WARNER MUSIC GROUP CORP.

Supplementary Information

Consolidating Financial Statements

The Company is the direct parent of Holdings, which is the direct parent of Acquisition Corp. Holdings has issued and outstanding the 13.75% Senior Notes due 2019 (the “Holdings Notes”). In addition, Acquisition Corp. has issued and outstanding the 5.625% Senior Secured Notes due 2022, the 6.00% Senior Secured Notes due 2021, the 6.25% Senior Secured Notes due 2021, and the 6.75% Senior Notes due 2022 (together, the “Acquisition Corp. Notes”).

The Holdings Notes are guaranteed by the Company. These guarantees are full, unconditional, joint and several. The following condensed consolidating financial statements are presented for the information of the holders of the Holdings Notes and present the results of operations, financial position and cash flows of (i) the Company, which is the guarantor of the Holdings Notes, (ii) Holdings, which is the issuer of the Holdings Notes, (iii) the subsidiaries of Holdings (Acquisition Corp. is the only direct subsidiary of Holdings) and (iv) the eliminations necessary to arrive at the information for the Company on a consolidated basis. Investments in consolidated or combined subsidiaries are presented under the equity method of accounting.

The Acquisition Corp. Notes are also guaranteed by the Company and, in addition, are guaranteed by all of Acquisition Corp.’s domestic wholly-owned subsidiaries. The secured notes are guaranteed on a senior secured basis and the unsecured notes are guaranteed on an unsecured senior basis. The Company’s guarantee of the Acquisition Corp. Notes is full and unconditional. The guarantee of the Acquisition Corp. Notes by Acquisition Corp.’s domestic, wholly-owned subsidiaries are full, unconditional, joint and several. The following condensed consolidating financial statements are also presented for the information of the holders of the Acquisition Corp. Notes and present the results of operations, financial position and cash flows of (i) Acquisition Corp., which is the issuer of the Acquisition Corp. Notes, (ii) the guarantor subsidiaries of Acquisition Corp., (iii) the non-guarantor subsidiaries of Acquisition Corp. and (iv) the eliminations necessary to arrive at the information for Acquisition Corp. on a consolidated basis. Investments in consolidated subsidiaries are presented under the equity method of accounting. There are no restrictions on Acquisition Corp.’s ability to obtain funds from any of its wholly-owned subsidiaries through dividends, loans or advances.

The Company and Holdings are holding companies that conduct substantially all of their business operations through Acquisition Corp. Accordingly, the ability of the Company and Holdings to obtain funds from their subsidiaries is restricted by the indentures for the Acquisition Corp. Notes and the credit agreements for the Acquisition Corp. Senior Credit Facilities, and, with respect to the Company, the indenture for the Holdings Notes.

The Company has revised its presentation for the prior period Guarantor and Non-Guarantor Financial Information from what was filed in our Form 10-Q on August 7, 2014. The Company uses the guidance under ASC Subtopic 605-45, Principal Agent Considerations, to determine when to measure revenue on a “gross” or “net” basis depending on whether the Company is acting as the “principal” in the transaction or acting as an “agent” in the transaction. The revised Consolidating Statement of Operations presentation reflects adjustments to certain revenue and expense balances to properly reflect the impact of one of the Guarantor entities acting as the principal in our digital arrangements. We have also revised the presentation of our Consolidating Balance Sheet to reflect the adjusted investment and equity balances as a result of the changes noted above in the Consolidating Statement of Operations. The principal elimination entries eliminate investments in subsidiaries and intercompany balances.

Consolidating Balance Sheet (Unaudited)

June 30, 2015

	WMG											WMG		WMG		Warner					Warner
	Acquisition					Non-						Acquisition		Holdings		Music					Music
	Corp.		Guarantor			Guarantor						Corp.		Corp.		Group					Group Corp.
	(issuer)		Subsidiaries			Subsidiaries			Eliminations			Consolidated		(issuer)		Corp.		Eliminations			Consolidated
	(in millions)
Assets:
Current assets:
Cash and equivalents	$	—	$	24		$	144		$	—		$	168	$	—	$	—	$	—		$	168
Accounts receivable, net		—		156			187			—			343		—		—		—			343
Inventories		—		14			25			—			39		—		—		—			39
Royalty advances expected to be recouped within one year		—		69			50			—			119		—		—		—			119
Deferred tax assets		—		21			25			—			46		—		—		—			46
Prepaid and other current assets		5		11			42			—			58		—		—		—			58
Total current assets		5		295			473			—			773		—		—		—			773
Due (to) from parent companies		897		(340	)		(557	)		—			—		—		—		—			—
Investments in and advances to (from) consolidated subsidiaries		2,353		1,218			—			(3,571	)		—		404		254		(658	)		—
Royalty advances expected to be recouped after one year		—		126			93			—			219		—		—		—			219
Property, plant and equipment, net		—		149			78			—			227		—		—		—			227
Goodwill		—		1,379			254			—			1,633		—		—		—			1,633
Intangible assets subject to amortization, net		—		1,294			1,303			—			2,597		—		—		—			2,597
Intangible assets not subject to amortization		—		71			49			—			120		—		—		—			120
Other assets		41		33			16			—			90		5		—		—			95
Total assets	$	3,296	$	4,225		$	1,709		$	(3,571	)	$	5,659	$	409	$	254	$	(658	)	$	5,664
Liabilities and Deficit:
Current liabilities:
Accounts payable	$	—	$	73		$	78		$	—		$	151	$	—	$	—	$	—		$	151
Accrued royalties		—		476			635			—			1,111		—		—		—			1,111
Accrued liabilities		—		82			153			—			235		—		—		—			235
Accrued interest		43		—			—			—			43		5		—		—			48
Deferred revenue		—		180			67			—			247		—		—		—			247
Current portion of long-term debt		13		—			—			—			13		—		—		—			13
Other current liabilities		—		1			18			—			19		—		—		—			19
Total current liabilities		56		812			951			—			1,819		5		—		—			1,824
Long-term debt		2,833		—			—			—			2,833		150		—		—			2,983
Deferred tax liabilities, net		—		128			217			—			345		—		—		—			345
Other noncurrent liabilities		3		116			118			2			239		—		—		—			239
Total liabilities		2,892		1,056			1,286			2			5,236		155		—		—			5,391
Total Warner Music Group Corp. equity (deficit)		404		3,167			406			(3,573	)		404		254		254		(658	)		254
Noncontrolling interest		—		2			17			—			19		—		—		—			19
Total equity (deficit)		404		3,169			423			(3,573	)		423		254		254		(658	)		273
Total liabilities and equity (deficit)	$	3,296	$	4,225		$	1,709		$	(3,571	)	$	5,659	$	409	$	254	$	(658	)	$	5,664

Consolidating Balance Sheet

September 30, 2014

	WMG											WMG		WMG		Warner					Warner
	Acquisition					Non-						Acquisition		Holdings		Music					Music
	Corp.		Guarantor			Guarantor						Corp.		Corp.		Group					Group Corp.
	(issuer)		Subsidiaries			Subsidiaries			Eliminations			Consolidated		(issuer)		Corp.		Eliminations			Consolidated
	(in millions)
Assets:
Current assets:
Cash and equivalents	$	—	$	26		$	131		$	—		$	157	$	—	$	—	$	—		$	157
Accounts receivable, net		—		174			209			—			383		—		—		—			383
Inventories		—		13			26			—			39		—		—		—			39
Royalty advances expected to be recouped within one year		—		62			40			—			102		—		—		—			102
Deferred tax assets		—		21			25			—			46		—		—		—			46
Prepaid and other current assets		5		10			40			—			55		—		—		—			55
Total current assets		5		306			471			—			782		—		—		—			782
Due (to) from parent companies		924		(242	)		(682	)		—			—		—		—		—			—
Investments in and advances to (from) consolidated subsidiaries		2,531		1,142			—			(3,673	)		—		525		371		(896	)		—
Royalty advances expected to be recouped after one year		—		115			75			—			190		—		—		—			190
Property, plant and equipment, net		—		143			84			—			227		—		—		—			227
Goodwill		—		1,379			282			—			1,661		—		—		—			1,661
Intangible assets subject to amortization, net		—		1,372			1,512			—			2,884		—		—		—			2,884
Intangible assets not subject to amortization		—		75			45			—			120		—		—		—			120
Other assets		46		10			28			—			84		6		—		—			90
Total assets	$	3,506	$	4,300		$	1,815		$	(3,673	)	$	5,948	$	531	$	371	$	(896	)	$	5,954
Liabilities and Deficit:
Current liabilities:
Accounts payable	$	38	$	91		$	86		$	—		$	215	$	—	$	—	$	—		$	215
Accrued royalties		—		531			601			—			1,132		—		—		—			1,132
Accrued liabilities		—		64			179			—			243		—		—		—			243
Accrued interest		50		—			—			—			50		10		—		—			60
Deferred revenue		—		167			52			—			219		—		—		—			219
Current portion of long-term debt		13		—			—			—			13		—		—		—			13
Other current liabilities		—		1			2			—			3		—		—		—			3
Total current liabilities		101		854			920			—			1,875		10		—		—			1,885
Long-term debt		2,867		—			—			—			2,867		150		—		—			3,017
Deferred tax liabilities, net		—		128			255			—			383		—		—		—			383
Other noncurrent liabilities		13		124			142			—			279		—		—		—			279
Total liabilities		2,981		1,106			1,317			—			5,404		160		—		—			5,564
Total Warner Music Group Corp. equity (deficit)		525		3,192			481			(3,673	)		525		371		371		(896	)		371
Noncontrolling interest		—		2			17			—			19		—		—		—			19
Total equity (deficit)		525		3,194			498			(3,673	)		544		371		371		(896	)		390
Total liabilities and equity (deficit)	$	3,506	$	4,300		$	1,815		$	(3,673	)	$	5,948	$	531	$	371	$	(896	)	$	5,954

Consolidating Statement of Operations (Unaudited)

For The Three Months Ended June 30, 2015

	WMG												WMG			WMG			Warner					Warner
	Acquisition						Non-						Acquisition			Holdings			Music					Music
	Corp.			Guarantor			Guarantor						Corp.			Corp.			Group					Group Corp.
	(issuer)			Subsidiaries			Subsidiaries			Eliminations			Consolidated			(issuer)			Corp.			Eliminations		Consolidated
	(in millions)
Revenues	$	—		$	419		$	428		$	(137	)	$	710		$	—		$	—		$	—	$	710
Costs and expenses:
Cost of revenue		—			(208	)		(208	)		43			(373	)		—			—			—		(373	)
Selling, general and administrative expenses		—			(215	)		(130	)		94			(251	)		—			—			—		(251	)
Amortization of intangible assets		—			(31	)		(32	)		—			(63	)		—			—			—		(63	)
Total costs and expenses		—			(454	)		(370	)		137			(687	)		—			—			—		(687	)
Operating (loss) income		—			(35	)		58			—			23			—			—			—		23
Interest income (expense), net		(22	)		1			(19	)		—			(40	)		(5	)		—			—		(45	)
Equity gains (losses) from equity method investments		(9	)		(52	)		—			61			—			(39	)		(44	)		83		—
Other income (expense), net		(4	)		—			(13	)		—			(17	)		—			—			—		(17	)
Income (loss) before income taxes		(35	)		(86	)		26			61			(34	)		(44	)		(44	)		83		(39	)
Income tax benefit (expense)		(4	)		(9	)		2			7			(4	)		—			—			—		(4	)
Net income (loss)		(39	)		(95	)		28			68			(38	)		(44	)		(44	)		83		(43	)
Less: income attributable to noncontrolling interest		—			(1	)		—			—			(1	)		—			—			—		(1	)
Net income (loss) attributable to Warner Music Group Corp.	$	(39	)	$	(96	)	$	28		$	68		$	(39	)	$	(44	)	$	(44	)	$	83	$	(44	)

Consolidating Statement of Operations (Unaudited)

For The Three Months Ended June 30, 2014

	WMG												WMG			WMG			Warner					Warner
	Acquisition						Non-						Acquisition			Holdings			Music					Music
	Corp.			Guarantor			Guarantor						Corp.			Corp.			Group					Group Corp.
	(issuer)			Subsidiaries			Subsidiaries			Eliminations			Consolidated			(issuer)			Corp.			Eliminations		Consolidated
	(in millions)
Revenues	$	—		$	408		$	534		$	(154	)	$	788		$	—		$	—		$	—	$	788
Costs and expenses:
Cost of revenue		—			(188	)		(280	)		51			(417	)		—			—			—		(417	)
Selling, general and administrative expenses		—			(267	)		(155	)		103			(319	)		—			—			—		(319	)
Amortization of intangible assets		—			(30	)		(37	)		—			(67	)		—			—			—		(67	)
Total costs and expenses		—			(485	)		(472	)		154			(803	)		—			—			—		(803	)
Operating income (loss)		—			(77	)		62			—			(15	)		—			—			—		(15	)
Loss on extinguishment of debt		(141	)		—			—			—			(141	)		—			—			—		(141	)
Interest income (expense), net		(23	)		2			(22	)		—			(43	)		(5	)		—			—		(48	)
Equity gains (losses) from equity method investments		(32	)		31			—			1			—			(180	)		(185	)		365		—
Other income (expense), net		—			1			3			—			4			—			—			—		4
Income (loss) before income taxes		(196	)		(43	)		43			1			(195	)		(185	)		(185	)		365		(200	)
Income tax benefit (expense)		16			2			22			(24	)		16			—			—			—		16
Net income (loss)		(180	)		(41	)		65			(23	)		(179	)		(185	)		(185	)		365		(184	)
Less: income attributable to noncontrolling interest		—			(1	)		—			—			(1	)		—			—			—		(1	)
Net income (loss) attributable to Warner Music Group Corp.	$	(180	)	$	(42	)	$	65		$	(23	)	$	(180	)	$	(185	)	$	(185	)	$	365	$	(185	)

Consolidating Statement of Operations (Unaudited)

For The Nine Months Ended June 30, 2015

	WMG												WMG			WMG			Warner					Warner
	Acquisition						Non-						Acquisition			Holdings			Music					Music
	Corp.			Guarantor			Guarantor						Corp.			Corp.			Group					Group Corp.
	(issuer)			Subsidiaries			Subsidiaries			Eliminations			Consolidated			(issuer)			Corp.			Eliminations		Consolidated
	(in millions)
Revenues	$	—		$	1,195		$	1,238		$	(217	)	$	2,216		$	—		$	—		$	—	$	2,216
Costs and expenses:
Cost of revenue		—			(578	)		(671	)		113			(1,136	)		—			—			—		(1,136	)
Selling, general and administrative expenses		1			(477	)		(427	)		104			(799	)		—			—			—		(799	)
Amortization of intangible assets		—			(91	)		(100	)		—			(191	)		—			—			—		(191	)
Total costs and expenses		1			(1,146	)		(1,198	)		217			(2,126	)		—			—			—		(2,126	)
Operating (loss) income		1			49			40			—			90			—			—			—		90
Interest income (expense), net		(62	)		5			(63	)		—			(120	)		(16	)		—			—		(136	)
Equity gains (losses) from equity method investments		26			(63	)		—			38			1			(52	)		(68	)		120		1
Other income (expense), net		(10	)		—			(3	)		—			(13	)		—			—			—		(13	)
Income (loss) before income taxes		(45	)		(9	)		(26	)		38			(42	)		(68	)		(68	)		120		(58	)
Income tax benefit (expense)		(7	)		(14	)		1			13			(7	)		—			—			—		(7	)
Net income (loss)		(52	)		(23	)		(25	)		51			(49	)		(68	)		(68	)		120		(65	)
Less: income attributable to noncontrolling interest		—			(1	)		(2	)		—			(3	)		—			—			—		(3	)
Net income (loss) attributable to Warner Music Group Corp.	$	(52	)	$	(24	)	$	(27	)	$	51		$	(52	)	$	(68	)	$	(68	)	$	120	$	(68	)

Consolidating Statement of Operations (Unaudited)

For The Nine Months Ended June 30, 2014

	WMG												WMG			WMG			Warner					Warner
	Acquisition						Non-						Acquisition			Holdings			Music					Music
	Corp.			Guarantor			Guarantor						Corp.			Corp.			Group					Group Corp.
	(issuer)			Subsidiaries			Subsidiaries			Eliminations			Consolidated			(issuer)			Corp.			Eliminations		Consolidated
	(in millions)
Revenues	$	—		$	1,115		$	1,377		$	(236	)	$	2,256		$	—		$	—		$	—	$	2,256
Costs and expenses:
Cost of revenue		—			(479	)		(823	)		125			(1,177	)		—			—			—		(1,177	)
Selling, general and administrative expenses		—			(503	)		(493	)		111			(885	)		—			—			—		(885	)
Amortization of intangible assets		—			(90	)		(109	)		—			(199	)		—			—			—		(199	)
Total costs and expenses		—			(1,072	)		(1,425	)		236			(2,261	)		—			—			—		(2,261	)
Operating income (loss)		—			43			(48	)		—			(5	)		—			—			—		(5	)
Loss on extinguishment of debt		(141	)		—			—			—			(141	)		—			—			—		(141	)
Interest income (expense), net		(82	)		6			(65	)		—			(141	)		(16	)		—			—		(157	)
Equity gains (losses) from equity method investments		(85	)		17			—			68			—			(266	)		(282	)		548		—
Other income (expense), net		15			(18	)		—			—			(3	)		—			—			—		(3	)
Income (loss) before income taxes		(293	)		48			(113	)		68			(290	)		(282	)		(282	)		548		(306	)
Income tax benefit (expense)		27			(6	)		32			(26	)		27			—			—			—		27
Net income (loss)		(266	)		42			(81	)		42			(263	)		(282	)		(282	)		548		(279	)
Less: income attributable to noncontrolling interest		—			(1	)		(2	)		—			(3	)		—			—			—		(3	)
Net income (loss) attributable to Warner Music Group Corp.	$	(266	)	$	41		$	(83	)	$	42		$	(266	)	$	(282	)	$	(282	)	$	548	$	(282	)

Consolidating Statement of Comprehensive Income (Unaudited)

For The Three Months Ended June 30, 2015

	WMG											WMG			WMG			Warner						Warner
	Acquisition						Non-					Acquisition			Holdings			Music						Music
	Corp.			Guarantor			Guarantor					Corp.			Corp.			Group						Group Corp.
	(issuer)			Subsidiaries			Subsidiaries		Eliminations			Consolidated			(issuer)			Corp.			Eliminations			Consolidated
	(in millions)
Net (loss) income	$	(39	)	$	(95	)	$	28	$	68		$	(38	)	$	(44	)	$	(44	)	$	83		$	(43	)
Other comprehensive income (loss), net of tax:
Foreign currency adjustment		41			—			41		(41	)		41			41			41			(82	)		41
Other comprehensive income (loss), net of tax:		41			—			41		(41	)		41			41			41			(82	)		41
Total comprehensive (loss) income		2			(95	)		69		27			3			(3	)		(3	)		1			(2	)
Less: income attributable to noncontrolling interest		—			(1	)		—		—			(1	)		—			—			—			(1	)
Comprehensive (loss) income attributable to Warner Music Group Corp.	$	2		$	(96	)	$	69	$	27		$	2		$	(3	)	$	(3	)	$	1		$	(3	)

Consolidating Statement of Comprehensive Income (Unaudited)

For The Three Months Ended June 30, 2014

	WMG											WMG			WMG			Warner						Warner
	Acquisition						Non-					Acquisition			Holdings			Music						Music
	Corp.			Guarantor			Guarantor					Corp.			Corp.			Group						Group Corp.
	(issuer)			Subsidiaries			Subsidiaries		Eliminations			Consolidated			(issuer)			Corp.			Eliminations			Consolidated
	(in millions)
Net (loss) income	$	(180	)	$	(41	)	$	65	$	(23	)	$	(179	)	$	(185	)	$	(185	)	$	365		$	(184	)
Other comprehensive income (loss), net of tax:
Foreign currency adjustment		4			—			4		(4	)		4			4			4			(8	)		4
Other comprehensive income (loss), net of tax:		4			—			4		(4	)		4			4			4			(8	)		4
Total comprehensive (loss) income		(176	)		(41	)		69		(27	)		(175	)		(181	)		(181	)		357			(180	)
Less: income attributable to noncontrolling interest		—			(1	)		—		—			(1	)		—			—			—			(1	)
Comprehensive (loss) income attributable to Warner Music Group Corp.	$	(176	)	$	(42	)	$	69	$	(27	)	$	(176	)	$	(181	)	$	(181	)	$	357		$	(181	)

Consolidating Statement of Comprehensive Income (Unaudited)

For The Nine Months Ended June 30, 2015

	WMG											WMG			WMG			Warner					Warner
	Acquisition						Non-					Acquisition			Holdings			Music					Music
	Corp.			Guarantor			Guarantor					Corp.			Corp.			Group					Group Corp.
	(issuer)			Subsidiaries			Subsidiaries			Eliminations		Consolidated			(issuer)			Corp.			Eliminations		Consolidated
	(in millions)
Net (loss) income	$	(52	)	$	(23	)	$	(25	)	$	51	$	(49	)	$	(68	)	$	(68	)	$	120	$	(65	)
Other comprehensive income (loss), net of tax:
Foreign currency adjustment		(49	)		—			(49	)		49		(49	)		(49	)		(49	)		98		(49	)
Other comprehensive income (loss), net of tax:		(49	)		—			(49	)		49		(49	)		(49	)		(49	)		98		(49	)
Total comprehensive (loss) income		(101	)		(23	)		(74	)		100		(98	)		(117	)		(117	)		218		(114	)
Less: income attributable to noncontrolling interest		—			(1	)		(2	)		—		(3	)		—			—			—		(3	)
Comprehensive (loss) income attributable to Warner Music Group Corp.	$	(101	)	$	(24	)	$	(76	)	$	100	$	(101	)	$	(117	)	$	(117	)	$	218	$	(117	)

Consolidating Statement of Comprehensive Income (Unaudited)

For The Nine Months Ended June 30, 2014

	WMG											WMG			WMG			Warner					Warner
	Acquisition						Non-					Acquisition			Holdings			Music					Music
	Corp.			Guarantor			Guarantor					Corp.			Corp.			Group					Group Corp.
	(issuer)			Subsidiaries			Subsidiaries			Eliminations		Consolidated			(issuer)			Corp.			Eliminations		Consolidated
	(in millions)
Net (loss) income	$	(266	)	$	42		$	(81	)	$	42	$	(263	)	$	(282	)	$	(282	)	$	548	$	(279	)
Other comprehensive income (loss), net of tax:
Foreign currency adjustment		(2	)		—			(2	)		2		(2	)		(2	)		(2	)		4		(2	)
Other comprehensive income (loss), net of tax:		(2	)		—			(2	)		2		(2	)		(2	)		(2	)		4		(2	)
Total comprehensive (loss) income		(268	)		42			(83	)		44		(265	)		(284	)		(284	)		552		(281	)
Less: income attributable to noncontrolling interest		—			(1	)		(2	)		—		(3	)		—			—			—		(3	)
Comprehensive (loss) income attributable to Warner Music Group Corp.	$	(268	)	$	41		$	(85	)	$	44	$	(268	)	$	(284	)	$	(284	)	$	552	$	(284	)

Consolidating Statement of Cash Flows (Unaudited)

For The Nine Months Ended June 30, 2015

	WMG												WMG			WMG			Warner						Warner
	Acquisition						Non-						Acquisition			Holdings			Music						Music
	Corp.			Guarantor			Guarantor						Corp.			Corp.			Group						Group Corp.
	(issuer)			Subsidiaries			Subsidiaries			Eliminations			Consolidated			(issuer)			Corp.			Eliminations			Consolidated
	(in millions)
Cash flows from operating activities
Net (loss) income	$	(52	)	$	(23	)	$	(25	)	$	51		$	(49	)	$	(68	)	$	(68	)	$	120		$	(65	)
Adjustments to reconcile net (loss) income to net cash provided by operating activities:
Depreciation and amortization		—			121			112			—			233			—			—			—			233
Unrealized gains/losses and remeasurement of foreign denominated loans		93			46			(120	)		—			19			—			—			—			19
Deferred income taxes		—			—			(17	)		—			(17	)		—			—			—			(17	)
Non-cash interest expense		7			—			—			—			7			1			—			—			8
Non-cash share-based compensation expense		—			—			—			—			—			—			—			—			—
Equity losses (gains), including distributions		(26	)		63			—			(38	)		(1	)		52			68			(120	)		(1	)
Changes in operating assets and liabilities:
Accounts receivable		—			18			(2	)		—			16			—			—			—			16
Inventories		—			(1	)		(2	)		—			(3	)		—			—			—			(3	)
Royalty advances		—			(18	)		(37	)		—			(55	)		—			—			—			(55	)
Accounts payable and accrued liabilities		—			(93	)		20			(13	)		(86	)		—			—			—			(86	)
Royalty payables		—			(55	)		90			—			35			—			—			—			35
Accrued interest		(7	)		—			—			—			(7	)		(5	)		—			—			(12	)
Deferred revenue		—			18			21			—			39			—			—			—			39
Other balance sheet changes		(1	)		(6	)		14			—			7			—			—			—			7
Net cash provided by (used in) operating activities		14			70			54			—			138			(20	)		—			—			118
Cash flows from investing activities
Acquisition of music publishing rights, net		—			(8	)		(4	)		—			(12	)		—			—			—			(12	)
Capital expenditures		—			(38	)		(13	)		—			(51	)		—			—			—			(51	)
Investments and acquisitions of businesses, net		—			(9	)		(7	)		—			(16	)		—			—			—			(16	)
Advances to issuer		16			—			—			(16	)		—			—			—			—			—
Net cash provided by (used in) investing activities		16			(55	)		(24	)		(16	)		(79	)		—			—			—			(79	)
Cash flows from financing activities
Dividend by Acquisition Corp. to Holdings Corp.		(20	)		—			—			—			(20	)		20			—			—			—
Proceeds from the Revolving Credit Facility		258			—			—			—			258			—			—			—			258
Repayment of the Revolving Credit Facility		(258	)		—			—			—			(258	)		—			—			—			(258	)
Repayment of Acquisition Corp. Senior Term Loan Facility		(10	)		—			—			—			(10	)		—			—			—			(10	)
Distribution to noncontrolling interest holder		—			(1	)		(2	)		—			(3	)		—			—			—			(3	)
Repayment of capital lease obligations		—			—			(2	)		—			(2	)		—			—			—			(2	)
Change in due to (from) issuer		—			(16	)		—			16			—			—			—			—			—
Net cash provided by (used in) financing activities		(30	)		(17	)		(4	)		16			(35	)		20			—			—			(15	)
Effect of exchange rate changes on cash and equivalents		—			—			(13	)		—			(13	)		—			—			—			(13	)
Net increase (decrease) in cash and equivalents		—			(2	)		13			—			11			—			—			—			11
Cash and equivalents at beginning of period		—			26			131			—			157			—			—			—			157
Cash and equivalents at end of period	$	—		$	24		$	144		$	—		$	168		$	—		$	—		$	—		$	168

Consolidating Statement of Cash Flows (Unaudited)

For The Nine Months Ended June 30, 2014

	WMG												WMG			WMG			Warner						Warner
	Acquisition						Non-						Acquisition			Holdings			Music						Music
	Corp.			Guarantor			Guarantor						Corp.			Corp.			Group						Group Corp.
	(issuer)			Subsidiaries			Subsidiaries			Eliminations			Consolidated			(issuer)			Corp.			Eliminations			Consolidated
	(in millions)
Cash flows from operating activities
Net (loss) income	$	(266	)	$	42		$	(81	)	$	42		$	(263	)	$	(282	)	$	(282	)	$	548		$	(279	)
Adjustments to reconcile net (loss) income to net cash provided by operating activities:
Loss on extinguishment of debt		141			—			—			—			141			—			—			—			141
Depreciation and amortization		—			117			121			—			238			—			—			—			238
Unrealized gains/losses and remeasurement of foreign denominated loans		1			(22	)		(20	)		—			(41	)		—			—			—			(41	)
Deferred income taxes		—			—			(47	)		—			(47	)		—			—			—			(47	)
Non-cash interest expense		10			—			—			—			10			1			—			—			11
Non-cash share-based compensation expense		—			5			—			—			5			—			—			—			5
Equity losses (gains), including distributions		85			(17	)		—			(68	)		—			266			282			(548	)		—
Changes in operating assets and liabilities:
Accounts receivable		—			24			43			—			67			—			—			—			67
Inventories		—			—			(4	)		—			(4	)		—			—			—			(4	)
Royalty advances		—			5			(29	)		—			(24	)		—			—			—			(24	)
Accounts payable and accrued liabilities		—			(90	)		(32	)		26			(96	)		—			—			—			(96	)
Royalty payables		—			(52	)		63			—			11			—			—			—			11
Accrued interest		(20	)		—			—			—			(20	)		(5	)		—			—			(25	)
Deferred revenue		—			84			9			—			93			—			—			—			93
Other balance sheet changes		—			(2	)		(7	)		—			(9	)		—			—			—			(9	)
Net cash provided by (used in) operating activities		(49	)		94			16			—			61			(20	)		—			—			41
Cash flows from investing activities
Acquisition of music publishing rights, net		—			(13	)		(7	)		—			(20	)		—			—			—			(20	)
Capital expenditures		—			(31	)		(15	)		—			(46	)		—			—			—			(46	)
Investments and acquisitions of businesses, net		—			(10	)		(16	)		—			(26	)		—			—			—			(26	)
Advances to issuer		22			—			—			(22	)		—			—			—			—			—
Net cash provided by (used in) investing activities		22			(54	)		(38	)		(22	)		(92	)		—			—			—			(92	)
Cash flows from financing activities
Dividend by Acquisition Corp. to Holdings Corp.		(20	)		—			—			—			(20	)		20			—			—			—
Proceeds from the Revolving Credit Facility		490			—			—			—			490			—			—			—			490
Repayment of the Revolving Credit Facility		(490	)		—			—			—			(490	)		—			—			—			(490	)
Proceeds from issuance of Acquisition Corp. 5.625% Senior Secured Notes		275			—			—			—			275			—			—			—			275
Proceeds from issuance of Acquisition Corp. 6.75% Senior Notes		660			—			—			—			660			—			—			—			660
Repayment of Acquisition Corp. 11.5% Senior Notes		(765	)		—			—			—			(765	)		—			—			—			(765	)
Financing costs paid		(104	)		—			—			—			(104	)		—			—			—			(104	)
Deferred financing costs paid		(12	)		—			—			—			(12	)		—			—			—			(12	)
Repayment of Term Loan		(7	)		—			—			—			(7	)		—			—			—			(7	)
Repayment of capital lease obligations		—			—			(2	)		—			(2	)		—			—			—			(2	)
Distribution to noncontrolling interest holder		—			—			(2	)		—			(2	)		—			—			—			(2	)
Change in due to (from) issuer		—			(22	)		—			22			—			—			—			—			—
Net cash provided by (used in) financing activities		27			(22	)		(4	)		22			23			20			—			—			43
Effect of exchange rate changes on cash and equivalents		—			—			(5	)		—			(5	)		—			—			—			(5	)
Net increase (decrease) in cash and equivalents		—			18			(31	)		—			(13	)		—			—			—			(13	)
Cash and equivalents at beginning of period		—			16			139			—			155			—			—			—			155
Cash and equivalents at end of period	$	—		$	34		$	108		$	—		$	142		$	—		$	—		$	—		$	142