items] | |||||||||||
Revenues | $ 750 | $ 710 | $ 677 | $ 829 | $ 771 | $ 788 | $ 653 | $ 815 | $ 2,966 | $ 3,027 | $ 2,871 |
Costs and expenses: | |||||||||||
Cost of revenue | (375) | (373) | (318) | (445) | (393) | (417) | (319) | (441) | (1,511) | (1,570) | (1,492) |
Selling, general and administrative expenses | (1,073) | (1,172) | (1,097) | ||||||||
Amortization of intangible assets | (64) | (63) | (63) | (65) | (67) | (67) | (66) | (66) | (255) | (266) | (207) |
Total costs and expenses | (713) | (687) | (633) | (806) | (747) | (803) | (658) | (800) | (2,839) | (3,008) | (2,796) |
Operating income | 37 | 23 | 44 | 23 | 24 | (15) | (5) | 15 | 127 | 19 | 75 |
Loss on extinguishment of debt | (141) | (141) | (85) | ||||||||
Interest income (expense), net | (45) | (45) | (45) | (46) | (46) | (48) | (54) | (55) | (181) | (203) | (203) |
Other income (expense), net | (21) | (4) | (12) | ||||||||
Loss before income taxes | (17) | (39) | 13 | (32) | (23) | (200) | (62) | (44) | (75) | (329) | (225) |
Income tax (expense) benefit | (6) | (4) | 6 | (9) | (1) | 16 | 3 | 8 | (13) | 26 | 31 |
Net (loss) income | (23) | (43) | 19 | (41) | (24) | (184) | (59) | (36) | (88) | (303) | (194) |
Less: Income attributable to noncontrolling interest | (1) | (1) | (1) | (2) | (1) | (1) | (1) | (3) | (5) | (4) | |
Net loss attributable to Warner Music Group Corp. | $ (23) | $ (44) | $ 18 | $ (42) | $ (26) | $ (185) | $ (60) | $ (37) | (91) | (308) | (198) |
Eliminations | |||||||||||
Condensed Income Statements Captions [Line Items] | |||||||||||
Revenues | (254) | (275) | (277) | ||||||||
Costs and expenses: | |||||||||||
Cost of revenue | 143 | 158 | 195 | ||||||||
Selling, general and administrative expenses | 110 | 117 | 82 | ||||||||
Total costs and expenses | 253 | 275 | 277 | ||||||||
Operating income | (1) | ||||||||||
Equity gains (losses) from consolidated subsidiaries | 32 | (33) | 50 | ||||||||
Loss before income taxes | 31 | (33) | 50 | ||||||||
Income tax (expense) benefit | 29 | (17) | (34) | ||||||||
Net (loss) income | 60 | (50) | 16 | ||||||||
Net loss attributable to Warner Music Group Corp. | 60 | (50) | 16 | ||||||||
Eliminations | |||||||||||
Costs and expenses: | |||||||||||
Equity gains (losses) from consolidated subsidiaries | 160 | 594 | 374 | ||||||||
Loss before income taxes | 160 | 594 | 374 | ||||||||
Net (loss) income | 160 | 594 | 374 | ||||||||
Net loss attributable to Warner Music Group Corp. | 160 | 594 | 374 | ||||||||
WMG Acquisition Corp. (issuer) | Reportable Legal Entities | |||||||||||
Costs and expenses: | |||||||||||
Selling, general and administrative expenses | 1 | (1) | (1) | ||||||||
Total costs and expenses | 1 | (1) | (1) | ||||||||
Operating income | 1 | (1) | (1) | ||||||||
Loss on extinguishment of debt | (141) | (85) | |||||||||
Interest income (expense), net | (82) | (102) | (154) | ||||||||
Equity gains (losses) from consolidated subsidiaries | 35 | (80) | (10) | ||||||||
Other income (expense), net | (10) | 12 | 43 | ||||||||
Loss before income taxes | (56) | (312) | (207) | ||||||||
Income tax (expense) benefit | (13) | 26 | 31 | ||||||||
Net (loss) income | (69) | (286) | (176) | ||||||||
Net loss attributable to Warner Music Group Corp. | (69) | (286) | (176) | ||||||||
Guarantor Subsidiaries | Reportable Legal Entities | |||||||||||
Condensed Income Statements Captions [Line Items] | |||||||||||
Revenues | 1,632 | 1,498 | 1,637 | ||||||||
Costs and expenses: | |||||||||||
Cost of revenue | (788) | (639) | (782) | ||||||||
Selling, general and administrative expenses | (675) | (633) | (578) | ||||||||
Amortization of intangible assets | (122) | (120) | (118) | ||||||||
Total costs and expenses | (1,585) | (1,392) | (1,478) | ||||||||
Operating income | 47 | 106 | 159 | ||||||||
Interest income (expense), net | 6 | 9 | 6 | ||||||||
Equity gains (losses) from consolidated subsidiaries | (67) | 113 | (40) | ||||||||
Other income (expense), net | 1 | (18) | (29) | ||||||||
Loss before income taxes | (13) | 210 | 96 | ||||||||
Income tax (expense) benefit | (29) | (9) | |||||||||
Net (loss) income | (42) | 201 | 96 | ||||||||
Less: Income attributable to noncontrolling interest | (1) | (1) | (2) | ||||||||
Net loss attributable to Warner Music Group Corp. | (43) | 200 | 94 | ||||||||
Non-Guarantor Subsidiaries | Reportable Legal Entities | |||||||||||
Condensed Income Statements Captions [Line Items] | |||||||||||
Revenues | 1,588 | 1,804 | 1,511 | ||||||||
Costs and expenses: | |||||||||||
Cost of revenue | (866) | (1,089) | (905) | ||||||||
Selling, general and administrative expenses | (509) | (655) | (600) | ||||||||
Amortization of intangible assets | (133) | (146) | (89) | ||||||||
Total costs and expenses | (1,508) | (1,890) | (1,594) | ||||||||
Operating income | 80 | (86) | (83) | ||||||||
Interest income (expense), net | (83) | (88) | (33) | ||||||||
Other income (expense), net | (12) | 2 | (26) | ||||||||
Loss before income taxes | (15) | (172) | (142) | ||||||||
Income tax (expense) benefit | 26 | 34 | |||||||||
Net (loss) income | (15) | (146) | (108) | ||||||||
Less: Income attributable to noncontrolling interest | (2) | (4) | (2) | ||||||||
Net loss attributable to Warner Music Group Corp. | (17) | (150) | (110) | ||||||||
WMG Acquisition Corp. Consolidated | Reportable Legal Entities | |||||||||||
Condensed Income Statements Captions [Line Items] | |||||||||||
Revenues | 2,966 | 3,027 | 2,871 | ||||||||
Costs and expenses: | |||||||||||
Cost of revenue | (1,511) | (1,570) | (1,492) | ||||||||
Selling, general and administrative expenses | (1,073) | (1,172) | (1,097) | ||||||||
Amortization of intangible assets | (255) | (266) | (207) | ||||||||
Total costs and expenses | (2,839) | (3,008) | (2,796) | ||||||||
Operating income | 127 | 19 | 75 | ||||||||
Loss on extinguishment of debt | (141) | (85) | |||||||||
Interest income (expense), net | (159) | (181) | (181) | ||||||||
Other income (expense), net | (21) | (4) | (12) | ||||||||
Loss before income taxes | (53) | (307) | (203) | ||||||||
Income tax (expense) benefit | (13) | 26 | 31 | ||||||||
Net (loss) income | (66) | (281) | (172) | ||||||||
Less: Income attributable to noncontrolling interest | (3) | (5) | (4) | ||||||||
Net loss attributable to Warner Music Group Corp. | (69) | (286) | (176) | ||||||||
Holdings Company | Reportable Legal Entities | |||||||||||
Costs and expenses: | |||||||||||
Interest income (expense), net | (22) | (22) | (22) | ||||||||
Equity gains (losses) from consolidated subsidiaries | (69) | (286) | (176) | ||||||||
Loss before income taxes | (91) | (308) | (198) | ||||||||
Net (loss) income | (91) | (308) | (198) | ||||||||
Net loss attributable to Warner Music Group Corp. | (91) | (308) | (198) | ||||||||
Warner Music Group Corp. | Reportable Legal Entities | |||||||||||
Costs and expenses: | |||||||||||
Equity gains (losses) from consolidated subsidiaries | (91) | (308) | (198) | ||||||||
Loss before income taxes | (91) | (308) | (198) | ||||||||
Net (loss) income | (91) | (308) | (198) | ||||||||
Net loss attributable to Warner Music Group Corp. | $ (91) | $ (308) | $ (198) |
Guarantor and Non-Guarantor S91
Guarantor and Non-Guarantor Subsidiaries Financial Information - Consolidating Statement of Comprehensive Income (Detail) - USD ($) $ in Millions | 3 Months Ended | 12 Months Ended | |||||||||
Sep. 30, 2015 | Jun. 30, 2015 | Mar. 31, 2015 | Dec. 31, 2014 | Sep. 30, 2014 | Jun. 30, 2014 | Mar. 31, 2014 | Dec. 31, 2013 | Sep. 30, 2015 | Sep. 30, 2014 | Sep. 30, 2013 | |
Condensed Statement Of Income Captions [Line Items] | |||||||||||
Net (loss) income | $ (23) | $ (43) | $ 19 | $ (41) | $ (24) | $ (184) | $ (59) | $ (36) | $ (88) | $ (303) | $ (194) |
Other comprehensive income (loss), net of tax: | |||||||||||
Foreign currency adjustment | (59) | (41) | (3) | ||||||||
Minimum pension liability | (6) | 2 | |||||||||
Deferred losses on derivative financial instruments | (1) | ||||||||||
Other comprehensive loss, net of tax | (59) | (47) | (2) | ||||||||
Total comprehensive loss | (147) | (350) | (196) | ||||||||
Less: Income attributable to noncontrolling interest | (3) | (5) | (4) | ||||||||
Comprehensive loss attributable to Warner Music Group Corp. | (150) | (355) | (200) | ||||||||
Eliminations | |||||||||||
Condensed Statement Of Income Captions [Line Items] | |||||||||||
Net (loss) income | 60 | (50) | 16 | ||||||||
Other comprehensive income (loss), net of tax: | |||||||||||
Foreign currency adjustment | 59 | 41 | 3 | ||||||||
Minimum pension liability | 6 | (2) | |||||||||
Deferred losses on derivative financial instruments | 1 | ||||||||||
Other comprehensive loss, net of tax | 59 | 47 | 2 | ||||||||
Total comprehensive loss | 119 | (3) | 18 | ||||||||
Comprehensive loss attributable to Warner Music Group Corp. | 119 | (3) | 18 | ||||||||
Eliminations | |||||||||||
Condensed Statement Of Income Captions [Line Items] | |||||||||||
Net (loss) income | 160 | 594 | 374 | ||||||||
Other comprehensive income (loss), net of tax: | |||||||||||
Foreign currency adjustment | 118 | 82 | 6 | ||||||||
Minimum pension liability | 12 | (4) | |||||||||
Deferred losses on derivative financial instruments | 2 | ||||||||||
Other comprehensive loss, net of tax | 118 | 94 | 4 | ||||||||
Total comprehensive loss | 278 | 688 | 378 | ||||||||
Comprehensive loss attributable to Warner Music Group Corp. | 278 | 688 | 378 | ||||||||
WMG Acquisition Corp. (issuer) | Reportable Legal Entities | |||||||||||
Condensed Statement Of Income Captions [Line Items] | |||||||||||
Net (loss) income | (69) | (286) | (176) | ||||||||
Other comprehensive income (loss), net of tax: | |||||||||||
Foreign currency adjustment | (59) | (41) | (3) | ||||||||
Minimum pension liability | (6) | 2 | |||||||||
Deferred losses on derivative financial instruments | (1) | ||||||||||
Other comprehensive loss, net of tax | (59) | (47) | (2) | ||||||||
Total comprehensive loss | (128) | (333) | (178) | ||||||||
Comprehensive loss attributable to Warner Music Group Corp. | (128) | (333) | (178) | ||||||||
Guarantor Subsidiaries | Reportable Legal Entities | |||||||||||
Condensed Statement Of Income Captions [Line Items] | |||||||||||
Net (loss) income | (42) | 201 | 96 | ||||||||
Other comprehensive income (loss), net of tax: | |||||||||||
Total comprehensive loss | (42) | 201 | 96 | ||||||||
Less: Income attributable to noncontrolling interest | (1) | (1) | (2) | ||||||||
Comprehensive loss attributable to Warner Music Group Corp. | (43) | 200 | 94 | ||||||||
Non-Guarantor Subsidiaries | Reportable Legal Entities | |||||||||||
Condensed Statement Of Income Captions [Line Items] | |||||||||||
Net (loss) income | (15) | (146) | (108) | ||||||||
Other comprehensive income (loss), net of tax: | |||||||||||
Foreign currency adjustment | (59) | (41) | (3) | ||||||||
Minimum pension liability | (6) | 2 | |||||||||
Deferred losses on derivative financial instruments | (1) | ||||||||||
Other comprehensive loss, net of tax | (59) | (47) | (2) | ||||||||
Total comprehensive loss | (74) | (193) | (110) | ||||||||
Less: Income attributable to noncontrolling interest | (2) | (4) | (2) | ||||||||
Comprehensive loss attributable to Warner Music Group Corp. | (76) | (197) | (112) | ||||||||
WMG Acquisition Corp. Consolidated | Reportable Legal Entities | |||||||||||
Condensed Statement Of Income Captions [Line Items] | |||||||||||
Net (loss) income | (66) | (281) | (172) | ||||||||
Other comprehensive income (loss), net of tax: | |||||||||||
Foreign currency adjustment | (59) | (41) | (3) | ||||||||
Minimum pension liability | (6) | 2 | |||||||||
Deferred losses on derivative financial instruments | (1) | ||||||||||
Other comprehensive loss, net of tax | (59) | (47) | (2) | ||||||||
Total comprehensive loss | (125) | (328) | (174) | ||||||||
Less: Income attributable to noncontrolling interest | (3) | (5) | (4) | ||||||||
Comprehensive loss attributable to Warner Music Group Corp. | (128) | (333) | (178) | ||||||||
Holdings Company | Reportable Legal Entities | |||||||||||
Condensed Statement Of Income Captions [Line Items] | |||||||||||
Net (loss) income | (91) | (308) | (198) | ||||||||
Other comprehensive income (loss), net of tax: | |||||||||||
Foreign currency adjustment | (59) | (41) | (3) | ||||||||
Minimum pension liability | (6) | 2 | |||||||||
Deferred losses on derivative financial instruments | (1) | ||||||||||
Other comprehensive loss, net of tax | (59) | (47) | (2) | ||||||||
Total comprehensive loss | (150) | (355) | (200) | ||||||||
Comprehensive loss attributable to Warner Music Group Corp. | (150) | (355) | (200) | ||||||||
Warner Music Group Corp. | Reportable Legal Entities | |||||||||||
Condensed Statement Of Income Captions [Line Items] | |||||||||||
Net (loss) income | (91) | (308) | (198) | ||||||||
Other comprehensive income (loss), net of tax: | |||||||||||
Foreign currency adjustment | (59) | (41) | (3) | ||||||||
Minimum pension liability | (6) | 2 | |||||||||
Deferred losses on derivative financial instruments | (1) | ||||||||||
Other comprehensive loss, net of tax | (59) | (47) | (2) | ||||||||
Total comprehensive loss | (150) | (355) | (200) | ||||||||
Comprehensive loss attributable to Warner Music Group Corp. | $ (150) | $ (355) | $ (200) |
Guarantor and Non-Guarantor S92
Guarantor and Non-Guarantor Subsidiaries Financial Information - Consolidating Statement of Cash Flows (Detail) - USD ($) $ in Millions | 3 Months Ended | 12 Months Ended | |||||||||
Sep. 30, 2015 | Jun. 30, 2015 | Mar. 31, 2015 | Dec. 31, 2014 | Sep. 30, 2014 | Jun. 30, 2014 | Mar. 31, 2014 | Dec. 31, 2013 | Sep. 30, 2015 | Sep. 30, 2014 | Sep. 30, 2013 | |
Cash flows from operating activities | |||||||||||
Net (loss) income | $ (23) | $ (43) | $ 19 | $ (41) | $ (24) | $ (184) | $ (59) | $ (36) | $ (88) | $ (303) | $ (194) |
Adjustments to reconcile net (loss) income to net cash provided by operating activities: | |||||||||||
Loss on extinguishment of debt | $ 141 | 141 | 85 | ||||||||
Depreciation and amortization | 309 | 321 | 258 | ||||||||
Unrealized gains/losses and remeasurement of foreign denominated loans | 28 | (39) | (4) | ||||||||
Deferred income taxes | (11) | (55) | (73) | ||||||||
Gain on sale of assets | (2) | ||||||||||
Non-cash interest expense | 11 | 13 | 13 | ||||||||
Non-cash share-based compensation expense | 3 | 8 | 19 | ||||||||
Changes in operating assets and liabilities: | |||||||||||
Accounts receivable | 6 | 72 | (15) | ||||||||
Inventories | (6) | (7) | (5) | ||||||||
Royalty advances | (46) | (32) | (1) | ||||||||
Accounts payable and accrued liabilities | (17) | (87) | 73 | ||||||||
Royalty payables | 27 | 25 | 6 | ||||||||
Accrued interest | (2) | (15) | (14) | ||||||||
Deferred revenue | 12 | 95 | 14 | ||||||||
Other balance sheet changes | (4) | (5) | (3) | ||||||||
Net cash provided by operating activities | 222 | 130 | 159 | ||||||||
Cash flows from investing activities | |||||||||||
Acquisition of music publishing rights, net | (16) | (26) | (37) | ||||||||
Capital expenditures | (63) | (76) | (34) | ||||||||
Investments and acquisitions of businesses, net | (16) | (53) | (737) | ||||||||
Net cash used in investing activities | (95) | (155) | (808) | ||||||||
Cash flows from financing activities | |||||||||||
Proceeds from the Revolving Credit Facility | 258 | 600 | 136 | ||||||||
Repayment of the Revolving Credit Facility | (258) | (600) | (136) | ||||||||
Repayment of Acquisition Corp. Senior Term Loan Facility | (13) | (10) | (110) | ||||||||
Financing costs paid | (104) | (129) | |||||||||
Deferred financing costs paid | (13) | (62) | |||||||||
Distribution to noncontrolling interest holder | (3) | (3) | (4) | ||||||||
Repayment of capital lease obligations | (3) | (3) | |||||||||
Net cash (used in) provided by financing activities | (19) | 37 | 511 | ||||||||
Proceeds from Acquisition Corp. Senior Term Loan Facility | 1,412 | ||||||||||
Effect of exchange rate changes on cash and equivalents | (19) | (10) | (9) | ||||||||
Net increase (decrease) in cash and equivalents | 89 | 2 | (147) | ||||||||
Cash and equivalents at beginning of period | 157 | 155 | 157 | 155 | 302 | ||||||
Cash and equivalents at end of period | 246 | 157 | 246 | 157 | 155 | ||||||
Eliminations | |||||||||||
Cash flows from operating activities | |||||||||||
Net (loss) income | 60 | (50) | 16 | ||||||||
Adjustments to reconcile net (loss) income to net cash provided by operating activities: | |||||||||||
Unrealized gains/losses and remeasurement of foreign denominated loans | (5) | ||||||||||
Equity losses (gains), including distributions | (32) | 33 | (50) | ||||||||
Changes in operating assets and liabilities: | |||||||||||
Accounts payable and accrued liabilities | (28) | ||||||||||
Other balance sheet changes | 15 | 39 | |||||||||
Net cash provided by operating activities | (2) | ||||||||||
Cash flows from investing activities | |||||||||||
Advances to issuer | (110) | (58) | (245) | ||||||||
Net cash used in investing activities | (110) | (58) | (245) | ||||||||
Cash flows from financing activities | |||||||||||
Change in due to (from) issuer | 110 | 60 | 245 | ||||||||
Net cash (used in) provided by financing activities | 110 | 60 | 245 | ||||||||
Eliminations | |||||||||||
Cash flows from operating activities | |||||||||||
Net (loss) income | 160 | 594 | 374 | ||||||||
Adjustments to reconcile net (loss) income to net cash provided by operating activities: | |||||||||||
Equity losses (gains), including distributions | (160) | (594) | (374) | ||||||||
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 Notes | |||||||||||
Cash flows from financing activities | |||||||||||
Repayment of Acquisition Corp. Senior Unsecured Notes | (765) | ||||||||||
Repayment of Acquisition Corp Senior Secured Notes | (765) | ||||||||||
6.00% Senior Notes | |||||||||||
Cash flows from financing activities | |||||||||||
Proceeds from issuance of Acquisition Corp | 500 | ||||||||||
6.00% Senior Secured Notes | |||||||||||
Cash flows from financing activities | |||||||||||
Proceeds from issuance of Acquisition Corp | 500 | ||||||||||
Repayment of Acquisition Corp Senior Secured Notes | (50) | ||||||||||
6.25% Senior Secured Notes | |||||||||||
Cash flows from financing activities | |||||||||||
Proceeds from issuance of Acquisition Corp | 227 | ||||||||||
Repayment of Acquisition Corp Senior Secured Notes | (23) | ||||||||||
9.5% Senior Notes | |||||||||||
Cash flows from financing activities | |||||||||||
Repayment of Acquisition Corp Senior Secured Notes | (1,250) | ||||||||||
WMG Acquisition Corp. (issuer) | Reportable Legal Entities | |||||||||||
Cash flows from operating activities | |||||||||||
Net (loss) income | (69) | (286) | (176) | ||||||||
Adjustments to reconcile net (loss) income to net cash provided by operating activities: | |||||||||||
Loss on extinguishment of debt | 141 | 85 | |||||||||
Depreciation and amortization | (1) | ||||||||||
Unrealized gains/losses and remeasurement of foreign denominated loans | 21 | (12) | 9 | ||||||||
Non-cash interest expense | 10 | 12 | 11 | ||||||||
Equity losses (gains), including distributions | (35) | 80 | 10 | ||||||||
Changes in operating assets and liabilities: | |||||||||||
Accrued interest | (2) | (15) | (14) | ||||||||
Net cash provided by operating activities | (76) | (80) | (75) | ||||||||
Cash flows from investing activities | |||||||||||
Investments and acquisitions of businesses, net | (719) | ||||||||||
Advances to issuer | 110 | 58 | 245 | ||||||||
Net cash used in investing activities | 110 | 58 | (474) | ||||||||
Cash flows from financing activities | |||||||||||
Dividend by Acquisition Corp. to Holdings Corp. | (21) | (21) | (12) | ||||||||
Proceeds from the Revolving Credit Facility | 258 | 600 | 136 | ||||||||
Repayment of the Revolving Credit Facility | (258) | (600) | (136) | ||||||||
Repayment of Acquisition Corp. Senior Term Loan Facility | (13) | (10) | (110) | ||||||||
Financing costs paid | (104) | (129) | |||||||||
Deferred financing costs paid | (13) | (60) | |||||||||
Net cash (used in) provided by financing activities | (34) | 22 | 505 | ||||||||
Proceeds from Acquisition Corp. Senior Term Loan Facility | 1,412 | ||||||||||
Net increase (decrease) in cash and equivalents | (44) | ||||||||||
Cash and equivalents at beginning of period | 44 | ||||||||||
WMG Acquisition Corp. (issuer) | 5.625% Senior Secured Notes | Reportable Legal Entities | |||||||||||
Cash flows from financing activities | |||||||||||
Proceeds from issuance of Acquisition Corp | 275 | ||||||||||
WMG Acquisition Corp. (issuer) | 6.750% Senior Notes | Reportable Legal Entities | |||||||||||
Cash flows from financing activities | |||||||||||
Proceeds from issuance of Acquisition Corp Senior Notes | 660 | ||||||||||
WMG Acquisition Corp. (issuer) | 11.5% Senior Notes | Reportable Legal Entities | |||||||||||
Cash flows from financing activities | |||||||||||
Repayment of Acquisition Corp Senior Secured Notes | (765) | ||||||||||
WMG Acquisition Corp. (issuer) | 6.00% Senior Notes | Reportable Legal Entities | |||||||||||
Cash flows from financing activities | |||||||||||
Proceeds from issuance of Acquisition Corp | 500 | ||||||||||
WMG Acquisition Corp. (issuer) | 6.00% Senior Secured Notes | Reportable Legal Entities | |||||||||||
Cash flows from financing activities | |||||||||||
Repayment of Acquisition Corp Senior Secured Notes | (50) | ||||||||||
WMG Acquisition Corp. (issuer) | 6.25% Senior Secured Notes | Reportable Legal Entities | |||||||||||
Cash flows from financing activities | |||||||||||
Proceeds from issuance of Acquisition Corp | 227 | ||||||||||
Repayment of Acquisition Corp Senior Secured Notes | (23) | ||||||||||
WMG Acquisition Corp. (issuer) | 9.5% Senior Notes | Reportable Legal Entities | |||||||||||
Cash flows from financing activities | |||||||||||
Repayment of Acquisition Corp Senior Secured Notes | (1,250) | ||||||||||
Guarantor Subsidiaries | Reportable Legal Entities | |||||||||||
Cash flows from operating activities | |||||||||||
Net (loss) income | (42) | 201 | 96 | ||||||||
Adjustments to reconcile net (loss) income to net cash provided by operating activities: | |||||||||||
Depreciation and amortization | 162 | 160 | 155 | ||||||||
Unrealized gains/losses and remeasurement of foreign denominated loans | 55 | (23) | 23 | ||||||||
Gain on sale of assets | (2) | ||||||||||
Non-cash share-based compensation expense | 3 | 8 | 19 | ||||||||
Equity losses (gains), including distributions | 67 | (113) | 40 | ||||||||
Changes in operating assets and liabilities: | |||||||||||
Accounts receivable | 4 | 10 | (28) | ||||||||
Inventories | (1) | (3) | |||||||||
Royalty advances | (23) | (9) | (18) | ||||||||
Accounts payable and accrued liabilities | 26 | (162) | (22) | ||||||||
Royalty payables | (19) | (38) | (22) | ||||||||
Deferred revenue | (9) | 107 | (1) | ||||||||
Other balance sheet changes | 3 | 2 | (19) | ||||||||
Net cash provided by operating activities | 226 | 138 | 223 | ||||||||
Cash flows from investing activities | |||||||||||
Acquisition of music publishing rights, net | (9) | (16) | (33) | ||||||||
Capital expenditures | (48) | (53) | (25) | ||||||||
Investments and acquisitions of businesses, net | (11) | 2 | (9) | ||||||||
Net cash used in investing activities | (68) | (67) | (67) | ||||||||
Cash flows from financing activities | |||||||||||
Distribution to noncontrolling interest holder | (1) | (1) | |||||||||
Change in due to (from) issuer | (110) | (60) | (245) | ||||||||
Net cash (used in) provided by financing activities | (111) | (61) | (245) | ||||||||
Net increase (decrease) in cash and equivalents | 47 | 10 | (89) | ||||||||
Cash and equivalents at beginning of period | 26 | 16 | 26 | 16 | 105 | ||||||
Cash and equivalents at end of period | 73 | 26 | 73 | 26 | 16 | ||||||
Non-Guarantor Subsidiaries | Reportable Legal Entities | |||||||||||
Cash flows from operating activities | |||||||||||
Net (loss) income | (15) | (146) | (108) | ||||||||
Adjustments to reconcile net (loss) income to net cash provided by operating activities: | |||||||||||
Depreciation and amortization | 148 | 161 | 103 | ||||||||
Unrealized gains/losses and remeasurement of foreign denominated loans | (48) | (4) | (31) | ||||||||
Deferred income taxes | (11) | (55) | (73) | ||||||||
Changes in operating assets and liabilities: | |||||||||||
Accounts receivable | 2 | 62 | 13 | ||||||||
Inventories | (5) | (4) | (5) | ||||||||
Royalty advances | (23) | (23) | 17 | ||||||||
Accounts payable and accrued liabilities | (15) | 75 | 95 | ||||||||
Royalty payables | 46 | 63 | 28 | ||||||||
Deferred revenue | 21 | (12) | 15 | ||||||||
Other balance sheet changes | (7) | (22) | (23) | ||||||||
Net cash provided by operating activities | 93 | 95 | 31 | ||||||||
Cash flows from investing activities | |||||||||||
Acquisition of music publishing rights, net | (7) | (10) | (4) | ||||||||
Capital expenditures | (15) | (23) | (9) | ||||||||
Investments and acquisitions of businesses, net | (5) | (55) | (9) | ||||||||
Net cash used in investing activities | (27) | (88) | (22) | ||||||||
Cash flows from financing activities | |||||||||||
Distribution to noncontrolling interest holder | (2) | (2) | (4) | ||||||||
Repayment of capital lease obligations | (3) | (3) | |||||||||
Net cash (used in) provided by financing activities | (5) | (5) | (4) | ||||||||
Effect of exchange rate changes on cash and equivalents | (19) | 0 | (9) | ||||||||
Net increase (decrease) in cash and equivalents | 42 | (8) | (4) | ||||||||
Cash and equivalents at beginning of period | 131 | 139 | 131 | 139 | 143 | ||||||
Cash and equivalents at end of period | 173 | 131 | 173 | 131 | 139 | ||||||
WMG Acquisition Corp. Consolidated | Reportable Legal Entities | |||||||||||
Cash flows from operating activities | |||||||||||
Net (loss) income | (66) | (281) | (172) | ||||||||
Adjustments to reconcile net (loss) income to net cash provided by operating activities: | |||||||||||
Loss on extinguishment of debt | 141 | 85 | |||||||||
Depreciation and amortization | 309 | 321 | 258 | ||||||||
Unrealized gains/losses and remeasurement of foreign denominated loans | 28 | (39) | (4) | ||||||||
Deferred income taxes | (11) | (55) | (73) | ||||||||
Gain on sale of assets | (2) | ||||||||||
Non-cash interest expense | 10 | 12 | 11 | ||||||||
Non-cash share-based compensation expense | 3 | 8 | 19 | ||||||||
Changes in operating assets and liabilities: | |||||||||||
Accounts receivable | 6 | 72 | (15) | ||||||||
Inventories | (6) | (7) | (5) | ||||||||
Royalty advances | (46) | (32) | (1) | ||||||||
Accounts payable and accrued liabilities | (17) | (87) | 73 | ||||||||
Royalty payables | 27 | 25 | 6 | ||||||||
Accrued interest | (2) | (15) | (14) | ||||||||
Deferred revenue | 12 | 95 | 14 | ||||||||
Other balance sheet changes | (4) | (5) | (3) | ||||||||
Net cash provided by operating activities | 243 | 151 | 179 | ||||||||
Cash flows from investing activities | |||||||||||
Acquisition of music publishing rights, net | (16) | (26) | (37) | ||||||||
Capital expenditures | (63) | (76) | (34) | ||||||||
Investments and acquisitions of businesses, net | (16) | (53) | (737) | ||||||||
Net cash used in investing activities | (95) | (155) | (808) | ||||||||
Cash flows from financing activities | |||||||||||
Dividend by Acquisition Corp. to Holdings Corp. | (21) | (21) | (12) | ||||||||
Proceeds from the Revolving Credit Facility | 258 | 600 | 136 | ||||||||
Repayment of the Revolving Credit Facility | (258) | (600) | (136) | ||||||||
Repayment of Acquisition Corp. Senior Term Loan Facility | (13) | (10) | (110) | ||||||||
Financing costs paid | (104) | (129) | |||||||||
Deferred financing costs paid | (13) | (60) | |||||||||
Distribution to noncontrolling interest holder | (3) | (3) | (4) | ||||||||
Repayment of capital lease obligations | (3) | (3) | |||||||||
Net cash (used in) provided by financing activities | (40) | 16 | 501 | ||||||||
Proceeds from Acquisition Corp. Senior Term Loan Facility | 1,412 | ||||||||||
Effect of exchange rate changes on cash and equivalents | (19) | 0 | (9) | ||||||||
Net increase (decrease) in cash and equivalents | 89 | 2 | (137) | ||||||||
Cash and equivalents at beginning of period | $ 157 | $ 155 | 157 | 155 | 292 | ||||||
Cash and equivalents at end of period | $ 246 | $ 157 | 246 | 157 | 155 | ||||||
WMG Acquisition Corp. Consolidated | 5.625% Senior Secured Notes | Reportable Legal Entities | |||||||||||
Cash flows from financing activities | |||||||||||
Proceeds from issuance of Acquisition Corp | 275 | ||||||||||
WMG Acquisition Corp. Consolidated | 6.750% Senior Notes | Reportable Legal Entities | |||||||||||
Cash flows from financing activities | |||||||||||
Proceeds from issuance of Acquisition Corp Senior Notes | 660 | ||||||||||
WMG Acquisition Corp. Consolidated | 11.5% Senior Notes | Reportable Legal Entities | |||||||||||
Cash flows from financing activities | |||||||||||
Repayment of Acquisition Corp Senior Secured Notes | (765) | ||||||||||
WMG Acquisition Corp. Consolidated | 6.00% Senior Notes | Reportable Legal Entities | |||||||||||
Cash flows from financing activities | |||||||||||
Proceeds from issuance of Acquisition Corp | 500 | ||||||||||
WMG Acquisition Corp. Consolidated | 6.00% Senior Secured Notes | Reportable Legal Entities | |||||||||||
Cash flows from financing activities | |||||||||||
Repayment of Acquisition Corp Senior Secured Notes | (50) | ||||||||||
WMG Acquisition Corp. Consolidated | 6.25% Senior Secured Notes | Reportable Legal Entities | |||||||||||
Cash flows from financing activities | |||||||||||
Proceeds from issuance of Acquisition Corp | 227 | ||||||||||
Repayment of Acquisition Corp Senior Secured Notes | (23) | ||||||||||
WMG Acquisition Corp. Consolidated | 9.5% Senior Notes | Reportable Legal Entities | |||||||||||
Cash flows from financing activities | |||||||||||
Repayment of Acquisition Corp Senior Secured Notes | (1,250) | ||||||||||
Holdings Company | Reportable Legal Entities | |||||||||||
Cash flows from operating activities | |||||||||||
Net (loss) income | (91) | (308) | (198) | ||||||||
Adjustments to reconcile net (loss) income to net cash provided by operating activities: | |||||||||||
Non-cash interest expense | 1 | 1 | 2 | ||||||||
Equity losses (gains), including distributions | 69 | 286 | 176 | ||||||||
Changes in operating assets and liabilities: | |||||||||||
Net cash provided by operating activities | (21) | (21) | (20) | ||||||||
Cash flows from financing activities | |||||||||||
Dividend by Acquisition Corp. to Holdings Corp. | 21 | 21 | 12 | ||||||||
Deferred financing costs paid | (2) | ||||||||||
Net cash (used in) provided by financing activities | 21 | 21 | 10 | ||||||||
Net increase (decrease) in cash and equivalents | (10) | ||||||||||
Cash and equivalents at beginning of period | 10 | ||||||||||
Warner Music Group Corp. | Reportable Legal Entities | |||||||||||
Cash flows from operating activities | |||||||||||
Net (loss) income | (91) | (308) | (198) | ||||||||
Adjustments to reconcile net (loss) income to net cash provided by operating activities: | |||||||||||
Equity losses (gains), including distributions | $ 91 | $ 308 | $ 198 |
Guarantor And Non-Guarantor S93
Guarantor And Non-Guarantor Subsidiaries Financial Information - Consolidating Statement of Cash Flows (Parenthetical) (Detail) | Sep. 30, 2015 | Sep. 30, 2014 | Sep. 30, 2013 |
5.625% Senior Secured Notes | |||
Condensed Cash Flow Statements Captions [Line Items] | |||
Interest rate | 5.625% | 5.625% | 5.625% |
6.750% Senior Notes | |||
Condensed Cash Flow Statements Captions [Line Items] | |||
Interest rate | 6.75% | 6.75% | 6.75% |
11.5% Senior Unsecured Notes | |||
Condensed Cash Flow Statements Captions [Line Items] | |||
Interest rate | 11.50% | 11.50% | 11.50% |
6.00% Senior Secured Notes | |||
Condensed Cash Flow Statements Captions [Line Items] | |||
Interest rate | 6.00% | 6.00% | 6.00% |
6.25% Senior Secured Notes | |||
Condensed Cash Flow Statements Captions [Line Items] | |||
Interest rate | 6.25% | 6.25% | 6.25% |
9.5% Senior Secured Notes | |||
Condensed Cash Flow Statements Captions [Line Items] | |||
Interest rate | 9.50% | 9.50% | 9.50% |
Valuation and Qualifying Accoun
Valuation and Qualifying Accounts (Detail) - USD ($) $ in Millions | 12 Months Ended | |||
Sep. 30, 2015 | Sep. 30, 2014 | Sep. 30, 2013 | ||
Allowance for Doubtful Accounts | ||||
Valuation And Qualifying Accounts Disclosure [Line Items] | ||||
Balance at Beginning of Period | $ 11 | $ 2 | $ 5 | |
Additions Charged to Cost and Expenses | 7 | 2 | 3 | |
Deductions | (6) | (6) | ||
Other | [1] | 7 | ||
Balance at End of period | 12 | 11 | 2 | |
Reserves for Sales Returns | ||||
Valuation And Qualifying Accounts Disclosure [Line Items] | ||||
Balance at Beginning of Period | 54 | 53 | 58 | |
Additions Charged to Cost and Expenses | 161 | 194 | 166 | |
Deductions | (171) | (193) | (171) | |
Balance at End of period | 44 | 54 | 53 | |
Allowance for Deferred Tax Asset | ||||
Valuation And Qualifying Accounts Disclosure [Line Items] | ||||
Balance at Beginning of Period | 394 | 296 | 244 | |
Additions Charged to Cost and Expenses | 34 | 101 | 53 | |
Deductions | (84) | (3) | (1) | |
Balance at End of period | $ 344 | $ 394 | $ 296 | |
[1] | (a) Other changes due to acquisitions and dispositions. |