Additional Financial Information

9 Months Ended

Jun. 30, 2022

Additional Financial Information [Abstract]

Additional Financial Information

Additional Financial Information

Cash Interest and Taxes

The Company made interest payments of approximately $21 million and $28 million during the three months ended June 30, 2022 and 2021, respectively, and approximately $78 million and $92 million during the nine months ended June 30, 2022 and 2021, respectively. The Company paid approximately $38 million and $37 million of income and withholding taxes, net of refunds, for the three months ended June 30, 2022 and 2021, respectively, and approximately $104 million and $89 million of income and withholding taxes, net of refunds, for the nine months ended June 30, 2022 and 2021, respectively.

Dividends

The Company’s ability to pay dividends may be restricted by covenants in the credit agreement for the Revolving Credit Facility which are currently suspended but which will be reinstated if Acquisition Corp.’s Total Indebtedness to EBITDA Ratio increases above 3.50:1.00 and the term loans do not achieve an investment grade rating.

The Company intends to pay quarterly cash dividends to holders of its Class A Common Stock and Class B Common Stock. The declaration of each dividend will continue to be at the discretion of the Company’s board of directors and will depend on the Company’s financial condition, earnings, liquidity and capital requirements, level of indebtedness, contractual restrictions with respect to payment of dividends, restrictions imposed by Delaware law, general business conditions and any other factors that the Company’s board of directors deems relevant in making such a determination. Therefore, there can be no assurance that the Company will pay any dividends to holders of the Company’s common stock, or as to the amount of any such dividends.

On May 13, 2022, the Company’s board of directors declared a cash dividend of $0.15 per share on the Company’s Class A Common Stock and Class B Common Stock, as well as related payments under certain stock-based compensation plans, which was paid to stockholders on June 1, 2022. The Company paid an aggregate of approximately $79 million and $235 million, or $0.15 and $0.45 per share, in cash dividends to stockholders and participating security holders for the three and nine months ended June 30, 2022, respectively.

Noncash Investment Activity

Noncash investing activities was approximately $125 million related to the acquisition of music publishing rights and music catalogs, net during the nine months ended June 30, 2022. The corresponding notes payable balance is reflected as other current liabilities within the Company’s consolidated balance sheet at June 30, 2022.

COVID-19 Pandemic

On March 11, 2020, the COVID-19 outbreak was declared a global pandemic by the World Health Organization. Government-imposed mandates limiting public assembly and restrictions on non-essential businesses have adversely impacted the Company’s operations for the three and nine months ended June 30, 2022 and June 30, 2021, including touring and live events. For the three and nine months ended June 30, 2022, revenues improved due to the ongoing recovery of certain COVID-19 impacted revenue streams. The continued impact of COVID-19, including increases in infection rates, new variants and sub-variants, renewed governmental action to slow the spread of COVID-19 and to what extent it will impact the Company’s music and related services cannot be predicted.

The Company is not presently aware of any events or circumstances arising from the global pandemic that would require us to update any estimates, judgments or materially revise the carrying value of our assets or liabilities. The Company’s estimates may change, however, as new events occur and additional information is obtained, and any such changes will be recognized in the consolidated financial statements. Actual results could differ from estimates, and any such differences may be material to our consolidated financial statements.