Document and Entity Information
Document and Entity Information - USD ($) | 12 Months Ended | ||
Sep. 30, 2017 | Dec. 05, 2017 | Mar. 31, 2017 | |
Document And Entity Information [Abstract] | |||
Document Type | 10-K | ||
Amendment Flag | false | ||
Document Period End Date | Sep. 30, 2017 | ||
Document Fiscal Year Focus | 2,017 | ||
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, 2017 | Sep. 30, 2016 |
Current assets: | ||
Cash and equivalents | $ 647 | $ 359 |
Accounts receivable, net of allowances of $50 million and $52 million | 404 | 329 |
Inventories | 39 | 41 |
Royalty advances expected to be recouped within one year | 141 | 128 |
Prepaid and other current assets | 44 | 51 |
Total current assets | 1,275 | 908 |
Royalty advances expected to be recouped after one year | 172 | 196 |
Property, plant and equipment, net | 213 | 203 |
Goodwill | 1,685 | 1,627 |
Intangible assets subject to amortization, net | 2,090 | 2,201 |
Intangible assets not subject to amortization | 117 | 116 |
Deferred tax assets, net | 97 | 2 |
Other assets | 69 | 82 |
Total assets | 5,718 | 5,335 |
Current liabilities: | ||
Accounts payable | 208 | 204 |
Accrued royalties | 1,263 | 1,104 |
Accrued liabilities | 365 | 297 |
Accrued interest | 41 | 38 |
Deferred revenue | 197 | 178 |
Other current liabilities | 26 | 21 |
Total current liabilities | 2,100 | 1,842 |
Long-term debt | 2,811 | 2,778 |
Deferred tax liabilities, net | 190 | 269 |
Other noncurrent liabilities | 309 | 236 |
Total liabilities | 5,410 | 5,125 |
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 | (654) | (715) |
Accumulated other comprehensive loss, net | (181) | (218) |
Total Warner Music Group Corp. equity | 293 | 195 |
Noncontrolling interest | 15 | 15 |
Total equity | 308 | 210 |
Total liabilities and equity | $ 5,718 | $ 5,335 |
Consolidated Balance Sheets (Pa
Consolidated Balance Sheets (Parenthetical) - USD ($) $ in Millions | Sep. 30, 2017 | Sep. 30, 2016 |
Statement Of Financial Position [Abstract] | ||
Accounts receivable, allowances | $ 50 | $ 52 |
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, 2017 | Jun. 30, 2017 | Mar. 31, 2017 | Dec. 31, 2016 | Sep. 30, 2016 | Jun. 30, 2016 | Mar. 31, 2016 | Dec. 31, 2015 | Sep. 30, 2017 | Sep. 30, 2016 | Sep. 30, 2015 | ||||||||||||
Income Statement [Abstract] | ||||||||||||||||||||||
Revenues | $ 917 | $ 917 | $ 825 | $ 917 | $ 841 | $ 811 | $ 745 | $ 849 | $ 3,576 | $ 3,246 | $ 2,966 | |||||||||||
Costs and expenses: | ||||||||||||||||||||||
Cost of revenue | (501) | (519) | (415) | (496) | (436) | (448) | (374) | (449) | (1,931) | (1,707) | (1,511) | |||||||||||
Selling, general and administrative expenses | (368) | [1] | (296) | [1] | (282) | [1] | (276) | [1] | (295) | [2] | (255) | [2] | (256) | [2] | (276) | [2] | (1,222) | [3] | (1,082) | [3] | (1,073) | [3] |
Amortization expense | (49) | (51) | (50) | (51) | (55) | (63) | (63) | (62) | (201) | (243) | (255) | |||||||||||
Total costs and expenses | (918) | (866) | (747) | (823) | (786) | (766) | (693) | (787) | (3,354) | (3,032) | (2,839) | |||||||||||
Operating income | (1) | 51 | 78 | 94 | 55 | 45 | 52 | 62 | 222 | 214 | 127 | |||||||||||
Loss on extinguishment of debt | (3) | (32) | (14) | (4) | (35) | (18) | ||||||||||||||||
Interest expense, net | (37) | (36) | (36) | (40) | (42) | (43) | (43) | (45) | (149) | (173) | (181) | |||||||||||
Other (expense) income | (19) | (21) | (19) | 19 | (7) | (5) | 22 | 8 | (40) | 18 | (21) | |||||||||||
(Loss) income before income taxes | (57) | (9) | 23 | 41 | (8) | (3) | 27 | 25 | (2) | 41 | (75) | |||||||||||
Income tax benefit (expense) | 19 | 152 | (3) | (17) | 5 | (4) | (15) | 3 | 151 | (11) | (13) | |||||||||||
Net income (loss) | 149 | 30 | (88) | |||||||||||||||||||
Less: Income attributable to noncontrolling interest | (1) | (2) | (1) | (2) | (1) | (2) | (1) | (1) | (6) | (5) | (3) | |||||||||||
Net income (loss) attributable to Warner Music Group Corp. | $ (39) | $ 141 | $ 19 | $ 22 | $ (4) | $ (9) | $ 11 | $ 27 | $ 143 | $ 25 | $ (91) | |||||||||||
[1] | (a) Includes depreciation expense of: $(12) $(13) $(13) $(12) | |||||||||||||||||||||
[2] | (a) Includes depreciation expense of: $(13) $(12) $(12) $(13) | |||||||||||||||||||||
[3] | (a) Includes depreciation expense of: $(50) $(50) $(54) |
Consolidated Statements of Ope5
Consolidated Statements of Operations (Parenthetical) - USD ($) $ in Millions | 3 Months Ended | 12 Months Ended | |||||||||
Sep. 30, 2017 | Jun. 30, 2017 | Mar. 31, 2017 | Dec. 31, 2016 | Sep. 30, 2016 | Jun. 30, 2016 | Mar. 31, 2016 | Dec. 31, 2015 | Sep. 30, 2017 | Sep. 30, 2016 | Sep. 30, 2015 | |
Income Statement [Abstract] | |||||||||||
Depreciation expense | $ (12) | $ (13) | $ (13) | $ (12) | $ (13) | $ (12) | $ (12) | $ (13) | $ (50) | $ (50) | $ (54) |
Consolidated Statements of Comp
Consolidated Statements of Comprehensive Income (Loss) - USD ($) $ in Millions | 12 Months Ended | ||
Sep. 30, 2017 | Sep. 30, 2016 | Sep. 30, 2015 | |
Statement Of Income And Comprehensive Income [Abstract] | |||
Net income (loss) | $ 149 | $ 30 | $ (88) |
Other comprehensive income (loss), net of tax | |||
Foreign currency adjustment | 30 | (44) | (59) |
Minimum pension liability | 7 | (7) | |
Other comprehensive income (loss), net of tax | 37 | (51) | (59) |
Total comprehensive income (loss) | 186 | (21) | (147) |
Less: Income attributable to noncontrolling interest | (6) | (5) | (3) |
Comprehensive income (loss) attributable to Warner Music Group Corp. | $ 180 | $ (26) | $ (150) |
Consolidated Statements of Cash
Consolidated Statements of Cash Flows - USD ($) $ in Millions | 12 Months Ended | ||
Sep. 30, 2017 | Sep. 30, 2016 | Sep. 30, 2015 | |
Cash flows from operating activities | |||
Net income (loss) | $ 149 | $ 30 | $ (88) |
Adjustments to reconcile net income (loss) to net cash provided by operating activities: | |||
Depreciation and amortization | 251 | 293 | 309 |
Unrealized gains/losses and remeasurement of foreign denominated loans | 24 | 28 | |
Deferred income taxes | (192) | (26) | (11) |
Loss on extinguishment of debt | 35 | 18 | |
Net loss (gain) on divestitures and investments | 17 | (9) | |
Gain on sale of real estate | (24) | ||
Non-cash interest expense | 8 | 11 | 11 |
Equity-based compensation expense | 70 | 23 | 3 |
Changes in operating assets and liabilities: | |||
Accounts receivable | (60) | 17 | 6 |
Inventories | 1 | (6) | |
Royalty advances | 17 | (13) | (46) |
Accounts payable and accrued liabilities | 48 | 23 | (17) |
Royalty payables | 136 | 49 | 27 |
Accrued interest | 3 | (20) | (2) |
Deferred revenue | 22 | (35) | 12 |
Other balance sheet changes | 6 | 5 | (4) |
Net cash (used in) provided by operating activities | 535 | 342 | 222 |
Cash flows from investing activities | |||
Acquisition of music publishing rights, net | (16) | (25) | (16) |
Capital expenditures | (44) | (42) | (63) |
Investments and acquisitions of businesses, net | (139) | (28) | (16) |
Divestitures, net | 73 | 45 | |
Proceeds from the sale of real estate | 42 | ||
Net cash (used in) provided by investing activities | (126) | (8) | (95) |
Cash flows from financing activities | |||
Proceeds from the Revolving Credit Facility | 258 | ||
Repayment of the Revolving Credit Facility | (258) | ||
Proceeds from issuance of Acquisition Corp. Senior Term Loan Facility | 22 | ||
Repayment of Acquisition Corp. Senior Term Loan Facility | (309) | (13) | |
Call premiums paid on early redemption of debt | (27) | (10) | |
Deferred financing costs paid | (13) | (4) | |
Distribution to noncontrolling interest holder | (5) | (5) | (3) |
Dividends paid | (84) | ||
Repayment of capital lease obligations | (14) | (3) | |
Net cash (used in) provided by financing activities | (128) | (216) | (19) |
Effect of exchange rate changes on cash and equivalents | 7 | (5) | (19) |
Net increase in cash and equivalents | 288 | 113 | 89 |
Cash and equivalents at beginning of period | 359 | 246 | 157 |
Cash and equivalents at end of period | 647 | 359 | $ 246 |
4.125% Senior Secured Notes | |||
Cash flows from financing activities | |||
Proceeds from issuance of Acquisition Corp | 380 | ||
4.875% Senior Secured Notes | |||
Cash flows from financing activities | |||
Proceeds from issuance of Acquisition Corp | 250 | ||
5.00% Senior Secured Notes | |||
Cash flows from financing activities | |||
Proceeds from issuance of Acquisition Corp | 300 | ||
6.00% Senior Secured Notes | |||
Cash flows from financing activities | |||
Repayment of Senior Secured Notes | (450) | ||
6.25% Senior Secured Notes | |||
Cash flows from financing activities | |||
Repayment of Senior Secured Notes | (173) | ||
5.625% Senior Secured Notes | |||
Cash flows from financing activities | |||
Repayment of Senior Secured Notes | $ (28) | ||
13.75% Senior Notes | |||
Cash flows from financing activities | |||
Repayment of Senior Notes | (150) | ||
6.75% Senior Notes | |||
Cash flows from financing activities | |||
Repayment of Senior Notes | $ (24) |
Consolidated Statements of Cas8
Consolidated Statements of Cash Flows (Parenthetical) | Sep. 30, 2017 | Sep. 30, 2016 | Sep. 30, 2015 |
4.125% Senior Secured Notes | |||
Interest rate | 4.125% | 4.125% | 4.125% |
4.875% Senior Secured Notes | |||
Interest rate | 4.875% | 4.875% | 4.875% |
5.00% Senior Secured Notes | |||
Interest rate | 5.00% | 5.00% | 5.00% |
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% |
5.625% Senior Secured Notes | |||
Interest rate | 5.625% | 5.625% | 5.625% |
13.75% Senior Notes | |||
Interest rate | 13.75% | 13.75% | 13.75% |
6.75% Senior Notes | |||
Interest rate | 6.75% | 6.75% | 6.75% |
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, 2014 | $ 390 | $ 1,128 | $ (649) | $ (108) | $ 371 | $ 19 | |
Beginning balance, shares at Sep. 30, 2014 | 1,055 | ||||||
Net (loss) income | (88) | (91) | (91) | 3 | |||
Other comprehensive income (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 | ||||||
Net (loss) income | 30 | 25 | 25 | 5 | |||
Other comprehensive income (loss), net of tax | (51) | (51) | (51) | ||||
Disposal of noncontrolling interest related to divestiture | (3) | (3) | |||||
Distribution to noncontrolling interest holders | (5) | (5) | |||||
Ending balance at Sep. 30, 2016 | $ 210 | 1,128 | (715) | (218) | 195 | 15 | |
Ending balance, shares at Sep. 30, 2016 | 1,055 | 1,055 | |||||
Net (loss) income | $ 149 | 143 | 143 | 6 | |||
Dividends | (84) | (84) | (84) | ||||
Other comprehensive income (loss), net of tax | 37 | 37 | 37 | ||||
Disposal of noncontrolling interest related to divestiture | (3) | (3) | |||||
Distribution to noncontrolling interest holders | (5) | (5) | |||||
Other | 4 | 2 | 2 | 2 | |||
Ending balance at Sep. 30, 2017 | $ 308 | $ 1,128 | $ (654) | $ (181) | $ 293 | $ 15 | |
Ending balance, shares at Sep. 30, 2017 | 1,055 | 1,055 |
Description of Business
Description of Business | 12 Months Ended |
Sep. 30, 2017 | |
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 voluntarily 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”) as provided for in certain covenants contained in the instruments covering its outstanding indebtedness. 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 music and promoting artists and their products. In the United States, Recorded Music operations are conducted principally through the Company’s major record labels—Warner Bros. Records and Atlantic Records. The Company’s Recorded Music operations also include Rhino, a division that specializes in marketing the Company’s music catalog through compilations and reissuances of previously released music and video titles. The Company also conducts its Recorded Music operations through a collection of additional record labels, including, Asylum, Big Beat, Canvasback, East West, Elektra, Erato, FFRR, Fueled by Ramen, Nonesuch, Parlophone, Reprise, Roadrunner, Sire, Spinnin’, Warner Classics and Warner Music Nashville. 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 music 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; and various distribution centers and ventures operated internationally. 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 and bestbuy.com and in digital form to an expanded universe of digital partners, including digital streaming services such as Amazon, Apple Music, Deezer, Napster, Soundcloud, Spotify and YouTube, digital radio services such as iHeart Radio, Pandora and Sirius XM and digital download services such as Apple’s iTunes and Google Play. 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 music 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 are conducted principally through 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 70,000 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 and gospel. Warner/Chappell also administers the music and soundtracks of several third-party television and film producers and studios. 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, 2017 | |
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, 2017 ended on September 29, 2017, the fiscal year ended September 30, 2016 ended on September 30, 2016, and the fiscal year ended September 30, 2015 ended on September 25, 2015. 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 Reclassifications Certain reclassifications have been made to the prior fiscal years’ consolidated financial statements to conform to 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 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. As of September 30, 2017 and September 30, 2016, Spotify represented 15% and 10%, respectively, of the Company’s accounts receivable balance. No other single customer accounted for more than 10% of accounts receivable in either period. The Company, by policy, routinely assesses the financial strength of its customers. 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 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 15) 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. Accounting for Goodwill and Other Intangible Assets In accordance with FASB ASC Topic 350, Intangibles-Goodwill and Other 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 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 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 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 Share-Based Compensation The Company accounts for share-based payments as required by FASB ASC Topic 718, Compensation-Stock Compensation 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, 2015, 2016 and 2017. Income Taxes Income taxes are provided using the asset and liability method presented by FASB ASC Topic 740, Income Taxes 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 2017, the Company adopted ASU 2015-03, Simplifying the Presentation of Debt Issuance Costs In May 2014, the FASB issued guidance codified in ASC 606, Revenue from Contracts with Customers Revenue Recognition Entertainment – Music In January 2016, the FASB issued ASU 2016-01, Recognition and Measurement of Financial Assets and Financial Liabilities In February 2016, the FASB issued ASU 2016-02, Leases In March 2016, the FASB issued ASU 2016-09, Compensation - Stock Compensation In August 2016, the FASB issued ASU 2016-15, Statement of Cash Flows: Classification of Certain Cash Receipts and Cash Payments In October 2016, the FASB issued ASU 2016-16, Income Taxes: Intra-Entity Transfers of Assets Other Than Inventory |
Comprehensive Income (Loss)
Comprehensive Income (Loss) | 12 Months Ended |
Sep. 30, 2017 | |
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 of $12 million: Foreign Minimum Accumulated Currency Pension Other Translation Liability Comprehensive Loss Adjustment Loss, net (in millions) Balance at September 30, 2014 $ (98 ) $ (10 ) $ (108 ) Other comprehensive loss (a) (59 ) — (59 ) Amounts reclassified from accumulated other comprehensive income — — — Balance at September 30, 2015 $ (157 ) $ (10 ) $ (167 ) Other comprehensive loss (a) (44 ) (6 ) (50 ) Amounts reclassified from accumulated other comprehensive income — (1 ) (1 ) Balance at September 30, 2016 $ (201 ) $ (17 ) $ (218 ) Other comprehensive income (a) 30 8 38 Amounts reclassified from accumulated other comprehensive income — (1 ) (1 ) Balance at September 30, 2017 $ (171 ) $ (10 ) $ (181 ) (a) Includes historical foreign currency translation related to certain intra-entity transactions that are no longer considered of a long-term investment nature of $(19) million, $(109) million and $(51) million during the fiscal year ended September 30, 2017, 2016 and 2015, respectively. |
Property, Plant and Equipment
Property, Plant and Equipment | 12 Months Ended |
Sep. 30, 2017 | |
Property Plant And Equipment [Abstract] | |
Property, Plant and Equipment | 4. Property, Plant and Equipment Property, plant and equipment consist of the following: September 30, September 30, 2017 2016 (in millions) Land $ 11 $ 11 Buildings and improvements 99 90 Furniture and fixtures 10 10 Computer hardware and software 262 232 Construction in progress 30 15 Machinery and equipment 11 11 Gross Property, Plant and Equipment $ 423 $ 369 Less accumulated depreciation (210 ) (166 ) Net Property, Plant and Equipment $ 213 $ 203 During the fiscal year ended September 30, 2016 the Company sold buildings resulting in a gain of $24 million. |
Goodwill and Intangible Assets
Goodwill and Intangible Assets | 12 Months Ended |
Sep. 30, 2017 | |
Goodwill And Intangible Assets Disclosure [Abstract] | |
Goodwill and Intangible Assets | 5. 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, 2015 $ 1,168 $ 464 $ 1,632 Acquisitions 13 — 13 Dispositions (12 ) — (12 ) Other adjustments (6 ) — (6 ) Balance at September 30, 2016 $ 1,163 $ 464 $ 1,627 Acquisitions 58 — 58 Dispositions (10 ) — (10 ) Other adjustments 10 — 10 Balance at September 30, 2017 $ 1,221 $ 464 $ 1,685 The increase in goodwill during the fiscal year ended September 30, 2017 primarily relates to the Spinnin’ Records acquisition in September 2017. The increase in goodwill during the fiscal year ended September 30, 2016 includes goodwill associated with immaterial acquisitions. The decrease in goodwill during the fiscal years ended September 30, 2017 and September 30, 2016 includes goodwill associated with immaterial dispositions. The other adjustments during both the fiscal years ended September 30, 2017 and 2016 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 2017 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 2017 2016 (in millions) Intangible assets subject to amortization: Recorded music catalog 10 years $ 898 $ 923 Music publishing copyrights 27 years 1,534 1,504 Artist and songwriter contracts 13 years 904 883 Trademarks 6 years 14 7 Other intangible assets 7 years 10 5 Total gross intangible asset subject to amortization 3,360 3,322 Accumulated amortization (1,270 ) (1,121 ) Total net intangible assets subject to amortization 2,090 2,201 Intangible assets not subject to amortization: Trademarks and tradenames Indefinite 117 116 Total net other intangible assets $ 2,207 $ 2,317 The Company performs its annual indefinite-lived intangible assets 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 indefinite-lived intangible assets may not be recoverable. The performance of the annual fiscal 2017 impairment analysis did not result in an impairment of the Company’s indefinite-lived intangible assets. For the fiscal year ended September 30, 2017, the intangible balances presented include a preliminary purchase accounting allocation resulting from the acquisition of Spinnin’ Records in September 2017. Amortization Based on the amount of intangible assets subject to amortization at September 30, 2017, the expected amortization for each of the next five fiscal years and thereafter are as follows: Fiscal Years September 30, (in millions) 2018 $ 209 2019 194 2020 179 2021 179 2022 174 Thereafter 1,155 $ 2,090 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 primarily established in the accounting for the Merger and the PLG Acquisition. |
Debt
Debt | 12 Months Ended |
Sep. 30, 2017 | |
Debt Disclosure [Abstract] | |
Debt | 6. Debt Debt Capitalization Long-term debt, including the current portion, consists of the following: September 30, September 30, 2017 2016 (in millions) Revolving Credit Facility—Acquisition Corp. (a) $ — $ — Senior Term Loan Facility due 2023—Acquisition Corp. (b) 990 963 6.00% Senior Secured Notes due 2021—Acquisition Corp. (c) — 444 6.25% Senior Secured Notes due 2021—Acquisition Corp. (d) — 174 5.625% Senior Secured Notes due 2022—Acquisition Corp. (e) 246 272 5.00% Senior Secured Notes due 2023—Acquisition Corp. (f) 297 296 4.125% Senior Secured Notes due 2024—Acquisition Corp. (g) 402 — 4.875% Senior Secured Notes due 2024—Acquisition Corp. (h) 246 — 6.75% Senior Notes due 2022—Acquisition Corp. (i) 630 629 Total debt (j) $ 2,811 $ 2,778 (a) Reflects $150 million of commitments under the Revolving Credit Facility, less letters of credit outstanding of approximately $12 million and $5 million at September 30, 2017 and September 30, 2016, respectively. There were no loans outstanding under the Revolving Credit Facility at September 30, 2017 or September 30, 2016. (b) Principal amount of $1.006 billion and $978 million less unamortized discount of $6 million and $3 million and unamortized deferred financing costs of $10 million and $12 million at September 30, 2017 and September 30, 2016, respectively. (c) Principal amount of $450 million less unamortized deferred financing costs of $6 million at September 30, 2016. (d) Face amount of €158 million. Above amounts represent the dollar equivalent of such notes at September 30, 2016. Principal amount of $177 million less unamortized deferred financing costs of $3 million at September 30, 2016. (e) Principal amount of $248 million and $275 million less unamortized deferred financing costs of $2 million and $3 million at September 30, 2017 and September 30, 2016, respectively. (f) Principal amount of $300 million at both 30, 2017 and September 30, 2016 less unamortized deferred financing costs of $3 million and $4 million at 30, 2017 and September 30, 2016, respectively. (g) Face amount of €345 million. Above amounts represent the dollar equivalent of such notes at September 30, 2017. Principal amount of $407 million less unamortized deferred financing costs of $5 million at September 30, 2017. (h) Principal amount of $250 million less unamortized deferred financing costs of $4 million at September 30, 2017. (i) Principal amount of $635 million at both 30, 2017 and September 30, 2016 less unamortized deferred financing costs of $5 million and $6 million at 30, 2017 and September 30, 2016, respectively. (j) Principal amount of debt of $2.846 billion and $2.815 billion less unamortized discount of $6 million and $3 million and unamortized deferred financing costs of $29 million and $34 million at September 30, 2017 and September 30, 2016, respectively. October 2016 Refinancing Transactions On October 18, 2016, Acquisition Corp. issued €345 million in aggregate principal amount of its 4.125% Senior Secured Notes due 2024 and $250 million in aggregate principal amount of its 4.875% Senior Secured Notes due 2024. Acquisition Corp. used the net proceeds to pay the consideration in the tender offers and satisfy and discharge its 2021 Senior Secured Notes as described below. On October 18, 2016, Acquisition Corp. accepted for purchase in connection with tender offers for its 6.000% Senior Secured Notes due 2021 (the “Existing Dollar Notes”) and 6.250% Senior Secured Notes due 2021 (the “Existing Euro Notes” and, together with the Existing Dollar Notes, the “2021 Senior Secured Notes”) the 2021 Senior Secured Notes that had been validly tendered and not validly withdrawn on October 17, 2016 (the “Expiration Time”). Acquisition Corp. then issued a notice of redemption on October 18, 2016 with respect to the remaining 2021 Senior Secured Notes not accepted for payment pursuant to the tender offers. Following payment of the 2021 Senior Secured Notes tendered at or prior to the Expiration Time, Acquisition Corp. deposited with the Trustee for the 2021 Senior Secured Notes not accepted for purchase in the tender offers funds sufficient to satisfy all obligations remaining to the date of redemption, which redemption date was January 15, 2017, under the applicable indenture governing the 2021 Senior Secured Notes. The Company recorded a loss on extinguishment of debt of approximately $31 million, which represented the premium paid on early redemption and unamortized deferred financing costs. These transactions are collectively referred to as the “October 2016 Refinancing Transactions.” November 2016 Senior Term Loan Credit Agreement Amendment On November 21, 2016, Acquisition Corp. received lender consent to an amendment (the “November 2016 Senior Term Loan Credit Agreement Amendment”) to the Senior Term Loan Credit Agreement governing Acquisition Corp.’s Senior Term Loan Facility, which extended the maturity date of the Senior Term Loan Credit Agreement to November 1, 2023, subject, in certain circumstances, to a springing maturity inside the maturity date of certain of Acquisition Corp.’s other outstanding indebtedness and increased the principal amount outstanding by $27.5 million to $1.006 billion and increased the original issue discount by $5 million to $8 million. Acquisition Corp. used the proceeds from the November 2016 Senior Term Loan Credit Agreement Amendment to redeem $27.5 million of the 5.625% Senior Secured Notes due 2022 and to pay fees, costs and expenses related to the transactions. May 2017 Senior Term Loan Credit Agreement Amendment On May 22, 2017, Acquisition Corp. entered into an amendment (the “May 2017 Senior Term Loan Credit Agreement Amendment”) to the Senior Term Loan Credit Agreement, dated November 1, 2012, among Acquisition Corp., the guarantors party thereto, the lenders party thereto and Credit Suisse AG, as administrative agent, governing Acquisition Corp.’s senior secured term loan facility with Credit Suisse AG, as administrative agent, and the other financial institutions and lenders from time to time party thereto, to, among other things, reduce the pricing terms of its outstanding term loans. The Company recorded a loss on extinguishment of debt of approximately $3 million, which represented the discount and unamortized deferred financing costs related to the debt of the lenders that was fully repaid. Prior to the May 2017 Senior Term Loan Credit Agreement Amendment, term loan borrowings under the Senior Term Loan Credit Agreement bore interest at a floating rate measured by reference to, at Acquisition Corp.’s option, either (i) an adjusted London inter-bank offered rate, or “LIBOR,” not less than 1.00% per annum plus a borrowing margin of 2.75% per annum or (ii) an alternate base rate plus a borrowing margin of 1.75% per annum. Pursuant to the May 2017 Senior Term Loan Credit Agreement Amendment, term loan borrowings under the Senior Term Loan Credit Agreement will bear interest at a floating rate measured by reference to, at Acquisition Corp.’s option, either (i) an adjusted LIBOR not less than 0.00% per annum plus a borrowing margin of 2.50% per annum or (ii) an alternative base rate plus a borrowing margin of 1.50% per annum. Debt Redemptions and Prepayments On November 21, 2016, Acquisition Corp. redeemed $27.5 million, or 10%, of its outstanding 5.625% Senior Secured Notes due 2022. The Company recorded a loss on extinguishment of debt of approximately $1 million, which represents the premium paid on early redemption and unamortized deferred financing costs. On February 16, 2016, Holdings redeemed $50 million of its $150 million outstanding 13.75% Senior Notes due 2019. The Company recorded a loss on extinguishment of debt of approximately $5 million, which represents the premium paid on early redemption and unamortized deferred financing costs. On July 1, 2016, Holdings redeemed the remaining $100 million of its outstanding 13.75% Senior Notes due 2019. The Company recorded a loss on extinguishment of debt of approximately $10 million as a result of this debt redemption, which represents the premium paid on early redemption and unamortized deferred financing costs. On July 27, 2016, Acquisition Corp. prepaid $295.5 million of its outstanding Senior Term Loan Facility due 2020. The Company recorded a loss on extinguishment of debt of approximately $4 million, which represents the unamortized discount and unamortized deferred financing costs. Open Market Purchases On March 11, 2016, Acquisition Corp. purchased, in the open market, approximately $25 million of its $660 million outstanding 6.75% Senior Notes due 2022. The acquired notes were subsequently retired. Following retirement of the acquired notes, approximately $635 million of the 6.75% Senior Notes due 2022 remain outstanding. Notes Offering On July 27, 2016, Acquisition Corp. issued $300 million in aggregate principal amount of its 5.00% Senior Secured Notes due 2023 (the “Notes Offering”). Acquisition Corp. used the net proceeds for the prepayment of $295.5 million of its outstanding Senior Term Loan Facility due 2020. 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 Acquisition Corp.’s election at a rate equal to (i) the rate for deposits in U.S. dollars in the London interbank market (adjusted for maximum reserves) for the applicable interest period (“Term Loan LIBOR”), plus 2.50% 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) three-month Term Loan LIBOR, plus 1.00% per annum, plus, in each case, 1.50% per annum. 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. Maturity of Senior Term Loan Facility The loans outstanding under the Senior Term Loan Facility mature on November 1, 2023, subject, in certain circumstances, to a springing maturity inside the maturity of certain of Acquisition Corp.’s other indebtedness. Maturity of Revolving Credit Facility The maturity date of the Revolving Credit Facility is April 1, 2021. Maturities of Senior Notes and Senior Secured Notes As of September 30, 2017, there are no scheduled maturities of notes until 2022, when $883 million is scheduled to mature. Thereafter, $957 million is scheduled to mature. Interest Expense, net Total interest expense, net, was $149 million, $173 million, and $181 million for the fiscal years ended September 30, 2017, 2016 and 2015, respectively. The weighted-average interest rate of the Company’s total debt was 4.9% at September 30, 2017, 5.3% at September 30, 2016 and 5.6% at September 30, 2015. |
Income Taxes
Income Taxes | 12 Months Ended |
Sep. 30, 2017 | |
Income Tax Disclosure [Abstract] | |
Income Taxes | 7. 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, 2017 2016 2015 (in millions) Domestic $ (37 ) $ 35 $ (18 ) Foreign 35 6 (57 ) Total $ (2 ) $ 41 $ (75 ) 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, 2017 2016 2015 (in millions) Federal: Current $ — $ — $ — Deferred (169 ) 3 4 Foreign: Current (a) 41 39 40 Deferred (12 ) (30 ) (33 ) U.S. State: Current 2 3 3 Deferred (13 ) (4 ) (1 ) Total $ (151 ) $ 11 $ 13 (a) Includes withholding taxes of $13 million, $17 million and $13 million for the fiscal year ended September 30, 2017, for the fiscal year ended September 30, 2016, and for the fiscal year ended September 30, 2015, 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, 2017 2016 2015 (in millions) Taxes on income at the U.S. federal statutory rate $ (1 ) $ 14 $ (26 ) U.S. state and local taxes 3 (1 ) 2 Foreign income taxed at different rates, including withholding taxes 11 12 11 Increase in valuation allowance 18 19 34 Release of valuation allowance (134 ) (26 ) (5 ) Change in tax rates (1 ) (10 ) (2 ) Foreign Currency Losses on Intra-Entity Loans (59 ) — — Non-deductible share based compensation 10 1 — Other 2 2 (1 ) Total income tax (benefit) expense $ (151 ) $ 11 $ 13 During the year ended September 30, 2017, the Company recognized a U.S. tax benefit of $59 million related to foreign currency losses on intra-entity loans. The foreign currency loss was previously reported in accumulated other comprehensive loss as the intra-entity loans were previously considered long-term investment in nature. For the fiscal year ended September 30, 2017 and for the fiscal year ended September 30, 2016, the Company incurred losses in 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. In the U.S., the Company has released $125 million of the US valuation allowance related to US tax attributes. Significant components of the Company’s net deferred tax assets (liabilities) are summarized below: September 30, September 30, 2017 2016 (in millions) Deferred tax assets: Allowances and reserves $ 35 $ 34 Employee benefits and compensation 91 47 Other accruals 68 82 Tax attribute carry forwards 482 475 Other 13 3 Total deferred tax assets 689 641 Valuation allowance (193 ) (310 ) Net deferred tax assets 496 331 Deferred tax liabilities: Depreciation, amortization and artist advances (15 ) (26 ) Intangible assets (574 ) (572 ) Total deferred tax liabilities (589 ) (598 ) Net deferred tax liabilities $ (93 ) $ (267 ) In the third quarter ended June 30, 2017 the Company emerged from cumulative U.S. losses in the most recent three-year period. The emergence from cumulative three-year losses, projections of sufficient future taxable income in the U.S., and the reversal of future taxable temporary differences represents significant positive evidence, which outweighed our historical negative evidence. The Company concluded that it is more likely than not that the Company’s deferred tax assets, except for a portion of the Company’s deferred tax assets relating to foreign tax credit (“FTC”) carryforwards and U.S. State net operating loss (“NOL”) carryforwards, will be realized. As a result, the Company released $125 million of its valuation allowance recorded on its deferred tax assets as of the year-ended September 30, 2016. The Company has retained a portion of its valuation allowance of $119 million against its U.S. tax attributes of which $108 million relates to our FTC carryforwards, $4 million relates to our U.S. State NOL carryforwards and $7 million relates to outside basis differences in investments due to its expectation of realizing the benefits of these tax attributes during the limited carryforward period does not meet the “more likely than not” threshold. At September 30, 2017, the Company has U.S. federal tax net operating loss carry-forwards of $558 million, which will begin to expire in fiscal year 2027. The Company also has tax net operating loss carry-forwards, with no expiration date, in the U.K., France and Spain of $23 million, $120 million and $45 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. The US foreign tax credits will begin to expire in fiscal year 2018. U.S. income and foreign withholding taxes have not been recorded on indefinitely reinvested earnings of certain foreign subsidiaries of approximately $218 million at September 30, 2017. 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 position as a component of income tax expense. As of September 30, 2017 and September 30, 2016, the Company had accrued $3 million and $3 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, 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 Additions for current year tax positions 7 Additions for prior year tax positions 1 Subtractions for prior year tax positions (13 ) Balance at September 30, 2016 $ 30 Additions for current year tax positions 2 Additions for prior year tax positions 1 Subtractions for prior year tax positions (14 ) Balance at September 30, 2017 $ 19 Included in the total unrecognized tax benefits at September 30, 2017 and 2016 are $19 million and $30 million, respectively, that if recognized, would favorably affect the effective income tax rate. The Company’s gross unrecognized tax benefits decreased during the year ended September 30, 2017 by $14 million due primarily to the finalization of an agreement with the United Kingdom (“U.K.”) tax authorities. The Company has determined that is reasonably possible that its existing reserve for uncertain tax positions as of September 30, 2017 could decrease by up to approximately $3 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, 2013, in the U.K. for the tax years ending through September 30, 2013, in Canada for tax years ended through September 30, 2013, 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, 2017 | |
Compensation And Retirement Disclosure [Abstract] | |
Employee Benefit Plans | 8. 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 $75 million and $83 million as of September 30, 2017 and September 30, 2016, 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 $50 million and $56 million recorded in its balance sheets as of September 30, 2017 and September 30, 2016, respectively. The Company uses a September 30 measurement date for its plans. For each of the fiscal years ended September 30, 2017, September 30, 2016, and September 30, 2015, pension expense amounted to $4 million. 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 $5 million for the fiscal year ended September 30, 2017, $5 million for the fiscal year ended September 30, 2016, and $4 million for the fiscal year ended September 30, 2015. |
Share-Based Compensation Plans
Share-Based Compensation Plans | 12 Months Ended |
Sep. 30, 2017 | |
Disclosure Of Compensation Related Costs Sharebased Payments [Abstract] | |
Share-Based Compensation Plans | 9. Share-Based Compensation Plans Effective January 1, 2013, eligible individuals were invited to participate in the Senior Management Free Cash Flow Plan (as amended, 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. In 2017, the Company’s Compensation Committee invited two additional employees 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 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 on the grant date. 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. The deferred and matching equity units have cash settlement dates that begin in December 2018. The deferred units will be settled at the participant’s election for cash equal to the fair market value of one fractional company share or a fractional company share. The matching units will be settled for cash equal to the redemption price or fractional company shares of equivalent value. At the end of the redemption period, 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, 2015 18 25 $ 135.00 $ 27.87 $ 107.13 $ — Granted 9 9 135.00 — 107.13 — Vested (7 ) (5 ) 135.00 27.87 107.13 — Forfeited (1 ) (1 ) 135.00 27.87 107.13 — Unvested units at September 30, 2016 19 28 $ 142.21 $ 35.08 $ 107.13 $ — Granted 11 11 241.75 90.06 146.86 — Vested (17 ) (3 ) 241.75 134.62 107.13 — Forfeited — — — — — — Unvested units at September 30, 2017 13 36 $ 241.75 $ 111.23 $ 140.04 $ — The weighted-average grant date intrinsic value of deferred equity unit awards for the fiscal year ended September 30, 2017 was $140.04. The fair value of these deferred equity units at September 30, 2017 was $241.75. The weighted-average grant date intrinsic value of deferred equity unit awards for the period ended September 30, 2016 was $107.13. The fair value of these deferred equity units at September 30, 2016 was $142.21. The weighted-average grant date intrinsic value of deferred equity unit awards for the period ended September 30, 2015 was $107.13. The fair value of these deferred equity units at September 30, 2015 was $135.00. Compensation Expense The Company recognized non-cash share-based compensation expense of $70 million, free cash flow compensation expense of $30 million and dividend expense related to the equity units of $2 million for the fiscal year ended September 30, 2017. The Company recognized non-cash share-based compensation of $23 million for the fiscal year ended September 30, 2016. Of the $23 million, $13 million related to awards for employees and $10 million related to awards for non-employees for the fiscal year ended September 30, 2016. The Company recognized non-cash share-based compensation 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. In addition, at September 30, 2017, September 30, 2016 and September 30, 2015, the Company had approximately $34 million, $2 million and $7 million, respectively, of unrecognized compensation costs related to its unvested share awards. As of September 30, 2017, the remaining weighted average period over which total compensation related to unvested awards is expected to be recognized is 1 year. |
Related Party Transactions
Related Party Transactions | 12 Months Ended |
Sep. 30, 2017 | |
Related Party Transactions [Abstract] | |
Related Party Transactions | 10. 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 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 for each of the fiscal years ended September 30, 2017, September 30, 2016 and September 30, 2015, which includes the annual fee, but excludes $2 million of expenses reimbursed related to certain consultants with full time roles at the Company for the fiscal years ended September 30, 2016 and September 30, 2015. 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 fiscal year 2014. 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 for an additional five years from December 24, 2020 to December 24, 2025, with a market rate rent review that would begin December 25, 2020. 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. On July 15, 2016, a subsidiary of the Company, Warner Music Inc., entered into a license agreement with Cooper Investment Partners LLC, for the use of office space in our corporate headquarters at 1633 Broadway, New York, New York. The license fee of $16,967.21 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, 2016, an immaterial amount was recorded as rental income. The space is occupied by Cooper Investment Partners LLC, which is a private equity fund that pursues a wide range of investment opportunities. Deezer Access owns a controlling 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. 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 $36 million and $29 million in connection with the foregoing arrangements during the fiscal year ended September 30, 2017 and 2016, respectively. In addition, in connection with these arrangements, (i) the Company was issued, and currently holds, warrants to purchase shares of Deezer S.A. and (ii) the Company purchased a small number of shares of Deezer S.A., which collectively represent a small minority interest in Deezer S.A. Acquisition of Selected Assets of Songkick As of July 12, 2017, we acquired selected assets from Songkick, including the concert discovery app and website and the Songkick trademark, for a purchase price of $5 million. Access owns a significant minority interest in the seller. |
Commitments and Contingencies
Commitments and Contingencies | 12 Months Ended |
Sep. 30, 2017 | |
Commitments And Contingencies Disclosure [Abstract] | |
Commitments and Contingencies | 11. Commitments and Contingencies Leases The Company occupies various facilities and uses certain equipment under both capital and operating leases. Net rent expense was approximately $62 million, $60 million and $66 million for the fiscal years ended September 30, 2017, September 30, 2016 and September 30, 2015, respectively. At September 30, 2017, future minimum payments under non-cancelable operating leases (net of sublease income) are as follows: Operating Years Leases (in millions) 2018 $ 50 2019 52 2020 48 2021 45 2022 44 Thereafter 286 Total $ 525 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 $305 million and $288 million as of September 30, 2017 and September 30, 2016, respectively. Other Other off-balance sheet, firm commitments, which primarily include minimum funding commitments to investees, amounted to approximately $3 million and $2 million at September 30, 2017 and September 30, 2016, 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 U.S. 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. On March 19, 2014, plaintiffs filed a motion for class certification. Plaintiffs filed an operative consolidated amended complaint on September 25, 2015. The Company filed its answer to the fourth amended complaint on October 9, 2015, and filed an amended answer on November 3, 2015. A mediation took place on February 22, 2016, but the parties were unable to reach a resolution. On July 12, 2017, the District Court denied plaintiffs’ motion for class certification. On August 1, 2017, plaintiffs filed a petition with the Second Circuit seeking permission to appeal the district court’s order denying class certification. The Company intends to defend against these lawsuits vigorously, but is unable to predict the outcome of these suits. Regardless of the merits of the claims, this and any related litigation could continue to be costly, and divert the time and resources of management. The potential outcomes of these claims that are reasonably possible cannot be determined at this time and an estimate of the reasonably possible loss or range of loss cannot presently be made. Sirius XM On September 11, 2013, the Company joined with Capitol Records, LLC, Sony Music Entertainment, UMG Recordings, Inc. and ABKCO Music & Records, Inc. in a lawsuit brought in California Superior Court against Sirius XM Radio Inc., alleging copyright infringement for Sirius XM’s use of pre-1972 sound recordings under California law. A nation-wide settlement was reached on June 17, 2015 pursuant to which Sirius XM paid the plaintiffs, in the aggregate, $210 million on July 29, 2015 and the plaintiffs dismissed their lawsuit with prejudice. The settlement resolves all past claims as to Sirius XM’s use of pre-1972 recordings owned or controlled by the plaintiffs and enables Sirius XM, without any additional payment, to reproduce, perform and broadcast such recordings in the United States through December 31, 2017. As part of the settlement, Sirius XM has the right, to be exercised before December 31, 2017, to enter into a license with each plaintiff to reproduce, perform and broadcast its pre-1972 recordings from January 1, 2018 through December 31, 2022. The royalty rate for each such license will be determined by negotiation or, if the parties are unable to agree, binding arbitration on a willing buyer/willing seller standard. The allocation of the settlement proceeds among the plaintiffs was determined and the settlement proceeds were distributed accordingly. This resulted in a cash distribution to the Company of $33 million of which $28 million was recognized in revenue during the 2016 fiscal year and $4 million was recognized in revenue during the 2017 fiscal year. The balance will be recognized in revenue in the first quarter of the 2018 fiscal year. The Company is sharing its allocation of the settlement proceeds with its artists on the same basis as statutory revenue from Sirius XM is shared, i.e., the artist share of our allocation will be paid to artists by SoundExchange. Other Matters In addition to the matter 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 the currently pending proceedings, the amount of accrual is not 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, 2017 | |
Derivative Instruments And Hedging Activities Disclosure [Abstract] | |
Derivative Financial Instruments | 12. 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, Derivatives and Hedging The Company may at times choose to hedge foreign currency risk associated with financing transactions such as third-party debt and other balance sheet items. The foreign currency forward exchange contracts related to balance sheet items denominated in foreign currency are reviewed on a contract-by-contract basis and are designated accordingly. If these foreign currency forward exchange contracts do not qualify for hedge accounting, then the Company records these contracts at fair value on its balance sheet and the related gains and losses are immediately recognized in the statement of operations where there is an equal and offsetting entry related to the underlying exposure. The fair value of foreign currency forward exchange contracts is determined by using observable market transactions of spot and forward rates (i.e., Level 2 inputs) which is discussed further in Note 15. 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, 2017, 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, 2016, the Company had no outstanding hedge contracts and no deferred gains or losses in comprehensive loss related to foreign exchange hedging. |
Segment Information
Segment Information | 12 Months Ended |
Sep. 30, 2017 | |
Segment Reporting [Abstract] | |
Segment Information | 13. 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) 2017 Revenues $ 3,020 $ 572 $ (16 ) $ 3,576 Operating income (loss) 283 81 (142 ) 222 Amortization of intangible assets 136 65 — 201 Depreciation of property, plant and equipment 32 6 12 50 OIBDA 451 152 (130 ) 473 Total assets 2,085 2,510 1,123 5,718 Capital expenditures 21 5 18 44 2016 Revenues $ 2,736 $ 524 $ (14 ) $ 3,246 Operating income (loss) 247 68 (101 ) 214 Amortization of intangible assets 180 63 — 243 Depreciation of property, plant and equipment 32 7 11 50 OIBDA 459 138 (90 ) 507 Total assets 2,584 2,365 386 5,335 Capital expenditures 18 7 17 42 2015 Revenues $ 2,501 $ 482 $ (17 ) $ 2,966 Operating income (loss) 151 77 (101 ) 127 Amortization of intangible assets 192 63 — 255 Depreciation of property, plant and equipment 36 6 12 54 OIBDA 379 146 (89 ) 436 Capital expenditures 19 7 37 63 Revenues relating to operations in different geographical areas are set forth below for the fiscal years ended September 30, 2017, September 30, 2016 and September 30, 2015. Total assets relating to operations in different geographical areas are set forth below as of September 30, 2017 and September 30, 2016. 2017 2016 2015 Long-lived Long-lived Revenue Assets Revenue Assets Revenue (in millions) United States $ 1,587 $ 139 $ 1,360 $ 138 $ 1,171 United Kingdom 522 26 491 23 477 All other territories 1,467 48 1,395 42 1,318 Total $ 3,576 $ 213 $ 3,246 $ 203 $ 2,966 Customer Concentration In the fiscal years ended September 30, 2017, September 30, 2016 and September 30, 2015, one customer represented 14%, 14% and 13% 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, 2017 | |
Additional Financial Information [Abstract] | |
Additional Financial Information | 14. Additional Financial Information Cash Interest and Taxes The Company made interest payments of approximately $138 million, $181 million and $171 million during the fiscal years ended September 30, 2017, September 30, 2016 and September 30, 2015, respectively. The Company paid approximately $40 million, $41 million and $25 million of foreign income and withholding taxes, net of refunds, for the fiscal years ended September 30, 2017, September 30, 2016 and September 30, 2015, respectively. Special Cash Dividends On December 2, 2016, the Company’s Board of Directors approved a special cash dividend of $54 million which was paid on January 3, 2017 to stockholders of record as of December 30, 2016. On June 5, 2017, the Company’s Board of Directors approved a special cash dividend of $30 million which was paid on July 31, 2017 to stockholders of record as of June 30, 2017. Investments and Acquisitions of businesses, net The Company paid cash of $139 million, $28 million and $16 million for investments and acquisitions of businesses, net, during the fiscal years ended September 30, 2017, September 30, 2016 and September 30, 2015, respectively. For the fiscal year ended September 30, 2017, the cash paid of $139 million includes the acquisition of Spinnin’ Records, which was acquired on September 7, 2017. Based in the Netherlands, Spinnin’ Records is a dance and electronic music company. The results of operations for Spinnin’ Records are reported in our Recorded Music segment following the acquisition date. The Company accounted for the acquisition of Spinnin’ Records as a business combination under ASC 805, which requires the acquisition method of accounting. Under this method, the Company performed a preliminary purchase accounting allocation, which resulted in goodwill, intangibles, deferred tax liabilities and other insignificant assets and liabilities assumed. The acquisition accounting is subject to revision based on final determinations of fair value and allocations of purchase price to the identifiable assets and liabilities acquired. |
Fair Value Measurements
Fair Value Measurements | 12 Months Ended |
Sep. 30, 2017 | |
Fair Value Disclosures [Abstract] | |
Fair Value Measurements | 15. 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, 2017 and September 30, 2016. Fair Value Measurements as of September 30, 2017 (Level 1) (Level 2) (Level 3) Total (in millions) Other Current Liabilities: Contractual Obligations (a) — — — — Other Non-Current Liabilities: Contractual Obligations (a) — — (5 ) (5 ) Total $ — $ — $ (5 ) $ (5 ) Fair Value Measurements as of September 30, 2016 (Level 1) (Level 2) (Level 3) Total (in millions) Other Current Liabilities: Contractual Obligations (a) — — — — Other Non-Current Liabilities: Contractual Obligations (a) — — (4 ) (4 ) Total $ — $ — $ (4 ) $ (4 ) (a) This represents purchase obligations and contingent consideration related to the Company’s various acquisitions. This is based on a probability weighted performance 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, 2016 $ (4 ) Additions (1 ) Reductions — Payments — Balance at September 30, 2017 $ (5 ) 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, 2017, the fair value of the Company’s debt was $2.936 billion. Based on the level of interest rates prevailing at September 30, 2016, the fair value of the Company’s debt was $2.896 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. |
Subsequent Events
Subsequent Events | 12 Months Ended |
Sep. 30, 2017 | |
Subsequent Events [Abstract] | |
Subsequent Events | 16. Subsequent Events November 2017 Senior Term Loan Credit Agreement Amendment On November 30, 2017, Warner Music Group acquired lender consent to effect an amendment (the “Senior Term Loan Credit Agreement Amendment”) to the credit agreement, dated November 1, 2012 (as amended by the amendments dated as of May 9, 2013, July 13, 2016, November 21, 2016 and May 22, 2017), among Warner Music Group, the guarantors party thereto, the lenders party thereto and Credit Suisse AG, as administrative agent, governing the Company’s senior secured term loan facility with Credit Suisse AG, as administrative agent, and the other financial institutions and lenders from time to time party thereto. The Senior Term Loan Credit Agreement Amendment is scheduled to close on December 6, 2017 and (among other changes) will reduce the pricing terms of its outstanding term loans and change certain incurrence thresholds governing the ability to incur debt and liens, change certain EBITDA add-backs, as well as adjust the thresholds below which the excess cash flow sweep is triggered. |
Quarterly Financial Information
Quarterly Financial Information | 12 Months Ended |
Sep. 30, 2017 | |
Quarterly Financial Information Disclosure [Abstract] | |
Quarterly Financial Information | WARNER MUSIC GROUP CORP. 2017 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, 2017 2017 2017 2016 (in millions) Revenues $ 917 $ 917 $ 825 $ 917 Costs and expenses: Cost of revenue (501 ) (519 ) (415 ) (496 ) Selling, general and administrative expenses (a) (368 ) (296 ) (282 ) (276 ) Amortization expense (49 ) (51 ) (50 ) (51 ) Total costs and expenses (918 ) (866 ) (747 ) (823 ) Operating income (1 ) 51 78 94 Loss on extinguishment of debt — (3 ) — (32 ) Interest expense, net (37 ) (36 ) (36 ) (40 ) Other (expense) income (19 ) (21 ) (19 ) 19 (Loss) income before income taxes (57 ) (9 ) 23 41 Income tax (expense) benefit 19 152 (3 ) (17 ) Net (loss) income (38 ) 143 20 24 Less: income attributable to noncontrolling interest (1 ) (2 ) (1 ) (2 ) Net (loss) income attributable to Warner Music Group Corp. $ (39 ) $ 141 $ 19 $ 22 (a) Includes depreciation expense of: $ (12 ) $ (13 ) $ (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. WARNER MUSIC GROUP CORP. 2016 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, 2016 2016 2016 2015 (in millions) Revenues $ 841 $ 811 $ 745 $ 849 Costs and expenses: Cost of revenue (436 ) (448 ) (374 ) (449 ) Selling, general and administrative expenses (a) (295 ) (255 ) (256 ) (276 ) Amortization expense (55 ) (63 ) (63 ) (62 ) Total costs and expenses (786 ) (766 ) (693 ) (787 ) Operating income 55 45 52 62 Loss on extinguishment of debt (14 ) — (4 ) — Interest expense, net (42 ) (43 ) (43 ) (45 ) Other (expense) income (7 ) (5 ) 22 8 (Loss) income before income taxes (8 ) (3 ) 27 25 Income tax benefit (expense) 5 (4 ) (15 ) 3 Net (loss) income (3 ) (7 ) 12 28 Less: income attributable to noncontrolling interest (1 ) (2 ) (1 ) (1 ) Net (loss) income attributable to Warner Music Group Corp. $ (4 ) $ (9 ) $ 11 $ 27 (a) Includes depreciation expense of: $ (13 ) $ (12 ) $ (12 ) $ (13 ) 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, 2017 | |
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. Acquisition Corp. has issued and outstanding the 5.625% Senior Secured Notes due 2022, the 5.00% Senior Secured Notes due 2023, the 4.125% Senior Secured Notes due 2024, the 4.875% Senior Secured Notes due 2024 and the 6.75% Senior Notes due 2022 (together, the “Acquisition Corp. Notes”). The Acquisition Corp. Notes are 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 and joint and several. The following condensed consolidating financial statements are also presented for the information of the holders of the Acquisition Corp. Notes and present the results of operations, financial position and cash flows of (i) Acquisition Corp., which is the issuer of the Acquisition Corp. Notes, (ii) the guarantor subsidiaries of Acquisition Corp., (iii) the non-guarantor subsidiaries of Acquisition Corp. and (iv) the eliminations necessary to arrive at the information for Acquisition Corp. on a consolidated basis. Investments in consolidated subsidiaries are presented under the equity method of accounting. There are no restrictions on Acquisition Corp.’s ability to obtain funds from any of its wholly-owned subsidiaries through dividends, loans or advances. The Company and Holdings are holding companies that conduct substantially all of their business operations through Acquisition Corp. Accordingly, the ability of the Company and Holdings to obtain funds from their subsidiaries is restricted by the indentures for the Acquisition Corp. Notes and the credit agreements for the Acquisition Corp. Senior Credit Facilities, including the Revolving Credit Facility and Senior Term Loan Facility. Consolidating Balance Sheet September 30, 2017 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 $ — $ 347 $ 300 $ — $ 647 $ — $ — $ — $ 647 Accounts receivable, net — 214 190 — 404 — — — 404 Inventories — 12 27 — 39 — — — 39 Royalty advances expected to be recouped within one year — 89 52 — 141 — — — 141 Prepaid and other current assets — 15 29 — 44 — — — 44 Total current assets — 677 598 — 1,275 — — — 1,275 Due from (to) parent companies 418 96 (514 ) — — — — — — Investments in and advances to consolidated subsidiaries 2,721 1,312 — (4,033 ) — 377 377 (754 ) — Royalty advances expected to be recouped after one year — 109 63 — 172 — — — 172 Property, plant and equipment, net — 139 74 — 213 — — — 213 Goodwill — 1,368 317 — 1,685 — — — 1,685 Intangible assets subject to amortization, net — 1,029 1,061 — 2,090 — — — 2,090 Intangible assets not subject to amortization — 71 46 — 117 — — — 117 Deferred tax assets, net — 89 8 — 97 — — — 97 Other assets 7 45 17 — 69 — — — 69 Total assets $ 3,146 $ 4,935 $ 1,670 $ (4,033 ) $ 5,718 $ 377 $ 377 $ (754 ) $ 5,718 Liabilities and Deficit: Current liabilities: Accounts payable $ — $ 135 $ 73 $ — $ 208 $ — $ — $ — $ 208 Accrued royalties — 732 531 — 1,263 — — — 1,263 Accrued liabilities — 144 221 — 365 — — — 365 Accrued interest 41 — — — 41 — — — 41 Deferred revenue — 125 72 — 197 — — — 197 Other current liabilities — 3 23 — 26 — — — 26 Total current liabilities 41 1,139 920 — 2,100 — — — 2,100 Long-term debt 2,811 — — — 2,811 — — — 2,811 Deferred tax liabilities, net — — 190 — 190 — — — 190 Other noncurrent liabilities 1 196 112 — 309 — — — 309 Total liabilities 2,853 1,335 1,222 — 5,410 — — — 5,410 Total Warner Music Group Corp. equity 293 3,596 437 (4,033 ) 293 377 377 (754 ) 293 Noncontrolling interest — 4 11 — 15 — — — 15 Total equity 293 3,600 448 (4,033 ) 308 377 377 (754 ) 308 Total liabilities and equity $ 3,146 $ 4,935 $ 1,670 $ (4,033 ) $ 5,718 $ 377 $ 377 $ (754 ) $ 5,718 Consolidating Balance Sheet September 30, 2016 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 $ — $ 180 $ 179 $ — $ 359 $ — $ — $ — $ 359 Accounts receivable, net — 177 152 — 329 — — — 329 Inventories — 16 25 — 41 — — — 41 Royalty advances expected to be recouped within one year — 79 49 — 128 — — — 128 Prepaid and other current assets 1 13 37 — 51 — — — 51 Total current assets 1 465 442 — 908 — — — 908 Due from (to) parent companies 750 (312 ) (438 ) — — — — — — Investments in and advances to consolidated subsidiaries 2,260 1,458 — (3,718 ) — 195 195 (390 ) — Royalty advances expected to be recouped after one year — 120 76 — 196 — — — 196 Property, plant and equipment, net — 138 65 — 203 — — — 203 Goodwill — 1,372 255 — 1,627 — — — 1,627 Intangible assets subject to amortization, net — 1,165 1,036 — 2,201 — — — 2,201 Intangible assets not subject to amortization — 71 45 — 116 — — — 116 Deferred tax assets, net — — 2 — 2 — — — 2 Other assets 3 62 17 — 82 — — — 82 Total assets $ 3,014 $ 4,539 $ 1,500 $ (3,718 ) $ 5,335 $ 195 $ 195 $ (390 ) $ 5,335 Liabilities and Deficit: Current liabilities: Accounts payable $ — $ 124 $ 80 $ — $ 204 $ — $ — $ — $ 204 Accrued royalties — 606 498 — 1,104 — — — 1,104 Accrued liabilities — 112 185 — 297 — — — 297 Accrued interest 38 — — — 38 — — — 38 Deferred revenue — 143 35 — 178 — — — 178 Current portion of long-term debt — — — — — — — — — Other current liabilities — 3 18 — 21 — — — 21 Total current liabilities 38 988 816 — 1,842 — — — 1,842 Long-term debt 2,778 — — — 2,778 — — — 2,778 Deferred tax liabilities, net — 109 160 — 269 — — — 269 Other noncurrent liabilities 3 126 107 — 236 — — — 236 Total liabilities 2,819 1,223 1,083 — 5,125 — — — 5,125 Total Warner Music Group Corp. equity (deficit) 195 3,314 404 (3,718 ) 195 195 195 (390 ) 195 Noncontrolling interest — 2 13 — 15 — — — 15 Total equity (deficit) 195 3,316 417 (3,718 ) 210 195 195 (390 ) 210 Total liabilities and equity (deficit) $ 3,014 $ 4,539 $ 1,500 $ (3,718 ) $ 5,335 $ 195 $ 195 $ (390 ) $ 5,335 Consolidating Statement of Operations For The Fiscal Year Ended September 30, 2017 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 $ — $ 1,978 $ 2,008 $ (410 ) $ 3,576 $ — $ — $ — $ 3,576 Costs and expenses: Cost of revenue — (922 ) (1,275 ) 266 (1,931 ) — — — (1,931 ) Selling, general and administrative expenses (1 ) (900 ) (464 ) 143 (1,222 ) — — — (1,222 ) Amortization of intangible assets — (100 ) (101 ) — (201 ) — — — (201 ) Total costs and expenses (1 ) (1,922 ) (1,840 ) 409 (3,354 ) — — — (3,354 ) Operating income (loss) (1 ) 56 168 (1 ) 222 — — — 222 Loss on extinguishment of debt (35 ) — — — (35 ) — — — (35 ) Interest (expense) income, net (95 ) 2 (56 ) — (149 ) — — — (149 ) Equity gains from consolidated subsidiaries 124 87 — (210 ) 1 143 143 (286 ) 1 Other expense, net (1 ) (17 ) (23 ) — (41 ) — — — (41 ) (Loss) income before income taxes (8 ) 128 89 (211 ) (2 ) 143 143 (286 ) (2 ) Income tax benefit (expense) 151 154 (30 ) (124 ) 151 — — — 151 Net income 143 282 59 (335 ) 149 143 143 (286 ) 149 Less: income attributable to noncontrolling interest — (1 ) (5 ) — (6 ) — — — (6 ) Net income attributable to Warner Music Group Corp. $ 143 $ 281 $ 54 $ (335 ) $ 143 $ 143 $ 143 $ (286 ) $ 143 Consolidating Statement of Operations For The Fiscal Year Ended September 30, 2016 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 $ — $ 1,668 $ 1,887 $ (309 ) $ 3,246 $ — $ — $ — $ 3,246 Costs and expenses: Cost of revenue — (703 ) (1,192 ) 188 (1,707 ) — — — (1,707 ) Selling, general and administrative expenses — (739 ) (464 ) 121 (1,082 ) — — — (1,082 ) Amortization of intangible assets — (118 ) (125 ) — (243 ) — — — (243 ) Total costs and expenses — (1,560 ) (1,781 ) 309 (3,032 ) — — — (3,032 ) Operating income — 108 106 — 214 — — — 214 Loss on extinguishment of debt (4 ) — — — (4 ) (14 ) — — (18 ) Interest (expense) income, net (84 ) 3 (79 ) 1 (159 ) (14 ) — — (173 ) Equity gains (losses) from consolidated subsidiaries 162 74 — (236 ) — 53 25 (78 ) — Other income (expense), net (10 ) 2 26 — 18 — — — 18 Income (loss) before income taxes 64 187 53 (235 ) 69 25 25 (78 ) 41 Income tax (expense) benefit (11 ) (20 ) 1 19 (11 ) — — — (11 ) Net income (loss) 53 167 54 (216 ) 58 25 25 (78 ) 30 Less: income attributable to noncontrolling interest — (1 ) (4 ) — (5 ) — — — (5 ) Net income (loss) attributable to Warner Music Group Corp. $ 53 $ 166 $ 50 $ (216 ) $ 53 $ 25 $ 25 $ (78 ) $ 25 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 income 1 47 80 (1 ) 127 — — — 127 Loss on extinguishment of debt — — — — — — — — — Interest (expense) income, net (82 ) 6 (83 ) — (159 ) (22 ) — — (181 ) Equity gains (losses) from consolidated subsidiaries 35 (67 ) — 32 — (69 ) (91 ) 160 — Other (expense) benefit, net (10 ) 1 (12 ) — (21 ) — — — (21 ) (Loss) income before income taxes (56 ) (13 ) (15 ) 31 (53 ) (91 ) (91 ) 160 (75 ) Income tax (expense) benefit (13 ) (29 ) — 29 (13 ) — — — (13 ) Net (loss) income (69 ) (42 ) (15 ) 60 (66 ) (91 ) (91 ) 160 (88 ) Less: income attributable to noncontrolling interest — (1 ) (2 ) — (3 ) — — — (3 ) Net (loss) income attributable to Warner Music Group Corp. $ (69 ) $ (43 ) $ (17 ) $ 60 $ (69 ) $ (91 ) $ (91 ) $ 160 $ (91 ) Consolidating Statement of Comprehensive Income For The Fiscal Year Ended September 30, 2017 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 income $ 143 $ 282 $ 59 $ (335 ) $ 149 $ 143 $ 143 $ (286 ) $ 149 Other comprehensive income (loss), net of tax: Foreign currency adjustment 30 — (30 ) 30 30 32 32 (64 ) 30 Minimum pension liability 7 — 7 (7 ) 7 7 7 (14 ) 7 Deferred (loss) on derivative financial instruments — (1 ) — 1 — — — — — Other comprehensive income (loss), net of tax: 37 (1 ) (23 ) 24 37 39 39 (78 ) 37 Total comprehensive income 180 281 36 (311 ) 186 182 182 (364 ) 186 Less: income attributable to noncontrolling interest — (1 ) (5 ) — (6 ) — — — (6 ) Comprehensive income attributable to Warner Music Group Corp. $ 180 $ 280 $ 31 $ (311 ) $ 180 $ 182 $ 182 $ (364 ) $ 180 Consolidating Statement of Comprehensive Income For The Fiscal Year Ended September 30, 2016 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 income $ 53 $ 167 $ 54 $ (216 ) $ 58 $ 25 $ 25 $ (78 ) $ 30 Other comprehensive (loss) income, net of tax: Foreign currency adjustment (44 ) — (44 ) 44 (44 ) (44 ) (44 ) 88 (44 ) Minimum pension liability (7 ) — (7 ) 7 (7 ) (7 ) (7 ) 14 (7 ) Deferred (loss) gain on derivative financial instruments — (1 ) — 1 — — — — — Other comprehensive (loss) income , net of tax: (51 ) (1 ) (51 ) 52 (51 ) (51 ) (51 ) 102 (51 ) Total comprehensive (loss) income 2 166 3 (164 ) 7 (26 ) (26 ) 24 (21 ) Less: income attributable to noncontrolling interest — (1 ) (4 ) — (5 ) — — — (5 ) Comprehensive (loss) income attributable to Warner Music Group Corp. $ 2 $ 165 $ (1 ) $ (164 ) $ 2 $ (26 ) $ (26 ) $ 24 $ (26 ) Consolidating Statement of Comprehensive (Loss) 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 (loss) income, net of tax: Foreign currency adjustment (59 ) — (59 ) 59 (59 ) (59 ) (59 ) 118 (59 ) Minimum pension liability — — — — — — — — — Other comprehensive (loss) income, 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 Cash Flows For The Fiscal Year Ended September 30, 2017 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 income $ 143 $ 282 $ 59 $ (335 ) $ 149 $ 143 $ 143 $ (286 ) $ 149 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation and amortization — 137 114 — 251 — — — 251 Unrealized gains/losses and remeasurement of foreign denominated loans 27 — (3 ) — 24 — — — 24 Deferred income taxes 2 — (194 ) — (192 ) — — — (192 ) Loss on extinguishment of debt 35 — — — 35 — — — 35 Net loss (gain) on divestitures and investments — 33 (16 ) — 17 — — — 17 Non-cash interest expense 8 — — — 8 — — — 8 Equity-based compensation expense — 70 — — 70 — — — 70 Equity losses (gains), including distributions (124 ) (86 ) — 210 — (143 ) (143 ) 286 — Changes in operating assets and liabilities: Accounts receivable — (37 ) (23 ) — (60 ) — — — (60 ) Inventories — 2 (1 ) — 1 — — — 1 Royalty advances — 2 15 — 17 — — — 17 Accounts payable and accrued liabilities (120 ) (4 ) 47 125 48 — — — 48 Royalty payables — 126 10 — 136 — — — 136 Accrued interest 3 — — — 3 — — — 3 Deferred revenue — (6 ) 28 — 22 — — — 22 Other balance sheet changes 5 (204 ) 205 — 6 — — — 6 Net cash provided by (used in) operating activities (21 ) 315 241 — 535 — — — 535 Cash flows from investing activities Acquisition of music publishing rights, net — (9 ) (7 ) — (16 ) — — — (16 ) Capital expenditures — (31 ) (13 ) — (44 ) — — — (44 ) Investments and acquisitions of businesses, net — (6 ) (133 ) — (139 ) — — — (139 ) Divestitures, net — 42 31 — 73 — — — 73 Advance to Issuer 60 — — (60 ) — — — — — Net cash (used in) provided by investing activities 60 (4 ) (122 ) (60 ) (126 ) — — — (126 ) Cash flows from financing activities Dividend by Acquisition Corp. to Holdings Corp. — (84 ) — — (84 ) 84 — — — Proceeds from issuance of Acquisition Corp. 4.125% Senior Secured Notes 380 — — — 380 — — — 380 Proceeds from issuance of Acquisition Corp. 4.875% Senior Secured Notes 250 — — — 250 — — — 250 Proceeds from issuance of Acquisition Corp. Senior Term Loan Facility 22 — — — 22 — — — 22 Repayment of Acquisition Corp. 6.00% Senior Secured Notes (450 ) — — — (450 ) — — — (450 ) Repayment of Acquisition Corp. 6.25% Senior Secured Notes (173 ) — — — (173 ) — — — (173 ) Repayment of Acquisition Corp. 5.625% Senior Secured Notes (28 ) — — — (28 ) — — — (28 ) Call premiums paid on early redemption of debt (27 ) — — — (27 ) — — — (27 ) Deferred financing costs paid (13 ) — — — (13 ) — — — (13 ) Distribution to noncontrolling interest holder — — (5 ) — (5 ) — — — (5 ) Dividends paid — — — — — (84 ) — — (84 ) Change in due (from) to issuer — (60 ) — 60 — — — — — Net cash (used in) provided by financing activities (39 ) (144 ) (5 ) 60 (128 ) — — — (128 ) Effect of exchange rate changes on cash and equivalents — — 7 — 7 — — — 7 Net increase in cash and equivalents — 167 121 — 288 — — — 288 Cash and equivalents at beginning of period — 180 179 — 359 — — — 359 Cash and equivalents at end of period $ — $ 347 $ 300 $ — $ 647 $ — $ — $ — $ 647 Consolidating Statement of Cash Flows For The Fiscal Year Ended September 30, 2016 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 income $ 53 $ 167 $ 54 $ (216 ) $ 58 $ 25 $ 25 $ (78 ) $ 30 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation and amortization — 156 137 — 293 — — — 293 Unrealized gains/losses and remeasurement of foreign denominated loans — — — — — — — — — Deferred income taxes — — (26 ) — (26 ) — — — (26 ) Loss on extinguishment of debt 4 — — — 4 14 — — 18 Net gain on divestitures — (3 ) (6 ) — (9 ) — — — (9 ) Gain on sale of real estate — — (24 ) — (24 ) — — — (24 ) Non-cash interest expense 10 — — — 10 1 — — 11 Equity-based compensation expense — 23 — — 23 — — — 23 Equity losses (gains), including distributions (162 ) (74 ) — 236 — (53 ) (25 ) 78 — Changes in operating assets and liabilities: Accounts receivable — (7 ) 24 — 17 — — — 17 Inventories — — — — — — — — — Royalty advances — 1 (14 ) — (13 ) — — — (13 ) Accounts payable and accrued liabilities — 142 (99 ) (20 ) 23 — — — 23 Royalty payables — 93 (44 ) — 49 — — — 49 Accrued interest (10 ) — — — (10 ) (10 ) — — (20 ) Deferred revenue — (4 ) (31 ) — (35 ) — — — (35 ) Other balance sheet changes (4 ) (10 ) 19 — 5 — — — 5 Net cash (used in) provided by operating activities (109 ) 484 (10 ) — 365 (23 ) — — 342 Cash flows from investing activities Acquisition of music publishing rights, net — (16 ) (9 ) — (25 ) — — — (25 ) Capital expenditures — (30 ) (12 ) — (42 ) — — — (42 ) Investments and acquisitions of businesses, net — (10 ) (18 ) — (28 ) — — — (28 ) Divestitures, net — 8 37 — 45 — — — 45 Proceeds from the sale of real estate — — 42 — 42 — — — 42 Advance to Issuer 329 — — (329 ) — — — — — Net cash (used in) provided by investing activities 329 (48 ) 40 (329 ) (8 ) — — — (8 ) Cash flows from financing activities Dividend by Acquisition Corp. to Holdings Corp. (183 ) — — — (183 ) 183 — — — Repayment of Acquisition Corp. Senior Term Loan Facility (309 ) — — — (309 ) — — — (309 ) Proceeds from issuance of Acquisition Corp. 5.00% Senior Secured Notes 300 — — — 300 — — — 300 Repayment of Holdings 13.75% Senior Notes — — — — — (150 ) — — (150 ) Repayment of Acquisition Corp. 6.75% Senior Notes (24 ) — — — (24 ) — — — (24 ) Financing costs paid — — — — — (10 ) — — (10 ) Deferred financing costs paid (4 ) — — — (4 ) — — — (4 ) Distribution to noncontrolling interest holder — — (5 ) — (5 ) — — — (5 ) Repayment of capital lease obligations — — (14 ) — (14 ) — — — (14 ) Change in due (from) to issuer — (329 ) — 329 — — — — — Net cash (used in) provided by financing activities (220 ) (329 ) (19 ) 329 (239 ) 23 — — (216 ) Effect of exchange rate changes on cash and equivalents — — (5 ) — (5 ) — — — (5 ) Net increase in cash and equivalents — 107 6 — 113 — — — 113 Cash and equivalents at beginning of period — 73 173 — 246 — — — 246 Cash and equivalents at end of period $ — $ 180 $ 179 $ — $ 359 $ — $ — $ — $ 359 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 Equity-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 (from) to 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 1 |
Schedule II - Valuation and Qua
Schedule II - Valuation and Qualifying Accounts | 12 Months Ended |
Sep. 30, 2017 | |
Valuation And Qualifying Accounts [Abstract] | |
Schedule II - Valuation and Qualifying Accounts | 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, 2017 Allowance for doubtful accounts $ 19 $ 3 $ (4 ) $ — $ 18 Reserves for sales returns 33 119 (119 ) — 33 Allowance for deferred tax asset 310 23 (140 ) — 193 Year Ended September 30, 2016 Allowance for doubtful accounts $ 12 $ 6 $ — $ 1 $ 19 Reserves for sales returns 44 131 (142 ) — 33 Allowance for deferred tax asset 344 27 (61 ) — 310 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 (a) Other changes due to acquisitions and dispositions. |
Summary of Significant Accoun29
Summary of Significant Accounting Policies (Policies) | 12 Months Ended |
Sep. 30, 2017 | |
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, 2017 ended on September 29, 2017, the fiscal year ended September 30, 2016 ended on September 30, 2016, and the fiscal year ended September 30, 2015 ended on September 25, 2015. 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 |
Reclassifications | Reclassifications Certain reclassifications have been made to the prior fiscal years’ consolidated financial statements to conform to 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 |
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 | 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. As of September 30, 2017 and September 30, 2016, Spotify represented 15% and 10%, respectively, of the Company’s accounts receivable balance. No other single customer accounted for more than 10% of accounts receivable in either period. The Company, by policy, routinely assesses the financial strength of its customers. 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 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 15) 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. |
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 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 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 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 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 |
Share-Based Compensation | Share-Based Compensation The Company accounts for share-based payments as required by FASB ASC Topic 718, Compensation-Stock Compensation 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, 2015, 2016 and 2017. |
Income Taxes | Income Taxes Income taxes are provided using the asset and liability method presented by FASB ASC Topic 740, Income Taxes 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 2017, the Company adopted ASU 2015-03, Simplifying the Presentation of Debt Issuance Costs In May 2014, the FASB issued guidance codified in ASC 606, Revenue from Contracts with Customers Revenue Recognition Entertainment – Music In January 2016, the FASB issued ASU 2016-01, Recognition and Measurement of Financial Assets and Financial Liabilities In February 2016, the FASB issued ASU 2016-02, Leases In March 2016, the FASB issued ASU 2016-09, Compensation - Stock Compensation In August 2016, the FASB issued ASU 2016-15, Statement of Cash Flows: Classification of Certain Cash Receipts and Cash Payments In October 2016, the FASB issued ASU 2016-16, Income Taxes: Intra-Entity Transfers of Assets Other Than Inventory |
Comprehensive Income (Loss) (Ta
Comprehensive Income (Loss) (Tables) | 12 Months Ended |
Sep. 30, 2017 | |
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 of $12 million: Foreign Minimum Accumulated Currency Pension Other Translation Liability Comprehensive Loss Adjustment Loss, net (in millions) Balance at September 30, 2014 $ (98 ) $ (10 ) $ (108 ) Other comprehensive loss (a) (59 ) — (59 ) Amounts reclassified from accumulated other comprehensive income — — — Balance at September 30, 2015 $ (157 ) $ (10 ) $ (167 ) Other comprehensive loss (a) (44 ) (6 ) (50 ) Amounts reclassified from accumulated other comprehensive income — (1 ) (1 ) Balance at September 30, 2016 $ (201 ) $ (17 ) $ (218 ) Other comprehensive income (a) 30 8 38 Amounts reclassified from accumulated other comprehensive income — (1 ) (1 ) Balance at September 30, 2017 $ (171 ) $ (10 ) $ (181 ) (a) Includes historical foreign currency translation related to certain intra-entity transactions that are no longer considered of a long-term investment nature of $(19) million, $(109) million and $(51) million during the fiscal year ended September 30, 2017, 2016 and 2015, respectively. |
Property, Plant and Equipment (
Property, Plant and Equipment (Tables) | 12 Months Ended |
Sep. 30, 2017 | |
Property Plant And Equipment [Abstract] | |
Schedule of Property, Plant and Equipment | Property, plant and equipment consist of the following: September 30, September 30, 2017 2016 (in millions) Land $ 11 $ 11 Buildings and improvements 99 90 Furniture and fixtures 10 10 Computer hardware and software 262 232 Construction in progress 30 15 Machinery and equipment 11 11 Gross Property, Plant and Equipment $ 423 $ 369 Less accumulated depreciation (210 ) (166 ) Net Property, Plant and Equipment $ 213 $ 203 |
Goodwill and Intangible Assets
Goodwill and Intangible Assets (Tables) | 12 Months Ended |
Sep. 30, 2017 | |
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, 2015 $ 1,168 $ 464 $ 1,632 Acquisitions 13 — 13 Dispositions (12 ) — (12 ) Other adjustments (6 ) — (6 ) Balance at September 30, 2016 $ 1,163 $ 464 $ 1,627 Acquisitions 58 — 58 Dispositions (10 ) — (10 ) Other adjustments 10 — 10 Balance at September 30, 2017 $ 1,221 $ 464 $ 1,685 |
Schedule of Intangible Assets | Intangible assets consist of the following: Weighted Average September 30, September 30, Useful Life 2017 2016 (in millions) Intangible assets subject to amortization: Recorded music catalog 10 years $ 898 $ 923 Music publishing copyrights 27 years 1,534 1,504 Artist and songwriter contracts 13 years 904 883 Trademarks 6 years 14 7 Other intangible assets 7 years 10 5 Total gross intangible asset subject to amortization 3,360 3,322 Accumulated amortization (1,270 ) (1,121 ) Total net intangible assets subject to amortization 2,090 2,201 Intangible assets not subject to amortization: Trademarks and tradenames Indefinite 117 116 Total net other intangible assets $ 2,207 $ 2,317 |
Expected Amortization of Intangible Assets | Based on the amount of intangible assets subject to amortization at September 30, 2017, the expected amortization for each of the next five fiscal years and thereafter are as follows: Fiscal Years September 30, (in millions) 2018 $ 209 2019 194 2020 179 2021 179 2022 174 Thereafter 1,155 $ 2,090 |
Debt (Tables)
Debt (Tables) | 12 Months Ended |
Sep. 30, 2017 | |
Debt Disclosure [Abstract] | |
Long-term Debt | Long-term debt, including the current portion, consists of the following: September 30, September 30, 2017 2016 (in millions) Revolving Credit Facility—Acquisition Corp. (a) $ — $ — Senior Term Loan Facility due 2023—Acquisition Corp. (b) 990 963 6.00% Senior Secured Notes due 2021—Acquisition Corp. (c) — 444 6.25% Senior Secured Notes due 2021—Acquisition Corp. (d) — 174 5.625% Senior Secured Notes due 2022—Acquisition Corp. (e) 246 272 5.00% Senior Secured Notes due 2023—Acquisition Corp. (f) 297 296 4.125% Senior Secured Notes due 2024—Acquisition Corp. (g) 402 — 4.875% Senior Secured Notes due 2024—Acquisition Corp. (h) 246 — 6.75% Senior Notes due 2022—Acquisition Corp. (i) 630 629 Total debt (j) $ 2,811 $ 2,778 (a) Reflects $150 million of commitments under the Revolving Credit Facility, less letters of credit outstanding of approximately $12 million and $5 million at September 30, 2017 and September 30, 2016, respectively. There were no loans outstanding under the Revolving Credit Facility at September 30, 2017 or September 30, 2016. (b) Principal amount of $1.006 billion and $978 million less unamortized discount of $6 million and $3 million and unamortized deferred financing costs of $10 million and $12 million at September 30, 2017 and September 30, 2016, respectively. (c) Principal amount of $450 million less unamortized deferred financing costs of $6 million at September 30, 2016. (d) Face amount of €158 million. Above amounts represent the dollar equivalent of such notes at September 30, 2016. Principal amount of $177 million less unamortized deferred financing costs of $3 million at September 30, 2016. (e) Principal amount of $248 million and $275 million less unamortized deferred financing costs of $2 million and $3 million at September 30, 2017 and September 30, 2016, respectively. (f) Principal amount of $300 million at both 30, 2017 and September 30, 2016 less unamortized deferred financing costs of $3 million and $4 million at 30, 2017 and September 30, 2016, respectively. (g) Face amount of €345 million. Above amounts represent the dollar equivalent of such notes at September 30, 2017. Principal amount of $407 million less unamortized deferred financing costs of $5 million at September 30, 2017. (h) Principal amount of $250 million less unamortized deferred financing costs of $4 million at September 30, 2017. (i) Principal amount of $635 million at both 30, 2017 and September 30, 2016 less unamortized deferred financing costs of $5 million and $6 million at 30, 2017 and September 30, 2016, respectively. (j) Principal amount of debt of $2.846 billion and $2.815 billion less unamortized discount of $6 million and $3 million and unamortized deferred financing costs of $29 million and $34 million at September 30, 2017 and September 30, 2016, respectively. |
Income Taxes (Tables)
Income Taxes (Tables) | 12 Months Ended |
Sep. 30, 2017 | |
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, 2017 2016 2015 (in millions) Domestic $ (37 ) $ 35 $ (18 ) Foreign 35 6 (57 ) Total $ (2 ) $ 41 $ (75 ) |
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, 2017 2016 2015 (in millions) Federal: Current $ — $ — $ — Deferred (169 ) 3 4 Foreign: Current (a) 41 39 40 Deferred (12 ) (30 ) (33 ) U.S. State: Current 2 3 3 Deferred (13 ) (4 ) (1 ) Total $ (151 ) $ 11 $ 13 (a) Includes withholding taxes of $13 million, $17 million and $13 million for the fiscal year ended September 30, 2017, for the fiscal year ended September 30, 2016, and for the fiscal year ended September 30, 2015, 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, 2017 2016 2015 (in millions) Taxes on income at the U.S. federal statutory rate $ (1 ) $ 14 $ (26 ) U.S. state and local taxes 3 (1 ) 2 Foreign income taxed at different rates, including withholding taxes 11 12 11 Increase in valuation allowance 18 19 34 Release of valuation allowance (134 ) (26 ) (5 ) Change in tax rates (1 ) (10 ) (2 ) Foreign Currency Losses on Intra-Entity Loans (59 ) — — Non-deductible share based compensation 10 1 — Other 2 2 (1 ) Total income tax (benefit) expense $ (151 ) $ 11 $ 13 |
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, 2017 2016 (in millions) Deferred tax assets: Allowances and reserves $ 35 $ 34 Employee benefits and compensation 91 47 Other accruals 68 82 Tax attribute carry forwards 482 475 Other 13 3 Total deferred tax assets 689 641 Valuation allowance (193 ) (310 ) Net deferred tax assets 496 331 Deferred tax liabilities: Depreciation, amortization and artist advances (15 ) (26 ) Intangible assets (574 ) (572 ) Total deferred tax liabilities (589 ) (598 ) Net deferred tax liabilities $ (93 ) $ (267 ) |
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, 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 Additions for current year tax positions 7 Additions for prior year tax positions 1 Subtractions for prior year tax positions (13 ) Balance at September 30, 2016 $ 30 Additions for current year tax positions 2 Additions for prior year tax positions 1 Subtractions for prior year tax positions (14 ) Balance at September 30, 2017 $ 19 |
Share-Based Compensation Plans
Share-Based Compensation Plans (Tables) | 12 Months Ended |
Sep. 30, 2017 | |
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, 2015 18 25 $ 135.00 $ 27.87 $ 107.13 $ — Granted 9 9 135.00 — 107.13 — Vested (7 ) (5 ) 135.00 27.87 107.13 — Forfeited (1 ) (1 ) 135.00 27.87 107.13 — Unvested units at September 30, 2016 19 28 $ 142.21 $ 35.08 $ 107.13 $ — Granted 11 11 241.75 90.06 146.86 — Vested (17 ) (3 ) 241.75 134.62 107.13 — Forfeited — — — — — — Unvested units at September 30, 2017 13 36 $ 241.75 $ 111.23 $ 140.04 $ — |
Commitments and Contingencies (
Commitments and Contingencies (Tables) | 12 Months Ended |
Sep. 30, 2017 | |
Commitments And Contingencies Disclosure [Abstract] | |
Future Minimum Payments Under Non-Cancelable Operating Leases (Net of Sublease Income) | At September 30, 2017, future minimum payments under non-cancelable operating leases (net of sublease income) are as follows: Operating Years Leases (in millions) 2018 $ 50 2019 52 2020 48 2021 45 2022 44 Thereafter 286 Total $ 525 |
Segment Information (Tables)
Segment Information (Tables) | 12 Months Ended |
Sep. 30, 2017 | |
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) 2017 Revenues $ 3,020 $ 572 $ (16 ) $ 3,576 Operating income (loss) 283 81 (142 ) 222 Amortization of intangible assets 136 65 — 201 Depreciation of property, plant and equipment 32 6 12 50 OIBDA 451 152 (130 ) 473 Total assets 2,085 2,510 1,123 5,718 Capital expenditures 21 5 18 44 2016 Revenues $ 2,736 $ 524 $ (14 ) $ 3,246 Operating income (loss) 247 68 (101 ) 214 Amortization of intangible assets 180 63 — 243 Depreciation of property, plant and equipment 32 7 11 50 OIBDA 459 138 (90 ) 507 Total assets 2,584 2,365 386 5,335 Capital expenditures 18 7 17 42 2015 Revenues $ 2,501 $ 482 $ (17 ) $ 2,966 Operating income (loss) 151 77 (101 ) 127 Amortization of intangible assets 192 63 — 255 Depreciation of property, plant and equipment 36 6 12 54 OIBDA 379 146 (89 ) 436 Capital expenditures 19 7 37 63 |
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, 2017, September 30, 2016 and September 30, 2015. Total assets relating to operations in different geographical areas are set forth below as of September 30, 2017 and September 30, 2016. 2017 2016 2015 Long-lived Long-lived Revenue Assets Revenue Assets Revenue (in millions) United States $ 1,587 $ 139 $ 1,360 $ 138 $ 1,171 United Kingdom 522 26 491 23 477 All other territories 1,467 48 1,395 42 1,318 Total $ 3,576 $ 213 $ 3,246 $ 203 $ 2,966 |
Fair Value Measurements (Tables
Fair Value Measurements (Tables) | 12 Months Ended |
Sep. 30, 2017 | |
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, 2017 and September 30, 2016. Fair Value Measurements as of September 30, 2017 (Level 1) (Level 2) (Level 3) Total (in millions) Other Current Liabilities: Contractual Obligations (a) — — — — Other Non-Current Liabilities: Contractual Obligations (a) — — (5 ) (5 ) Total $ — $ — $ (5 ) $ (5 ) Fair Value Measurements as of September 30, 2016 (Level 1) (Level 2) (Level 3) Total (in millions) Other Current Liabilities: Contractual Obligations (a) — — — — Other Non-Current Liabilities: Contractual Obligations (a) — — (4 ) (4 ) Total $ — $ — $ (4 ) $ (4 ) (a) This represents purchase obligations and contingent consideration related to the Company’s various acquisitions. This is based on a probability weighted performance 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, 2016 $ (4 ) Additions (1 ) Reductions — Payments — Balance at September 30, 2017 $ (5 ) |
Quarterly Financial Informati39
Quarterly Financial Information (Tables) | 12 Months Ended |
Sep. 30, 2017 | |
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, 2017 2017 2017 2016 (in millions) Revenues $ 917 $ 917 $ 825 $ 917 Costs and expenses: Cost of revenue (501 ) (519 ) (415 ) (496 ) Selling, general and administrative expenses (a) (368 ) (296 ) (282 ) (276 ) Amortization expense (49 ) (51 ) (50 ) (51 ) Total costs and expenses (918 ) (866 ) (747 ) (823 ) Operating income (1 ) 51 78 94 Loss on extinguishment of debt — (3 ) — (32 ) Interest expense, net (37 ) (36 ) (36 ) (40 ) Other (expense) income (19 ) (21 ) (19 ) 19 (Loss) income before income taxes (57 ) (9 ) 23 41 Income tax (expense) benefit 19 152 (3 ) (17 ) Net (loss) income (38 ) 143 20 24 Less: income attributable to noncontrolling interest (1 ) (2 ) (1 ) (2 ) Net (loss) income attributable to Warner Music Group Corp. $ (39 ) $ 141 $ 19 $ 22 (a) Includes depreciation expense of: $ (12 ) $ (13 ) $ (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. WARNER MUSIC GROUP CORP. 2016 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, 2016 2016 2016 2015 (in millions) Revenues $ 841 $ 811 $ 745 $ 849 Costs and expenses: Cost of revenue (436 ) (448 ) (374 ) (449 ) Selling, general and administrative expenses (a) (295 ) (255 ) (256 ) (276 ) Amortization expense (55 ) (63 ) (63 ) (62 ) Total costs and expenses (786 ) (766 ) (693 ) (787 ) Operating income 55 45 52 62 Loss on extinguishment of debt (14 ) — (4 ) — Interest expense, net (42 ) (43 ) (43 ) (45 ) Other (expense) income (7 ) (5 ) 22 8 (Loss) income before income taxes (8 ) (3 ) 27 25 Income tax benefit (expense) 5 (4 ) (15 ) 3 Net (loss) income (3 ) (7 ) 12 28 Less: income attributable to noncontrolling interest (1 ) (2 ) (1 ) (1 ) Net (loss) income attributable to Warner Music Group Corp. $ (4 ) $ (9 ) $ 11 $ 27 (a) Includes depreciation expense of: $ (13 ) $ (12 ) $ (12 ) $ (13 ) 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 S40
Guarantor and Non-Guarantor Subsidiaries Financial Information (Tables) | 12 Months Ended |
Sep. 30, 2017 | |
Condensed Financial Information Of Parent Company Only Disclosure [Abstract] | |
Schedule of Consolidating Balance Sheet | Consolidating Balance Sheet September 30, 2017 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 $ — $ 347 $ 300 $ — $ 647 $ — $ — $ — $ 647 Accounts receivable, net — 214 190 — 404 — — — 404 Inventories — 12 27 — 39 — — — 39 Royalty advances expected to be recouped within one year — 89 52 — 141 — — — 141 Prepaid and other current assets — 15 29 — 44 — — — 44 Total current assets — 677 598 — 1,275 — — — 1,275 Due from (to) parent companies 418 96 (514 ) — — — — — — Investments in and advances to consolidated subsidiaries 2,721 1,312 — (4,033 ) — 377 377 (754 ) — Royalty advances expected to be recouped after one year — 109 63 — 172 — — — 172 Property, plant and equipment, net — 139 74 — 213 — — — 213 Goodwill — 1,368 317 — 1,685 — — — 1,685 Intangible assets subject to amortization, net — 1,029 1,061 — 2,090 — — — 2,090 Intangible assets not subject to amortization — 71 46 — 117 — — — 117 Deferred tax assets, net — 89 8 — 97 — — — 97 Other assets 7 45 17 — 69 — — — 69 Total assets $ 3,146 $ 4,935 $ 1,670 $ (4,033 ) $ 5,718 $ 377 $ 377 $ (754 ) $ 5,718 Liabilities and Deficit: Current liabilities: Accounts payable $ — $ 135 $ 73 $ — $ 208 $ — $ — $ — $ 208 Accrued royalties — 732 531 — 1,263 — — — 1,263 Accrued liabilities — 144 221 — 365 — — — 365 Accrued interest 41 — — — 41 — — — 41 Deferred revenue — 125 72 — 197 — — — 197 Other current liabilities — 3 23 — 26 — — — 26 Total current liabilities 41 1,139 920 — 2,100 — — — 2,100 Long-term debt 2,811 — — — 2,811 — — — 2,811 Deferred tax liabilities, net — — 190 — 190 — — — 190 Other noncurrent liabilities 1 196 112 — 309 — — — 309 Total liabilities 2,853 1,335 1,222 — 5,410 — — — 5,410 Total Warner Music Group Corp. equity 293 3,596 437 (4,033 ) 293 377 377 (754 ) 293 Noncontrolling interest — 4 11 — 15 — — — 15 Total equity 293 3,600 448 (4,033 ) 308 377 377 (754 ) 308 Total liabilities and equity $ 3,146 $ 4,935 $ 1,670 $ (4,033 ) $ 5,718 $ 377 $ 377 $ (754 ) $ 5,718 Consolidating Balance Sheet September 30, 2016 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 $ — $ 180 $ 179 $ — $ 359 $ — $ — $ — $ 359 Accounts receivable, net — 177 152 — 329 — — — 329 Inventories — 16 25 — 41 — — — 41 Royalty advances expected to be recouped within one year — 79 49 — 128 — — — 128 Prepaid and other current assets 1 13 37 — 51 — — — 51 Total current assets 1 465 442 — 908 — — — 908 Due from (to) parent companies 750 (312 ) (438 ) — — — — — — Investments in and advances to consolidated subsidiaries 2,260 1,458 — (3,718 ) — 195 195 (390 ) — Royalty advances expected to be recouped after one year — 120 76 — 196 — — — 196 Property, plant and equipment, net — 138 65 — 203 — — — 203 Goodwill — 1,372 255 — 1,627 — — — 1,627 Intangible assets subject to amortization, net — 1,165 1,036 — 2,201 — — — 2,201 Intangible assets not subject to amortization — 71 45 — 116 — — — 116 Deferred tax assets, net — — 2 — 2 — — — 2 Other assets 3 62 17 — 82 — — — 82 Total assets $ 3,014 $ 4,539 $ 1,500 $ (3,718 ) $ 5,335 $ 195 $ 195 $ (390 ) $ 5,335 Liabilities and Deficit: Current liabilities: Accounts payable $ — $ 124 $ 80 $ — $ 204 $ — $ — $ — $ 204 Accrued royalties — 606 498 — 1,104 — — — 1,104 Accrued liabilities — 112 185 — 297 — — — 297 Accrued interest 38 — — — 38 — — — 38 Deferred revenue — 143 35 — 178 — — — 178 Current portion of long-term debt — — — — — — — — — Other current liabilities — 3 18 — 21 — — — 21 Total current liabilities 38 988 816 — 1,842 — — — 1,842 Long-term debt 2,778 — — — 2,778 — — — 2,778 Deferred tax liabilities, net — 109 160 — 269 — — — 269 Other noncurrent liabilities 3 126 107 — 236 — — — 236 Total liabilities 2,819 1,223 1,083 — 5,125 — — — 5,125 Total Warner Music Group Corp. equity (deficit) 195 3,314 404 (3,718 ) 195 195 195 (390 ) 195 Noncontrolling interest — 2 13 — 15 — — — 15 Total equity (deficit) 195 3,316 417 (3,718 ) 210 195 195 (390 ) 210 Total liabilities and equity (deficit) $ 3,014 $ 4,539 $ 1,500 $ (3,718 ) $ 5,335 $ 195 $ 195 $ (390 ) $ 5,335 |
Schedule of Consolidating Statement of Operations | Consolidating Statement of Operations For The Fiscal Year Ended September 30, 2017 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 $ — $ 1,978 $ 2,008 $ (410 ) $ 3,576 $ — $ — $ — $ 3,576 Costs and expenses: Cost of revenue — (922 ) (1,275 ) 266 (1,931 ) — — — (1,931 ) Selling, general and administrative expenses (1 ) (900 ) (464 ) 143 (1,222 ) — — — (1,222 ) Amortization of intangible assets — (100 ) (101 ) — (201 ) — — — (201 ) Total costs and expenses (1 ) (1,922 ) (1,840 ) 409 (3,354 ) — — — (3,354 ) Operating income (loss) (1 ) 56 168 (1 ) 222 — — — 222 Loss on extinguishment of debt (35 ) — — — (35 ) — — — (35 ) Interest (expense) income, net (95 ) 2 (56 ) — (149 ) — — — (149 ) Equity gains from consolidated subsidiaries 124 87 — (210 ) 1 143 143 (286 ) 1 Other expense, net (1 ) (17 ) (23 ) — (41 ) — — — (41 ) (Loss) income before income taxes (8 ) 128 89 (211 ) (2 ) 143 143 (286 ) (2 ) Income tax benefit (expense) 151 154 (30 ) (124 ) 151 — — — 151 Net income 143 282 59 (335 ) 149 143 143 (286 ) 149 Less: income attributable to noncontrolling interest — (1 ) (5 ) — (6 ) — — — (6 ) Net income attributable to Warner Music Group Corp. $ 143 $ 281 $ 54 $ (335 ) $ 143 $ 143 $ 143 $ (286 ) $ 143 Consolidating Statement of Operations For The Fiscal Year Ended September 30, 2016 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 $ — $ 1,668 $ 1,887 $ (309 ) $ 3,246 $ — $ — $ — $ 3,246 Costs and expenses: Cost of revenue — (703 ) (1,192 ) 188 (1,707 ) — — — (1,707 ) Selling, general and administrative expenses — (739 ) (464 ) 121 (1,082 ) — — — (1,082 ) Amortization of intangible assets — (118 ) (125 ) — (243 ) — — — (243 ) Total costs and expenses — (1,560 ) (1,781 ) 309 (3,032 ) — — — (3,032 ) Operating income — 108 106 — 214 — — — 214 Loss on extinguishment of debt (4 ) — — — (4 ) (14 ) — — (18 ) Interest (expense) income, net (84 ) 3 (79 ) 1 (159 ) (14 ) — — (173 ) Equity gains (losses) from consolidated subsidiaries 162 74 — (236 ) — 53 25 (78 ) — Other income (expense), net (10 ) 2 26 — 18 — — — 18 Income (loss) before income taxes 64 187 53 (235 ) 69 25 25 (78 ) 41 Income tax (expense) benefit (11 ) (20 ) 1 19 (11 ) — — — (11 ) Net income (loss) 53 167 54 (216 ) 58 25 25 (78 ) 30 Less: income attributable to noncontrolling interest — (1 ) (4 ) — (5 ) — — — (5 ) Net income (loss) attributable to Warner Music Group Corp. $ 53 $ 166 $ 50 $ (216 ) $ 53 $ 25 $ 25 $ (78 ) $ 25 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 income 1 47 80 (1 ) 127 — — — 127 Loss on extinguishment of debt — — — — — — — — — Interest (expense) income, net (82 ) 6 (83 ) — (159 ) (22 ) — — (181 ) Equity gains (losses) from consolidated subsidiaries 35 (67 ) — 32 — (69 ) (91 ) 160 — Other (expense) benefit, net (10 ) 1 (12 ) — (21 ) — — — (21 ) (Loss) income before income taxes (56 ) (13 ) (15 ) 31 (53 ) (91 ) (91 ) 160 (75 ) Income tax (expense) benefit (13 ) (29 ) — 29 (13 ) — — — (13 ) Net (loss) income (69 ) (42 ) (15 ) 60 (66 ) (91 ) (91 ) 160 (88 ) Less: income attributable to noncontrolling interest — (1 ) (2 ) — (3 ) — — — (3 ) Net (loss) income attributable to Warner Music Group Corp. $ (69 ) $ (43 ) $ (17 ) $ 60 $ (69 ) $ (91 ) $ (91 ) $ 160 $ (91 ) |
Schedule of Consolidating Statement of Comprehensive Income | Consolidating Statement of Comprehensive Income For The Fiscal Year Ended September 30, 2017 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 income $ 143 $ 282 $ 59 $ (335 ) $ 149 $ 143 $ 143 $ (286 ) $ 149 Other comprehensive income (loss), net of tax: Foreign currency adjustment 30 — (30 ) 30 30 32 32 (64 ) 30 Minimum pension liability 7 — 7 (7 ) 7 7 7 (14 ) 7 Deferred (loss) on derivative financial instruments — (1 ) — 1 — — — — — Other comprehensive income (loss), net of tax: 37 (1 ) (23 ) 24 37 39 39 (78 ) 37 Total comprehensive income 180 281 36 (311 ) 186 182 182 (364 ) 186 Less: income attributable to noncontrolling interest — (1 ) (5 ) — (6 ) — — — (6 ) Comprehensive income attributable to Warner Music Group Corp. $ 180 $ 280 $ 31 $ (311 ) $ 180 $ 182 $ 182 $ (364 ) $ 180 Consolidating Statement of Comprehensive Income For The Fiscal Year Ended September 30, 2016 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 income $ 53 $ 167 $ 54 $ (216 ) $ 58 $ 25 $ 25 $ (78 ) $ 30 Other comprehensive (loss) income, net of tax: Foreign currency adjustment (44 ) — (44 ) 44 (44 ) (44 ) (44 ) 88 (44 ) Minimum pension liability (7 ) — (7 ) 7 (7 ) (7 ) (7 ) 14 (7 ) Deferred (loss) gain on derivative financial instruments — (1 ) — 1 — — — — — Other comprehensive (loss) income , net of tax: (51 ) (1 ) (51 ) 52 (51 ) (51 ) (51 ) 102 (51 ) Total comprehensive (loss) income 2 166 3 (164 ) 7 (26 ) (26 ) 24 (21 ) Less: income attributable to noncontrolling interest — (1 ) (4 ) — (5 ) — — — (5 ) Comprehensive (loss) income attributable to Warner Music Group Corp. $ 2 $ 165 $ (1 ) $ (164 ) $ 2 $ (26 ) $ (26 ) $ 24 $ (26 ) Consolidating Statement of Comprehensive (Loss) 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 (loss) income, net of tax: Foreign currency adjustment (59 ) — (59 ) 59 (59 ) (59 ) (59 ) 118 (59 ) Minimum pension liability — — — — — — — — — Other comprehensive (loss) income, 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 ) |
Schedule of Consolidating Statement of Cash Flows | Consolidating Statement of Cash Flows For The Fiscal Year Ended September 30, 2017 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 income $ 143 $ 282 $ 59 $ (335 ) $ 149 $ 143 $ 143 $ (286 ) $ 149 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation and amortization — 137 114 — 251 — — — 251 Unrealized gains/losses and remeasurement of foreign denominated loans 27 — (3 ) — 24 — — — 24 Deferred income taxes 2 — (194 ) — (192 ) — — — (192 ) Loss on extinguishment of debt 35 — — — 35 — — — 35 Net loss (gain) on divestitures and investments — 33 (16 ) — 17 — — — 17 Non-cash interest expense 8 — — — 8 — — — 8 Equity-based compensation expense — 70 — — 70 — — — 70 Equity losses (gains), including distributions (124 ) (86 ) — 210 — (143 ) (143 ) 286 — Changes in operating assets and liabilities: Accounts receivable — (37 ) (23 ) — (60 ) — — — (60 ) Inventories — 2 (1 ) — 1 — — — 1 Royalty advances — 2 15 — 17 — — — 17 Accounts payable and accrued liabilities (120 ) (4 ) 47 125 48 — — — 48 Royalty payables — 126 10 — 136 — — — 136 Accrued interest 3 — — — 3 — — — 3 Deferred revenue — (6 ) 28 — 22 — — — 22 Other balance sheet changes 5 (204 ) 205 — 6 — — — 6 Net cash provided by (used in) operating activities (21 ) 315 241 — 535 — — — 535 Cash flows from investing activities Acquisition of music publishing rights, net — (9 ) (7 ) — (16 ) — — — (16 ) Capital expenditures — (31 ) (13 ) — (44 ) — — — (44 ) Investments and acquisitions of businesses, net — (6 ) (133 ) — (139 ) — — — (139 ) Divestitures, net — 42 31 — 73 — — — 73 Advance to Issuer 60 — — (60 ) — — — — — Net cash (used in) provided by investing activities 60 (4 ) (122 ) (60 ) (126 ) — — — (126 ) Cash flows from financing activities Dividend by Acquisition Corp. to Holdings Corp. — (84 ) — — (84 ) 84 — — — Proceeds from issuance of Acquisition Corp. 4.125% Senior Secured Notes 380 — — — 380 — — — 380 Proceeds from issuance of Acquisition Corp. 4.875% Senior Secured Notes 250 — — — 250 — — — 250 Proceeds from issuance of Acquisition Corp. Senior Term Loan Facility 22 — — — 22 — — — 22 Repayment of Acquisition Corp. 6.00% Senior Secured Notes (450 ) — — — (450 ) — — — (450 ) Repayment of Acquisition Corp. 6.25% Senior Secured Notes (173 ) — — — (173 ) — — — (173 ) Repayment of Acquisition Corp. 5.625% Senior Secured Notes (28 ) — — — (28 ) — — — (28 ) Call premiums paid on early redemption of debt (27 ) — — — (27 ) — — — (27 ) Deferred financing costs paid (13 ) — — — (13 ) — — — (13 ) Distribution to noncontrolling interest holder — — (5 ) — (5 ) — — — (5 ) Dividends paid — — — — — (84 ) — — (84 ) Change in due (from) to issuer — (60 ) — 60 — — — — — Net cash (used in) provided by financing activities (39 ) (144 ) (5 ) 60 (128 ) — — — (128 ) Effect of exchange rate changes on cash and equivalents — — 7 — 7 — — — 7 Net increase in cash and equivalents — 167 121 — 288 — — — 288 Cash and equivalents at beginning of period — 180 179 — 359 — — — 359 Cash and equivalents at end of period $ — $ 347 $ 300 $ — $ 647 $ — $ — $ — $ 647 Consolidating Statement of Cash Flows For The Fiscal Year Ended September 30, 2016 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 income $ 53 $ 167 $ 54 $ (216 ) $ 58 $ 25 $ 25 $ (78 ) $ 30 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation and amortization — 156 137 — 293 — — — 293 Unrealized gains/losses and remeasurement of foreign denominated loans — — — — — — — — — Deferred income taxes — — (26 ) — (26 ) — — — (26 ) Loss on extinguishment of debt 4 — — — 4 14 — — 18 Net gain on divestitures — (3 ) (6 ) — (9 ) — — — (9 ) Gain on sale of real estate — — (24 ) — (24 ) — — — (24 ) Non-cash interest expense 10 — — — 10 1 — — 11 Equity-based compensation expense — 23 — — 23 — — — 23 Equity losses (gains), including distributions (162 ) (74 ) — 236 — (53 ) (25 ) 78 — Changes in operating assets and liabilities: Accounts receivable — (7 ) 24 — 17 — — — 17 Inventories — — — — — — — — — Royalty advances — 1 (14 ) — (13 ) — — — (13 ) Accounts payable and accrued liabilities — 142 (99 ) (20 ) 23 — — — 23 Royalty payables — 93 (44 ) — 49 — — — 49 Accrued interest (10 ) — — — (10 ) (10 ) — — (20 ) Deferred revenue — (4 ) (31 ) — (35 ) — — — (35 ) Other balance sheet changes (4 ) (10 ) 19 — 5 — — — 5 Net cash (used in) provided by operating activities (109 ) 484 (10 ) — 365 (23 ) — — 342 Cash flows from investing activities Acquisition of music publishing rights, net — (16 ) (9 ) — (25 ) — — — (25 ) Capital expenditures — (30 ) (12 ) — (42 ) — — — (42 ) Investments and acquisitions of businesses, net — (10 ) (18 ) — (28 ) — — — (28 ) Divestitures, net — 8 37 — 45 — — — 45 Proceeds from the sale of real estate — — 42 — 42 — — — 42 Advance to Issuer 329 — — (329 ) — — — — — Net cash (used in) provided by investing activities 329 (48 ) 40 (329 ) (8 ) — — — (8 ) Cash flows from financing activities Dividend by Acquisition Corp. to Holdings Corp. (183 ) — — — (183 ) 183 — — — Repayment of Acquisition Corp. Senior Term Loan Facility (309 ) — — — (309 ) — — — (309 ) Proceeds from issuance of Acquisition Corp. 5.00% Senior Secured Notes 300 — — — 300 — — — 300 Repayment of Holdings 13.75% Senior Notes — — — — — (150 ) — — (150 ) Repayment of Acquisition Corp. 6.75% Senior Notes (24 ) — — — (24 ) — — — (24 ) Financing costs paid — — — — — (10 ) — — (10 ) Deferred financing costs paid (4 ) — — — (4 ) — — — (4 ) Distribution to noncontrolling interest holder — — (5 ) — (5 ) — — — (5 ) Repayment of capital lease obligations — — (14 ) — (14 ) — — — (14 ) Change in due (from) to issuer — (329 ) — 329 — — — — — Net cash (used in) provided by financing activities (220 ) (329 ) (19 ) 329 (239 ) 23 — — (216 ) Effect of exchange rate changes on cash and equivalents — — (5 ) — (5 ) — — — (5 ) Net increase in cash and equivalents — 107 6 — 113 — — — 113 Cash and equivalents at beginning of period — 73 173 — 246 — — — 246 Cash and equivalents at end of period $ — $ 180 $ 179 $ — $ 359 $ — $ — $ — $ 359 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 Equity-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 (from) to 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 1 |
Description of Business - Addit
Description of Business - Additional Information (Detail) | 12 Months Ended |
Sep. 30, 2017CountryMusical_compositionsongwriters | |
Accounting Policies [Abstract] | |
Number of countries in which Recorded Music activity conducted | Country | 50 |
Minimum number of musical compositions on which Company owns or controls rights | Musical_composition | 1,000,000 |
Number of songwriters and composers | songwriters | 70,000 |
Summary of Significant Accoun42
Summary of Significant Accounting Policies - Additional Information (Detail) - USD ($) $ in Millions | 12 Months Ended | ||
Sep. 30, 2017 | Sep. 30, 2016 | Sep. 30, 2015 | |
Accounting Policies [Line Items] | |||
Advertising expense | $ 97 | $ 91 | $ 88 |
ASU 2015-03 | |||
Accounting Policies [Line Items] | |||
Decrease in other assets | 34 | ||
Decrease in long-term debt | $ 34 | ||
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 | ||
Credit Concentration Risk | Accounts Receivable | Spotify | |||
Accounting Policies [Line Items] | |||
Concentration risk, percentage | 15.00% | 10.00% |
Comprehensive Income (Loss) - A
Comprehensive Income (Loss) - Additional Information (Detail) $ in Millions | 12 Months Ended |
Sep. 30, 2017USD ($) | |
Equity [Abstract] | |
Changes in accumulated other comprehensive loss, net of related taxes | $ 12 |
Comprehensive Income (Loss) - S
Comprehensive Income (Loss) - Schedule of Accumulated Other Comprehensive Loss (Detail) - USD ($) $ in Millions | 12 Months Ended | |||
Sep. 30, 2017 | Sep. 30, 2016 | Sep. 30, 2015 | ||
Accumulated Other Comprehensive Income Loss [Line Items] | ||||
Beginning balance | $ 210 | $ 239 | $ 390 | |
Ending balance | 308 | 210 | 239 | |
Foreign Currency Translation Loss | ||||
Accumulated Other Comprehensive Income Loss [Line Items] | ||||
Beginning balance | (201) | (157) | (98) | |
Other comprehensive loss | [1] | 30 | (44) | (59) |
Ending balance | (171) | (201) | (157) | |
Minimum Pension Liability Adjustment | ||||
Accumulated Other Comprehensive Income Loss [Line Items] | ||||
Beginning balance | (17) | (10) | (10) | |
Other comprehensive loss | [1] | 8 | (6) | |
Amounts reclassified from accumulated other comprehensive income | (1) | (1) | ||
Ending balance | (10) | (17) | (10) | |
Accumulated Other Comprehensive Loss | ||||
Accumulated Other Comprehensive Income Loss [Line Items] | ||||
Beginning balance | (218) | (167) | (108) | |
Other comprehensive loss | [1] | 38 | (50) | (59) |
Amounts reclassified from accumulated other comprehensive income | (1) | (1) | ||
Ending balance | $ (181) | $ (218) | $ (167) | |
[1] | Includes historical foreign currency translation related to certain intra-entity transactions that are no longer considered of a long-term investment nature of $(19) million, $(109) million and $(51) million during the fiscal year ended September 30, 2017, 2016 and 2015, respectively. |
Comprehensive Income (Loss) -45
Comprehensive Income (Loss) - Schedule of Accumulated Other Comprehensive Loss (Parenthetical) (Detail) - USD ($) $ in Millions | 12 Months Ended | ||
Sep. 30, 2017 | Sep. 30, 2016 | Sep. 30, 2015 | |
Equity [Abstract] | |||
Historical foreign currency translation related to intra-entity transactions | $ (19) | $ (109) | $ (51) |
Property, Plant and Equipment -
Property, Plant and Equipment - Schedule of Property, Plant and Equipment (Detail) - USD ($) $ in Millions | Sep. 30, 2017 | Sep. 30, 2016 |
Property, Plant and Equipment [Line Items] | ||
Gross Property, Plant and Equipment | $ 423 | $ 369 |
Less accumulated depreciation | (210) | (166) |
Net Property, Plant and Equipment | 213 | 203 |
Land | ||
Property, Plant and Equipment [Line Items] | ||
Gross Property, Plant and Equipment | 11 | 11 |
Buildings and Improvements | ||
Property, Plant and Equipment [Line Items] | ||
Gross Property, Plant and Equipment | 99 | 90 |
Furniture and Fixtures | ||
Property, Plant and Equipment [Line Items] | ||
Gross Property, Plant and Equipment | 10 | 10 |
Computer Hardware and Software | ||
Property, Plant and Equipment [Line Items] | ||
Gross Property, Plant and Equipment | 262 | 232 |
Construction in Progress | ||
Property, Plant and Equipment [Line Items] | ||
Gross Property, Plant and Equipment | 30 | 15 |
Machinery and Equipment | ||
Property, Plant and Equipment [Line Items] | ||
Gross Property, Plant and Equipment | $ 11 | $ 11 |
Property, Plant and Equipment47
Property, Plant and Equipment - Additional Information (Detail) $ in Millions | 12 Months Ended |
Sep. 30, 2016USD ($) | |
Property Plant And Equipment [Abstract] | |
Gain on sale of buildings | $ 24 |
Goodwill and Intangible Asset48
Goodwill and Intangible Assets - Changes in Goodwill for Each Reportable Segment (Detail) - USD ($) $ in Millions | 12 Months Ended | |
Sep. 30, 2017 | Sep. 30, 2016 | |
Goodwill [Line Items] | ||
Beginning balance | $ 1,627 | $ 1,632 |
Acquisitions | 58 | 13 |
Dispositions | (10) | (12) |
Other adjustments | 10 | (6) |
Ending balance | 1,685 | 1,627 |
Recorded Music | ||
Goodwill [Line Items] | ||
Beginning balance | 1,163 | 1,168 |
Acquisitions | 58 | 13 |
Dispositions | (10) | (12) |
Other adjustments | 10 | (6) |
Ending balance | 1,221 | 1,163 |
Music Publishing | ||
Goodwill [Line Items] | ||
Beginning balance | 464 | 464 |
Ending balance | $ 464 | $ 464 |
Goodwill and Intangible Asset49
Goodwill and Intangible Assets - Schedule of Intangible Assets (Detail) - USD ($) $ in Millions | 12 Months Ended | |
Sep. 30, 2017 | Sep. 30, 2016 | |
Finite Lived And Indefinite Lived Intangible Assets [Line Items] | ||
Total gross intangible asset subject to amortization | $ 3,360 | $ 3,322 |
Accumulated amortization | (1,270) | (1,121) |
Total net intangible assets subject to amortization | 2,090 | 2,201 |
Intangible assets not subject to amortization | 117 | 116 |
Total net other intangible assets | 2,207 | 2,317 |
Trademarks and tradenames | ||
Finite Lived And Indefinite Lived Intangible Assets [Line Items] | ||
Intangible assets not subject to amortization | $ 117 | 116 |
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 | $ 898 | 923 |
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 | $ 1,534 | 1,504 |
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 | $ 904 | 883 |
Trademarks | ||
Finite Lived And Indefinite Lived Intangible Assets [Line Items] | ||
Intangible assets, Useful Life | 6 years | |
Total gross intangible asset subject to amortization | $ 14 | 7 |
Other Intangible Assets | ||
Finite Lived And Indefinite Lived Intangible Assets [Line Items] | ||
Intangible assets, Useful Life | 7 years | |
Total gross intangible asset subject to amortization | $ 10 | $ 5 |
Goodwill and Intangible Asset50
Goodwill and Intangible Assets - Expected Amortization of Intangible Assets (Detail) - USD ($) $ in Millions | Sep. 30, 2017 | Sep. 30, 2016 |
Goodwill And Intangible Assets Disclosure [Abstract] | ||
2,018 | $ 209 | |
2,019 | 194 | |
2,020 | 179 | |
2,021 | 179 | |
2,022 | 174 | |
Thereafter | 1,155 | |
Total net intangible assets subject to amortization | $ 2,090 | $ 2,201 |
Debt - Long-term Debt (Detail)
Debt - Long-term Debt (Detail) - USD ($) $ in Millions | Sep. 30, 2017 | Sep. 30, 2016 | |
Debt Instrument [Line Items] | |||
Total debt | [1] | $ 2,811 | $ 2,778 |
Acquisition Corp. | Senior Term Loan Facility due 2023 | |||
Debt Instrument [Line Items] | |||
Total debt | [2] | 990 | 963 |
Acquisition Corp. | 6.25% Senior Secured Notes due 2021 | |||
Debt Instrument [Line Items] | |||
Total debt | [3] | 174 | |
Acquisition Corp. | 6.00% Senior Secured Notes due 2021 | |||
Debt Instrument [Line Items] | |||
Total debt | [4] | 444 | |
Acquisition Corp. | 5.625% Senior Secured Notes due 2022 | |||
Debt Instrument [Line Items] | |||
Total debt | [5] | 246 | 272 |
Acquisition Corp. | 5.00% Senior Secured Notes due 2023 | |||
Debt Instrument [Line Items] | |||
Total debt | [6] | 297 | 296 |
Acquisition Corp. | 4.125% Senior Secured Notes due 2024 | |||
Debt Instrument [Line Items] | |||
Total debt | [7] | 402 | |
Acquisition Corp. | 4.875% Senior Secured Notes due 2024 | |||
Debt Instrument [Line Items] | |||
Total debt | [8] | 246 | |
Acquisition Corp. | 6.75% Senior Notes due 2022 | |||
Debt Instrument [Line Items] | |||
Total debt | [9] | $ 630 | $ 629 |
[1] | Principal amount of debt of $2.846 billion and $2.815 billion less unamortized discount of $6 million and $3 million and unamortized deferred financing costs of $29 million and $34 million at September 30, 2017 and September 30, 2016, respectively. | ||
[2] | Principal amount of $1.006 billion and $978 million less unamortized discount of $6 million and $3 million and unamortized deferred financing costs of $10 million and $12 million at September 30, 2017 and September 30, 2016, respectively. | ||
[3] | Face amount of €158 million. Above amounts represent the dollar equivalent of such notes at September 30, 2016. Principal amount of $177 million less unamortized deferred financing costs of $3 million at September 30, 2016. | ||
[4] | Principal amount of $450 million less unamortized deferred financing costs of $6 million at September 30, 2016. | ||
[5] | Principal amount of $248 million and $275 million less unamortized deferred financing costs of $2 million and $3 million at September 30, 2017 and September 30, 2016, respectively. | ||
[6] | Principal amount of $300 million at both September 30, 2017 and September 30, 2016 less unamortized deferred financing costs of $3 million and $4 million at September 30, 2017 and September 30, 2016, respectively. | ||
[7] | Face amount of €345 million. Above amounts represent the dollar equivalent of such notes at September 30, 2017. Principal amount of $407 million less unamortized deferred financing costs of $5 million at September 30, 2017. | ||
[8] | Principal amount of $250 million less unamortized deferred financing costs of $4 million at September 30, 2017. | ||
[9] | Principal amount of $635 million at both September 30, 2017 and September 30, 2016 less unamortized deferred financing costs of $5 million and $6 million at September 30, 2017 and September 30, 2016, respectively. |
Debt - Long-term Debt (Parenthe
Debt - Long-term Debt (Parenthetical) (Detail) € in Millions | 12 Months Ended | |||||
Sep. 30, 2017USD ($) | Sep. 30, 2016USD ($) | Sep. 30, 2017EUR (€) | Sep. 30, 2016EUR (€) | Jul. 27, 2016USD ($) | Sep. 30, 2015 | |
Debt Instrument [Line Items] | ||||||
Face or principal amount of debt instrument | $ 2,846,000,000 | $ 2,815,000,000 | ||||
Unamortized discount | 6,000,000 | 3,000,000 | ||||
Unamortized deferred financing costs | 29,000,000 | 34,000,000 | ||||
Revolving Credit Facility | ||||||
Debt Instrument [Line Items] | ||||||
Commitments under revolving credit facility | 150,000,000 | |||||
Letters of credit outstanding | 12,000,000 | 5,000,000 | ||||
Revolving Credit Facility Outstanding | $ 0 | $ 0 | ||||
Senior Term Loan Facility due 2023 | Acquisition Corp. | ||||||
Debt Instrument [Line Items] | ||||||
Due date of Senior Secured Notes | 2,023 | 2,023 | ||||
Face or principal amount of debt instrument | $ 1,006,000,000 | $ 978,000,000 | ||||
Unamortized discount | 6,000,000 | 3,000,000 | ||||
Unamortized deferred financing costs | $ 10,000,000 | $ 12,000,000 | ||||
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% | ||
Face or principal amount of debt instrument | $ 450,000,000 | |||||
Unamortized deferred financing costs | $ 6,000,000 | |||||
6.25% Senior Secured Notes due 2021 | ||||||
Debt Instrument [Line Items] | ||||||
Interest rate | 6.25% | 6.25% | 6.25% | 6.25% | 6.25% | |
6.25% Senior Secured Notes due 2021 | 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% | ||
Face or principal amount of debt instrument | $ 177,000,000 | € 158 | ||||
Unamortized deferred financing costs | $ 3,000,000 | |||||
5.00% Senior Secured Notes due 2023 | ||||||
Debt Instrument [Line Items] | ||||||
Interest rate | 5.00% | 5.00% | 5.00% | 5.00% | 5.00% | |
5.00% Senior Secured Notes due 2023 | Acquisition Corp. | ||||||
Debt Instrument [Line Items] | ||||||
Due date of Senior Secured Notes | 2,023 | 2,023 | ||||
Interest rate | 5.00% | 5.00% | 5.00% | 5.00% | 5.00% | |
Face or principal amount of debt instrument | $ 300,000,000 | $ 300,000,000 | $ 300,000,000 | |||
Unamortized deferred financing costs | $ 3,000,000 | $ 4,000,000 | ||||
4.125% Senior Secured Notes due 2024 | Acquisition Corp. | ||||||
Debt Instrument [Line Items] | ||||||
Due date of Senior Secured Notes | 2,024 | 2,024 | ||||
Interest rate | 4.125% | 4.125% | 4.125% | 4.125% | ||
Face or principal amount of debt instrument | $ 407,000,000 | € 345 | ||||
Unamortized deferred financing costs | $ 5,000,000 | |||||
4.875% Senior Secured Notes due 2024 | Acquisition Corp. | ||||||
Debt Instrument [Line Items] | ||||||
Due date of Senior Secured Notes | 2,024 | 2,024 | ||||
Interest rate | 4.875% | 4.875% | 4.875% | 4.875% | ||
Face or principal amount of debt instrument | $ 250,000,000 | |||||
Unamortized deferred financing costs | $ 4,000,000 | |||||
6.75% Senior Notes due 2022 | Acquisition Corp. | ||||||
Debt Instrument [Line Items] | ||||||
Due date of Senior Secured Notes | 2,022 | 2,022 | ||||
Interest rate | 6.75% | 6.75% | 6.75% | 6.75% | ||
Face or principal amount of debt instrument | $ 635,000,000 | $ 635,000,000 | ||||
Unamortized deferred financing costs | $ 5,000,000 | $ 6,000,000 | ||||
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 | 2,022 | ||||
Interest rate | 5.625% | 5.625% | 5.625% | 5.625% | ||
Face or principal amount of debt instrument | $ 248,000,000 | $ 275,000,000 | ||||
Unamortized deferred financing costs | $ 2,000,000 | $ 3,000,000 |
Debt - October 2016 Refinancing
Debt - October 2016 Refinancing Transactions - Additional Information (Detail) € in Millions, $ in Millions | Oct. 18, 2016USD ($) | Jun. 30, 2017USD ($) | Dec. 31, 2016USD ($) | Sep. 30, 2016USD ($) | Mar. 31, 2016USD ($) | Sep. 30, 2017USD ($) | Sep. 30, 2016USD ($) | Oct. 18, 2016EUR (€) |
Debt Instrument [Line Items] | ||||||||
Face or principal amount of debt instrument | $ 2,815 | $ 2,846 | $ 2,815 | |||||
Loss on extinguishment of debt | $ (3) | $ (32) | $ (14) | $ (4) | $ (35) | $ (18) | ||
October 2016 Refinancing Transactions | ||||||||
Debt Instrument [Line Items] | ||||||||
Loss on extinguishment of debt | $ (31) | |||||||
October 2016 Refinancing Transactions | 4.125% Senior Secured Notes due 2024 | ||||||||
Debt Instrument [Line Items] | ||||||||
Face or principal amount of debt instrument | € | € 345 | |||||||
Due date of Senior Secured Notes | 2,024 | |||||||
Interest rate | 4.125% | 4.125% | ||||||
October 2016 Refinancing Transactions | 4.875% Senior Secured Notes due 2024 | ||||||||
Debt Instrument [Line Items] | ||||||||
Face or principal amount of debt instrument | $ 250 | |||||||
Due date of Senior Secured Notes | 2,024 | |||||||
Interest rate | 4.875% | 4.875% | ||||||
October 2016 Refinancing Transactions | 6.000% Senior Secured Notes due 2021 | ||||||||
Debt Instrument [Line Items] | ||||||||
Due date of Senior Secured Notes | 2,021 | |||||||
Interest rate | 6.00% | 6.00% | ||||||
October 2016 Refinancing Transactions | 6.250% Senior Secured Notes Due 2021 | ||||||||
Debt Instrument [Line Items] | ||||||||
Due date of Senior Secured Notes | 2,021 | |||||||
Interest rate | 6.25% | 6.25% |
Debt - November 2016 Senior Ter
Debt - November 2016 Senior Term Loan Credit Agreement Amendment - Additional Information (Detail) - USD ($) $ in Millions | Nov. 21, 2016 | Sep. 30, 2017 | Nov. 20, 2016 | Sep. 30, 2016 |
Debt Instrument [Line Items] | ||||
Unamortized discount | $ 6 | $ 3 | ||
November 2016 Senior Term Loan Credit Agreement Amendment | ||||
Debt Instrument [Line Items] | ||||
Credit facility maturity date | Nov. 1, 2023 | |||
Revolving Credit Facility Outstanding | $ 1,006 | $ 27.5 | ||
Redemption of senior notes | $ 27.5 | |||
Interest rate | 5.625% | |||
November 2016 Senior Term Loan Credit Agreement Amendment | Minimum | ||||
Debt Instrument [Line Items] | ||||
Unamortized discount | $ 5 | |||
November 2016 Senior Term Loan Credit Agreement Amendment | Maximum | ||||
Debt Instrument [Line Items] | ||||
Unamortized discount | $ 8 |
Debt - May 2017 Senior Term Loa
Debt - May 2017 Senior Term Loan Credit Agreement Amendment - Additional Information (Detail) - USD ($) $ in Millions | May 22, 2017 | Nov. 01, 2012 | Jun. 30, 2017 | Dec. 31, 2016 | Sep. 30, 2016 | Mar. 31, 2016 | Sep. 30, 2017 | Sep. 30, 2016 |
Debt Instrument [Line Items] | ||||||||
Loss on extinguishment of debt | $ (3) | $ (32) | $ (14) | $ (4) | $ (35) | $ (18) | ||
May 2017 Senior Term Loan Credit Agreement Amendment | ||||||||
Debt Instrument [Line Items] | ||||||||
Loss on extinguishment of debt | $ (3) | |||||||
Debt instrument, marginal interest rate | 2.50% | |||||||
May 2017 Senior Term Loan Credit Agreement Amendment | London Interbank Offered Rate (LIBOR) | Maximum | ||||||||
Debt Instrument [Line Items] | ||||||||
Debt instrument, marginal interest rate | 0.00% | |||||||
May 2017 Senior Term Loan Credit Agreement Amendment | Base Rate | ||||||||
Debt Instrument [Line Items] | ||||||||
Debt instrument, marginal interest rate | 1.50% | |||||||
November 2012 Senior Term Loan Credit Agreement | ||||||||
Debt Instrument [Line Items] | ||||||||
Debt instrument, marginal interest rate | 2.75% | |||||||
November 2012 Senior Term Loan Credit Agreement | London Interbank Offered Rate (LIBOR) | Maximum | ||||||||
Debt Instrument [Line Items] | ||||||||
Debt instrument, marginal interest rate | 1.00% | |||||||
November 2012 Senior Term Loan Credit Agreement | Base Rate | ||||||||
Debt Instrument [Line Items] | ||||||||
Debt instrument, marginal interest rate | 1.75% |
Debt - Debt Redemptions - Addit
Debt - Debt Redemptions - Additional Information (Detail) - USD ($) $ in Millions | Nov. 21, 2016 | Jul. 27, 2016 | Jul. 02, 2016 | Feb. 16, 2016 | Jun. 30, 2017 | Dec. 31, 2016 | Sep. 30, 2016 | Mar. 31, 2016 | Sep. 30, 2017 | Sep. 30, 2016 | |
Debt Instrument [Line Items] | |||||||||||
Outstanding senior notes | [1] | $ 2,778 | $ 2,811 | $ 2,778 | |||||||
Loss on extinguishment of debt | $ (3) | $ (32) | $ (14) | $ (4) | $ (35) | (18) | |||||
13.75% Senior Notes due 2019 | |||||||||||
Debt Instrument [Line Items] | |||||||||||
Redemption of senior notes | $ 150 | ||||||||||
5.625% Existing Secured Notes Redemption | |||||||||||
Debt Instrument [Line Items] | |||||||||||
Redemption of senior notes | $ 27.5 | ||||||||||
Interest rate | 5.625% | ||||||||||
Loss on extinguishment of debt | $ (1) | ||||||||||
Percentage of outstanding debt redeemed | 10.00% | ||||||||||
Holdings Company | 13.75% Senior Notes due 2019 | |||||||||||
Debt Instrument [Line Items] | |||||||||||
Redemption of senior notes | $ 100 | $ 50 | |||||||||
Outstanding senior notes | $ 150 | ||||||||||
Interest rate | 13.75% | ||||||||||
Loss on extinguishment of debt | $ (10) | $ (5) | |||||||||
WMG Acquisition Corp. | |||||||||||
Debt Instrument [Line Items] | |||||||||||
Loss on extinguishment of debt | $ (4) | ||||||||||
WMG Acquisition Corp. | Revolving Credit Facility | |||||||||||
Debt Instrument [Line Items] | |||||||||||
Prepayment of senior term loan facility | $ 295.5 | ||||||||||
[1] | Principal amount of debt of $2.846 billion and $2.815 billion less unamortized discount of $6 million and $3 million and unamortized deferred financing costs of $29 million and $34 million at September 30, 2017 and September 30, 2016, respectively. |
Debt - Open Market Purchases -
Debt - Open Market Purchases - Additional Information (Detail) - USD ($) $ in Millions | Sep. 30, 2017 | Sep. 30, 2016 | Mar. 11, 2016 | Sep. 30, 2015 | |
Debt Instrument [Line Items] | |||||
Outstanding senior notes | [1] | $ 2,811 | $ 2,778 | ||
6.75% Senior Notes due 2022 | |||||
Debt Instrument [Line Items] | |||||
Interest rate | 6.75% | 6.75% | 6.75% | ||
Acquisition Corp. | 6.75% Senior Notes due 2022 | |||||
Debt Instrument [Line Items] | |||||
Open market purchases of senior debt | $ 25 | ||||
Outstanding senior notes | $ 635 | $ 660 | |||
Interest rate | 6.75% | 6.75% | |||
[1] | Principal amount of debt of $2.846 billion and $2.815 billion less unamortized discount of $6 million and $3 million and unamortized deferred financing costs of $29 million and $34 million at September 30, 2017 and September 30, 2016, respectively. |
Debt - Notes Offering - Additio
Debt - Notes Offering - Additional Information (Detail) - USD ($) $ in Millions | Jul. 27, 2016 | Sep. 30, 2017 | Sep. 30, 2016 | Sep. 30, 2015 |
Debt Instrument [Line Items] | ||||
Face or principal amount of debt instrument | $ 2,846 | $ 2,815 | ||
5.00% Senior Secured Notes due 2023 | ||||
Debt Instrument [Line Items] | ||||
Interest rate | 5.00% | 5.00% | 5.00% | |
WMG Acquisition Corp. | Revolving Credit Facility | ||||
Debt Instrument [Line Items] | ||||
Prepayment of senior term loan facility | $ 295.5 | |||
WMG Acquisition Corp. | 5.00% Senior Secured Notes due 2023 | ||||
Debt Instrument [Line Items] | ||||
Face or principal amount of debt instrument | $ 300 | $ 300 | $ 300 | |
Interest rate | 5.00% | 5.00% | 5.00% |
Debt - Interest Rates - Additio
Debt - Interest Rates - Additional Information (Detail) | 12 Months Ended |
Sep. 30, 2017 | |
Senior Term Loan Facility due 2020 | |
Debt Instrument [Line Items] | |
Description of variable rate basis | The loans under the Senior Term Loan Facility bear interest at Acquisition Corp.’s election at a rate equal to (i) the rate for deposits in U.S. dollars in the London interbank market (adjusted for maximum reserves) for the applicable interest period (“Term Loan LIBOR”), plus 2.50% 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) three-month Term Loan LIBOR, plus 1.00% per annum, plus, in each case, 1.50% per annum. |
Interest rate applicable to overdue principal | 2.00% |
Term loan Base rate plus Election Rate | 1.00% |
London Interbank Offered Rate (LIBOR) | Senior Term Loan Facility due 2020 | |
Debt Instrument [Line Items] | |
Debt instrument, marginal interest rate | 2.50% |
Federal Funds Effective Swap Rate | Senior Term Loan Facility due 2020 | |
Debt Instrument [Line Items] | |
Debt instrument, marginal interest rate | 0.50% |
Base Rate | Senior Term Loan Facility due 2020 | |
Debt Instrument [Line Items] | |
Debt instrument, marginal interest rate | 1.50% |
Additional Interest rate on other overdue amounts | 2.00% |
Revolving Credit Facility | |
Debt Instrument [Line Items] | |
Debt instrument, marginal interest rate | 1.00% |
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. |
Interest rate applicable to overdue principal | 2.00% |
Revolving Credit Facility | London Interbank Offered Rate (LIBOR) | |
Debt Instrument [Line Items] | |
Debt instrument, marginal interest rate | 2.00% |
Revolving Credit Facility | Federal Funds Effective Swap Rate | |
Debt Instrument [Line Items] | |
Debt instrument, marginal interest rate | 0.50% |
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% |
Debt - Additional Information (
Debt - Additional Information (Detail) - USD ($) $ in Millions | 3 Months Ended | 12 Months Ended | |||||||||
Sep. 30, 2017 | Jun. 30, 2017 | Mar. 31, 2017 | Dec. 31, 2016 | Sep. 30, 2016 | Jun. 30, 2016 | Mar. 31, 2016 | Dec. 31, 2015 | Sep. 30, 2017 | Sep. 30, 2016 | Sep. 30, 2015 | |
Debt Instrument [Line Items] | |||||||||||
Interest expense, net | $ 37 | $ 36 | $ 36 | $ 40 | $ 42 | $ 43 | $ 43 | $ 45 | $ 149 | $ 173 | $ 181 |
Weighted-average interest rate of total debt | 4.90% | 5.30% | 4.90% | 5.30% | 5.60% | ||||||
Senior Notes | |||||||||||
Debt Instrument [Line Items] | |||||||||||
Scheduled maturities of long-term debt in 2021 | $ 883 | $ 883 | |||||||||
Scheduled to mature | $ 957 | $ 957 | |||||||||
Revolving Credit Facility | |||||||||||
Debt Instrument [Line Items] | |||||||||||
Extended maturity date of credit facility | Apr. 1, 2021 | ||||||||||
Term Loan Facility | |||||||||||
Debt Instrument [Line Items] | |||||||||||
Credit facility maturity date | Nov. 1, 2023 |
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, 2017 | Jun. 30, 2017 | Mar. 31, 2017 | Dec. 31, 2016 | Sep. 30, 2016 | Jun. 30, 2016 | Mar. 31, 2016 | Dec. 31, 2015 | Sep. 30, 2017 | Sep. 30, 2016 | Sep. 30, 2015 | |
Income Tax Disclosure [Abstract] | |||||||||||
Domestic | $ (37) | $ 35 | $ (18) | ||||||||
Foreign | 35 | 6 | (57) | ||||||||
(Loss) income before income taxes | $ (57) | $ (9) | $ 23 | $ 41 | $ (8) | $ (3) | $ 27 | $ 25 | $ (2) | $ 41 | $ (75) |
Income Taxes - Current and Defe
Income Taxes - Current and Deferred Income Taxes (Detail) - USD ($) $ in Millions | 3 Months Ended | 12 Months Ended | ||||||||||
Sep. 30, 2017 | Jun. 30, 2017 | Mar. 31, 2017 | Dec. 31, 2016 | Sep. 30, 2016 | Jun. 30, 2016 | Mar. 31, 2016 | Dec. 31, 2015 | Sep. 30, 2017 | Sep. 30, 2016 | Sep. 30, 2015 | ||
Federal: | ||||||||||||
Deferred | $ (169) | $ 3 | $ 4 | |||||||||
Foreign: | ||||||||||||
Current | [1] | 41 | 39 | 40 | ||||||||
Deferred | (12) | (30) | (33) | |||||||||
U.S. State: | ||||||||||||
Current | 2 | 3 | 3 | |||||||||
Deferred | (13) | (4) | (1) | |||||||||
Total | $ (19) | $ (152) | $ 3 | $ 17 | $ (5) | $ 4 | $ 15 | $ (3) | $ (151) | $ 11 | $ 13 | |
[1] | Includes withholding taxes of $13 million, $17 million and $13 million for the fiscal year ended September 30, 2017, for the fiscal year ended September 30, 2016, and for the fiscal year ended September 30, 2015, respectively. |
Income Taxes - Current and De63
Income Taxes - Current and Deferred Income Taxes (Parenthetical) (Detail) - USD ($) $ in Millions | 12 Months Ended | ||
Sep. 30, 2017 | Sep. 30, 2016 | Sep. 30, 2015 | |
Components Of Deferred Tax Assets And Liabilities [Abstract] | |||
Cash withholding taxes | $ 13 | $ 17 | $ 13 |
Income Taxes - Additional Infor
Income Taxes - Additional Information (Detail) - USD ($) $ in Millions | 12 Months Ended | |
Sep. 30, 2017 | Sep. 30, 2016 | |
Income Tax Contingency [Line Items] | ||
U.S. federal statutory income tax rate | 35.00% | |
Tax benefit related to foreign currency losses on intra-entity loans | $ 59 | |
Deferred tax assets valuation allowance written off during period | 125 | |
Deferred tax assets valuation allowance | 193 | $ 310 |
Valuation allowance relates to outside basis differences in investments | 7 | |
Reinvested Earnings at foreign subsidiaries | 218 | |
Accrued interest and penalties | 3 | 3 |
Uncertain income tax position not recognized | 19 | $ 30 |
Decrease in uncertain tax positions resulting from ongoing audits and settlements | 3 | |
United Kingdom Tax Authority | ||
Income Tax Contingency [Line Items] | ||
Net operating loss carry forward | 23 | |
France Tax Authority | ||
Income Tax Contingency [Line Items] | ||
Net operating loss carry forward | 120 | |
Spain Tax Authority | ||
Income Tax Contingency [Line Items] | ||
Net operating loss carry forward | 45 | |
Domestic Tax Authority | ||
Income Tax Contingency [Line Items] | ||
Deferred tax assets valuation allowance | 119 | |
Net operating loss carry forward | $ 558 | |
Operating loss carry forwards, expiration year | 2,027 | |
Foreign Tax Authority | ||
Income Tax Contingency [Line Items] | ||
Valuation allowances relates to FTC carryforwards | $ 108 | |
Foreign tax credit carry forward | $ 158 | |
Tax credit carry forwards, expiration year | 2,018 | |
Decrease in gross unrecognized tax benefits | $ 14 | |
State and Local Jurisdiction | ||
Income Tax Contingency [Line Items] | ||
Valuation allowance relates to NOL carryforwards | $ 4 |
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, 2017 | Jun. 30, 2017 | Mar. 31, 2017 | Dec. 31, 2016 | Sep. 30, 2016 | Jun. 30, 2016 | Mar. 31, 2016 | Dec. 31, 2015 | Sep. 30, 2017 | Sep. 30, 2016 | Sep. 30, 2015 | |
Income Tax Disclosure [Abstract] | |||||||||||
Taxes on income at the U.S. federal statutory rate | $ (1) | $ 14 | $ (26) | ||||||||
U.S. state and local taxes | 3 | (1) | 2 | ||||||||
Foreign income taxed at different rates, including withholding taxes | 11 | 12 | 11 | ||||||||
Increase in valuation allowance | 18 | 19 | 34 | ||||||||
Release of valuation allowance | (134) | (26) | (5) | ||||||||
Change in tax rates | (1) | (10) | (2) | ||||||||
Foreign Currency Losses on Intra-Entity Loans | (59) | ||||||||||
Non-deductible share based compensation | 10 | 1 | |||||||||
Other | 2 | 2 | (1) | ||||||||
Total | $ (19) | $ (152) | $ 3 | $ 17 | $ (5) | $ 4 | $ 15 | $ (3) | $ (151) | $ 11 | $ 13 |
Income Taxes - Significant Comp
Income Taxes - Significant Components of Company's Net Deferred Tax Assets/(Liabilities) (Detail) - USD ($) $ in Millions | Sep. 30, 2017 | Sep. 30, 2016 |
Deferred tax assets: | ||
Allowances and reserves | $ 35 | $ 34 |
Employee benefits and compensation | 91 | 47 |
Other accruals | 68 | 82 |
Tax attribute carry forwards | 482 | 475 |
Other | 13 | 3 |
Total deferred tax assets | 689 | 641 |
Valuation allowance | (193) | (310) |
Net deferred tax assets | 496 | 331 |
Deferred tax liabilities: | ||
Depreciation, amortization and artist advances | (15) | (26) |
Intangible assets | (574) | (572) |
Total deferred tax liabilities | (589) | (598) |
Net deferred tax liabilities | $ (93) | $ (267) |
Income Taxes - Reconciliation o
Income Taxes - Reconciliation of Unrecognized Tax Benefits Including Interest and Penalties (Detail) - USD ($) $ in Millions | 12 Months Ended | ||
Sep. 30, 2017 | Sep. 30, 2016 | Sep. 30, 2015 | |
Income Tax Disclosure [Abstract] | |||
Beginning Balance | $ 30 | $ 35 | $ 27 |
Additions for current year tax positions | 2 | 7 | 8 |
Additions for prior year tax positions | 1 | 1 | 9 |
Subtractions for prior year tax positions | (14) | (13) | (9) |
Ending Balance | $ 19 | $ 30 | $ 35 |
Employee Benefit Plans - Additi
Employee Benefit Plans - Additional Information (Detail) - USD ($) $ in Millions | 12 Months Ended | ||
Sep. 30, 2017 | Sep. 30, 2016 | Sep. 30, 2015 | |
Compensation And Retirement Disclosure [Abstract] | |||
Employee benefit plan obligation | $ 75 | $ 83 | |
Aggregate pension liability recorded in balance sheet | 50 | 56 | |
Pension expense | 4 | 4 | $ 4 |
Employers contribution plan expense | $ 5 | $ 5 | $ 4 |
Share-Based Compensation Plan69
Share-Based Compensation Plans - Additional Information (Detail) $ / shares in Units, $ in Millions | 12 Months Ended | ||
Sep. 30, 2017USD ($)Employee$ / sharesshares | Sep. 30, 2016USD ($)$ / shares | Sep. 30, 2015USD ($)$ / shares | |
Share Based Compensation Arrangement By Share Based Payment Award [Line Items] | |||
Number of additional employees to participate in plan | Employee | 2 | ||
Shares held in employee stock option plan, allocated | shares | 82.1918 | ||
Shares issued and outstanding to LLC | shares | 55 | ||
Deferred equity unit share | shares | 0.0001 | ||
Weighted-average grant date intrinsic value of share awards | $ / shares | $ 140.04 | $ 107.13 | $ 107.13 |
Non-cash compensation expense | $ 70 | $ 23 | $ 3 |
Free cash flow compensation expense | 30 | ||
Dividend expense related to equity units | 2 | ||
Unrecognized compensation costs | $ 34 | 2 | 7 |
Total compensation of unvested awards expected to be recognized, weighted average period | 1 year | ||
Employees | |||
Share Based Compensation Arrangement By Share Based Payment Award [Line Items] | |||
Non-cash compensation expense | 13 | 1 | |
Non-Employees | |||
Share Based Compensation Arrangement By Share Based Payment Award [Line Items] | |||
Non-cash compensation expense | $ 10 | $ 2 | |
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 | shares | 41.0959 | ||
Fair value of deferred equity units | $ / shares | $ 241.75 | $ 142.21 | $ 135 |
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 | |||
Share Based Compensation Arrangement By Share Based Payment Award [Line Items] | |||
Shares held in employee stock option plan, allocated | shares | 41.0959 | ||
Weighted-average grant date intrinsic value of share awards | $ / shares | $ 90.06 |
Share-Based Compensation Plan70
Share-Based Compensation Plans - Summary of Company's Share Awards (Detail) - $ / shares | 12 Months Ended | ||
Sep. 30, 2017 | Sep. 30, 2016 | Sep. 30, 2015 | |
Share Based Compensation Arrangement By Share Based Payment Award [Line Items] | |||
Intrinsic Value, Granted | $ 140.04 | $ 107.13 | $ 107.13 |
Deferred Equity Units | |||
Share Based Compensation Arrangement By Share Based Payment Award [Line Items] | |||
Unvested units | 19 | 18 | |
Units, Granted | 11 | 9 | |
Units, Vested | (17) | (7) | |
Units, Forfeited | (1) | ||
Unvested units | 13 | 19 | 18 |
Unvested units, Fair Value | $ 142.21 | $ 135 | |
Fair Value, Granted | 241.75 | 135 | |
Fair Value, Vested | 241.75 | 135 | |
Fair Value, Forfeited | 135 | ||
Unvested units, Fair Value | 241.75 | 142.21 | $ 135 |
Unvested units, Weighted-Average Grant-Date Intrinsic Value | 107.13 | 107.13 | |
Weighted-Average Grant-Date Intrinsic Value, Granted | 146.86 | 107.13 | |
Weighted-Average Grant-Date Intrinsic Value, Vested | 107.13 | 107.13 | |
Weighted-Average Grant-Date Intrinsic Value, Forfeited | 107.13 | ||
Unvested units, Weighted-Average Grant-Date Intrinsic Value | $ 140.04 | $ 107.13 | $ 107.13 |
Matching Equity Units | |||
Share Based Compensation Arrangement By Share Based Payment Award [Line Items] | |||
Unvested units | 28 | 25 | |
Units, Granted | 11 | 9 | |
Units, Vested | (3) | (5) | |
Units, Forfeited | (1) | ||
Unvested units | 36 | 28 | 25 |
Unvested units, Intrinsic Value | $ 35.08 | $ 27.87 | |
Intrinsic Value, Granted | 90.06 | ||
Vested | 134.62 | 27.87 | |
Forfeited | 27.87 | ||
Unvested units, Intrinsic Value | 111.23 | 35.08 | $ 27.87 |
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) | Jul. 12, 2017USD ($) | Jul. 15, 2016USD ($) | Aug. 13, 2015USD ($) | Jan. 01, 2015GBP (£) | Sep. 30, 2017USD ($) | Sep. 30, 2016USD ($) | Sep. 30, 2015USD ($) |
Related Party Transaction [Line Items] | |||||||
Lease arrangement with Related Party | $ 62,000,000 | $ 60,000,000 | $ 66,000,000 | ||||
Songkick | |||||||
Related Party Transaction [Line Items] | |||||||
Acquisition date | Jul. 12, 2017 | ||||||
Purchase price of selected assets | $ 5,000,000 | ||||||
Access Industries | |||||||
Related Party Transaction [Line Items] | |||||||
Management fee minimum | $ 9,000,000 | ||||||
Management fees and reimbursed expenses | $ 9,000,000 | 9,000,000 | 9,000,000 | ||||
Expenses reimbursed | 2,000,000 | 2,000,000 | |||||
Warner and Chappell Music Limited and WMG Acquisition Limited | |||||||
Related Party Transaction [Line Items] | |||||||
Lease arrangement with Related Party | £ | £ 3,460,250 | ||||||
Extended lease term | 5 years | ||||||
Extended lease term beginning date | Dec. 24, 2020 | ||||||
Extended lease term ending date | Dec. 24, 2025 | ||||||
Warner Music Inc | |||||||
Related Party Transaction [Line Items] | |||||||
License fee | $ 16,967.21 | $ 2,775 | |||||
IT support fee | $ 1,000 | ||||||
Deezer | |||||||
Related Party Transaction [Line Items] | |||||||
Related party revenue | $ 36,000,000 | $ 29,000,000 |
Commitments and Contingencies -
Commitments and Contingencies - Additional Information (Detail) - USD ($) $ in Millions | Jul. 29, 2015 | Sep. 30, 2017 | Jun. 30, 2017 | Mar. 31, 2017 | Dec. 31, 2016 | Sep. 30, 2016 | Jun. 30, 2016 | Mar. 31, 2016 | Dec. 31, 2015 | Sep. 30, 2017 | Sep. 30, 2016 | Sep. 30, 2015 |
Commitments And Contingencies [Line Items] | ||||||||||||
Net lease and rental expense | $ 62 | $ 60 | $ 66 | |||||||||
Firm's expected commitments | 305 | 288 | ||||||||||
Other off-balance sheet commitments to investees | $ 3 | $ 2 | 3 | 2 | ||||||||
Revenues | $ 917 | $ 917 | $ 825 | $ 917 | $ 841 | $ 811 | $ 745 | $ 849 | 3,576 | 3,246 | $ 2,966 | |
Sirius XM | Settled Litigation | ||||||||||||
Commitments And Contingencies [Line Items] | ||||||||||||
Receipts from plaintiff | $ 210 | |||||||||||
Cash distribution | 33 | |||||||||||
Revenues | $ 4 | $ 28 |
Commitments and Contingencies73
Commitments and Contingencies - Future Minimum Payments Under Non-Cancelable Operating Leases (Net of Sublease Income) (Detail) $ in Millions | Sep. 30, 2017USD ($) |
Commitments And Contingencies Disclosure [Abstract] | |
Operating Leases in 2018 | $ 50 |
Operating Leases in 2019 | 52 |
Operating Leases in 2020 | 48 |
Operating Leases in 2021 | 45 |
Operating Leases in 2022 | 44 |
Operating Leases, Thereafter | 286 |
Operating Leases, Total | $ 525 |
Derivative Financial Instrume74
Derivative Financial Instruments - Additional Information (Detail) - USD ($) | Sep. 30, 2017 | Sep. 30, 2016 |
Derivative Instruments And Hedging Activities Disclosure [Abstract] | ||
Outstanding hedge contracts | $ 0 | $ 0 |
Deferred gains (losses) in comprehensive loss related to foreign exchange hedging | $ 0 | $ 0 |
Segment Information - Additiona
Segment Information - Additional Information (Detail) | 12 Months Ended | ||
Sep. 30, 2017OperationsCustomer | Sep. 30, 2016Customer | Sep. 30, 2015Customer | |
Segment Reporting Information [Line Items] | |||
Number of fundamental operations | Operations | 2 | ||
Recorded Music | Sales Revenue, Net | Customer Concentration | |||
Segment Reporting Information [Line Items] | |||
Customer Concentration | 14.00% | 14.00% | 13.00% |
Number of customer | Customer | 1 | 1 | 1 |
Segment Information - Schedule
Segment Information - Schedule of Segment Information (Detail) - USD ($) $ in Millions | 3 Months Ended | 12 Months Ended | |||||||||
Sep. 30, 2017 | Jun. 30, 2017 | Mar. 31, 2017 | Dec. 31, 2016 | Sep. 30, 2016 | Jun. 30, 2016 | Mar. 31, 2016 | Dec. 31, 2015 | Sep. 30, 2017 | Sep. 30, 2016 | Sep. 30, 2015 | |
Segment Reporting Information [Line Items] | |||||||||||
Revenues | $ 917 | $ 917 | $ 825 | $ 917 | $ 841 | $ 811 | $ 745 | $ 849 | $ 3,576 | $ 3,246 | $ 2,966 |
Operating income (loss) | (1) | 51 | 78 | 94 | 55 | 45 | 52 | 62 | 222 | 214 | 127 |
Amortization of intangible assets | 49 | 51 | 50 | 51 | 55 | 63 | 63 | 62 | 201 | 243 | 255 |
Depreciation of property, plant and equipment | 12 | $ 13 | $ 13 | $ 12 | 13 | $ 12 | $ 12 | $ 13 | 50 | 50 | 54 |
OIBDA | 473 | 507 | 436 | ||||||||
Total assets | 5,718 | 5,335 | 5,718 | 5,335 | |||||||
Capital expenditures | 44 | 42 | 63 | ||||||||
Operating Segments | Recorded Music | |||||||||||
Segment Reporting Information [Line Items] | |||||||||||
Revenues | 3,020 | 2,736 | 2,501 | ||||||||
Operating income (loss) | 283 | 247 | 151 | ||||||||
Amortization of intangible assets | 136 | 180 | 192 | ||||||||
Depreciation of property, plant and equipment | 32 | 32 | 36 | ||||||||
OIBDA | 451 | 459 | 379 | ||||||||
Total assets | 2,085 | 2,584 | 2,085 | 2,584 | |||||||
Capital expenditures | 21 | 18 | 19 | ||||||||
Operating Segments | Music Publishing | |||||||||||
Segment Reporting Information [Line Items] | |||||||||||
Revenues | 572 | 524 | 482 | ||||||||
Operating income (loss) | 81 | 68 | 77 | ||||||||
Amortization of intangible assets | 65 | 63 | 63 | ||||||||
Depreciation of property, plant and equipment | 6 | 7 | 6 | ||||||||
OIBDA | 152 | 138 | 146 | ||||||||
Total assets | 2,510 | 2,365 | 2,510 | 2,365 | |||||||
Capital expenditures | 5 | 7 | 7 | ||||||||
Corporate Expenses and Eliminations | |||||||||||
Segment Reporting Information [Line Items] | |||||||||||
Revenues | (16) | (14) | (17) | ||||||||
Operating income (loss) | (142) | (101) | (101) | ||||||||
Depreciation of property, plant and equipment | 12 | 11 | 12 | ||||||||
OIBDA | (130) | (90) | (89) | ||||||||
Total assets | $ 1,123 | $ 386 | 1,123 | 386 | |||||||
Capital expenditures | $ 18 | $ 17 | $ 37 |
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, 2017 | Jun. 30, 2017 | Mar. 31, 2017 | Dec. 31, 2016 | Sep. 30, 2016 | Jun. 30, 2016 | Mar. 31, 2016 | Dec. 31, 2015 | Sep. 30, 2017 | Sep. 30, 2016 | Sep. 30, 2015 | |
Segment Reporting Information [Line Items] | |||||||||||
Revenues | $ 917 | $ 917 | $ 825 | $ 917 | $ 841 | $ 811 | $ 745 | $ 849 | $ 3,576 | $ 3,246 | $ 2,966 |
Long-lived Assets | 213 | 203 | 213 | 203 | |||||||
United States | |||||||||||
Segment Reporting Information [Line Items] | |||||||||||
Revenues | 1,587 | 1,360 | 1,171 | ||||||||
Long-lived Assets | 139 | 138 | 139 | 138 | |||||||
United Kingdom | |||||||||||
Segment Reporting Information [Line Items] | |||||||||||
Revenues | 522 | 491 | 477 | ||||||||
Long-lived Assets | 26 | 23 | 26 | 23 | |||||||
All Other Territories | |||||||||||
Segment Reporting Information [Line Items] | |||||||||||
Revenues | 1,467 | 1,395 | $ 1,318 | ||||||||
Long-lived Assets | $ 48 | $ 42 | $ 48 | $ 42 |
Additional Financial Informat78
Additional Financial Information - Additional Information (Detail) - USD ($) $ in Millions | Jun. 05, 2017 | Dec. 02, 2016 | Sep. 30, 2017 | Sep. 30, 2016 | Sep. 30, 2015 |
Supplemental Cash Flow Information [Line Items] | |||||
Accrued interest paid | $ 138 | $ 181 | $ 171 | ||
Income taxes paid net of refunds | 40 | 41 | 25 | ||
Special cash dividends payable, date to be paid | Jul. 31, 2017 | Jan. 3, 2017 | |||
Special cash dividends | $ 30 | $ 54 | |||
Special cash dividends payable, date of record | Jun. 30, 2017 | Dec. 30, 2016 | |||
Cash paid for investments and acquisitions of businesses, net | 139 | $ 28 | $ 16 | ||
Spinnin Records | |||||
Supplemental Cash Flow Information [Line Items] | |||||
Cash paid for investments and acquisitions of businesses, net | $ 139 | ||||
Acquisition date | Sep. 7, 2017 |
Fair Value Measurements - Sched
Fair Value Measurements - Schedule of Fair Value of Financial Instruments (Detail) - USD ($) $ in Millions | Sep. 30, 2017 | Sep. 30, 2016 | |
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items] | |||
Contractual Obligations | $ (5) | $ (4) | |
Level 3 | |||
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items] | |||
Contractual Obligations | (5) | (4) | |
Other Non-Current Liabilities | |||
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items] | |||
Contractual Obligations | [1] | (5) | (4) |
Other Non-Current Liabilities | Level 3 | |||
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items] | |||
Contractual Obligations | [1] | $ (5) | $ (4) |
[1] | This represents purchase obligations and contingent consideration related to the Company’s various acquisitions. This is based on a probability weighted performance 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, 2017USD ($) | |
Fair Value Liabilities Measured On Recurring Basis Unobservable Input Reconciliation [Line Items] | |
Balance at September 30, 2016 | $ (4) |
Additions | (1) |
Balance at September 30, 2017 | $ (5) |
Fair Value Measurements - Addit
Fair Value Measurements - Additional Information (Detail) - USD ($) $ in Millions | Sep. 30, 2017 | Sep. 30, 2016 |
Level 2 measurement | ||
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items] | ||
Debt Instrument, Fair Value Disclosure | $ 2,936 | $ 2,896 |
Subsequent Events - Additional
Subsequent Events - Additional Information (Detail) | 1 Months Ended |
Nov. 30, 2017 | |
Subsequent Event | November 2017 Senior Term Loan Credit Agreement Amendment | |
Subsequent Event [Line Items] | |
Credit facility maturity date | Dec. 6, 2017 |
Quarterly Financial Informati83
Quarterly Financial Information - Quarterly Information (Detail) - USD ($) $ in Millions | 3 Months Ended | 12 Months Ended | ||||||||||||||||||||
Sep. 30, 2017 | Jun. 30, 2017 | Mar. 31, 2017 | Dec. 31, 2016 | Sep. 30, 2016 | Jun. 30, 2016 | Mar. 31, 2016 | Dec. 31, 2015 | Sep. 30, 2017 | Sep. 30, 2016 | Sep. 30, 2015 | ||||||||||||
Quarterly Financial Information Disclosure [Abstract] | ||||||||||||||||||||||
Revenues | $ 917 | $ 917 | $ 825 | $ 917 | $ 841 | $ 811 | $ 745 | $ 849 | $ 3,576 | $ 3,246 | $ 2,966 | |||||||||||
Costs and expenses: | ||||||||||||||||||||||
Cost of revenue | (501) | (519) | (415) | (496) | (436) | (448) | (374) | (449) | (1,931) | (1,707) | (1,511) | |||||||||||
Selling, general and administrative expenses | (368) | [1] | (296) | [1] | (282) | [1] | (276) | [1] | (295) | [2] | (255) | [2] | (256) | [2] | (276) | [2] | (1,222) | [3] | (1,082) | [3] | (1,073) | [3] |
Amortization expense | (49) | (51) | (50) | (51) | (55) | (63) | (63) | (62) | (201) | (243) | (255) | |||||||||||
Total costs and expenses | (918) | (866) | (747) | (823) | (786) | (766) | (693) | (787) | (3,354) | (3,032) | (2,839) | |||||||||||
Operating income | (1) | 51 | 78 | 94 | 55 | 45 | 52 | 62 | 222 | 214 | 127 | |||||||||||
Loss on extinguishment of debt | (3) | (32) | (14) | (4) | (35) | (18) | ||||||||||||||||
Interest expense, net | (37) | (36) | (36) | (40) | (42) | (43) | (43) | (45) | (149) | (173) | (181) | |||||||||||
Other (expense) income | (19) | (21) | (19) | 19 | (7) | (5) | 22 | 8 | (40) | 18 | (21) | |||||||||||
(Loss) income before income taxes | (57) | (9) | 23 | 41 | (8) | (3) | 27 | 25 | (2) | 41 | (75) | |||||||||||
Income tax (expense) benefit | 19 | 152 | (3) | (17) | 5 | (4) | (15) | 3 | 151 | (11) | (13) | |||||||||||
Net (loss) income | (38) | 143 | 20 | 24 | (3) | (7) | 12 | 28 | ||||||||||||||
Less: Income attributable to noncontrolling interest | (1) | (2) | (1) | (2) | (1) | (2) | (1) | (1) | (6) | (5) | (3) | |||||||||||
Net income (loss) attributable to Warner Music Group Corp. | $ (39) | $ 141 | $ 19 | $ 22 | $ (4) | $ (9) | $ 11 | $ 27 | $ 143 | $ 25 | $ (91) | |||||||||||
[1] | (a) Includes depreciation expense of: $(12) $(13) $(13) $(12) | |||||||||||||||||||||
[2] | (a) Includes depreciation expense of: $(13) $(12) $(12) $(13) | |||||||||||||||||||||
[3] | (a) Includes depreciation expense of: $(50) $(50) $(54) |
Quarterly Financial Informati84
Quarterly Financial Information - Quarterly Information (Parenthetical) (Detail) - USD ($) $ in Millions | 3 Months Ended | 12 Months Ended | |||||||||
Sep. 30, 2017 | Jun. 30, 2017 | Mar. 31, 2017 | Dec. 31, 2016 | Sep. 30, 2016 | Jun. 30, 2016 | Mar. 31, 2016 | Dec. 31, 2015 | Sep. 30, 2017 | Sep. 30, 2016 | Sep. 30, 2015 | |
Quarterly Financial Information Disclosure [Abstract] | |||||||||||
Depreciation expense | $ (12) | $ (13) | $ (13) | $ (12) | $ (13) | $ (12) | $ (12) | $ (13) | $ (50) | $ (50) | $ (54) |
Guarantor and Non-Guarantor S85
Guarantor and Non-Guarantor Subsidiaries Financial Information - Additional Information (Detail) | 12 Months Ended | |||
Sep. 30, 2017 | Sep. 30, 2016 | Mar. 11, 2016 | Sep. 30, 2015 | |
5.625% Senior Secured Notes | ||||
Condensed Financial Statements Captions [Line Items] | ||||
Interest rate | 5.625% | 5.625% | 5.625% | |
5.625% Senior Secured Notes | Acquisition Corp. | ||||
Condensed Financial Statements Captions [Line Items] | ||||
Interest rate | 5.625% | 5.625% | ||
Due date of Senior Secured Notes | 2,022 | 2,022 | ||
5.00% Senior Secured Notes due 2023 | Acquisition Corp. | ||||
Condensed Financial Statements Captions [Line Items] | ||||
Interest rate | 5.00% | |||
Due date of Senior Secured Notes | 2,023 | |||
4.125% Senior Secured Notes due 2024 | Acquisition Corp. | ||||
Condensed Financial Statements Captions [Line Items] | ||||
Interest rate | 4.125% | 4.125% | ||
Due date of Senior Secured Notes | 2,024 | 2,024 | ||
4.875% Senior Secured Notes due 2024 | Acquisition Corp. | ||||
Condensed Financial Statements Captions [Line Items] | ||||
Interest rate | 4.875% | 4.875% | ||
Due date of Senior Secured Notes | 2,024 | 2,024 | ||
6.75% Senior Notes due 2022 | ||||
Condensed Financial Statements Captions [Line Items] | ||||
Interest rate | 6.75% | 6.75% | 6.75% | |
6.75% Senior Notes due 2022 | Acquisition Corp. | ||||
Condensed Financial Statements Captions [Line Items] | ||||
Interest rate | 6.75% | 6.75% | ||
Due date of Senior Secured Notes | 2,022 |
Guarantor and Non-Guarantor S86
Guarantor and Non-Guarantor Subsidiaries Financial Information - Consolidating Balance Sheet (Detail) - USD ($) $ in Millions | Sep. 30, 2017 | Sep. 30, 2016 | Sep. 30, 2015 | Sep. 30, 2014 |
Current assets: | ||||
Cash and equivalents | $ 647 | $ 359 | $ 246 | $ 157 |
Accounts receivable, net | 404 | 329 | ||
Inventories | 39 | 41 | ||
Royalty advances expected to be recouped within one year | 141 | 128 | ||
Prepaid and other current assets | 44 | 51 | ||
Total current assets | 1,275 | 908 | ||
Royalty advances expected to be recouped after one year | 172 | 196 | ||
Property, plant and equipment, net | 213 | 203 | ||
Goodwill | 1,685 | 1,627 | 1,632 | |
Intangible assets subject to amortization, net | 2,090 | 2,201 | ||
Intangible assets not subject to amortization | 117 | 116 | ||
Deferred tax assets, net | 97 | 2 | ||
Other assets | 69 | 82 | ||
Total assets | 5,718 | 5,335 | ||
Current liabilities: | ||||
Accounts payable | 208 | 204 | ||
Accrued royalties | 1,263 | 1,104 | ||
Accrued liabilities | 365 | 297 | ||
Accrued interest | 41 | 38 | ||
Deferred revenue | 197 | 178 | ||
Other current liabilities | 26 | 21 | ||
Total current liabilities | 2,100 | 1,842 | ||
Long-term debt | 2,811 | 2,778 | ||
Deferred tax liabilities, net | 190 | 269 | ||
Other noncurrent liabilities | 309 | 236 | ||
Total liabilities | 5,410 | 5,125 | ||
Total Warner Music Group Corp. equity (deficit) | 293 | 195 | ||
Noncontrolling interest | 15 | 15 | ||
Total equity | 308 | 210 | 239 | 390 |
Total liabilities and equity | 5,718 | 5,335 | ||
Reportable Legal Entities | Guarantor Subsidiaries | ||||
Current assets: | ||||
Cash and equivalents | 347 | 180 | 73 | 26 |
Accounts receivable, net | 214 | 177 | ||
Inventories | 12 | 16 | ||
Royalty advances expected to be recouped within one year | 89 | 79 | ||
Prepaid and other current assets | 15 | 13 | ||
Total current assets | 677 | 465 | ||
Due from (to) parent companies | 96 | (312) | ||
Investments in and advances to consolidated subsidiaries | 1,312 | 1,458 | ||
Royalty advances expected to be recouped after one year | 109 | 120 | ||
Property, plant and equipment, net | 139 | 138 | ||
Goodwill | 1,368 | 1,372 | ||
Intangible assets subject to amortization, net | 1,029 | 1,165 | ||
Intangible assets not subject to amortization | 71 | 71 | ||
Deferred tax assets, net | 89 | |||
Other assets | 45 | 62 | ||
Total assets | 4,935 | 4,539 | ||
Current liabilities: | ||||
Accounts payable | 135 | 124 | ||
Accrued royalties | 732 | 606 | ||
Accrued liabilities | 144 | 112 | ||
Deferred revenue | 125 | 143 | ||
Other current liabilities | 3 | 3 | ||
Total current liabilities | 1,139 | 988 | ||
Deferred tax liabilities, net | 109 | |||
Other noncurrent liabilities | 196 | 126 | ||
Total liabilities | 1,335 | 1,223 | ||
Total Warner Music Group Corp. equity (deficit) | 3,596 | 3,314 | ||
Noncontrolling interest | 4 | 2 | ||
Total equity | 3,600 | 3,316 | ||
Total liabilities and equity | 4,935 | 4,539 | ||
Reportable Legal Entities | Non-Guarantor Subsidiaries | ||||
Current assets: | ||||
Cash and equivalents | 300 | 179 | 173 | 131 |
Accounts receivable, net | 190 | 152 | ||
Inventories | 27 | 25 | ||
Royalty advances expected to be recouped within one year | 52 | 49 | ||
Prepaid and other current assets | 29 | 37 | ||
Total current assets | 598 | 442 | ||
Due from (to) parent companies | (514) | (438) | ||
Royalty advances expected to be recouped after one year | 63 | 76 | ||
Property, plant and equipment, net | 74 | 65 | ||
Goodwill | 317 | 255 | ||
Intangible assets subject to amortization, net | 1,061 | 1,036 | ||
Intangible assets not subject to amortization | 46 | 45 | ||
Deferred tax assets, net | 8 | 2 | ||
Other assets | 17 | 17 | ||
Total assets | 1,670 | 1,500 | ||
Current liabilities: | ||||
Accounts payable | 73 | 80 | ||
Accrued royalties | 531 | 498 | ||
Accrued liabilities | 221 | 185 | ||
Deferred revenue | 72 | 35 | ||
Other current liabilities | 23 | 18 | ||
Total current liabilities | 920 | 816 | ||
Deferred tax liabilities, net | 190 | 160 | ||
Other noncurrent liabilities | 112 | 107 | ||
Total liabilities | 1,222 | 1,083 | ||
Total Warner Music Group Corp. equity (deficit) | 437 | 404 | ||
Noncontrolling interest | 11 | 13 | ||
Total equity | 448 | 417 | ||
Total liabilities and equity | 1,670 | 1,500 | ||
Reportable Legal Entities | Warner Music Group Corp. | ||||
Current assets: | ||||
Investments in and advances to consolidated subsidiaries | 377 | 195 | ||
Total assets | 377 | 195 | ||
Current liabilities: | ||||
Total Warner Music Group Corp. equity (deficit) | 377 | 195 | ||
Total equity | 377 | 195 | ||
Total liabilities and equity | 377 | 195 | ||
Reportable Legal Entities | Acquisition Corp. | ||||
Current assets: | ||||
Prepaid and other current assets | 1 | |||
Total current assets | 1 | |||
Due from (to) parent companies | 418 | 750 | ||
Investments in and advances to consolidated subsidiaries | 2,721 | 2,260 | ||
Other assets | 7 | 3 | ||
Total assets | 3,146 | 3,014 | ||
Current liabilities: | ||||
Accrued interest | 41 | 38 | ||
Total current liabilities | 41 | 38 | ||
Long-term debt | 2,811 | 2,778 | ||
Other noncurrent liabilities | 1 | 3 | ||
Total liabilities | 2,853 | 2,819 | ||
Total Warner Music Group Corp. equity (deficit) | 293 | 195 | ||
Total equity | 293 | 195 | ||
Total liabilities and equity | 3,146 | 3,014 | ||
Reportable Legal Entities | WMG Acquisition Corp. Consolidated | ||||
Current assets: | ||||
Cash and equivalents | 647 | 359 | $ 246 | $ 157 |
Accounts receivable, net | 404 | 329 | ||
Inventories | 39 | 41 | ||
Royalty advances expected to be recouped within one year | 141 | 128 | ||
Prepaid and other current assets | 44 | 51 | ||
Total current assets | 1,275 | 908 | ||
Royalty advances expected to be recouped after one year | 172 | 196 | ||
Property, plant and equipment, net | 213 | 203 | ||
Goodwill | 1,685 | 1,627 | ||
Intangible assets subject to amortization, net | 2,090 | 2,201 | ||
Intangible assets not subject to amortization | 117 | 116 | ||
Deferred tax assets, net | 97 | 2 | ||
Other assets | 69 | 82 | ||
Total assets | 5,718 | 5,335 | ||
Current liabilities: | ||||
Accounts payable | 208 | 204 | ||
Accrued royalties | 1,263 | 1,104 | ||
Accrued liabilities | 365 | 297 | ||
Accrued interest | 41 | 38 | ||
Deferred revenue | 197 | 178 | ||
Other current liabilities | 26 | 21 | ||
Total current liabilities | 2,100 | 1,842 | ||
Long-term debt | 2,811 | 2,778 | ||
Deferred tax liabilities, net | 190 | 269 | ||
Other noncurrent liabilities | 309 | 236 | ||
Total liabilities | 5,410 | 5,125 | ||
Total Warner Music Group Corp. equity (deficit) | 293 | 195 | ||
Noncontrolling interest | 15 | 15 | ||
Total equity | 308 | 210 | ||
Total liabilities and equity | 5,718 | 5,335 | ||
Reportable Legal Entities | WMG Holdings Corp. | ||||
Current assets: | ||||
Investments in and advances to consolidated subsidiaries | 377 | 195 | ||
Total assets | 377 | 195 | ||
Current liabilities: | ||||
Total Warner Music Group Corp. equity (deficit) | 377 | 195 | ||
Total equity | 377 | 195 | ||
Total liabilities and equity | 377 | 195 | ||
Eliminations | ||||
Current assets: | ||||
Investments in and advances to consolidated subsidiaries | (754) | (390) | ||
Total assets | (754) | (390) | ||
Current liabilities: | ||||
Total Warner Music Group Corp. equity (deficit) | (754) | (390) | ||
Total equity | (754) | (390) | ||
Total liabilities and equity | (754) | (390) | ||
Eliminations | Acquisition Corp. | ||||
Current assets: | ||||
Investments in and advances to consolidated subsidiaries | (4,033) | (3,718) | ||
Total assets | (4,033) | (3,718) | ||
Current liabilities: | ||||
Total Warner Music Group Corp. equity (deficit) | (4,033) | (3,718) | ||
Total equity | (4,033) | (3,718) | ||
Total liabilities and equity | $ (4,033) | $ (3,718) |
Guarantor and Non-Guarantor S87
Guarantor and Non-Guarantor Subsidiaries Financial Information - Consolidating Statement of Operations (Detail) - USD ($) $ in Millions | Jul. 27, 2016 | Sep. 30, 2017 | Jun. 30, 2017 | Mar. 31, 2017 | Dec. 31, 2016 | Sep. 30, 2016 | Jun. 30, 2016 | Mar. 31, 2016 | Dec. 31, 2015 | Sep. 30, 2017 | Sep. 30, 2016 | Sep. 30, 2015 |
Condensed Income Statements Captions [Line Items] | ||||||||||||
Revenues | $ 917 | $ 917 | $ 825 | $ 917 | $ 841 | $ 811 | $ 745 | $ 849 | $ 3,576 | $ 3,246 | $ 2,966 | |
Costs and expenses: | ||||||||||||
Cost of revenue | (501) | (519) | (415) | (496) | (436) | (448) | (374) | (449) | (1,931) | (1,707) | (1,511) | |
Selling, general and administrative expenses | (1,222) | (1,082) | (1,073) | |||||||||
Amortization expense | (49) | (51) | (50) | (51) | (55) | (63) | (63) | (62) | (201) | (243) | (255) | |
Total costs and expenses | (918) | (866) | (747) | (823) | (786) | (766) | (693) | (787) | (3,354) | (3,032) | (2,839) | |
Operating income | (1) | 51 | 78 | 94 | 55 | 45 | 52 | 62 | 222 | 214 | 127 | |
Loss on extinguishment of debt | (3) | (32) | (14) | (4) | (35) | (18) | ||||||
Interest (expense) income, net | (37) | (36) | (36) | (40) | (42) | (43) | (43) | (45) | (149) | (173) | (181) | |
Equity gains (losses) from consolidated subsidiaries | 1 | |||||||||||
Other income (expense), net | (41) | 18 | (21) | |||||||||
(Loss) income before income taxes | (57) | (9) | 23 | 41 | (8) | (3) | 27 | 25 | (2) | 41 | (75) | |
Income tax (expense) benefit | 19 | 152 | (3) | (17) | 5 | (4) | (15) | 3 | 151 | (11) | (13) | |
Net income (loss) | 149 | 30 | (88) | |||||||||
Less: Income attributable to noncontrolling interest | (1) | (2) | (1) | (2) | (1) | (2) | (1) | (1) | (6) | (5) | (3) | |
Net income (loss) attributable to Warner Music Group Corp. | $ (39) | $ 141 | $ 19 | $ 22 | $ (4) | $ (9) | $ 11 | $ 27 | 143 | 25 | (91) | |
Acquisition Corp. | ||||||||||||
Costs and expenses: | ||||||||||||
Loss on extinguishment of debt | $ (4) | |||||||||||
Reportable Legal Entities | Guarantor Subsidiaries | ||||||||||||
Condensed Income Statements Captions [Line Items] | ||||||||||||
Revenues | 1,978 | 1,668 | 1,632 | |||||||||
Costs and expenses: | ||||||||||||
Cost of revenue | (922) | (703) | (788) | |||||||||
Selling, general and administrative expenses | (900) | (739) | (675) | |||||||||
Amortization expense | (100) | (118) | (122) | |||||||||
Total costs and expenses | (1,922) | (1,560) | (1,585) | |||||||||
Operating income | 56 | 108 | 47 | |||||||||
Interest (expense) income, net | 2 | 3 | 6 | |||||||||
Equity gains (losses) from consolidated subsidiaries | 87 | 74 | (67) | |||||||||
Other income (expense), net | (17) | 2 | 1 | |||||||||
(Loss) income before income taxes | 128 | 187 | (13) | |||||||||
Income tax (expense) benefit | 154 | (20) | (29) | |||||||||
Net income (loss) | 282 | 167 | (42) | |||||||||
Less: Income attributable to noncontrolling interest | (1) | (1) | (1) | |||||||||
Net income (loss) attributable to Warner Music Group Corp. | 281 | 166 | (43) | |||||||||
Reportable Legal Entities | Non-Guarantor Subsidiaries | ||||||||||||
Condensed Income Statements Captions [Line Items] | ||||||||||||
Revenues | 2,008 | 1,887 | 1,588 | |||||||||
Costs and expenses: | ||||||||||||
Cost of revenue | (1,275) | (1,192) | (866) | |||||||||
Selling, general and administrative expenses | (464) | (464) | (509) | |||||||||
Amortization expense | (101) | (125) | (133) | |||||||||
Total costs and expenses | (1,840) | (1,781) | (1,508) | |||||||||
Operating income | 168 | 106 | 80 | |||||||||
Interest (expense) income, net | (56) | (79) | (83) | |||||||||
Other income (expense), net | (23) | 26 | (12) | |||||||||
(Loss) income before income taxes | 89 | 53 | (15) | |||||||||
Income tax (expense) benefit | (30) | 1 | ||||||||||
Net income (loss) | 59 | 54 | (15) | |||||||||
Less: Income attributable to noncontrolling interest | (5) | (4) | (2) | |||||||||
Net income (loss) attributable to Warner Music Group Corp. | 54 | 50 | (17) | |||||||||
Reportable Legal Entities | Warner Music Group Corp. | ||||||||||||
Costs and expenses: | ||||||||||||
Equity gains (losses) from consolidated subsidiaries | 143 | 25 | (91) | |||||||||
(Loss) income before income taxes | 143 | 25 | (91) | |||||||||
Net income (loss) | 143 | 25 | (91) | |||||||||
Net income (loss) attributable to Warner Music Group Corp. | 143 | 25 | (91) | |||||||||
Reportable Legal Entities | Acquisition Corp. | ||||||||||||
Costs and expenses: | ||||||||||||
Selling, general and administrative expenses | (1) | 1 | ||||||||||
Total costs and expenses | (1) | 1 | ||||||||||
Operating income | (1) | 1 | ||||||||||
Loss on extinguishment of debt | (35) | (4) | ||||||||||
Interest (expense) income, net | (95) | (84) | (82) | |||||||||
Equity gains (losses) from consolidated subsidiaries | 124 | 162 | 35 | |||||||||
Other income (expense), net | (1) | (10) | (10) | |||||||||
(Loss) income before income taxes | (8) | 64 | (56) | |||||||||
Income tax (expense) benefit | 151 | (11) | (13) | |||||||||
Net income (loss) | 143 | 53 | (69) | |||||||||
Net income (loss) attributable to Warner Music Group Corp. | 143 | 53 | (69) | |||||||||
Reportable Legal Entities | WMG Acquisition Corp. Consolidated | ||||||||||||
Condensed Income Statements Captions [Line Items] | ||||||||||||
Revenues | 3,576 | 3,246 | 2,966 | |||||||||
Costs and expenses: | ||||||||||||
Cost of revenue | (1,931) | (1,707) | (1,511) | |||||||||
Selling, general and administrative expenses | (1,222) | (1,082) | (1,073) | |||||||||
Amortization expense | (201) | (243) | (255) | |||||||||
Total costs and expenses | (3,354) | (3,032) | (2,839) | |||||||||
Operating income | 222 | 214 | 127 | |||||||||
Loss on extinguishment of debt | (35) | (4) | ||||||||||
Interest (expense) income, net | (149) | (159) | (159) | |||||||||
Equity gains (losses) from consolidated subsidiaries | 1 | |||||||||||
Other income (expense), net | (41) | 18 | (21) | |||||||||
(Loss) income before income taxes | (2) | 69 | (53) | |||||||||
Income tax (expense) benefit | 151 | (11) | (13) | |||||||||
Net income (loss) | 149 | 58 | (66) | |||||||||
Less: Income attributable to noncontrolling interest | (6) | (5) | (3) | |||||||||
Net income (loss) attributable to Warner Music Group Corp. | 143 | 53 | (69) | |||||||||
Reportable Legal Entities | WMG Holdings Corp. | ||||||||||||
Costs and expenses: | ||||||||||||
Loss on extinguishment of debt | (14) | |||||||||||
Interest (expense) income, net | (14) | (22) | ||||||||||
Equity gains (losses) from consolidated subsidiaries | 143 | 53 | (69) | |||||||||
(Loss) income before income taxes | 143 | 25 | (91) | |||||||||
Net income (loss) | 143 | 25 | (91) | |||||||||
Net income (loss) attributable to Warner Music Group Corp. | 143 | 25 | (91) | |||||||||
Eliminations | ||||||||||||
Costs and expenses: | ||||||||||||
Equity gains (losses) from consolidated subsidiaries | (286) | (78) | 160 | |||||||||
(Loss) income before income taxes | (286) | (78) | 160 | |||||||||
Net income (loss) | (286) | (78) | 160 | |||||||||
Net income (loss) attributable to Warner Music Group Corp. | (286) | (78) | 160 | |||||||||
Eliminations | Acquisition Corp. | ||||||||||||
Condensed Income Statements Captions [Line Items] | ||||||||||||
Revenues | (410) | (309) | (254) | |||||||||
Costs and expenses: | ||||||||||||
Cost of revenue | 266 | 188 | 143 | |||||||||
Selling, general and administrative expenses | 143 | 121 | 110 | |||||||||
Total costs and expenses | 409 | 309 | 253 | |||||||||
Operating income | (1) | (1) | ||||||||||
Interest (expense) income, net | 1 | |||||||||||
Equity gains (losses) from consolidated subsidiaries | (210) | (236) | 32 | |||||||||
(Loss) income before income taxes | (211) | (235) | 31 | |||||||||
Income tax (expense) benefit | (124) | 19 | 29 | |||||||||
Net income (loss) | (335) | (216) | 60 | |||||||||
Net income (loss) attributable to Warner Music Group Corp. | $ (335) | $ (216) | $ 60 |
Guarantor and Non-Guarantor S88
Guarantor and Non-Guarantor Subsidiaries Financial Information - Consolidating Statement of Comprehensive Income (Detail) - USD ($) $ in Millions | 12 Months Ended | ||
Sep. 30, 2017 | Sep. 30, 2016 | Sep. 30, 2015 | |
Condensed Statement Of Income Captions [Line Items] | |||
Net (loss) income | $ 149 | $ 30 | $ (88) |
Other comprehensive income (loss), net of tax: | |||
Foreign currency adjustment | 30 | (44) | (59) |
Minimum pension liability | 7 | (7) | |
Other comprehensive income (loss), net of tax | 37 | (51) | (59) |
Total comprehensive income (loss) | 186 | (21) | (147) |
Less: Income attributable to noncontrolling interest | (6) | (5) | (3) |
Comprehensive income (loss) attributable to Warner Music Group Corp. | 180 | (26) | (150) |
Reportable Legal Entities | Guarantor Subsidiaries | |||
Condensed Statement Of Income Captions [Line Items] | |||
Net (loss) income | 282 | 167 | (42) |
Other comprehensive income (loss), net of tax: | |||
Deferred (loss) gain on derivative financial instruments | (1) | (1) | |
Other comprehensive income (loss), net of tax | (1) | (1) | |
Total comprehensive income (loss) | 281 | 166 | (42) |
Less: Income attributable to noncontrolling interest | (1) | (1) | (1) |
Comprehensive income (loss) attributable to Warner Music Group Corp. | 280 | 165 | (43) |
Reportable Legal Entities | Non-Guarantor Subsidiaries | |||
Condensed Statement Of Income Captions [Line Items] | |||
Net (loss) income | 59 | 54 | (15) |
Other comprehensive income (loss), net of tax: | |||
Foreign currency adjustment | (30) | (44) | (59) |
Minimum pension liability | 7 | (7) | |
Other comprehensive income (loss), net of tax | (23) | (51) | (59) |
Total comprehensive income (loss) | 36 | 3 | (74) |
Less: Income attributable to noncontrolling interest | (5) | (4) | (2) |
Comprehensive income (loss) attributable to Warner Music Group Corp. | 31 | (1) | (76) |
Reportable Legal Entities | Warner Music Group Corp. | |||
Condensed Statement Of Income Captions [Line Items] | |||
Net (loss) income | 143 | 25 | (91) |
Other comprehensive income (loss), net of tax: | |||
Foreign currency adjustment | 32 | (44) | (59) |
Minimum pension liability | 7 | (7) | |
Other comprehensive income (loss), net of tax | 39 | (51) | (59) |
Total comprehensive income (loss) | 182 | (26) | (150) |
Comprehensive income (loss) attributable to Warner Music Group Corp. | 182 | (26) | (150) |
Reportable Legal Entities | Acquisition Corp. | |||
Condensed Statement Of Income Captions [Line Items] | |||
Net (loss) income | 143 | 53 | (69) |
Other comprehensive income (loss), net of tax: | |||
Foreign currency adjustment | 30 | (44) | (59) |
Minimum pension liability | 7 | (7) | |
Other comprehensive income (loss), net of tax | 37 | (51) | (59) |
Total comprehensive income (loss) | 180 | 2 | (128) |
Comprehensive income (loss) attributable to Warner Music Group Corp. | 180 | 2 | (128) |
Reportable Legal Entities | WMG Acquisition Corp. Consolidated | |||
Condensed Statement Of Income Captions [Line Items] | |||
Net (loss) income | 149 | 58 | (66) |
Other comprehensive income (loss), net of tax: | |||
Foreign currency adjustment | 30 | (44) | (59) |
Minimum pension liability | 7 | (7) | |
Other comprehensive income (loss), net of tax | 37 | (51) | (59) |
Total comprehensive income (loss) | 186 | 7 | (125) |
Less: Income attributable to noncontrolling interest | (6) | (5) | (3) |
Comprehensive income (loss) attributable to Warner Music Group Corp. | 180 | 2 | (128) |
Reportable Legal Entities | WMG Holdings Corp. | |||
Condensed Statement Of Income Captions [Line Items] | |||
Net (loss) income | 143 | 25 | (91) |
Other comprehensive income (loss), net of tax: | |||
Foreign currency adjustment | 32 | (44) | (59) |
Minimum pension liability | 7 | (7) | |
Other comprehensive income (loss), net of tax | 39 | (51) | (59) |
Total comprehensive income (loss) | 182 | (26) | (150) |
Comprehensive income (loss) attributable to Warner Music Group Corp. | 182 | (26) | (150) |
Eliminations | |||
Condensed Statement Of Income Captions [Line Items] | |||
Net (loss) income | (286) | (78) | 160 |
Other comprehensive income (loss), net of tax: | |||
Foreign currency adjustment | (64) | 88 | 118 |
Minimum pension liability | (14) | 14 | |
Other comprehensive income (loss), net of tax | (78) | 102 | 118 |
Total comprehensive income (loss) | (364) | 24 | 278 |
Comprehensive income (loss) attributable to Warner Music Group Corp. | (364) | 24 | 278 |
Eliminations | Acquisition Corp. | |||
Condensed Statement Of Income Captions [Line Items] | |||
Net (loss) income | (335) | (216) | 60 |
Other comprehensive income (loss), net of tax: | |||
Foreign currency adjustment | 30 | 44 | 59 |
Minimum pension liability | (7) | 7 | |
Deferred (loss) gain on derivative financial instruments | 1 | 1 | |
Other comprehensive income (loss), net of tax | 24 | 52 | 59 |
Total comprehensive income (loss) | (311) | (164) | 119 |
Comprehensive income (loss) attributable to Warner Music Group Corp. | $ (311) | $ (164) | $ 119 |
Guarantor and Non-Guarantor S89
Guarantor and Non-Guarantor Subsidiaries Financial Information - Consolidating Statement of Cash Flows (Detail) - USD ($) $ in Millions | Jul. 27, 2016 | Jul. 02, 2016 | Feb. 16, 2016 | Jun. 30, 2017 | Dec. 31, 2016 | Sep. 30, 2016 | Mar. 31, 2016 | Sep. 30, 2017 | Sep. 30, 2016 | Sep. 30, 2015 |
Cash flows from operating activities | ||||||||||
Net income (loss) | $ 149 | $ 30 | $ (88) | |||||||
Adjustments to reconcile net income (loss) to net cash provided by operating activities: | ||||||||||
Depreciation and amortization | 251 | 293 | 309 | |||||||
Unrealized gains/losses and remeasurement of foreign denominated loans | 24 | 28 | ||||||||
Deferred income taxes | (192) | (26) | (11) | |||||||
Loss on extinguishment of debt | $ 3 | $ 32 | $ 14 | $ 4 | 35 | 18 | ||||
Gain on sale of real estate | (24) | |||||||||
Net loss (gain) on divestitures and investments | 17 | (9) | ||||||||
Non-cash interest expense | 8 | 11 | 11 | |||||||
Equity-based compensation expense | 70 | 23 | 3 | |||||||
Changes in operating assets and liabilities: | ||||||||||
Accounts receivable | (60) | 17 | 6 | |||||||
Inventories | 1 | (6) | ||||||||
Royalty advances | 17 | (13) | (46) | |||||||
Accounts payable and accrued liabilities | 48 | 23 | (17) | |||||||
Royalty payables | 136 | 49 | 27 | |||||||
Accrued interest | 3 | (20) | (2) | |||||||
Deferred revenue | 22 | (35) | 12 | |||||||
Other balance sheet changes | 6 | 5 | (4) | |||||||
Net cash (used in) provided by operating activities | 535 | 342 | 222 | |||||||
Cash flows from investing activities | ||||||||||
Acquisition of music publishing rights, net | (16) | (25) | (16) | |||||||
Capital expenditures | (44) | (42) | (63) | |||||||
Investments and acquisitions of businesses, net | (139) | (28) | (16) | |||||||
Divestitures, net | 73 | 45 | ||||||||
Proceeds from the sale of real estate | 42 | |||||||||
Net cash (used in) provided by investing activities | (126) | (8) | (95) | |||||||
Cash flows from financing activities | ||||||||||
Proceeds from the Revolving Credit Facility | 258 | |||||||||
Repayment of the Revolving Credit Facility | (258) | |||||||||
Repayment of Acquisition Corp. Senior Term Loan Facility | (309) | (13) | ||||||||
Proceeds from issuance of Acquisition Corp. Senior Term Loan Facility | 22 | |||||||||
Financing costs paid | (10) | |||||||||
Call premiums paid on early redemption of debt | (27) | (10) | ||||||||
Deferred financing costs paid | (13) | (4) | ||||||||
Distribution to noncontrolling interest holder | (5) | (5) | (3) | |||||||
Repayment of capital lease obligations | (14) | (3) | ||||||||
Dividends paid | (84) | |||||||||
Net cash (used in) provided by financing activities | (128) | (216) | (19) | |||||||
Effect of exchange rate changes on cash and equivalents | 7 | (5) | (19) | |||||||
Net increase in cash and equivalents | 288 | 113 | 89 | |||||||
Cash and equivalents at beginning of period | 359 | 359 | 246 | 157 | ||||||
Cash and equivalents at end of period | 359 | 647 | 359 | 246 | ||||||
4.125% Senior Secured Notes | ||||||||||
Cash flows from financing activities | ||||||||||
Proceeds from issuance of Acquisition Corp | 380 | |||||||||
4.875% Senior Secured Notes | ||||||||||
Cash flows from financing activities | ||||||||||
Proceeds from issuance of Acquisition Corp | 250 | |||||||||
6.00% Senior Secured Notes | ||||||||||
Cash flows from financing activities | ||||||||||
Repayment of Senior Secured Notes | (450) | |||||||||
6.25% Senior Secured Notes | ||||||||||
Cash flows from financing activities | ||||||||||
Repayment of Senior Secured Notes | (173) | |||||||||
5.625% Senior Secured Notes | ||||||||||
Cash flows from financing activities | ||||||||||
Repayment of Senior Secured Notes | (28) | |||||||||
5.00% Senior Secured Notes | ||||||||||
Cash flows from financing activities | ||||||||||
Proceeds from issuance of Acquisition Corp | 300 | |||||||||
13.75% Senior Notes due 2019 | ||||||||||
Cash flows from financing activities | ||||||||||
Repayment of Senior Notes | (150) | |||||||||
6.750% Senior Notes | ||||||||||
Cash flows from financing activities | ||||||||||
Repayment of Senior Secured Notes | (24) | |||||||||
Acquisition Corp. | ||||||||||
Adjustments to reconcile net income (loss) to net cash provided by operating activities: | ||||||||||
Loss on extinguishment of debt | $ 4 | |||||||||
WMG Holdings Corp. | 13.75% Senior Notes due 2019 | ||||||||||
Adjustments to reconcile net income (loss) to net cash provided by operating activities: | ||||||||||
Loss on extinguishment of debt | $ 10 | $ 5 | ||||||||
Cash flows from financing activities | ||||||||||
Repayment of Senior Notes | $ (100) | $ (50) | ||||||||
Reportable Legal Entities | Guarantor Subsidiaries | ||||||||||
Cash flows from operating activities | ||||||||||
Net income (loss) | 282 | 167 | (42) | |||||||
Adjustments to reconcile net income (loss) to net cash provided by operating activities: | ||||||||||
Depreciation and amortization | 137 | 156 | 162 | |||||||
Unrealized gains/losses and remeasurement of foreign denominated loans | 55 | |||||||||
Net loss (gain) on divestitures and investments | 33 | (3) | ||||||||
Equity-based compensation expense | 70 | 23 | 3 | |||||||
Equity losses (gains), including distributions | (86) | (74) | 67 | |||||||
Changes in operating assets and liabilities: | ||||||||||
Accounts receivable | (37) | (7) | 4 | |||||||
Inventories | 2 | (1) | ||||||||
Royalty advances | 2 | 1 | (23) | |||||||
Accounts payable and accrued liabilities | (4) | 142 | 26 | |||||||
Royalty payables | 126 | 93 | (19) | |||||||
Deferred revenue | (6) | (4) | (9) | |||||||
Other balance sheet changes | (204) | (10) | 3 | |||||||
Net cash (used in) provided by operating activities | 315 | 484 | 226 | |||||||
Cash flows from investing activities | ||||||||||
Acquisition of music publishing rights, net | (9) | (16) | (9) | |||||||
Capital expenditures | (31) | (30) | (48) | |||||||
Investments and acquisitions of businesses, net | (6) | (10) | (11) | |||||||
Divestitures, net | 42 | 8 | ||||||||
Net cash (used in) provided by investing activities | (4) | (48) | (68) | |||||||
Cash flows from financing activities | ||||||||||
Dividend by Acquisition Corp. to Holdings Corp. | (84) | |||||||||
Distribution to noncontrolling interest holder | (1) | |||||||||
Change in due (from) to issuer | (60) | (329) | (110) | |||||||
Net cash (used in) provided by financing activities | (144) | (329) | (111) | |||||||
Net increase in cash and equivalents | 167 | 107 | 47 | |||||||
Cash and equivalents at beginning of period | 180 | 180 | 73 | 26 | ||||||
Cash and equivalents at end of period | 180 | 347 | 180 | 73 | ||||||
Reportable Legal Entities | Non-Guarantor Subsidiaries | ||||||||||
Cash flows from operating activities | ||||||||||
Net income (loss) | 59 | 54 | (15) | |||||||
Adjustments to reconcile net income (loss) to net cash provided by operating activities: | ||||||||||
Depreciation and amortization | 114 | 137 | 148 | |||||||
Unrealized gains/losses and remeasurement of foreign denominated loans | (3) | (48) | ||||||||
Deferred income taxes | (194) | (26) | (11) | |||||||
Gain on sale of real estate | (24) | |||||||||
Net loss (gain) on divestitures and investments | (16) | (6) | ||||||||
Changes in operating assets and liabilities: | ||||||||||
Accounts receivable | (23) | 24 | 2 | |||||||
Inventories | (1) | (5) | ||||||||
Royalty advances | 15 | (14) | (23) | |||||||
Accounts payable and accrued liabilities | 47 | (99) | (15) | |||||||
Royalty payables | 10 | (44) | 46 | |||||||
Deferred revenue | 28 | (31) | 21 | |||||||
Other balance sheet changes | 205 | 19 | (7) | |||||||
Net cash (used in) provided by operating activities | 241 | (10) | 93 | |||||||
Cash flows from investing activities | ||||||||||
Acquisition of music publishing rights, net | (7) | (9) | (7) | |||||||
Capital expenditures | (13) | (12) | (15) | |||||||
Investments and acquisitions of businesses, net | (133) | (18) | (5) | |||||||
Divestitures, net | 31 | 37 | ||||||||
Proceeds from the sale of real estate | 42 | |||||||||
Net cash (used in) provided by investing activities | (122) | 40 | (27) | |||||||
Cash flows from financing activities | ||||||||||
Distribution to noncontrolling interest holder | (5) | (5) | (2) | |||||||
Repayment of capital lease obligations | (14) | (3) | ||||||||
Net cash (used in) provided by financing activities | (5) | (19) | (5) | |||||||
Effect of exchange rate changes on cash and equivalents | 7 | (5) | (19) | |||||||
Net increase in cash and equivalents | 121 | 6 | 42 | |||||||
Cash and equivalents at beginning of period | 179 | 179 | 173 | 131 | ||||||
Cash and equivalents at end of period | 179 | 300 | 179 | 173 | ||||||
Reportable Legal Entities | Warner Music Group Corp. | ||||||||||
Cash flows from operating activities | ||||||||||
Net income (loss) | 143 | 25 | (91) | |||||||
Adjustments to reconcile net income (loss) to net cash provided by operating activities: | ||||||||||
Equity losses (gains), including distributions | (143) | (25) | 91 | |||||||
Reportable Legal Entities | Acquisition Corp. | ||||||||||
Cash flows from operating activities | ||||||||||
Net income (loss) | 143 | 53 | (69) | |||||||
Adjustments to reconcile net income (loss) to net cash provided by operating activities: | ||||||||||
Depreciation and amortization | (1) | |||||||||
Unrealized gains/losses and remeasurement of foreign denominated loans | 27 | 21 | ||||||||
Deferred income taxes | 2 | |||||||||
Loss on extinguishment of debt | 35 | 4 | ||||||||
Non-cash interest expense | 8 | 10 | 10 | |||||||
Equity losses (gains), including distributions | (124) | (162) | (35) | |||||||
Changes in operating assets and liabilities: | ||||||||||
Accounts payable and accrued liabilities | (120) | |||||||||
Accrued interest | 3 | (10) | (2) | |||||||
Other balance sheet changes | 5 | (4) | ||||||||
Net cash (used in) provided by operating activities | (21) | (109) | (76) | |||||||
Cash flows from investing activities | ||||||||||
Advances to Issuer | 60 | 329 | 110 | |||||||
Net cash (used in) provided by investing activities | 60 | 329 | 110 | |||||||
Cash flows from financing activities | ||||||||||
Dividend by Acquisition Corp. to Holdings Corp. | (183) | (21) | ||||||||
Proceeds from the Revolving Credit Facility | 258 | |||||||||
Repayment of the Revolving Credit Facility | (258) | |||||||||
Repayment of Acquisition Corp. Senior Term Loan Facility | (309) | (13) | ||||||||
Proceeds from issuance of Acquisition Corp. Senior Term Loan Facility | 22 | |||||||||
Call premiums paid on early redemption of debt | (27) | |||||||||
Deferred financing costs paid | (13) | (4) | ||||||||
Net cash (used in) provided by financing activities | (39) | (220) | (34) | |||||||
Reportable Legal Entities | Acquisition Corp. | 4.125% Senior Secured Notes | ||||||||||
Cash flows from financing activities | ||||||||||
Proceeds from issuance of Acquisition Corp | 380 | |||||||||
Reportable Legal Entities | Acquisition Corp. | 4.875% Senior Secured Notes | ||||||||||
Cash flows from financing activities | ||||||||||
Proceeds from issuance of Acquisition Corp | 250 | |||||||||
Reportable Legal Entities | Acquisition Corp. | 6.00% Senior Secured Notes | ||||||||||
Cash flows from financing activities | ||||||||||
Repayment of Senior Secured Notes | (450) | |||||||||
Reportable Legal Entities | Acquisition Corp. | 6.25% Senior Secured Notes | ||||||||||
Cash flows from financing activities | ||||||||||
Repayment of Senior Secured Notes | (173) | |||||||||
Reportable Legal Entities | Acquisition Corp. | 5.625% Senior Secured Notes | ||||||||||
Cash flows from financing activities | ||||||||||
Repayment of Senior Secured Notes | (28) | |||||||||
Reportable Legal Entities | Acquisition Corp. | 5.00% Senior Secured Notes | ||||||||||
Cash flows from financing activities | ||||||||||
Proceeds from issuance of Acquisition Corp | 300 | |||||||||
Reportable Legal Entities | Acquisition Corp. | 6.750% Senior Notes | ||||||||||
Cash flows from financing activities | ||||||||||
Repayment of Senior Secured Notes | (24) | |||||||||
Reportable Legal Entities | WMG Acquisition Corp. Consolidated | ||||||||||
Cash flows from operating activities | ||||||||||
Net income (loss) | 149 | 58 | (66) | |||||||
Adjustments to reconcile net income (loss) to net cash provided by operating activities: | ||||||||||
Depreciation and amortization | 251 | 293 | 309 | |||||||
Unrealized gains/losses and remeasurement of foreign denominated loans | 24 | 28 | ||||||||
Deferred income taxes | (192) | (26) | (11) | |||||||
Loss on extinguishment of debt | 35 | 4 | ||||||||
Gain on sale of real estate | (24) | |||||||||
Net loss (gain) on divestitures and investments | 17 | (9) | ||||||||
Non-cash interest expense | 8 | 10 | 10 | |||||||
Equity-based compensation expense | 70 | 23 | 3 | |||||||
Changes in operating assets and liabilities: | ||||||||||
Accounts receivable | (60) | 17 | 6 | |||||||
Inventories | 1 | (6) | ||||||||
Royalty advances | 17 | (13) | (46) | |||||||
Accounts payable and accrued liabilities | 48 | 23 | (17) | |||||||
Royalty payables | 136 | 49 | 27 | |||||||
Accrued interest | 3 | (10) | (2) | |||||||
Deferred revenue | 22 | (35) | 12 | |||||||
Other balance sheet changes | 6 | 5 | (4) | |||||||
Net cash (used in) provided by operating activities | 535 | 365 | 243 | |||||||
Cash flows from investing activities | ||||||||||
Acquisition of music publishing rights, net | (16) | (25) | (16) | |||||||
Capital expenditures | (44) | (42) | (63) | |||||||
Investments and acquisitions of businesses, net | (139) | (28) | (16) | |||||||
Divestitures, net | 73 | 45 | ||||||||
Proceeds from the sale of real estate | 42 | |||||||||
Net cash (used in) provided by investing activities | (126) | (8) | (95) | |||||||
Cash flows from financing activities | ||||||||||
Dividend by Acquisition Corp. to Holdings Corp. | (84) | (183) | (21) | |||||||
Proceeds from the Revolving Credit Facility | 258 | |||||||||
Repayment of the Revolving Credit Facility | (258) | |||||||||
Repayment of Acquisition Corp. Senior Term Loan Facility | (309) | (13) | ||||||||
Proceeds from issuance of Acquisition Corp. Senior Term Loan Facility | 22 | |||||||||
Call premiums paid on early redemption of debt | (27) | |||||||||
Deferred financing costs paid | (13) | (4) | ||||||||
Distribution to noncontrolling interest holder | (5) | (5) | (3) | |||||||
Repayment of capital lease obligations | (14) | (3) | ||||||||
Net cash (used in) provided by financing activities | (128) | (239) | (40) | |||||||
Effect of exchange rate changes on cash and equivalents | 7 | (5) | (19) | |||||||
Net increase in cash and equivalents | 288 | 113 | 89 | |||||||
Cash and equivalents at beginning of period | $ 359 | 359 | 246 | 157 | ||||||
Cash and equivalents at end of period | $ 359 | 647 | 359 | 246 | ||||||
Reportable Legal Entities | WMG Acquisition Corp. Consolidated | 4.125% Senior Secured Notes | ||||||||||
Cash flows from financing activities | ||||||||||
Proceeds from issuance of Acquisition Corp | 380 | |||||||||
Reportable Legal Entities | WMG Acquisition Corp. Consolidated | 4.875% Senior Secured Notes | ||||||||||
Cash flows from financing activities | ||||||||||
Proceeds from issuance of Acquisition Corp | 250 | |||||||||
Reportable Legal Entities | WMG Acquisition Corp. Consolidated | 6.00% Senior Secured Notes | ||||||||||
Cash flows from financing activities | ||||||||||
Repayment of Senior Secured Notes | (450) | |||||||||
Reportable Legal Entities | WMG Acquisition Corp. Consolidated | 6.25% Senior Secured Notes | ||||||||||
Cash flows from financing activities | ||||||||||
Repayment of Senior Secured Notes | (173) | |||||||||
Reportable Legal Entities | WMG Acquisition Corp. Consolidated | 5.625% Senior Secured Notes | ||||||||||
Cash flows from financing activities | ||||||||||
Repayment of Senior Secured Notes | (28) | |||||||||
Reportable Legal Entities | WMG Acquisition Corp. Consolidated | 5.00% Senior Secured Notes | ||||||||||
Cash flows from financing activities | ||||||||||
Proceeds from issuance of Acquisition Corp | 300 | |||||||||
Reportable Legal Entities | WMG Acquisition Corp. Consolidated | 6.750% Senior Notes | ||||||||||
Cash flows from financing activities | ||||||||||
Repayment of Senior Secured Notes | (24) | |||||||||
Reportable Legal Entities | WMG Holdings Corp. | ||||||||||
Cash flows from operating activities | ||||||||||
Net income (loss) | 143 | 25 | (91) | |||||||
Adjustments to reconcile net income (loss) to net cash provided by operating activities: | ||||||||||
Loss on extinguishment of debt | 14 | |||||||||
Non-cash interest expense | 1 | 1 | ||||||||
Equity losses (gains), including distributions | (143) | (53) | 69 | |||||||
Changes in operating assets and liabilities: | ||||||||||
Accrued interest | (10) | |||||||||
Net cash (used in) provided by operating activities | (23) | (21) | ||||||||
Cash flows from financing activities | ||||||||||
Dividend by Acquisition Corp. to Holdings Corp. | 84 | 183 | 21 | |||||||
Financing costs paid | (10) | |||||||||
Dividends paid | (84) | |||||||||
Net cash (used in) provided by financing activities | 23 | 21 | ||||||||
Reportable Legal Entities | WMG Holdings Corp. | 13.75% Senior Notes due 2019 | ||||||||||
Cash flows from financing activities | ||||||||||
Repayment of Senior Notes | (150) | |||||||||
Eliminations | ||||||||||
Cash flows from operating activities | ||||||||||
Net income (loss) | (286) | (78) | 160 | |||||||
Adjustments to reconcile net income (loss) to net cash provided by operating activities: | ||||||||||
Equity losses (gains), including distributions | 286 | 78 | (160) | |||||||
Eliminations | Acquisition Corp. | ||||||||||
Cash flows from operating activities | ||||||||||
Net income (loss) | (335) | (216) | 60 | |||||||
Adjustments to reconcile net income (loss) to net cash provided by operating activities: | ||||||||||
Equity losses (gains), including distributions | 210 | 236 | (32) | |||||||
Changes in operating assets and liabilities: | ||||||||||
Accounts payable and accrued liabilities | 125 | (20) | (28) | |||||||
Cash flows from investing activities | ||||||||||
Advances to Issuer | (60) | (329) | (110) | |||||||
Net cash (used in) provided by investing activities | (60) | (329) | (110) | |||||||
Cash flows from financing activities | ||||||||||
Change in due (from) to issuer | 60 | 329 | 110 | |||||||
Net cash (used in) provided by financing activities | $ 60 | $ 329 | $ 110 |
Guarantor And Non-Guarantor S90
Guarantor And Non-Guarantor Subsidiaries Financial Information - Consolidating Statement of Cash Flows (Parenthetical) (Detail) | Sep. 30, 2017 | Sep. 30, 2016 | Sep. 30, 2015 |
4.125% Senior Secured Notes | |||
Condensed Cash Flow Statements Captions [Line Items] | |||
Interest rate | 4.125% | ||
6.00% Senior Secured Notes | |||
Condensed Cash Flow Statements Captions [Line Items] | |||
Interest rate | 6.00% | ||
4.875% Senior Secured Notes | |||
Condensed Cash Flow Statements Captions [Line Items] | |||
Interest rate | 4.875% | ||
6.25% Senior Secured Notes | |||
Condensed Cash Flow Statements Captions [Line Items] | |||
Interest rate | 6.25% | ||
5.625% Senior Secured Notes | |||
Condensed Cash Flow Statements Captions [Line Items] | |||
Interest rate | 5.625% | 5.625% | |
5.00% Senior Secured Notes | |||
Condensed Cash Flow Statements Captions [Line Items] | |||
Interest rate | 5.00% | 5.00% | 5.00% |
6.75% Senior Notes | |||
Condensed Cash Flow Statements Captions [Line Items] | |||
Interest rate | 6.75% | 6.75% | |
13.75% Senior Notes | |||
Condensed Cash Flow Statements Captions [Line Items] | |||
Interest rate | 13.75% | 13.75% | 13.75% |
11.5% Senior Unsecured Notes | |||
Condensed Cash Flow Statements Captions [Line Items] | |||
Interest rate | 11.50% |
Valuation and Qualifying Accoun
Valuation and Qualifying Accounts (Detail) - USD ($) $ in Millions | 12 Months Ended | |||
Sep. 30, 2017 | Sep. 30, 2016 | Sep. 30, 2015 | ||
Allowance for Doubtful Accounts | ||||
Valuation And Qualifying Accounts Disclosure [Line Items] | ||||
Balance at Beginning of Period | $ 19 | $ 12 | $ 11 | |
Additions Charged to Cost and Expenses | 3 | 6 | 7 | |
Deductions | (4) | (6) | ||
Other | [1] | 1 | ||
Balance at End of period | 18 | 19 | 12 | |
Reserves for Sales Returns | ||||
Valuation And Qualifying Accounts Disclosure [Line Items] | ||||
Balance at Beginning of Period | 33 | 44 | 54 | |
Additions Charged to Cost and Expenses | 119 | 131 | 161 | |
Deductions | (119) | (142) | (171) | |
Balance at End of period | 33 | 33 | 44 | |
Allowance for Deferred Tax Asset | ||||
Valuation And Qualifying Accounts Disclosure [Line Items] | ||||
Balance at Beginning of Period | 310 | 344 | 394 | |
Additions Charged to Cost and Expenses | 23 | 27 | 34 | |
Deductions | (140) | (61) | (84) | |
Balance at End of period | $ 193 | $ 310 | $ 344 | |
[1] | Other changes due to acquisitions and dispositions. |