FORM 10-Q |
☒ | QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
☐ | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
Warner Music Group Corp. (Exact name of Registrant as specified in its charter) |
Delaware | 13-4271875 | |
(State or other jurisdiction of incorporation or organization) | (I.R.S. Employer Identification No.) |
1633 Broadway New York, NY 10019 (Address of principal executive offices) (212) 275-2000 (Registrant’s telephone number, including area code) |
Large accelerated filer | ☐ | Accelerated filer | ☐ | ||
Non-accelerated filer | x | Smaller reporting company | ☐ | ||
Emerging growth company | ☐ |
Title of each class (a) | Trading Symbol(s) | Name of each exchange on which registered | ||
None |
(a) | There is no public market for the Registrant’s common stock. As of August 6, 2019, the number of shares of the Registrant’s common stock, par value $0.001 per share, outstanding was 1,060. All of the Registrant’s common stock is owned by affiliates of Access Industries, Inc. The Registrant has filed all Exchange Act reports for the preceding 12 months. |
Page Number | ||
June 30, 2019 | September 30, 2018 | ||||||
(in millions) | |||||||
Assets | |||||||
Current assets: | |||||||
Cash and equivalents | $ | 541 | $ | 514 | |||
Accounts receivable, net of allowances of $21 million and $45 million | 744 | 447 | |||||
Inventories | 67 | 42 | |||||
Royalty advances expected to be recouped within one year | 171 | 123 | |||||
Prepaid and other current assets | 57 | 50 | |||||
Total current assets | 1,580 | 1,176 | |||||
Royalty advances expected to be recouped after one year | 209 | 153 | |||||
Property, plant and equipment, net | 296 | 229 | |||||
Goodwill | 1,772 | 1,692 | |||||
Intangible assets subject to amortization, net | 1,780 | 1,851 | |||||
Intangible assets not subject to amortization | 153 | 154 | |||||
Deferred tax assets, net | 7 | 11 | |||||
Other assets | 158 | 78 | |||||
Total assets | $ | 5,955 | $ | 5,344 | |||
Liabilities and Equity | |||||||
Current liabilities: | |||||||
Accounts payable | $ | 208 | $ | 281 | |||
Accrued royalties | 1,577 | 1,396 | |||||
Accrued liabilities | 448 | 423 | |||||
Accrued interest | 18 | 31 | |||||
Deferred revenue | 170 | 208 | |||||
Other current liabilities | 123 | 34 | |||||
Total current liabilities | 2,544 | 2,373 | |||||
Long-term debt | 3,006 | 2,819 | |||||
Deferred tax liabilities, net | 236 | 165 | |||||
Other noncurrent liabilities | 302 | 307 | |||||
Total liabilities | $ | 6,088 | $ | 5,664 | |||
Equity: | |||||||
Common stock ($0.001 par value; 10,000 shares authorized; 1,060 and 1,052 shares issued and outstanding at June 30, 2019 and September 30, 2018, respectively) | $ | — | $ | — | |||
Additional paid-in capital | 1,128 | 1,128 | |||||
Accumulated deficit | (1,061 | ) | (1,272 | ) | |||
Accumulated other comprehensive loss, net | (219 | ) | (190 | ) | |||
Total Warner Music Group Corp. deficit | (152 | ) | (334 | ) | |||
Noncontrolling interest | 19 | 14 | |||||
Total equity | (133 | ) | (320 | ) | |||
Total liabilities and equity | $ | 5,955 | $ | 5,344 |
Three Months Ended June 30, | Nine Months Ended June 30, | ||||||||||||||
2019 | 2018 | 2019 | 2018 | ||||||||||||
(in millions) | (in millions) | ||||||||||||||
Revenue | $ | 1,058 | $ | 958 | $ | 3,351 | $ | 2,966 | |||||||
Costs and expenses: | |||||||||||||||
Cost of revenue | (577 | ) | (531 | ) | (1,762 | ) | (1,588 | ) | |||||||
Selling, general and administrative expenses (a) | (372 | ) | (343 | ) | (1,102 | ) | (1,013 | ) | |||||||
Amortization expense | (51 | ) | (56 | ) | (160 | ) | (164 | ) | |||||||
Total costs and expenses | (1,000 | ) | (930 | ) | (3,024 | ) | (2,765 | ) | |||||||
Operating income | 58 | 28 | 327 | 201 | |||||||||||
Loss on extinguishment of debt | (4 | ) | (7 | ) | (7 | ) | (31 | ) | |||||||
Interest expense, net | (36 | ) | (33 | ) | (108 | ) | (105 | ) | |||||||
Other (expense) income, net | (16 | ) | 394 | 41 | 392 | ||||||||||
Income before income taxes | 2 | 382 | 253 | 457 | |||||||||||
Income tax benefit (expense) | 12 | (61 | ) | (86 | ) | (132 | ) | ||||||||
Net income | 14 | 321 | 167 | 325 | |||||||||||
Less: Income attributable to noncontrolling interest | (1 | ) | (1 | ) | (1 | ) | (4 | ) | |||||||
Net income attributable to Warner Music Group Corp. | $ | 13 | $ | 320 | $ | 166 | $ | 321 | |||||||
(a) Includes depreciation expense of: | $ | (15 | ) | $ | (15 | ) | $ | (43 | ) | $ | (41 | ) |
Three Months Ended June 30, | Nine Months Ended June 30, | ||||||||||||||
2019 | 2018 | 2019 | 2018 | ||||||||||||
(in millions) | (in millions) | ||||||||||||||
Net income | $ | 14 | $ | 321 | $ | 167 | $ | 325 | |||||||
Other comprehensive income (loss), net of tax: | |||||||||||||||
Foreign currency adjustment | 9 | (31 | ) | (17 | ) | (13 | ) | ||||||||
Deferred loss on derivative | (3 | ) | (3 | ) | (12 | ) | (1 | ) | |||||||
Other comprehensive income (loss), net of tax | 6 | (34 | ) | (29 | ) | (14 | ) | ||||||||
Total comprehensive income | 20 | 287 | 138 | 311 | |||||||||||
Less: Income attributable to noncontrolling interest | (1 | ) | (1 | ) | (1 | ) | (4 | ) | |||||||
Comprehensive income attributable to Warner Music Group Corp. | $ | 19 | $ | 286 | $ | 137 | $ | 307 |
Nine Months Ended June 30, | |||||||
2019 | 2018 | ||||||
(in millions) | |||||||
Cash flows from operating activities | |||||||
Net income | $ | 167 | $ | 325 | |||
Adjustments to reconcile net income to net cash provided by operating activities: | |||||||
Depreciation and amortization | 203 | 205 | |||||
Unrealized gains on remeasurement of foreign denominated loans | (6 | ) | (6 | ) | |||
Deferred income taxes | 25 | 105 | |||||
Loss on extinguishment of debt | 7 | 31 | |||||
Net gain on divestitures and investments | (27 | ) | (385 | ) | |||
Non-cash interest expense | 5 | 5 | |||||
Equity-based compensation expense | 28 | 52 | |||||
Changes in operating assets and liabilities: | |||||||
Accounts receivable, net | (50 | ) | (43 | ) | |||
Inventories | 12 | (1 | ) | ||||
Royalty advances | (107 | ) | — | ||||
Accounts payable and accrued liabilities | (94 | ) | (84 | ) | |||
Royalty payables | 117 | 113 | |||||
Accrued interest | (13 | ) | (22 | ) | |||
Deferred revenue | (17 | ) | — | ||||
Other balance sheet changes | (1 | ) | (30 | ) | |||
Net cash provided by operating activities | 249 | 265 | |||||
Cash flows from investing activities | |||||||
Acquisition of music publishing rights, net | (24 | ) | (11 | ) | |||
Capital expenditures | (82 | ) | (40 | ) | |||
Investments and acquisitions of businesses, net of cash received | (234 | ) | (14 | ) | |||
Proceeds from the sale of investments | — | 516 | |||||
Net cash (used in) provided by investing activities | (340 | ) | 451 | ||||
Cash flows from financing activities | |||||||
Proceeds from issuance of Acquisition Corp. 3.625% Senior Secured Notes | 514 | — | |||||
Repayment of Acquisition Corp. 4.125% Senior Secured Notes | (40 | ) | — | ||||
Repayment of Acquisition Corp. 4.875% Senior Secured Notes | (30 | ) | — | ||||
Repayment of Acquisition Corp. 5.625% Senior Secured Notes | (247 | ) | — | ||||
Proceeds from issuance of Acquisition Corp. 5.50% Senior Notes | — | 325 | |||||
Proceeds from supplement of Acquisition Corp. Senior Term Loan Facility | — | 320 | |||||
Repayment of and redemption deposit for Acquisition Corp. 6.75% Senior Notes | — | (635 | ) | ||||
Call premiums paid and deposit on early redemption of debt | (5 | ) | (23 | ) | |||
Deferred financing costs paid | (7 | ) | (12 | ) | |||
Distribution to noncontrolling interest holder | (3 | ) | (3 | ) | |||
Dividends paid | (63 | ) | (425 | ) | |||
Net cash provided by (used in) financing activities | 119 | (453 | ) | ||||
Effect of exchange rate changes on cash and equivalents | (1 | ) | (5 | ) | |||
Net increase in cash and equivalents | 27 | 258 | |||||
Cash and equivalents at beginning of period | 514 | 647 | |||||
Cash and equivalents at end of period | $ | 541 | $ | 905 |
Nine Months Ended June 30, 2019 | Additional Paid-in Capital | Accumulated Deficit | Accumulated Other Comprehensive Loss | Total Warner Music Group Corp. Deficit | Noncontrolling Interest | Total Equity | ||||||||||||||||||||||||
Common Stock | ||||||||||||||||||||||||||||||
Shares | Value | |||||||||||||||||||||||||||||
(in millions, except share amounts) | ||||||||||||||||||||||||||||||
Balance at September 30, 2018 | 1,052 | $ | — | $ | 1,128 | $ | (1,272 | ) | $ | (190 | ) | $ | (334 | ) | $ | 14 | $ | (320 | ) | |||||||||||
Cumulative effect of ASC 606 adoption | — | — | — | 139 | — | 139 | 11 | 150 | ||||||||||||||||||||||
Net income | — | — | — | 166 | — | 166 | 1 | 167 | ||||||||||||||||||||||
Other comprehensive loss, net of tax | — | — | — | — | (29 | ) | (29 | ) | — | (29 | ) | |||||||||||||||||||
Dividends | — | — | — | (94 | ) | — | (94 | ) | — | (94 | ) | |||||||||||||||||||
Distribution to noncontrolling interest holders | — | — | — | — | — | — | (3 | ) | (3 | ) | ||||||||||||||||||||
Other | 8 | — | — | — | — | — | (4 | ) | (4 | ) | ||||||||||||||||||||
Balance at June 30, 2019 | 1,060 | $ | — | $ | 1,128 | $ | (1,061 | ) | $ | (219 | ) | $ | (152 | ) | $ | 19 | $ | (133 | ) |
Three Months Ended June 30, 2019 | Additional Paid-in Capital | Accumulated Deficit | Accumulated Other Comprehensive Loss | Total Warner Music Group Corp. Deficit | Noncontrolling Interest | Total Equity | ||||||||||||||||||||||||
Common Stock | ||||||||||||||||||||||||||||||
Shares | Value | |||||||||||||||||||||||||||||
(in millions, except share amounts) | ||||||||||||||||||||||||||||||
Balance at March 31, 2019 | 1,060 | $ | — | $ | 1,128 | $ | (1,043 | ) | $ | (225 | ) | $ | (140 | ) | $ | 20 | $ | (120 | ) | |||||||||||
Net income | — | — | — | 13 | — | 13 | 1 | 14 | ||||||||||||||||||||||
Other comprehensive income, net of tax | — | — | — | — | 6 | 6 | — | 6 | ||||||||||||||||||||||
Dividends | — | — | — | (31 | ) | — | (31 | ) | — | (31 | ) | |||||||||||||||||||
Distribution to noncontrolling interest holders | — | — | — | — | — | — | (1 | ) | (1 | ) | ||||||||||||||||||||
Other | — | — | — | — | — | — | (1 | ) | (1 | ) | ||||||||||||||||||||
Balance at June 30, 2019 | 1,060 | $ | — | $ | 1,128 | $ | (1,061 | ) | $ | (219 | ) | $ | (152 | ) | $ | 19 | $ | (133 | ) |
Nine Months Ended June 30, 2018 | Additional Paid-in Capital | Accumulated Deficit | Accumulated Other Comprehensive Loss | Total Warner Music Group Corp. Equity | Noncontrolling Interest | Total Equity | ||||||||||||||||||||||||
Common Stock | ||||||||||||||||||||||||||||||
Shares | Value | |||||||||||||||||||||||||||||
(in millions, except share amounts) | ||||||||||||||||||||||||||||||
Balance at September 30, 2017 | 1,055 | $ | — | $ | 1,128 | $ | (654 | ) | $ | (181 | ) | $ | 293 | $ | 15 | $ | 308 | |||||||||||||
Net income | — | — | — | 321 | — | 321 | 4 | 325 | ||||||||||||||||||||||
Other comprehensive loss, net of tax | — | — | — | — | (14 | ) | (14 | ) | — | (14 | ) | |||||||||||||||||||
Dividends | — | — | — | (425 | ) | — | (425 | ) | — | (425 | ) | |||||||||||||||||||
Distribution to noncontrolling interest holders | — | — | — | — | — | — | (3 | ) | (3 | ) | ||||||||||||||||||||
Other | (3 | ) | — | — | — | — | — | — | — | |||||||||||||||||||||
Balance at June 30, 2018 | 1,052 | $ | — | $ | 1,128 | $ | (758 | ) | $ | (195 | ) | $ | 175 | $ | 16 | $ | 191 |
Three Months Ended June 30, 2018 | Additional Paid-in Capital | Accumulated Deficit | Accumulated Other Comprehensive Loss | Total Warner Music Group Corp. Equity | Noncontrolling Interest | Total Equity | ||||||||||||||||||||||||
Common Stock | ||||||||||||||||||||||||||||||
Shares | Value | |||||||||||||||||||||||||||||
(in millions, except share amounts) | ||||||||||||||||||||||||||||||
Balance at March 31, 2018 | 1,052 | $ | — | $ | 1,128 | $ | (778 | ) | $ | (161 | ) | $ | 189 | $ | 16 | $ | 205 | |||||||||||||
Net income | — | — | — | 320 | — | 320 | 1 | 321 | ||||||||||||||||||||||
Other comprehensive loss, net of tax | — | — | — | — | (34 | ) | (34 | ) | — | (34 | ) | |||||||||||||||||||
Dividends | — | — | — | (300 | ) | — | (300 | ) | — | (300 | ) | |||||||||||||||||||
Distribution to noncontrolling interest holders | — | — | — | — | — | — | (1 | ) | (1 | ) | ||||||||||||||||||||
Balance at June 30, 2018 | 1,052 | $ | — | $ | 1,128 | $ | (758 | ) | $ | (195 | ) | $ | 175 | $ | 16 | $ | 191 |
September 30, 2018 | Impact of Adoption | October 1, 2018 | |||||||||
(in millions) | |||||||||||
Assets | |||||||||||
Accounts receivable, net | $ | 447 | $ | 257 | $ | 704 | |||||
Total current assets | 1,176 | 257 | 1,433 | ||||||||
Other assets | 78 | 15 | 93 | ||||||||
Total assets | $ | 5,344 | $ | 272 | $ | 5,616 | |||||
Liabilities and Equity | |||||||||||
Accrued royalties | 1,396 | 79 | 1,475 | ||||||||
Accrued liabilities | 423 | (1 | ) | 422 | |||||||
Deferred revenue | 208 | (27 | ) | 181 | |||||||
Other current liabilities | 34 | 33 | 67 | ||||||||
Total current liabilities | 2,373 | 84 | 2,457 | ||||||||
Deferred tax liabilities, net | 165 | 37 | 202 | ||||||||
Other noncurrent liabilities | 307 | 1 | 308 | ||||||||
Total liabilities | 5,664 | 122 | 5,786 | ||||||||
Equity: | |||||||||||
Accumulated Deficit | (1,272 | ) | 139 | (1,133 | ) | ||||||
Noncontrolling interest | 14 | 11 | 25 | ||||||||
Total equity | (320 | ) | 150 | (170 | ) | ||||||
Total liabilities and equity | $ | 5,344 | $ | 272 | $ | 5,616 |
Three Months Ended June 30, 2019 | Nine Months Ended June 30, 2019 | ||||||||||||||||||||||
As Reported | Balances without adoption of ASC 606 | Effect of Change | As Reported | Balances without adoption of ASC 606 | Effect of Change | ||||||||||||||||||
(in millions) | (in millions) | ||||||||||||||||||||||
Revenue | $ | 1,058 | $ | 1,057 | $ | 1 | $ | 3,351 | $ | 3,322 | $ | 29 | |||||||||||
Cost and expenses: | |||||||||||||||||||||||
Cost of revenue | (577 | ) | (558 | ) | (19 | ) | (1,762 | ) | (1,765 | ) | 3 | ||||||||||||
Operating income | 58 | 76 | (18 | ) | 327 | 295 | 32 | ||||||||||||||||
Income before income taxes | 2 | 20 | (18 | ) | 253 | 221 | 32 | ||||||||||||||||
Income tax benefit (expense) | 12 | 17 | (5 | ) | (86 | ) | (75 | ) | (11 | ) | |||||||||||||
Net income | 14 | 37 | (23 | ) | 167 | 146 | 21 | ||||||||||||||||
Less: Income attributable to noncontrolling interest | (1 | ) | — | (1 | ) | (1 | ) | (3 | ) | 2 | |||||||||||||
Net income attributable to Warner Music Group Corp. | $ | 13 | $ | 37 | $ | (24 | ) | $ | 166 | $ | 143 | $ | 23 |
June 30, 2019 | |||||||||||
As Reported | Balances without adoption of ASC 606 | Effect of Change | |||||||||
(in millions) | |||||||||||
Assets | |||||||||||
Accounts receivable, net | $ | 744 | $ | 465 | $ | 279 | |||||
Total current assets | 1,580 | 1,301 | 279 | ||||||||
Other assets | 158 | 143 | 15 | ||||||||
Deferred tax assets, net | 7 | 7 | — | ||||||||
Total assets | $ | 5,955 | $ | 5,661 | $ | 294 | |||||
Liabilities and Equity | |||||||||||
Accounts payable | 208 | 209 | (1 | ) | |||||||
Accrued royalties | 1,577 | 1,501 | 76 | ||||||||
Accrued liabilities | 448 | 449 | (1 | ) | |||||||
Deferred revenue | 170 | 199 | (29 | ) | |||||||
Other current liabilities | 123 | 95 | 28 | ||||||||
Total current liabilities | 2,544 | 2,471 | 73 | ||||||||
Deferred tax liabilities, net | 236 | 189 | 47 | ||||||||
Other noncurrent liabilities | 302 | 298 | 4 | ||||||||
Total liabilities | 6,088 | 5,964 | 124 | ||||||||
Equity: | |||||||||||
Accumulated deficit | (1,061 | ) | (1,221 | ) | 160 | ||||||
Noncontrolling interest | 19 | 9 | 10 | ||||||||
Total equity | (133 | ) | (303 | ) | 170 | ||||||
Total liabilities and equity | $ | 5,955 | $ | 5,661 | $ | 294 |
June 30, 2019 | |||||||||||
As Reported | Balances without adoption of ASC 606 | Effect of Change | |||||||||
(in millions) | |||||||||||
Cash flows from operating activities | |||||||||||
Net income | $ | 167 | $ | 146 | $ | 21 | |||||
Deferred income taxes | 25 | 15 | 10 | ||||||||
Changes in operating assets and liabilities: | |||||||||||
Accounts receivable, net | (50 | ) | (28 | ) | (22 | ) | |||||
Accounts payable and accrued liabilities | (94 | ) | (96 | ) | 2 | ||||||
Royalty advances | (107 | ) | (104 | ) | (3 | ) | |||||
Deferred revenue | (17 | ) | (15 | ) | (2 | ) | |||||
Other balance sheet changes | (1 | ) | 5 | (6 | ) | ||||||
Net cash provided by operating activities | 249 | 249 | — | ||||||||
Effect of exchange rate changes on cash and equivalents | (1 | ) | (1 | ) | — | ||||||
Net decrease in cash and equivalents | 27 | 27 | — | ||||||||
Cash and equivalents at beginning of period | 514 | 514 | — | ||||||||
Cash and equivalents at end of period | $ | 541 | $ | 541 | $ | — |
For the Three Months Ended June 30, | 2019 vs. 2018 | |||||||||||||
2019 | 2018 | $ Change | % Change | |||||||||||
Revenue by Type | ||||||||||||||
Digital | $ | 584 | $ | 519 | $ | 65 | 13 | % | ||||||
Physical | 95 | 130 | (35 | ) | -27 | % | ||||||||
Total Digital and Physical | 679 | 649 | 30 | 5 | % | |||||||||
Artist services and expanded-rights | 158 | 85 | 73 | 86 | % | |||||||||
Licensing | 76 | 68 | 8 | 12 | % | |||||||||
Total Recorded Music | 913 | 802 | 111 | 14 | % | |||||||||
Performance | 36 | 51 | (15 | ) | -29 | % | ||||||||
Digital | 65 | 59 | 6 | 10 | % | |||||||||
Mechanical | 13 | 17 | (4 | ) | -24 | % | ||||||||
Synchronization | 29 | 28 | 1 | 4 | % | |||||||||
Other | 4 | 4 | — | — | % | |||||||||
Total Music Publishing | 147 | 159 | (12 | ) | -8 | % | ||||||||
Intersegment eliminations | (2 | ) | (3 | ) | 1 | -33 | % | |||||||
Total Revenue | $ | 1,058 | $ | 958 | $ | 100 | 10 | % | ||||||
Revenue by Geographical Location | ||||||||||||||
U.S. Recorded Music | $ | 395 | $ | 356 | $ | 39 | 11 | % | ||||||
U.S. Music Publishing | 71 | 69 | 2 | 3 | % | |||||||||
Total U.S. | 466 | 425 | 41 | 10 | % | |||||||||
International Recorded Music | 518 | 446 | 72 | 16 | % | |||||||||
International Music Publishing | 76 | 90 | (14 | ) | -16 | % | ||||||||
Total International | 594 | 536 | 58 | 11 | % | |||||||||
Intersegment eliminations | (2 | ) | (3 | ) | 1 | -33 | % | |||||||
Total Revenue | $ | 1,058 | $ | 958 | $ | 100 | 10 | % |
For the Nine Months Ended June 30, | 2019 vs. 2018 | |||||||||||||
2019 | 2018 | $ Change | % Change | |||||||||||
Revenue by Type | ||||||||||||||
Digital | $ | 1,744 | $ | 1,491 | $ | 253 | 17 | % | ||||||
Physical | 456 | 500 | (44 | ) | -9 | % | ||||||||
Total Digital and Physical | 2,200 | 1,991 | 209 | 10 | % | |||||||||
Artist services and expanded-rights | 458 | 264 | 194 | 73 | % | |||||||||
Licensing | 229 | 242 | (13 | ) | -5 | % | ||||||||
Total Recorded Music | 2,887 | 2,497 | 390 | 16 | % | |||||||||
Performance | 135 | 153 | (18 | ) | -12 | % | ||||||||
Digital | 195 | 169 | 26 | 15 | % | |||||||||
Mechanical | 41 | 55 | (14 | ) | -25 | % | ||||||||
Synchronization | 89 | 90 | (1 | ) | -1 | % | ||||||||
Other | 10 | 9 | 1 | 11 | % | |||||||||
Total Music Publishing | 470 | 476 | (6 | ) | -1 | % | ||||||||
Intersegment eliminations | (6 | ) | (7 | ) | 1 | -14 | % | |||||||
Total Revenue | $ | 3,351 | $ | 2,966 | $ | 385 | 13 | % | ||||||
Revenue by Geographical Location | ||||||||||||||
U.S. Recorded Music | $ | 1,236 | $ | 1,061 | $ | 175 | 16 | % | ||||||
U.S. Music Publishing | 219 | 220 | (1 | ) | — | % | ||||||||
Total U.S. | 1,455 | 1,281 | 174 | 14 | % | |||||||||
International Recorded Music | 1,651 | 1,436 | 215 | 15 | % | |||||||||
International Music Publishing | 251 | 256 | (5 | ) | -2 | % | ||||||||
Total International | 1,902 | 1,692 | 210 | 12 | % | |||||||||
Intersegment eliminations | (6 | ) | (7 | ) | 1 | -14 | % | |||||||
Total Revenue | $ | 3,351 | $ | 2,966 | $ | 385 | 13 | % |
Rest of FY19 | FY20 | FY21 | Thereafter | Total | |||||||||||||||
(in millions) | |||||||||||||||||||
Remaining performance obligations | $ | 51 | $ | 138 | $ | 94 | $ | 7 | $ | 290 | |||||||||
Total | $ | 51 | $ | 138 | $ | 94 | $ | 7 | $ | 290 |
Purchase Price | € | 155 | |
Working Capital | 10 | ||
Final Purchase Price | € | 165 | |
Foreign Currency Rate at October 10, 2018 | 1.15 | ||
Final Purchase Price in U.S. dollars | $ | 190 | |
Fair value of assets acquired and liabilities assumed | |||
Cash and equivalents | $ | 7 | |
Accounts receivable, net | 3 | ||
Inventories | 37 | ||
Other current assets | 5 | ||
Property plant and equipment | 32 | ||
Intangible assets | 81 | ||
Accounts payable | (18 | ) | |
Other current liabilities | (11 | ) | |
Deferred revenue | (7 | ) | |
Deferred tax liabilities | (25 | ) | |
Other noncurrent liabilities | (3 | ) | |
Fair value of assets acquired and liabilities assumed | 101 | ||
Goodwill recorded | 89 | ||
Total purchase price allocated | $ | 190 |
Three Months Ended June 30, 2019 | Three Months Ended June 30, 2018 | Nine Months Ended June 30, 2019 | Nine Months Ended June 30, 2018 | ||||||||||||
(in millions) | (in millions) | ||||||||||||||
Revenue | $ | 1,058 | $ | 1,011 | $ | 3,356 | $ | 3,153 | |||||||
Operating income | 58 | 29 | 327 | 201 | |||||||||||
Net income attributable to Warner Music Group | $ | 13 | $ | 321 | $ | 166 | $ | 320 |
Foreign Currency Translation Loss (a) | Minimum Pension Liability Adjustment | Deferred Losses On Derivative Financial Instruments | Accumulated Other Comprehensive Loss, net | ||||||||||||
(in millions) | |||||||||||||||
Balance at September 30, 2018 | $ | (184 | ) | $ | (9 | ) | $ | 3 | $ | (190 | ) | ||||
Other comprehensive loss | (17 | ) | — | (12 | ) | (29 | ) | ||||||||
Balance at June 30, 2019 | $ | (201 | ) | $ | (9 | ) | $ | (9 | ) | $ | (219 | ) |
Recorded Music | Music Publishing | Total | |||||||||
(in millions) | |||||||||||
Balance at September 30, 2018 | $ | 1,228 | $ | 464 | $ | 1,692 | |||||
Acquisitions (a) | 89 | — | 89 | ||||||||
Divestitures | — | — | — | ||||||||
Other adjustments (b) | (9 | ) | — | (9 | ) | ||||||
Balance at June 30, 2019 | $ | 1,308 | $ | 464 | $ | 1,772 |
(a) | Relates to the acquisition of EMP during the nine months ended June 30, 2019. |
(b) | Other adjustments during the nine months ended June 30, 2019 represent foreign currency movements. |
Weighted Average Useful Life | June 30, 2019 | September 30, 2018 | |||||||
(in millions) | |||||||||
Intangible assets subject to amortization: | |||||||||
Recorded music catalog | 10 years | $ | 861 | $ | 870 | ||||
Music publishing copyrights | 26 years | 1,555 | 1,540 | ||||||
Artist and songwriter contracts | 13 years | 853 | 864 | ||||||
Trademarks | 18 years | 52 | 12 | ||||||
Other intangible assets | 7 years | 58 | 26 | ||||||
Total gross intangible asset subject to amortization | 3,379 | 3,312 | |||||||
Accumulated amortization | (1,599 | ) | (1,461 | ) | |||||
Total net intangible assets subject to amortization | 1,780 | 1,851 | |||||||
Intangible assets not subject to amortization: | |||||||||
Trademarks and tradenames | Indefinite | 153 | 154 | ||||||
Total net intangible assets | $ | 1,933 | $ | 2,005 |
June 30, 2019 | September 30, 2018 | ||||||
(in millions) | |||||||
Revolving Credit Facility (a) | $ | — | $ | — | |||
Senior Term Loan Facility due 2023 (b) | 1,313 | 1,310 | |||||
5.625% Senior Secured Notes due 2022 (c) | — | 246 | |||||
5.000% Senior Secured Notes due 2023 (d) | 298 | 297 | |||||
4.125% Senior Secured Notes due 2024 (e) | 349 | 399 | |||||
4.875% Senior Secured Notes due 2024 (f) | 218 | 247 | |||||
3.625% Senior Secured Notes due 2026 (g) | 507 | — | |||||
5.500% Senior Notes due 2026 (h) | 321 | 320 | |||||
Total debt (i) | $ | 3,006 | $ | 2,819 |
(a) | Reflects $180 million of commitments under the Revolving Credit Facility available at both June 30, 2019 and September 30, 2018, less letters of credit outstanding of approximately $13 million at June 30, 2019 and $8 million at September 30, 2018. There were no loans outstanding under the Revolving Credit Facility at June 30, 2019 or September 30, 2018. |
(b) | Principal amount of $1.326 billion less unamortized discount of $3 million and unamortized deferred financing costs of $10 million and $12 million at June 30, 2019 and September 30, 2018, respectively. |
(c) | On May 16, 2019, Acquisition Corp. redeemed the remaining $221 million of its outstanding 5.625% Senior Notes due 2022. The Company recorded a loss on extinguishment of debt of approximately $4 million as a result of the debt redemption, which represents the premium paid on early redemption and unamortized deferred financing costs. |
(d) | Principal amount of $300 million less unamortized deferred financing costs of $2 million at both June 30, 2019 and September 30, 2018. |
(e) | Face amount of €311 million and €345 million at June 30, 2019 and September 30, 2018 respectively. Above amounts represent the dollar equivalent of such note at June 30, 2019 and September 30, 2018. Principal amount of $353 million and $402 million at June 30, 2019 and September 30, 2018, respectively, less unamortized deferred financing costs of $4 million and $3 million at June 30, 2019 and September 30, 2018, respectively. |
(f) | Principal amount of $220 million and $250 million less unamortized deferred financing costs of $2 million and $3 million at June 30, 2019 and September 30, 2018, respectively. |
(g) | Face amount of €445 million at June 30, 2019. Above amounts represent the dollar equivalent of such note at June 30, 2019. Principal amount of $506 million, an additional issuance premium of $8 million, less unamortized deferred financing costs of $7 million at June 30, 2019. |
(h) | Principal amount of $325 million and $325 million less unamortized deferred financing costs of $4 million and $5 million at June 30, 2019 and September 30, 2018, respectively. |
(i) | Principal amount of debt of $3.030 billion and $2.851 billion, an additional issuance premium of $8 million and nil, less unamortized discount of $3 million and $4 million and unamortized deferred financing costs of $29 million and $28 million at June 30, 2019 and September 30, 2018, respectively. |
June 30, 2019 (a) | September 30, 2018 (b) | ||||||
(in millions) | |||||||
Other current assets | $ | 1 | $ | — | |||
Other current liabilities | — | — | |||||
Other noncurrent assets | — | 4 | |||||
Other noncurrent liabilities | 11 | — |
(a) | $4 million and $3 million of foreign exchange derivative contracts in asset and liability positions, respectively, and $11 million of interest rate swap in a liability position including non-designated cash flow hedges. |
(b) | $4 million of interest rate swap in an asset position. |
Recorded Music | Music Publishing | Corporate expenses and eliminations | Total | ||||||||||||
Three Months Ended | (in millions) | ||||||||||||||
June 30, 2019 | |||||||||||||||
Revenue | $ | 913 | $ | 147 | $ | (2 | ) | $ | 1,058 | ||||||
Operating income (loss) | 85 | 18 | (45 | ) | 58 | ||||||||||
Amortization of intangible assets | 34 | 17 | — | 51 | |||||||||||
Depreciation of property, plant and equipment | 12 | 1 | 2 | 15 | |||||||||||
OIBDA | 131 | 36 | (43 | ) | 124 | ||||||||||
June 30, 2018 | |||||||||||||||
Revenue | $ | 802 | $ | 159 | $ | (3 | ) | $ | 958 | ||||||
Operating income (loss) | 67 | 5 | (44 | ) | 28 | ||||||||||
Amortization of intangible assets | 39 | 17 | — | 56 | |||||||||||
Depreciation of property, plant and equipment | 9 | 2 | 4 | 15 | |||||||||||
OIBDA | 115 | 24 | (40 | ) | 99 |
Recorded Music | Music Publishing | Corporate expenses and eliminations | Total | ||||||||||||
Nine Months Ended | (in millions) | ||||||||||||||
June 30, 2019 | |||||||||||||||
Revenue | $ | 2,887 | $ | 470 | $ | (6 | ) | $ | 3,351 | ||||||
Operating income (loss) | 382 | 67 | (122 | ) | 327 | ||||||||||
Amortization of intangible assets | 109 | 51 | — | 160 | |||||||||||
Depreciation of property, plant and equipment | 31 | 4 | 8 | 43 | |||||||||||
OIBDA | 522 | 122 | (114 | ) | 530 | ||||||||||
June 30, 2018 | |||||||||||||||
Revenue | $ | 2,497 | $ | 476 | $ | (7 | ) | $ | 2,966 | ||||||
Operating income (loss) | 276 | 45 | (120 | ) | 201 | ||||||||||
Amortization of intangible assets | 113 | 51 | — | 164 | |||||||||||
Depreciation of property, plant and equipment | 26 | 5 | 10 | 41 | |||||||||||
OIBDA | 415 | 101 | (110 | ) | 406 |
• | 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. |
Fair Value Measurements as of June 30, 2019 | |||||||||||||||
(Level 1) | (Level 2) | (Level 3) | Total | ||||||||||||
(in millions) | |||||||||||||||
Other Current Assets: | |||||||||||||||
Foreign Currency Forward Exchange Contracts (a) | $ | — | $ | 1 | $ | — | $ | 1 | |||||||
Other Current Liabilities: | |||||||||||||||
Contractual Obligations (b) | — | — | (3 | ) | (3 | ) | |||||||||
Other Noncurrent Assets: | |||||||||||||||
Equity Method Investment (d) | — | 45 | — | 45 | |||||||||||
Other Noncurrent Liabilities: | |||||||||||||||
Contractual Obligations (b) | — | — | (6 | ) | (6 | ) | |||||||||
Interest Rate Swap (c) | — | (11 | ) | — | (11 | ) | |||||||||
Total | $ | — | $ | 35 | $ | (9 | ) | $ | 26 |
Fair Value Measurements as of September 30, 2018 | |||||||||||||||
(Level 1) | (Level 2) | (Level 3) | Total | ||||||||||||
(in millions) | |||||||||||||||
Other Current Liabilities: | |||||||||||||||
Contractual Obligations (b) | $ | — | $ | — | $ | (2 | ) | $ | (2 | ) | |||||
Other Noncurrent Assets: | |||||||||||||||
Interest Rate Swap (c) | — | 4 | — | 4 | |||||||||||
Other Noncurrent Liabilities: | |||||||||||||||
Contractual Obligations (b) | — | — | (6 | ) | (6 | ) | |||||||||
Total | $ | — | $ | 4 | $ | (8 | ) | $ | (4 | ) |
(a) | The fair value of foreign currency forward exchange contracts is based on dealer quotes of market forward rates and reflects the amount that the Company would receive or pay at their maturity dates for contracts involving the same currencies and maturity dates. |
(b) | 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. |
(c) | The fair value of the interest rate swap is based on dealer quotes of market forward rates and reflects the amount that the Company would receive or pay as of June 30, 2019 for contracts involving the same attributes and maturity dates. |
(d) | The fair value of equity method investment represents an equity method investment acquired during the nine months June 30, 2019 whereby the Company has elected the fair value option under ASC 825 – Financial Instruments. The valuation is based upon quoted prices in active markets and model-based valuation techniques to determine fair value. |
Total | |||
(in millions) | |||
Balance at September 30, 2018 | $ | (8 | ) |
Additions | (2 | ) | |
Reductions | — | ||
Payments | 1 | ||
Balance at June 30, 2019 | $ | (9 | ) |
WMG Acquisition Corp. (issuer) | Guarantor Subsidiaries | Non- Guarantor Subsidiaries | Eliminations | WMG Acquisition Corp. Consolidated | WMG Holdings Corp. | Warner Music Group Corp. | Eliminations | Warner Music Group Corp. Consolidated | |||||||||||||||||||||||||||
(in millions) | |||||||||||||||||||||||||||||||||||
Assets: | |||||||||||||||||||||||||||||||||||
Current assets: | |||||||||||||||||||||||||||||||||||
Cash and equivalents | $ | — | $ | 297 | $ | 244 | $ | — | $ | 541 | $ | — | $ | — | $ | — | $ | 541 | |||||||||||||||||
Accounts receivable, net | — | 331 | 413 | — | 744 | — | — | — | 744 | ||||||||||||||||||||||||||
Inventories | — | 13 | 54 | — | 67 | — | — | — | 67 | ||||||||||||||||||||||||||
Royalty advances expected to be recouped within one year | — | 103 | 68 | — | 171 | — | — | — | 171 | ||||||||||||||||||||||||||
Prepaid and other current assets | — | 10 | 47 | — | 57 | — | — | — | 57 | ||||||||||||||||||||||||||
Total current assets | — | 754 | 826 | — | 1,580 | — | — | — | 1,580 | ||||||||||||||||||||||||||
Due from (to) parent companies | 473 | (430 | ) | (43 | ) | — | — | — | — | — | — | ||||||||||||||||||||||||
Investments in and advances to consolidated subsidiaries | 2,409 | 2,394 | — | (4,803 | ) | — | 809 | 809 | (1,618 | ) | — | ||||||||||||||||||||||||
Royalty advances expected to be recouped after one year | — | 126 | 83 | — | 209 | — | — | — | 209 | ||||||||||||||||||||||||||
Property, plant and equipment, net | — | 195 | 101 | — | 296 | — | — | — | 296 | ||||||||||||||||||||||||||
Goodwill | — | 1,370 | 402 | — | 1,772 | — | — | — | 1,772 | ||||||||||||||||||||||||||
Intangible assets subject to amortization, net | — | 902 | 878 | — | 1,780 | — | — | — | 1,780 | ||||||||||||||||||||||||||
Intangible assets not subject to amortization | — | 71 | 82 | — | 153 | — | — | — | 153 | ||||||||||||||||||||||||||
Deferred tax assets, net | — | — | 7 | — | 7 | — | — | — | 7 | ||||||||||||||||||||||||||
Other assets | 5 | 124 | 29 | — | 158 | — | — | — | 158 | ||||||||||||||||||||||||||
Total assets | $ | 2,887 | $ | 5,506 | $ | 2,365 | $ | (4,803 | ) | $ | 5,955 | $ | 809 | $ | 809 | $ | (1,618 | ) | $ | 5,955 | |||||||||||||||
Liabilities and Deficit: | |||||||||||||||||||||||||||||||||||
Current liabilities: | |||||||||||||||||||||||||||||||||||
Accounts payable | $ | — | $ | 127 | $ | 81 | $ | — | $ | 208 | $ | — | $ | — | $ | — | $ | 208 | |||||||||||||||||
Accrued royalties | 5 | 803 | 769 | — | 1,577 | — | — | — | 1,577 | ||||||||||||||||||||||||||
Accrued liabilities | — | 234 | 214 | — | 448 | — | — | — | 448 | ||||||||||||||||||||||||||
Accrued interest | 18 | — | — | — | 18 | — | — | — | 18 | ||||||||||||||||||||||||||
Deferred revenue | — | 51 | 119 | — | 170 | — | — | — | 170 | ||||||||||||||||||||||||||
Other current liabilities | — | 42 | 81 | — | 123 | — | — | — | 123 | ||||||||||||||||||||||||||
Total current liabilities | 23 | 1,257 | 1,264 | — | 2,544 | — | — | — | 2,544 | ||||||||||||||||||||||||||
Long-term debt | 3,006 | — | — | — | 3,006 | — | — | — | 3,006 | ||||||||||||||||||||||||||
Deferred tax liabilities, net | — | 61 | 175 | — | 236 | — | — | — | 236 | ||||||||||||||||||||||||||
Other noncurrent liabilities | 10 | 182 | 110 | — | 302 | — | — | — | 302 | ||||||||||||||||||||||||||
Total liabilities | 3,039 | 1,500 | 1,549 | — | 6,088 | — | — | — | 6,088 | ||||||||||||||||||||||||||
Total Warner Music Group Corp. (deficit) equity | (152 | ) | 4,002 | 801 | (4,803 | ) | (152 | ) | 809 | 809 | (1,618 | ) | (152 | ) | |||||||||||||||||||||
Noncontrolling interest | — | 4 | 15 | — | 19 | — | — | — | 19 | ||||||||||||||||||||||||||
Total equity | (152 | ) | 4,006 | 816 | (4,803 | ) | (133 | ) | 809 | 809 | (1,618 | ) | (133 | ) | |||||||||||||||||||||
Total liabilities and equity | $ | 2,887 | $ | 5,506 | $ | 2,365 | $ | (4,803 | ) | $ | 5,955 | $ | 809 | $ | 809 | $ | (1,618 | ) | $ | 5,955 |
WMG Acquisition Corp. (issuer) | Guarantor Subsidiaries | Non- Guarantor Subsidiaries | Eliminations | WMG Acquisition Corp. Consolidated | WMG Holdings Corp. | Warner Music Group Corp. | Eliminations | Warner Music Group Corp. Consolidated | |||||||||||||||||||||||||||
(in millions) | |||||||||||||||||||||||||||||||||||
Assets: | |||||||||||||||||||||||||||||||||||
Current assets: | |||||||||||||||||||||||||||||||||||
Cash and equivalents | $ | — | $ | 169 | $ | 345 | $ | — | $ | 514 | $ | — | $ | — | $ | — | $ | 514 | |||||||||||||||||
Accounts receivable, net | — | 262 | 185 | — | 447 | — | — | — | 447 | ||||||||||||||||||||||||||
Inventories | — | 18 | 24 | — | 42 | — | — | — | 42 | ||||||||||||||||||||||||||
Royalty advances expected to be recouped within one year | — | 79 | 44 | — | 123 | — | — | — | 123 | ||||||||||||||||||||||||||
Prepaid and other current assets | — | 15 | 35 | — | 50 | — | — | — | 50 | ||||||||||||||||||||||||||
Total current assets | — | 543 | 633 | — | 1,176 | — | — | — | 1,176 | ||||||||||||||||||||||||||
Due from (to) parent companies | 488 | (214 | ) | (274 | ) | — | — | — | — | — | — | ||||||||||||||||||||||||
Investments in and advances to consolidated subsidiaries | 2,018 | 2,192 | — | (4,210 | ) | — | 675 | 675 | (1,350 | ) | — | ||||||||||||||||||||||||
Royalty advances expected to be recouped after one year | — | 93 | 60 | — | 153 | — | — | — | 153 | ||||||||||||||||||||||||||
Property, plant and equipment, net | — | 155 | 74 | — | 229 | — | — | — | 229 | ||||||||||||||||||||||||||
Goodwill | — | 1,370 | 322 | — | 1,692 | — | — | — | 1,692 | ||||||||||||||||||||||||||
Intangible assets subject to amortization, net | — | 956 | 895 | — | 1,851 | — | — | — | 1,851 | ||||||||||||||||||||||||||
Intangible assets not subject to amortization | — | 71 | 83 | — | 154 | — | — | — | 154 | ||||||||||||||||||||||||||
Deferred tax assets, net | — | — | 11 | — | 11 | — | — | — | 11 | ||||||||||||||||||||||||||
Other assets | 12 | 55 | 11 | — | 78 | — | — | — | 78 | ||||||||||||||||||||||||||
Total assets | $ | 2,518 | $ | 5,221 | $ | 1,815 | $ | (4,210 | ) | $ | 5,344 | $ | 675 | $ | 675 | $ | (1,350 | ) | $ | 5,344 | |||||||||||||||
Liabilities and Deficit: | |||||||||||||||||||||||||||||||||||
Current liabilities: | |||||||||||||||||||||||||||||||||||
Accounts payable | $ | — | $ | 200 | $ | 81 | $ | — | $ | 281 | $ | — | $ | — | $ | — | $ | 281 | |||||||||||||||||
Accrued royalties | — | 869 | 527 | — | 1,396 | — | — | — | 1,396 | ||||||||||||||||||||||||||
Accrued liabilities | — | 195 | 228 | — | 423 | — | — | — | 423 | ||||||||||||||||||||||||||
Accrued interest | 31 | — | — | — | 31 | — | — | — | 31 | ||||||||||||||||||||||||||
Deferred revenue | — | 94 | 114 | — | 208 | — | — | — | 208 | ||||||||||||||||||||||||||
Other current liabilities | — | 2 | 32 | — | 34 | — | — | — | 34 | ||||||||||||||||||||||||||
Total current liabilities | 31 | 1,360 | 982 | — | 2,373 | — | — | — | 2,373 | ||||||||||||||||||||||||||
Long-term debt | 2,819 | — | — | — | 2,819 | — | — | — | 2,819 | ||||||||||||||||||||||||||
Deferred tax liabilities, net | — | 3 | 162 | — | 165 | — | — | — | 165 | ||||||||||||||||||||||||||
Other noncurrent liabilities | 2 | 197 | 108 | — | 307 | — | — | — | 307 | ||||||||||||||||||||||||||
Total liabilities | 2,852 | 1,560 | 1,252 | — | 5,664 | — | — | — | 5,664 | ||||||||||||||||||||||||||
Total Warner Music Group Corp. (deficit) equity | (334 | ) | 3,656 | 554 | (4,210 | ) | (334 | ) | 675 | 675 | (1,350 | ) | (334 | ) | |||||||||||||||||||||
Noncontrolling interest | — | 5 | 9 | — | 14 | — | — | — | 14 | ||||||||||||||||||||||||||
Total equity | (334 | ) | 3,661 | 563 | (4,210 | ) | (320 | ) | 675 | 675 | (1,350 | ) | (320 | ) | |||||||||||||||||||||
Total liabilities and equity | $ | 2,518 | $ | 5,221 | $ | 1,815 | $ | (4,210 | ) | $ | 5,344 | $ | 675 | $ | 675 | $ | (1,350 | ) | $ | 5,344 |
WMG Acquisition Corp. (issuer) | Guarantor Subsidiaries | Non- Guarantor Subsidiaries | Eliminations | WMG Acquisition Corp. Consolidated | WMG Holdings Corp. | Warner Music Group Corp. | Eliminations | Warner Music Group Corp. Consolidated | |||||||||||||||||||||||||||
(in millions) | |||||||||||||||||||||||||||||||||||
Revenue | $ | — | $ | 410 | $ | 760 | $ | (112 | ) | $ | 1,058 | $ | — | $ | — | $ | — | $ | 1,058 | ||||||||||||||||
Costs and expenses: | |||||||||||||||||||||||||||||||||||
Cost of revenue | — | (216 | ) | (442 | ) | 81 | (577 | ) | — | — | — | (577 | ) | ||||||||||||||||||||||
Selling, general and administrative expenses | — | (198 | ) | (203 | ) | 29 | (372 | ) | — | — | — | (372 | ) | ||||||||||||||||||||||
Amortization of intangible assets | — | (24 | ) | (27 | ) | — | (51 | ) | — | — | — | (51 | ) | ||||||||||||||||||||||
Total costs and expenses | — | (438 | ) | (672 | ) | 110 | (1,000 | ) | — | — | — | (1,000 | ) | ||||||||||||||||||||||
Operating income (loss) | — | (28 | ) | 88 | (2 | ) | 58 | — | — | — | 58 | ||||||||||||||||||||||||
Loss on extinguishment of debt | (4 | ) | — | — | — | (4 | ) | — | — | — | (4 | ) | |||||||||||||||||||||||
Interest expense, net | (30 | ) | — | (6 | ) | — | (36 | ) | — | — | — | (36 | ) | ||||||||||||||||||||||
Equity gains from equity method investments | 43 | 58 | — | (101 | ) | — | 13 | 13 | (26 | ) | — | ||||||||||||||||||||||||
Other (expense) income, net | (8 | ) | 37 | (45 | ) | — | (16 | ) | — | — | — | (16 | ) | ||||||||||||||||||||||
Income before income taxes | 1 | 67 | 37 | (103 | ) | 2 | 13 | 13 | (26 | ) | 2 | ||||||||||||||||||||||||
Income tax benefit | 12 | 15 | 9 | (24 | ) | 12 | — | — | — | 12 | |||||||||||||||||||||||||
Net income | 13 | 82 | 46 | (127 | ) | 14 | 13 | 13 | (26 | ) | 14 | ||||||||||||||||||||||||
Less: income attributable to noncontrolling interest | — | — | (1 | ) | — | (1 | ) | — | — | — | (1 | ) | |||||||||||||||||||||||
Net income attributable to Warner Music Group Corp. | $ | 13 | $ | 82 | $ | 45 | $ | (127 | ) | $ | 13 | $ | 13 | $ | 13 | $ | (26 | ) | $ | 13 |
WMG Acquisition Corp. (issuer) | Guarantor Subsidiaries | Non- Guarantor Subsidiaries | Eliminations | WMG Acquisition Corp. Consolidated | WMG Holdings Corp. | Warner Music Group Corp. | Eliminations | Warner Music Group Corp. Consolidated | |||||||||||||||||||||||||||
(in millions) | |||||||||||||||||||||||||||||||||||
Revenue | $ | — | $ | 544 | $ | 533 | $ | (119 | ) | $ | 958 | $ | — | $ | — | $ | — | $ | 958 | ||||||||||||||||
Costs and expenses: | |||||||||||||||||||||||||||||||||||
Cost of revenue | — | (261 | ) | (346 | ) | 76 | (531 | ) | — | — | — | (531 | ) | ||||||||||||||||||||||
Selling, general and administrative expenses | — | (252 | ) | (133 | ) | 42 | (343 | ) | — | — | — | (343 | ) | ||||||||||||||||||||||
Amortization of intangible assets | — | (23 | ) | (33 | ) | — | (56 | ) | — | — | — | (56 | ) | ||||||||||||||||||||||
Total costs and expenses | — | (536 | ) | (512 | ) | 118 | (930 | ) | — | — | — | (930 | ) | ||||||||||||||||||||||
Operating income (loss) | — | 8 | 21 | (1 | ) | 28 | — | — | — | 28 | |||||||||||||||||||||||||
Loss on extinguishment of debt | (7 | ) | — | — | — | (7 | ) | — | — | — | (7 | ) | |||||||||||||||||||||||
Interest (expense) income, net | (27 | ) | 2 | (8 | ) | — | (33 | ) | — | — | — | (33 | ) | ||||||||||||||||||||||
Equity gains from equity method investments | 39 | 23 | — | (62 | ) | — | 320 | 320 | (640 | ) | — | ||||||||||||||||||||||||
Other income (expense), net | 376 | (1 | ) | 19 | — | 394 | — | — | — | 394 | |||||||||||||||||||||||||
Income before income taxes | 381 | 32 | 32 | (63 | ) | 382 | 320 | 320 | (640 | ) | 382 | ||||||||||||||||||||||||
Income tax (expense) benefit | (61 | ) | (62 | ) | 7 | 55 | (61 | ) | — | — | — | (61 | ) | ||||||||||||||||||||||
Net income (loss) | 320 | (30 | ) | 39 | (8 | ) | 321 | 320 | 320 | (640 | ) | 321 | |||||||||||||||||||||||
Less: income attributable to noncontrolling interest | — | — | (1 | ) | — | (1 | ) | — | — | — | (1 | ) | |||||||||||||||||||||||
Net income (loss) attributable to Warner Music Group Corp. | $ | 320 | $ | (30 | ) | $ | 38 | $ | (8 | ) | $ | 320 | $ | 320 | $ | 320 | $ | (640 | ) | $ | 320 |
WMG Acquisition Corp. (issuer) | Guarantor Subsidiaries | Non- Guarantor Subsidiaries | Eliminations | WMG Acquisition Corp. Consolidated | WMG Holdings Corp. | Warner Music Group Corp. | Eliminations | Warner Music Group Corp. Consolidated | |||||||||||||||||||||||||||
(in millions) | |||||||||||||||||||||||||||||||||||
Revenue | $ | — | $ | 1,352 | $ | 2,286 | $ | (287 | ) | $ | 3,351 | $ | — | $ | — | $ | — | $ | 3,351 | ||||||||||||||||
Costs and expenses: | |||||||||||||||||||||||||||||||||||
Cost of revenue | — | (653 | ) | (1,338 | ) | 229 | (1,762 | ) | — | — | — | (1,762 | ) | ||||||||||||||||||||||
Selling, general and administrative expenses | — | (573 | ) | (586 | ) | 57 | (1,102 | ) | — | — | — | (1,102 | ) | ||||||||||||||||||||||
Amortization of intangible assets | — | (74 | ) | (86 | ) | — | (160 | ) | — | — | — | (160 | ) | ||||||||||||||||||||||
Total costs and expenses | — | (1,300 | ) | (2,010 | ) | 286 | (3,024 | ) | — | — | — | (3,024 | ) | ||||||||||||||||||||||
Operating income | — | 52 | 276 | (1 | ) | 327 | — | — | — | 327 | |||||||||||||||||||||||||
Loss on extinguishment of debt | (7 | ) | — | — | — | (7 | ) | — | — | — | (7 | ) | |||||||||||||||||||||||
Interest (expense) income, net | (92 | ) | 2 | (18 | ) | — | (108 | ) | — | — | — | (108 | ) | ||||||||||||||||||||||
Equity gains from equity method investments | 345 | 201 | — | (546 | ) | — | 166 | 166 | (332 | ) | — | ||||||||||||||||||||||||
Other income (expense), net | 6 | 107 | (72 | ) | — | 41 | — | — | — | 41 | |||||||||||||||||||||||||
Income before income taxes | 252 | 362 | 186 | (547 | ) | 253 | 166 | 166 | (332 | ) | 253 | ||||||||||||||||||||||||
Income tax expense | (86 | ) | (79 | ) | (41 | ) | 120 | (86 | ) | — | — | — | (86 | ) | |||||||||||||||||||||
Net income | 166 | 283 | 145 | (427 | ) | 167 | 166 | 166 | (332 | ) | 167 | ||||||||||||||||||||||||
Less: income attributable to noncontrolling interest | — | — | (1 | ) | — | (1 | ) | — | — | — | (1 | ) | |||||||||||||||||||||||
Net income attributable to Warner Music Group Corp. | $ | 166 | $ | 283 | $ | 144 | $ | (427 | ) | $ | 166 | $ | 166 | $ | 166 | $ | (332 | ) | $ | 166 |
WMG Acquisition Corp. (issuer) | Guarantor Subsidiaries | Non- Guarantor Subsidiaries | Eliminations | WMG Acquisition Corp. Consolidated | WMG Holdings Corp. | Warner Music Group Corp. | Eliminations | Warner Music Group Corp. Consolidated | |||||||||||||||||||||||||||
(in millions) | |||||||||||||||||||||||||||||||||||
Revenue | $ | — | $ | 1,626 | $ | 1,703 | $ | (363 | ) | $ | 2,966 | $ | — | $ | — | $ | — | $ | 2,966 | ||||||||||||||||
Costs and expenses: | |||||||||||||||||||||||||||||||||||
Cost of revenue | — | (760 | ) | (1,066 | ) | 238 | (1,588 | ) | — | — | — | (1,588 | ) | ||||||||||||||||||||||
Selling, general and administrative expenses | — | (731 | ) | (406 | ) | 124 | (1,013 | ) | — | — | — | (1,013 | ) | ||||||||||||||||||||||
Amortization of intangible assets | — | (70 | ) | (94 | ) | — | (164 | ) | — | — | — | (164 | ) | ||||||||||||||||||||||
Total costs and expenses | — | (1,561 | ) | (1,566 | ) | 362 | (2,765 | ) | — | — | — | (2,765 | ) | ||||||||||||||||||||||
Operating income | — | 65 | 137 | (1 | ) | 201 | — | — | — | 201 | |||||||||||||||||||||||||
Loss on extinguishment of debt | (31 | ) | — | — | — | (31 | ) | — | — | — | (31 | ) | |||||||||||||||||||||||
Interest (expense) income, net | (87 | ) | 3 | (21 | ) | — | (105 | ) | — | — | — | (105 | ) | ||||||||||||||||||||||
Equity gains from equity method investments | 195 | 99 | — | (294 | ) | — | 321 | 321 | (642 | ) | — | ||||||||||||||||||||||||
Other income, net | 376 | 8 | 8 | — | 392 | — | — | — | 392 | ||||||||||||||||||||||||||
Income before income taxes | 453 | 175 | 124 | (295 | ) | 457 | 321 | 321 | (642 | ) | 457 | ||||||||||||||||||||||||
Income tax expense | (132 | ) | (131 | ) | (21 | ) | 152 | (132 | ) | — | — | — | (132 | ) | |||||||||||||||||||||
Net income | 321 | 44 | 103 | (143 | ) | 325 | 321 | 321 | (642 | ) | 325 | ||||||||||||||||||||||||
Less: income attributable to noncontrolling interest | — | (1 | ) | (3 | ) | — | (4 | ) | — | — | — | (4 | ) | ||||||||||||||||||||||
Net income attributable to Warner Music Group Corp. | $ | 321 | $ | 43 | $ | 100 | $ | (143 | ) | $ | 321 | $ | 321 | $ | 321 | $ | (642 | ) | $ | 321 |
WMG Acquisition Corp. (issuer) | Guarantor Subsidiaries | Non- Guarantor Subsidiaries | Eliminations | WMG Acquisition Corp. Consolidated | WMG Holdings Corp. | Warner Music Group Corp. | Eliminations | Warner Music Group Corp. Consolidated | |||||||||||||||||||||||||||
(in millions) | |||||||||||||||||||||||||||||||||||
Net income | $ | 13 | $ | 82 | $ | 46 | $ | (127 | ) | $ | 14 | $ | 13 | $ | 13 | $ | (26 | ) | $ | 14 | |||||||||||||||
Other comprehensive income (loss), net of tax: | |||||||||||||||||||||||||||||||||||
Foreign currency adjustment | 9 | — | (9 | ) | 9 | 9 | 10 | 10 | (20 | ) | 9 | ||||||||||||||||||||||||
Deferred (loss) gains on derivatives | (3 | ) | — | 1 | (1 | ) | (3 | ) | (3 | ) | (3 | ) | 6 | (3 | ) | ||||||||||||||||||||
Other comprehensive income (loss), net of tax: | 6 | — | (8 | ) | 8 | 6 | 7 | 7 | (14 | ) | 6 | ||||||||||||||||||||||||
Total comprehensive income | 19 | 82 | 38 | (119 | ) | 20 | 20 | 20 | (40 | ) | 20 | ||||||||||||||||||||||||
Less: income attributable to noncontrolling interest | — | — | (1 | ) | — | (1 | ) | — | — | — | (1 | ) | |||||||||||||||||||||||
Comprehensive income attributable to Warner Music Group Corp. | $ | 19 | $ | 82 | $ | 37 | $ | (119 | ) | $ | 19 | $ | 20 | $ | 20 | $ | (40 | ) | $ | 19 |
WMG Acquisition Corp. (issuer) | Guarantor Subsidiaries | Non- Guarantor Subsidiaries | Eliminations | WMG Acquisition Corp. Consolidated | WMG Holdings Corp. | Warner Music Group Corp. | Eliminations | Warner Music Group Corp. Consolidated | |||||||||||||||||||||||||||
(in millions) | |||||||||||||||||||||||||||||||||||
Net income (loss) | $ | 320 | $ | (30 | ) | $ | 39 | $ | (8 | ) | $ | 321 | $ | 320 | $ | 320 | $ | (640 | ) | $ | 321 | ||||||||||||||
Other comprehensive (loss) income, net of tax: | |||||||||||||||||||||||||||||||||||
Foreign currency adjustment | (31 | ) | — | 31 | (31 | ) | (31 | ) | (31 | ) | (31 | ) | 62 | (31 | ) | ||||||||||||||||||||
Deferred loss on derivatives | (3 | ) | — | — | — | (3 | ) | (3 | ) | (3 | ) | 6 | (3 | ) | |||||||||||||||||||||
Other comprehensive (loss) income, net of tax: | (34 | ) | — | 31 | (31 | ) | (34 | ) | (34 | ) | (34 | ) | 68 | (34 | ) | ||||||||||||||||||||
Total comprehensive income (loss) | 286 | (30 | ) | 70 | (39 | ) | 287 | 286 | 286 | (572 | ) | 287 | |||||||||||||||||||||||
Less: income attributable to noncontrolling interest | — | — | (1 | ) | — | (1 | ) | — | — | — | (1 | ) | |||||||||||||||||||||||
Comprehensive income (loss) attributable to Warner Music Group Corp. | $ | 286 | $ | (30 | ) | $ | 69 | $ | (39 | ) | $ | 286 | $ | 286 | $ | 286 | $ | (572 | ) | $ | 286 |
WMG Acquisition Corp. (issuer) | Guarantor Subsidiaries | Non- Guarantor Subsidiaries | Eliminations | WMG Acquisition Corp. Consolidated | WMG Holdings Corp. | Warner Music Group Corp. | Eliminations | Warner Music Group Corp. Consolidated | |||||||||||||||||||||||||||
(in millions) | |||||||||||||||||||||||||||||||||||
Net income | $ | 166 | $ | 283 | $ | 145 | $ | (427 | ) | $ | 167 | $ | 166 | $ | 166 | $ | (332 | ) | $ | 167 | |||||||||||||||
Other comprehensive (loss) income, net of tax: | |||||||||||||||||||||||||||||||||||
Foreign currency adjustment | (17 | ) | — | 17 | (17 | ) | (17 | ) | (19 | ) | (19 | ) | 38 | (17 | ) | ||||||||||||||||||||
Deferred loss on derivatives | (12 | ) | — | (1 | ) | 1 | (12 | ) | (12 | ) | (12 | ) | 24 | (12 | ) | ||||||||||||||||||||
Other comprehensive (loss) income, net of tax: | (29 | ) | — | 16 | (16 | ) | (29 | ) | (31 | ) | (31 | ) | 62 | (29 | ) | ||||||||||||||||||||
Total comprehensive income | 137 | 283 | 161 | (443 | ) | 138 | 135 | 135 | (270 | ) | 138 | ||||||||||||||||||||||||
Less: income attributable to noncontrolling interest | — | — | (1 | ) | — | (1 | ) | — | — | — | (1 | ) | |||||||||||||||||||||||
Comprehensive income attributable to Warner Music Group Corp. | $ | 137 | $ | 283 | $ | 160 | $ | (443 | ) | $ | 137 | $ | 135 | $ | 135 | $ | (270 | ) | $ | 137 |
WMG Acquisition Corp. (issuer) | Guarantor Subsidiaries | Non- Guarantor Subsidiaries | Eliminations | WMG Acquisition Corp. Consolidated | WMG Holdings Corp. | Warner Music Group Corp. | Eliminations | Warner Music Group Corp. Consolidated | |||||||||||||||||||||||||||
(in millions) | |||||||||||||||||||||||||||||||||||
Net income | $ | 321 | $ | 44 | $ | 103 | $ | (143 | ) | $ | 325 | $ | 321 | $ | 321 | $ | (642 | ) | $ | 325 | |||||||||||||||
Other comprehensive (loss) income, net of tax: | |||||||||||||||||||||||||||||||||||
Foreign currency adjustment | (13 | ) | — | 13 | (13 | ) | (13 | ) | (13 | ) | (13 | ) | 26 | (13 | ) | ||||||||||||||||||||
Deferred loss on derivatives | (1 | ) | — | — | — | (1 | ) | (1 | ) | (1 | ) | 2 | (1 | ) | |||||||||||||||||||||
Other comprehensive (loss) income, net of tax: | (14 | ) | — | 13 | (13 | ) | (14 | ) | (14 | ) | (14 | ) | 28 | (14 | ) | ||||||||||||||||||||
Total comprehensive income | 307 | 44 | 116 | (156 | ) | 311 | 307 | 307 | (614 | ) | 311 | ||||||||||||||||||||||||
Less: income attributable to noncontrolling interest | — | (1 | ) | (3 | ) | — | (4 | ) | — | — | — | (4 | ) | ||||||||||||||||||||||
Comprehensive income attributable to Warner Music Group Corp. | $ | 307 | $ | 43 | $ | 113 | $ | (156 | ) | $ | 307 | $ | 307 | $ | 307 | $ | (614 | ) | $ | 307 |
WMG Acquisition Corp. (issuer) | Guarantor Subsidiaries | Non- Guarantor Subsidiaries | Eliminations | WMG Acquisition Corp. Consolidated | WMG Holdings Corp. | Warner Music Group Corp. | Eliminations | Warner Music Group Corp. Consolidated | |||||||||||||||||||||||||||
(in millions) | |||||||||||||||||||||||||||||||||||
Cash flows from operating activities | |||||||||||||||||||||||||||||||||||
Net income | $ | 166 | $ | 283 | $ | 145 | $ | (427 | ) | $ | 167 | $ | 166 | $ | 166 | $ | (332 | ) | $ | 167 | |||||||||||||||
Adjustments to reconcile net income to net cash provided by operating activities: | |||||||||||||||||||||||||||||||||||
Depreciation and amortization | — | 103 | 100 | — | 203 | — | — | — | 203 | ||||||||||||||||||||||||||
Unrealized gains and remeasurement of foreign denominated loans | (5 | ) | (1 | ) | — | — | (6 | ) | — | — | — | (6 | ) | ||||||||||||||||||||||
Deferred income taxes | — | — | 25 | 25 | 25 | ||||||||||||||||||||||||||||||
Loss on extinguishment of debt | 7 | — | — | — | 7 | — | — | — | 7 | ||||||||||||||||||||||||||
Net gain on investments | — | (25 | ) | (2 | ) | — | (27 | ) | — | — | — | (27 | ) | ||||||||||||||||||||||
Non-cash interest expense | 5 | — | — | — | 5 | — | — | — | 5 | ||||||||||||||||||||||||||
Equity-based compensation expense | — | 28 | — | — | 28 | — | — | — | 28 | ||||||||||||||||||||||||||
Equity gains, including distributions | (345 | ) | (201 | ) | — | 546 | — | (166 | ) | (166 | ) | 332 | — | ||||||||||||||||||||||
Changes in operating assets and liabilities: | |||||||||||||||||||||||||||||||||||
Accounts receivable, net | — | 11 | (61 | ) | — | (50 | ) | — | — | — | (50 | ) | |||||||||||||||||||||||
Inventories | — | 5 | 7 | — | 12 | — | — | — | 12 | ||||||||||||||||||||||||||
Royalty advances | — | (57 | ) | (50 | ) | — | (107 | ) | — | — | — | (107 | ) | ||||||||||||||||||||||
Accounts payable and accrued liabilities | — | 239 | (214 | ) | (119 | ) | (94 | ) | — | — | — | (94 | ) | ||||||||||||||||||||||
Royalty payables | 5 | (82 | ) | 194 | — | 117 | — | — | — | 117 | |||||||||||||||||||||||||
Accrued interest | (13 | ) | — | — | — | (13 | ) | — | — | — | (13 | ) | |||||||||||||||||||||||
Deferred revenue | — | (45 | ) | 28 | — | (17 | ) | — | — | — | (17 | ) | |||||||||||||||||||||||
Other balance sheet changes | 3 | 54 | (58 | ) | — | (1 | ) | — | — | — | (1 | ) | |||||||||||||||||||||||
Net cash (used in) provided by operating activities | (177 | ) | 312 | 114 | — | 249 | — | — | — | 249 | |||||||||||||||||||||||||
Cash flows from investing activities | |||||||||||||||||||||||||||||||||||
Acquisition of music publishing rights, net | — | (19 | ) | (5 | ) | — | (24 | ) | — | — | — | (24 | ) | ||||||||||||||||||||||
Capital expenditures | — | (70 | ) | (12 | ) | — | (82 | ) | — | — | — | (82 | ) | ||||||||||||||||||||||
Investments and acquisitions of businesses, net | — | (40 | ) | (194 | ) | — | (234 | ) | — | — | — | (234 | ) | ||||||||||||||||||||||
Advances from issuer | (8 | ) | — | — | 8 | — | — | — | — | — | |||||||||||||||||||||||||
Net cash used in investing activities | (8 | ) | (129 | ) | (211 | ) | 8 | (340 | ) | — | — | — | (340 | ) | |||||||||||||||||||||
Cash flows from financing activities | |||||||||||||||||||||||||||||||||||
Proceeds from issuance of Acquisition Corp. 3.625% Sr Secured Notes due 2026 | 514 | — | — | — | 514 | — | — | — | 514 | ||||||||||||||||||||||||||
Repayment of Acquisition Corp. 4.125% Senior Secured Notes | (40 | ) | — | — | — | (40 | ) | — | — | — | (40 | ) | |||||||||||||||||||||||
Repayment of Acquisition Corp. 4.875% Senior Secured Notes | (30 | ) | — | — | — | (30 | ) | — | — | — | (30 | ) | |||||||||||||||||||||||
Repayment of Acquisition Corp. 5.625% Senior Secured Notes | (247 | ) | — | — | — | (247 | ) | — | — | — | (247 | ) | |||||||||||||||||||||||
Call premiums paid and deposit on early redemption of debt | (5 | ) | — | — | — | (5 | ) | — | — | — | (5 | ) | |||||||||||||||||||||||
Deferred financing costs paid | (7 | ) | — | — | — | (7 | ) | — | — | — | (7 | ) | |||||||||||||||||||||||
Distribution to noncontrolling interest holder | — | — | (3 | ) | — | (3 | ) | — | — | — | (3 | ) | |||||||||||||||||||||||
Dividends paid | — | (63 | ) | — | — | (63 | ) | — | — | — | (63 | ) | |||||||||||||||||||||||
Change in due to (from) issuer | — | 8 | — | (8 | ) | — | — | — | — | — | |||||||||||||||||||||||||
Net cash provided by (used in) financing activities | 185 | (55 | ) | (3 | ) | (8 | ) | 119 | — | — | — | 119 | |||||||||||||||||||||||
Effect of exchange rate changes on cash and equivalents | — | — | (1 | ) | — | (1 | ) | — | — | — | (1 | ) | |||||||||||||||||||||||
Net increase (decrease) in cash and equivalents | — | 128 | (101 | ) | — | 27 | — | — | — | 27 | |||||||||||||||||||||||||
Cash and equivalents at beginning of period | — | 169 | 345 | — | 514 | — | — | — | 514 | ||||||||||||||||||||||||||
Cash and equivalents at end of period | $ | — | $ | 297 | $ | 244 | $ | — | $ | 541 | $ | — | $ | — | $ | — | $ | 541 |
WMG Acquisition Corp. (issuer) | Guarantor Subsidiaries | Non- Guarantor Subsidiaries | Eliminations | WMG Acquisition Corp. Consolidated | WMG Holdings Corp. | Warner Music Group Corp. | Eliminations | Warner Music Group Corp. Consolidated | |||||||||||||||||||||||||||
(in millions) | |||||||||||||||||||||||||||||||||||
Cash flows from operating activities | |||||||||||||||||||||||||||||||||||
Net income | $ | 321 | $ | 44 | $ | 103 | $ | (143 | ) | $ | 325 | $ | 321 | $ | 321 | $ | (642 | ) | $ | 325 | |||||||||||||||
Adjustments to reconcile net income to net cash provided by operating activities: | |||||||||||||||||||||||||||||||||||
Depreciation and amortization | — | 101 | 104 | — | 205 | — | — | — | 205 | ||||||||||||||||||||||||||
Unrealized (gains) losses and remeasurement of foreign denominated loans | (5 | ) | (3 | ) | 2 | — | (6 | ) | — | — | — | (6 | ) | ||||||||||||||||||||||
Deferred income taxes | — | — | 105 | — | 105 | — | — | — | 105 | ||||||||||||||||||||||||||
Loss on extinguishment of debt | 31 | — | — | — | 31 | — | — | — | 31 | ||||||||||||||||||||||||||
Net (gain) loss on divestitures and investments | (503 | ) | 84 | 34 | — | (385 | ) | — | — | — | (385 | ) | |||||||||||||||||||||||
Non-cash interest expense | 5 | — | — | — | 5 | — | — | — | 5 | ||||||||||||||||||||||||||
Equity-based compensation expense | — | 52 | — | — | 52 | — | — | — | 52 | ||||||||||||||||||||||||||
Equity gains, including distributions | (195 | ) | (99 | ) | — | 294 | — | (321 | ) | (321 | ) | 642 | — | ||||||||||||||||||||||
Changes in operating assets and liabilities: | |||||||||||||||||||||||||||||||||||
Accounts receivable, net | — | (39 | ) | (4 | ) | — | (43 | ) | — | — | — | (43 | ) | ||||||||||||||||||||||
Inventories | — | (5 | ) | 4 | — | (1 | ) | — | — | — | (1 | ) | |||||||||||||||||||||||
Accounts payable and accrued liabilities | — | 256 | (189 | ) | (151 | ) | (84 | ) | — | — | — | (84 | ) | ||||||||||||||||||||||
Royalty payables | — | 32 | 81 | — | 113 | — | — | — | 113 | ||||||||||||||||||||||||||
Accrued interest | (22 | ) | — | — | — | (22 | ) | — | — | — | (22 | ) | |||||||||||||||||||||||
Deferred revenue | — | 30 | (30 | ) | — | — | — | — | — | — | |||||||||||||||||||||||||
Other balance sheet changes | (3 | ) | 82 | (109 | ) | — | (30 | ) | — | — | — | (30 | ) | ||||||||||||||||||||||
Net cash (used in) provided by operating activities | (371 | ) | 535 | 101 | — | 265 | — | — | — | 265 | |||||||||||||||||||||||||
Cash flows from investing activities | |||||||||||||||||||||||||||||||||||
Acquisition of music publishing rights, net | — | (7 | ) | (4 | ) | — | (11 | ) | — | — | — | (11 | ) | ||||||||||||||||||||||
Capital expenditures | — | (30 | ) | (10 | ) | — | (40 | ) | — | — | — | (40 | ) | ||||||||||||||||||||||
Investments and acquisitions of businesses, net | — | (14 | ) | — | — | (14 | ) | — | — | — | (14 | ) | |||||||||||||||||||||||
Proceeds from the sale of investments | 504 | 12 | — | — | 516 | — | — | — | 516 | ||||||||||||||||||||||||||
Advances from issuer | (108 | ) | — | — | 108 | — | — | — | — | — | |||||||||||||||||||||||||
Net cash provided by (used in) investing activities | 396 | (39 | ) | (14 | ) | 108 | 451 | — | — | — | 451 | ||||||||||||||||||||||||
Cash flows from financing activities | |||||||||||||||||||||||||||||||||||
Proceeds from issuance of Acquisition Corp. 5.50% Senior Notes | 325 | — | — | — | 325 | — | — | — | 325 | ||||||||||||||||||||||||||
Proceeds from supplement of Acquisition Corp. Senior Term Loan Facility | 320 | — | — | — | 320 | — | — | — | 320 | ||||||||||||||||||||||||||
Repayment of redemption deposit for Acquisition Corp. 6.75% Senior Notes | (635 | ) | — | — | — | (635 | ) | — | — | — | (635 | ) | |||||||||||||||||||||||
Call premiums paid on and redemption deposit for early redemption of debt | (23 | ) | — | — | — | (23 | ) | — | — | — | (23 | ) | |||||||||||||||||||||||
Deferred financing costs paid | (12 | ) | — | — | — | (12 | ) | — | — | — | (12 | ) | |||||||||||||||||||||||
Distribution to noncontrolling interest holder | — | — | (3 | ) | — | (3 | ) | — | — | — | (3 | ) | |||||||||||||||||||||||
Dividends paid | — | (397 | ) | (28 | ) | — | (425 | ) | — | — | — | (425 | ) | ||||||||||||||||||||||
Change in due to (from) issuer | — | 108 | — | (108 | ) | — | — | — | — | — | |||||||||||||||||||||||||
Net cash used in financing activities | (25 | ) | (289 | ) | (31 | ) | (108 | ) | (453 | ) | — | — | — | (453 | ) | ||||||||||||||||||||
Effect of exchange rate changes on cash and equivalents | — | — | (5 | ) | — | (5 | ) | — | — | — | (5 | ) | |||||||||||||||||||||||
Net increase in cash and equivalents | — | 207 | 51 | — | 258 | — | — | — | 258 | ||||||||||||||||||||||||||
Cash and equivalents at beginning of period | — | 347 | 300 | — | 647 | — | — | — | 647 | ||||||||||||||||||||||||||
Cash and equivalents at end of period | $ | — | $ | 554 | $ | 351 | $ | — | $ | 905 | $ | — | $ | — | $ | — | $ | 905 |
ITEM 2. | MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS |
• | the failure of the digital portion of the global recorded music industry to grow or grow at a significant rate to offset declines in the physical portion of the global recorded music industry; |
• | downward pressure on our pricing and our profit margins and reductions in shelf space; |
• | our ability to identify, sign and retain artists and songwriters and the existence or absence of superstar releases; |
• | threats to our business associated with digital piracy; |
• | the significant threat posed to our business and the music industry by organized industrial piracy; |
• | the popular demand for particular recording artists and/or songwriters and albums and the timely completion of albums by major recording artists and/or songwriters; |
• | the diversity and quality of our portfolio of songwriters; |
• | the diversity and quality of our album releases; |
• | the impact of legitimate channels for digital distribution of our creative content; |
• | our dependence on a limited number of digital music services for the online sale of our music recordings and their ability to significantly influence the pricing structure for online music stores; |
• | our involvement in intellectual property litigation; |
• | our ability to continue to enforce our intellectual property rights in digital environments; |
• | the ability to develop a successful business model applicable to a digital environment and to enter into artist services and expanded-rights deals with recording artists in order to broaden our revenue streams in growing segments of the music business; |
• | the impact of heightened and intensive competition in the recorded music and music publishing businesses and our inability to execute our business strategy; |
• | risks associated with our non-U.S. operations, including limited legal protections of our intellectual property rights and restrictions on the repatriation of capital; |
• | significant fluctuations in our operations, cash flows and valuation of our common stock from period to period; |
• | our inability to compete successfully in the highly competitive markets in which we operate; |
• | trends, developments or other events in some foreign countries in which we operate; |
• | local economic conditions in the countries in which we operate; |
• | our failure to attract and retain our executive officers and other key personnel; |
• | a significant portion of our revenues are subject to rate regulation either by government entities or by local third-party collection societies throughout the world and rates on other income streams may be set by governmental proceedings, which may limit our profitability; |
• | an impairment in the carrying value of goodwill or other intangible and long-lived assets; |
• | unfavorable currency exchange rate fluctuations; |
• | our failure to have full control and ability to direct the operations we conduct through joint ventures; |
• | legislation limiting the terms by which an individual can be bound under a “personal services” contract; |
• | a potential loss of catalog if it is determined that recording artists have a right to recapture rights in their recordings under the U.S. Copyright Act; |
• | trends that affect the end uses of our musical compositions (which include uses in broadcast radio and television, film and advertising businesses); |
• | the growth of other products that compete for the disposable income of consumers; |
• | the impact of, and risks inherent in, acquisitions or business combinations; |
• | risks inherent to our outsourcing of information technology (“IT”) infrastructure and certain finance and accounting functions; |
• | our ability to maintain the security of information relating to our customers, employees and vendors and our music-based content; |
• | the fact that we have engaged in substantial restructuring activities in the past, and may need to implement further restructurings in the future and our restructuring efforts may not be successful or generate expected cost-savings; |
• | the impact of our substantial leverage on our ability to raise additional capital to fund our operations, on our ability to react to changes in the economy or our industry and on our ability to meet our obligations under our indebtedness; |
• | the ability to generate sufficient cash to service all of our indebtedness, and the risk that we may be forced to take other actions to satisfy our obligations under our indebtedness, which may not be successful; |
• | the fact that our debt agreements contain restrictions that limit our flexibility in operating our business; |
• | our indebtedness levels, and the fact that we may be able to incur substantially more indebtedness, which may increase the risks created by our substantial indebtedness; |
• | the significant amount of cash required to service our indebtedness and the ability to generate cash or refinance indebtedness as it becomes due depends on many factors, some of which are beyond our control; |
• | risks of downgrade, suspension or withdrawal of the rating assigned by a rating agency to us could impact our cost of capital; |
• | risks relating to Access Industries, Inc. (“Access”), which, together with its affiliates, indirectly owns all of our outstanding capital stock, and controls our company and may have conflicts of interest with the holders of our debt or us in the future. Access may also enter into, or cause us to enter into, strategic transactions that could change the nature or structure of our business, capital structure or credit profile; |
• | risks related to evolving regulations concerning data privacy which might result in increased regulation and different industry standards; |
• | changes in law and government regulations, including as a result of the Tax Cuts and Jobs Act; and |
• | risks related to other factors discussed under “Risk Factors” of this Quarterly Report and in our Annual Report on Form 10-K for the fiscal year ended September 30, 2018. |
• | Overview. This section provides a general description of our business, as well as a discussion of factors that we believe are important in understanding our results of operations and financial condition and in anticipating future trends. |
• | Results of operations. This section provides an analysis of our results of operations for the three and nine months ended June 30, 2019 and June 30, 2018. This analysis is presented on both a consolidated and segment basis. |
• | Financial condition and liquidity. This section provides an analysis of our cash flows for the nine months ended June 30, 2019 and June 30, 2018 as well as a discussion of our financial condition and liquidity as of June 30, 2019. The discussion of our financial condition and liquidity includes a summary of the key debt covenant compliance measures under our debt agreements. |
• | Digital: the rightsholder receives revenues with respect to digital streaming and digital download services; |
• | Physical: the rightsholder receives revenues with respect to sales of physical products such as CDs, vinyl and DVDs; |
• | Artist services and expanded-rights: the rightsholder receives revenues with respect to artist services businesses and our participation in expanded-rights associated with our artists, including sponsorship, fan clubs, artist websites, merchandising, touring, concert promotion, ticketing and artist and brand management; and |
• | Licensing: the rightsholder receives royalties or fees for the right to use sound recordings in combination with visual images such as in films or television programs, television commercials and videogames; the rightsholder also receives royalties if sound recordings are performed publicly through broadcast of music on television, radio and cable, and in public spaces such as shops, workplaces, restaurants, bars and clubs. |
• | A&R costs—the costs associated with (i) paying royalties to artists, producers, songwriters, other copyright holders and trade unions; (ii) signing and developing artists; and (iii) creating master recordings in the studio; |
• | Product costs—the costs to manufacture, package and distribute products to wholesale and retail distribution outlets, the royalty costs associated with distributing products of independent labels to wholesale and retail distribution outlets, as well as the costs related to our artist services business; |
• | Selling and marketing expenses—the costs associated with the promotion and marketing of artists and recorded music products, including costs to produce music videos for promotional purposes and artist tour support; and |
• | General and administrative expenses—the costs associated with general overhead and other administrative expenses. |
• | Performance: the rightsholder receives revenues if the composition is performed publicly through broadcast of music on television, radio and cable, live performance at a concert or other venue (e.g., arena concerts and nightclubs), and performance of music in staged theatrical productions; |
• | Digital: the rightsholder receives revenues with respect to compositions embodied in recordings sold in digital streaming services, digital download services and digital performance; |
• | Mechanical: the rightsholder receives revenues with respect to compositions embodied in recordings sold in any physical format or configuration such as CDs, vinyl and DVDs; |
• | Synchronization: the rightsholder receives revenues for the right to use the composition in combination with visual images such as in films or television programs, television commercials and videogames as well as from other uses such as in toys or novelty items and merchandise; and |
• | Other: the rightsholder receives revenues for use in printed sheet music and other uses. |
• | A&R costs—the costs associated with (i) paying royalties to songwriters, co-publishers and other copyright holders in connection with income generated from the exploitation of their copyrighted works and (ii) signing and developing songwriters; and |
• | Selling and marketing, general overhead and other administrative expenses—the costs associated with selling and marketing, general overhead and other administrative expenses. |
For the Three Months Ended June 30, | 2019 vs. 2018 | |||||||||||||
2019 | 2018 | $ Change | % Change | |||||||||||
Revenue by Type | ||||||||||||||
Digital | $ | 584 | $ | 519 | $ | 65 | 13 | % | ||||||
Physical | 95 | 130 | (35 | ) | -27 | % | ||||||||
Total Digital and Physical | 679 | 649 | 30 | 5 | % | |||||||||
Artist services and expanded-rights | 158 | 85 | 73 | 86 | % | |||||||||
Licensing | 76 | 68 | 8 | 12 | % | |||||||||
Total Recorded Music | 913 | 802 | 111 | 14 | % | |||||||||
Performance | 36 | 51 | (15 | ) | -29 | % | ||||||||
Digital | 65 | 59 | 6 | 10 | % | |||||||||
Mechanical | 13 | 17 | (4 | ) | -24 | % | ||||||||
Synchronization | 29 | 28 | 1 | 4 | % | |||||||||
Other | 4 | 4 | — | — | % | |||||||||
Total Music Publishing | 147 | 159 | (12 | ) | -8 | % | ||||||||
Intersegment eliminations | (2 | ) | (3 | ) | 1 | -33 | % | |||||||
Total Revenue | $ | 1,058 | $ | 958 | $ | 100 | 10 | % | ||||||
Revenue by Geographical Location | ||||||||||||||
U.S. Recorded Music | $ | 395 | $ | 356 | $ | 39 | 11 | % | ||||||
U.S. Music Publishing | 71 | 69 | 2 | 3 | % | |||||||||
Total U.S. | 466 | 425 | 41 | 10 | % | |||||||||
International Recorded Music | 518 | 446 | 72 | 16 | % | |||||||||
International Music Publishing | 76 | 90 | (14 | ) | -16 | % | ||||||||
Total International | 594 | 536 | 58 | 11 | % | |||||||||
Intersegment eliminations | (2 | ) | (3 | ) | 1 | -33 | % | |||||||
Total Revenue | $ | 1,058 | $ | 958 | $ | 100 | 10 | % |
For the Three Months Ended June 30, | 2019 vs. 2018 | |||||||||||||
2019 | 2018 | $ Change | % Change | |||||||||||
Artist and repertoire costs | $ | 372 | $ | 366 | $ | 6 | 2 | % | ||||||
Product costs | 205 | 165 | 40 | 24 | % | |||||||||
Total cost of revenues | $ | 577 | $ | 531 | $ | 46 | 9 | % |
For the Three Months Ended June 30, | 2019 vs. 2018 | |||||||||||||
2019 | 2018 | $ Change | % Change | |||||||||||
General and administrative expense (1) | $ | 191 | $ | 197 | $ | (6 | ) | -3 | % | |||||
Selling and marketing expense | 155 | 131 | 24 | 18 | % | |||||||||
Distribution expense | 26 | 15 | 11 | 73 | % | |||||||||
Total selling, general and administrative expense | $ | 372 | $ | 343 | $ | 29 | 8 | % |
(1) | Includes depreciation expense of $15 million for the three months ended June 30, 2019 and June 30, 2018. |
For the Three Months Ended June 30, | 2019 vs. 2018 | |||||||||||||
2019 | 2018 | $ Change | % Change | |||||||||||
Net income attributable to Warner Music Group Corp. | $ | 13 | $ | 320 | $ | (307 | ) | -96 | % | |||||
Income attributable to noncontrolling interest | 1 | 1 | — | — | % | |||||||||
Net income | 14 | 321 | (307 | ) | -96 | % | ||||||||
Income tax (benefit) expense | (12 | ) | 61 | (73 | ) | — | % | |||||||
Income before income taxes | 2 | 382 | (380 | ) | -99 | % | ||||||||
Other expense (income), net | 16 | (394 | ) | 410 | — | % | ||||||||
Interest expense, net | 36 | 33 | 3 | 9 | % | |||||||||
Loss on extinguishment of debt | 4 | 7 | (3 | ) | -43 | % | ||||||||
Operating income | 58 | 28 | 30 | — | % | |||||||||
Amortization expense | 51 | 56 | (5 | ) | -9 | % | ||||||||
Depreciation expense | 15 | 15 | — | — | % | |||||||||
OIBDA | $ | 124 | $ | 99 | $ | 25 | 25 | % |
For the Three Months Ended June 30, | 2019 vs. 2018 | |||||||||||||
2019 | 2018 | $ Change | % Change | |||||||||||
Recorded Music | ||||||||||||||
Revenue | $ | 913 | $ | 802 | $ | 111 | 14 | % | ||||||
Operating income | 85 | 67 | 18 | 27 | % | |||||||||
OIBDA | 131 | 115 | 16 | 14 | % | |||||||||
Music Publishing | ||||||||||||||
Revenue | 147 | 159 | (12 | ) | -8 | % | ||||||||
Operating income | 18 | 5 | 13 | — | % | |||||||||
OIBDA | 36 | 24 | 12 | 50 | % | |||||||||
Corporate expenses and eliminations | ||||||||||||||
Revenue elimination | (2 | ) | (3 | ) | 1 | -33 | % | |||||||
Operating loss | (45 | ) | (44 | ) | (1 | ) | 2 | % | ||||||
OIBDA loss | (43 | ) | (40 | ) | (3 | ) | 8 | % | ||||||
Total | ||||||||||||||
Revenue | 1,058 | 958 | 100 | 10 | % | |||||||||
Operating income | 58 | 28 | 30 | — | % | |||||||||
OIBDA | 124 | 99 | 25 | 25 | % |
For the Three Months Ended June 30, | 2019 vs. 2018 | |||||||||||||
2019 | 2018 | $ Change | % Change | |||||||||||
Artist and repertoire costs | $ | 282 | $ | 252 | $ | 30 | 12 | % | ||||||
Product costs | 205 | 165 | 40 | 24 | % | |||||||||
Total cost of revenues | $ | 487 | $ | 417 | $ | 70 | 17 | % |
For the Three Months Ended June 30, | 2019 vs. 2018 | |||||||||||||
2019 | 2018 | $ Change | % Change | |||||||||||
General and administrative expense (1) | $ | 128 | $ | 134 | $ | (6 | ) | -4 | % | |||||
Selling and marketing expense | 153 | 130 | 23 | 18 | % | |||||||||
Distribution expense | 26 | 15 | 11 | 73 | % | |||||||||
Total selling, general and administrative expense | $ | 307 | $ | 279 | $ | 28 | 10 | % |
(1) | Includes depreciation expense of $12 million and $9 million for the three months ended June 30, 2019 and for the three months ended June 30, 2018, respectively. |
For the Three Months Ended June 30, | 2019 vs. 2018 | |||||||||||||
2019 | 2018 | $ Change | % Change | |||||||||||
Operating Income | $ | 85 | $ | 67 | $ | 18 | 27 | % | ||||||
Depreciation and amortization | 46 | 48 | (2 | ) | -4 | % | ||||||||
OIBDA | $ | 131 | $ | 115 | $ | 16 | 14 | % |
For the Three Months Ended June 30, | 2019 vs. 2018 | |||||||||||||
2019 | 2018 | $ Change | % Change | |||||||||||
Artist and repertoire costs | $ | 92 | $ | 117 | $ | (25 | ) | -21 | % | |||||
Total cost of revenues | $ | 92 | $ | 117 | $ | (25 | ) | -21 | % |
For the Three Months Ended June 30, | 2019 vs. 2018 | |||||||||||||
2019 | 2018 | $ Change | % Change | |||||||||||
General and administrative expense (1) | $ | 19 | $ | 20 | $ | (1 | ) | -5 | % | |||||
Selling and marketing expense | 1 | — | 1 | — | % | |||||||||
Total selling, general and administrative expense | $ | 20 | $ | 20 | $ | — | — | % |
(1) | Includes depreciation expense of $1 million for the three months ended June 30, 2019 and $2 million for the three months ended June 30, 2018. |
For the Three Months Ended June 30, | 2019 vs. 2018 | |||||||||||||
2019 | 2018 | $ Change | % Change | |||||||||||
Operating income | $ | 18 | $ | 5 | $ | 13 | — | % | ||||||
Depreciation and amortization | 18 | 19 | (1 | ) | -5 | % | ||||||||
OIBDA | $ | 36 | $ | 24 | $ | 12 | 50 | % |
For the Nine Months Ended June 30, 2019 | 2019 vs. 2018 | |||||||||||||
2019 | 2018 | $ Change | % Change | |||||||||||
Revenue by Type | ||||||||||||||
Digital | $ | 1,744 | $ | 1,491 | $ | 253 | 17 | % | ||||||
Physical | 456 | 500 | (44 | ) | -9 | % | ||||||||
Total Digital and Physical | 2,200 | 1,991 | 209 | 10 | % | |||||||||
Artist services and expanded-rights | 458 | 264 | 194 | 73 | % | |||||||||
Licensing | 229 | 242 | (13 | ) | -5 | % | ||||||||
Total Recorded Music | 2,887 | 2,497 | 390 | 16 | % | |||||||||
Performance | 135 | 153 | (18 | ) | -12 | % | ||||||||
Digital | 195 | 169 | 26 | 15 | % | |||||||||
Mechanical | 41 | 55 | (14 | ) | -25 | % | ||||||||
Synchronization | 89 | 90 | (1 | ) | -1 | % | ||||||||
Other | 10 | 9 | 1 | 11 | % | |||||||||
Total Music Publishing | 470 | 476 | (6 | ) | -1 | % | ||||||||
Intersegment eliminations | (6 | ) | (7 | ) | 1 | -14 | % | |||||||
Total Revenue | $ | 3,351 | $ | 2,966 | $ | 385 | 13 | % | ||||||
Revenue by Geographical Location | ||||||||||||||
U.S. Recorded Music | $ | 1,236 | $ | 1,061 | $ | 175 | 16 | % | ||||||
U.S. Music Publishing | 219 | 220 | (1 | ) | — | % | ||||||||
Total U.S. | 1,455 | 1,281 | 174 | 14 | % | |||||||||
International Recorded Music | 1,651 | 1,436 | 215 | 15 | % | |||||||||
International Music Publishing | 251 | 256 | (5 | ) | -2 | % | ||||||||
Total International | 1,902 | 1,692 | 210 | 12 | % | |||||||||
Intersegment eliminations | (6 | ) | (7 | ) | 1 | -14 | % | |||||||
Total Revenue | $ | 3,351 | $ | 2,966 | $ | 385 | 13 | % |
For the Nine Months Ended June 30, 2019 | 2019 vs. 2018 | |||||||||||||
2019 | 2018 | $ Change | % Change | |||||||||||
Artist and repertoire costs | $ | 1,145 | $ | 1,075 | $ | 70 | 7 | % | ||||||
Product costs | 617 | 513 | 104 | 20 | % | |||||||||
Total cost of revenues | $ | 1,762 | $ | 1,588 | $ | 174 | 11 | % |
For the Nine Months Ended June 30, 2019 | 2019 vs. 2018 | |||||||||||||
2019 | 2018 | $ Change | % Change | |||||||||||
General and administrative expense (1) | $ | 542 | $ | 579 | $ | (37 | ) | -6 | % | |||||
Selling and marketing expense | 472 | 383 | 89 | 23 | % | |||||||||
Distribution expense | 88 | 51 | 37 | 73 | % | |||||||||
Total selling, general and administrative expense | $ | 1,102 | $ | 1,013 | $ | 89 | 9 | % |
(1) | Includes depreciation expense of $43 million and $41 million for the nine months ended June 30, 2019 and June 30, 2018, respectively. |
For the Nine Months Ended June 30, 2019 | 2019 vs. 2018 | |||||||||||||
2019 | 2018 | $ Change | % Change | |||||||||||
Net income attributable to Warner Music Group Corp. | $ | 166 | $ | 321 | $ | (155 | ) | -48 | % | |||||
Income attributable to noncontrolling interest | 1 | 4 | (3 | ) | -75 | % | ||||||||
Net income | 167 | 325 | (158 | ) | -49 | % | ||||||||
Income tax expense | 86 | 132 | (46 | ) | -35 | % | ||||||||
Income before income taxes | 253 | 457 | (204 | ) | -45 | % | ||||||||
Other income, net | (41 | ) | (392 | ) | 351 | -90 | % | |||||||
Interest expense, net | 108 | 105 | 3 | 3 | % | |||||||||
Loss on extinguishment of debt | 7 | 31 | (24 | ) | -77 | % | ||||||||
Operating income | 327 | 201 | 126 | 63 | % | |||||||||
Amortization expense | 160 | 164 | (4 | ) | -2 | % | ||||||||
Depreciation expense | 43 | 41 | 2 | 5 | % | |||||||||
OIBDA | $ | 530 | $ | 406 | $ | 124 | 31 | % |
For the Nine Months Ended June 30, 2019 | 2019 vs. 2018 | |||||||||||||
2019 | 2018 | $ Change | % Change | |||||||||||
Recorded Music | ||||||||||||||
Revenue | $ | 2,887 | $ | 2,497 | $ | 390 | 16 | % | ||||||
Operating income | 382 | 276 | 106 | 38 | % | |||||||||
OIBDA | 522 | 415 | 107 | 26 | % | |||||||||
Music Publishing | ||||||||||||||
Revenue | 470 | 476 | (6 | ) | -1 | % | ||||||||
Operating income | 67 | 45 | 22 | 49 | % | |||||||||
OIBDA | 122 | 101 | 21 | 21 | % | |||||||||
Corporate expenses and eliminations | ||||||||||||||
Revenue elimination | (6 | ) | (7 | ) | 1 | -14 | % | |||||||
Operating loss | (122 | ) | (120 | ) | (2 | ) | 2 | % | ||||||
OIBDA loss | (114 | ) | (110 | ) | (4 | ) | 4 | % | ||||||
Total | ||||||||||||||
Revenue | 3,351 | 2,966 | 385 | 13 | % | |||||||||
Operating income | 327 | 201 | 126 | 63 | % | |||||||||
OIBDA | 530 | 406 | 124 | 31 | % |
For the Nine Months Ended June 30, 2019 | 2019 vs. 2018 | |||||||||||||
2019 | 2018 | $ Change | % Change | |||||||||||
Artist and repertoire costs | $ | 857 | $ | 761 | $ | 96 | 13 | % | ||||||
Product costs | 617 | 513 | 104 | 20 | % | |||||||||
Total cost of revenues | $ | 1,474 | $ | 1,274 | $ | 200 | 16 | % |
For the Nine Months Ended June 30, 2019 | 2019 vs. 2018 | |||||||||||||
2019 | 2018 | $ Change | % Change | |||||||||||
General and administrative expense (1) | $ | 371 | $ | 406 | $ | (35 | ) | -9 | % | |||||
Selling and marketing expense | 463 | 377 | 86 | 23 | % | |||||||||
Distribution expense | 88 | 51 | 37 | 73 | % | |||||||||
Total selling, general and administrative expense | $ | 922 | $ | 834 | $ | 88 | 11 | % |
(1) | Includes depreciation expense of $31 million and $26 million for the nine months ended June 30, 2019 and June 30, 2018, respectively. |
For the Nine Months Ended June 30, 2019 | 2019 vs. 2018 | |||||||||||||
2019 | 2018 | $ Change | % Change | |||||||||||
Operating Income | $ | 382 | $ | 276 | $ | 106 | 38 | % | ||||||
Depreciation and amortization | 140 | 139 | 1 | 1 | % | |||||||||
OIBDA | $ | 522 | $ | 415 | $ | 107 | 26 | % |
For the Nine Months Ended June 30, 2019 | 2019 vs. 2018 | |||||||||||||
2019 | 2018 | $ Change | % Change | |||||||||||
Artist and repertoire costs | $ | 294 | $ | 321 | $ | (27 | ) | -8 | % | |||||
Total cost of revenues | $ | 294 | $ | 321 | $ | (27 | ) | -8 | % |
For the Nine Months Ended June 30, 2019 | 2019 vs. 2018 | |||||||||||||
2019 | 2018 | $ Change | % Change | |||||||||||
General and administrative expense (1) | $ | 56 | $ | 58 | $ | (2 | ) | -3 | % | |||||
Selling and marketing expense | 2 | 1 | 1 | 100 | % | |||||||||
Total selling, general and administrative expense | $ | 58 | $ | 59 | $ | (1 | ) | -2 | % |
(1) | Includes depreciation expense of $4 million and $5 million for the nine months ended June 30, 2019 and for the nine months ended June 30, 2018, respectively. |
For the Nine Months Ended June 30, 2019 | 2019 vs. 2018 | |||||||||||||
2019 | 2018 | $ Change | % Change | |||||||||||
Operating income | $ | 67 | $ | 45 | $ | 22 | 49 | % | ||||||
Depreciation and amortization | 55 | 56 | (1 | ) | -2 | % | ||||||||
OIBDA | $ | 122 | $ | 101 | $ | 21 | 21 | % |
For the Nine Months Ended June 30, 2019 | |||||||
2019 | 2018 | ||||||
Cash provided by (used in): | |||||||
Operating Activities | $ | 249 | $ | 265 | |||
Investing Activities | (340 | ) | 451 | ||||
Financing Activities | 119 | (453 | ) |
Revolving Credit Facility (a) | $ | — | |
Senior Term Loan Facility due 2023 (b) | 1,313 | ||
5.625% Senior Secured Notes due 2022 (c) | — | ||
5.000% Senior Secured Notes due 2023 (d) | 298 | ||
4.125% Senior Secured Notes due 2024 (e) | 349 | ||
4.875% Senior Secured Notes due 2024 (f) | 218 | ||
3.625% Senior Secured Notes due 2026 (g) | 507 | ||
5.500% Senior Notes due 2026 (h) | 321 | ||
Total long-term debt, including the current portion (i) | $ | 3,006 |
(a) | Reflects $180 million of commitments under the Revolving Credit Facility available at June 30, 2019 less letters of credit outstanding of approximately $13 million at June 30, 2019. There were no loans outstanding under the Revolving Credit Facility at June 30, 2019. |
(b) | Principal amount of $1.326 billion less unamortized discount of $3 million and unamortized deferred financing costs of $10 million at June 30, 2019. |
(c) | On May 16, 2019, Acquisition Corp. redeemed the remaining $221 million of its outstanding 5.625% Senior Notes due 2022. The Company recorded a loss on extinguishment of debt of approximately $4 million as a result of the debt redemption, which represents the premium paid on early redemption and unamortized deferred financing costs. |
(d) | Principal amount of $300 million less unamortized deferred financing costs of $2 million at June 30, 2019. |
(e) | Face amount of €311 million at June 30, 2019. Above amount represents the dollar equivalent of such note at June 30, 2019. Principal amount of $353 million at June 30, 2019, less unamortized deferred financing costs of $4 million at June 30, 2019. |
(f) | Principal amount of $220 million less unamortized deferred financing costs of $2 million at June 30, 2019. |
(g) | Face amount of €445 million at June 30, 2019. Above amount represents the dollar equivalent of such note at June 30, 2019. Principal amount of $506 million, an additional issuance premium of $8 million, less unamortized deferred financing costs of $7 million at June 30, 2019. |
(h) | Principal amount of $325 million less unamortized deferred financing costs of $4 million at June 30, 2019. |
(i) | Principal amount of debt of $3.030 billion, an additional issuance premium of $8 million, less unamortized discount of $3 million and unamortized deferred financing costs of $29 million at June 30, 2019. |
Twelve Months Ended June 30, 2019 | |||
Net Income | $ | 154 | |
Income tax expense | 84 | ||
Interest expense, net | 141 | ||
Depreciation and amortization | 260 | ||
Loss on extinguishment of debt (a) | 7 | ||
Net gain on divestitures and sale of securities (b) | (3 | ) | |
Restructuring costs (c) | 43 | ||
Net hedging gains and foreign exchange losses (d) | (11 | ) | |
Management fees (e) | 17 | ||
Transaction costs (f) | 3 | ||
Business optimization expenses (g) | 19 | ||
Equity based compensation expense (h) | 38 | ||
Other non-cash activity (i) | (25 | ) | |
Pro forma impact of transformation initiatives and specified transactions (j) | 8 | ||
Pro Forma Consolidated EBITDA | $ | 735 | |
Senior Secured Indebtedness (k) | $ | 2,505 | |
Leverage Ratio (l) | 3.41x |
(a) | Reflects net loss incurred on the early extinguishment of our debt incurred as part of the October 2018 partial redemption of 4.125% Secured Notes, the October 2018 open market purchase of our 4.875% Senior Secured Notes, the November 2018 partial redemption of 5.625% Secured Notes, and May 2019 redemption of the remaining 5.625% Secured Notes. |
(b) | Reflects net gain on divestitures and sale of securities. |
(c) | Reflects severance costs and other restructuring related expenses. |
(d) | Reflects net losses from hedging activities and unrealized losses due to foreign exchange on our Euro denominated debt and intercompany transactions. |
(e) | Reflects management fees paid to Access, including an annual fee and related expenses. Pursuant to the Company’s and Holdings’ management agreement with Access, the base amount of the annual fee is approximately $9 million, subject to certain potential upward adjustments, in addition to a $7 million increase in fiscal 2018. |
(f) | Reflects expenses related to transaction and other related costs. |
(g) | Reflects primarily costs associated with IT systems updates and U.S. shared services relocation and other transformation initiatives. |
(h) | Reflects equity-based compensation expense related to the Warner Music Group Corp. Senior Management Free Cash Flow Plan. |
(i) | Reflects non-cash activity, including the unrealized gain on the mark-to-market of an equity method investment. |
(j) | Reflects expected savings resulting from transformation initiatives and pro forma impact of specified transactions, including pro forma adjustments related to the acquisition of EMP. |
(k) | Reflects the principal balance of senior secured debt at Acquisition Corp. of approximately $2.705 billion less cash of $200 million. |
(l) | Reflects the ratio of Senior Secured Indebtedness, including Revolving Credit Agreement Indebtedness, to Pro Forma Consolidated EBITDA as of the twelve months ended June 30, 2019. This is calculated net of cash and equivalents of the Company as of June 30, 2019 not exceeding $200 million. If the outstanding aggregate principal amount of borrowings and drawings under letters of credit which have not been reimbursed under our Revolving Credit Facility is greater than $54 million at the end of a fiscal quarter, the maximum leverage ratio permitted under our Revolving Credit Facility is 4.75:1.00. The Company’s Revolving Credit Facility does not impose any “leverage ratio” restrictions on the Company when the aggregate principal amount of borrowings and drawings under letters of credit, which have not been reimbursed under the Revolving Credit Facility, is less than or equal to $54 million at the end of a fiscal quarter. |
ITEM 1. | LEGAL PROCEEDINGS |
ITEM 1A. | RISK FACTORS |
ITEM 2. | UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS |
ITEM 3. | DEFAULTS UPON SENIOR SECURITIES |
ITEM 4. | MINE SAFETY DISCLOSURES |
ITEM 5. | OTHER INFORMATION |
ITEM 6. | EXHIBITS AND FINANCIAL STATEMENT SCHEDULES |
Exhibit Number | Description | |
10.1*** | ||
10.2*** | ||
10.3*** | ||
31.1* | ||
31.2* | ||
32.1** | ||
32.2** | ||
101.1* | Financial statements from the Quarterly Report on Form 10-Q of Warner Music Group Corp. for the quarter ended June 30, 2019, filed on August 6, 2019, formatted in XBRL: (i) Consolidated Balance Sheets, (ii) Consolidated Statements of Operations, (iii) Consolidated Statement of Comprehensive Loss, (iv) Consolidated Statements of Cash Flows, (v) Consolidated Statements of Equity and (vi) Notes to Consolidated Interim Financial Statements |
* | Filed herewith |
** | Pursuant to SEC Release No. 33-8212, this certification will be treated as “accompanying” this Quarterly Report on Form 10-Q and not “filed” as part of such report for purposes of Section 18 of the Securities Exchange Act, as amended, or otherwise subject to the liability of Section 18 of the Securities Exchange Act, as amended, and this certification will not be deemed to be incorporated by reference into any filing under the Securities Act of 1933, as amended, except to the extent that the registrant specifically incorporates it by reference |
*** | Incorporated by reference to Warner Music Group Corp.’s Current Report on Form 8-K filed with the U.S. Securities and Exchange Commission on April 30, 2019 (File No. 001-32502). |
WARNER MUSIC GROUP CORP. | ||
By: | /S/ STEPHEN COOPER | |
Name: | Stephen Cooper | |
Title: | Chief Executive Officer (Principal Executive Officer) | |
By: | /S/ ERIC LEVIN | |
Name: | Eric Levin | |
Title: | Chief Financial Officer (Principal Financial Officer and Principal Accounting Officer) |
/S/ STEPHEN COOPER | |
Chief Executive Officer (Principal Executive Officer) |
/S/ ERIC LEVIN | |
Chief Financial Officer (Principal Financial and Accounting Officer) |
/S/ STEPHEN COOPER | |
Stephen Cooper Chief Executive Officer |
/S/ ERIC LEVIN | |
Eric Levin Chief Financial Officer |
Document and Entity Information - shares |
9 Months Ended | |
---|---|---|
Jun. 30, 2019 |
Aug. 06, 2019 |
|
Document And Entity Information [Abstract] | ||
Document Type | 10-Q | |
Amendment Flag | false | |
Document Period End Date | Jun. 30, 2019 | |
Document Fiscal Year Focus | 2019 | |
Document Fiscal Period Focus | Q3 | |
Entity Registrant Name | Warner Music Group Corp. | |
Entity Central Index Key | 0001319161 | |
Current Fiscal Year End Date | --09-30 | |
Entity Filer Category | Non-accelerated Filer | |
Entity Small Business | false | |
Entity Emerging Growth Company | false | |
Entity Common Stock, Shares Outstanding | 1,060 | |
Entity Current Reporting Status | No | |
Entity Shell Company | false | |
Entity Interactive Data Current | Yes |
Consolidated Balance Sheets (Unaudited) (Parenthetical) - USD ($) $ in Millions |
Jun. 30, 2019 |
Sep. 30, 2018 |
---|---|---|
Statement of Financial Position [Abstract] | ||
Accounts receivable, allowances | $ 21 | $ 45 |
Common stock, par value (in dollars per share) | $ 0.001 | $ 0.001 |
Common stock, shares authorized (in shares) | 10,000 | 10,000 |
Common stock, shares issued (in shares) | 1,060 | 1,060 |
Common stock, shares outstanding (in shares) | 1,052 | 1,052 |
Consolidated Statements of Operations (Unaudited) - USD ($) $ in Millions |
3 Months Ended | 9 Months Ended | ||||
---|---|---|---|---|---|---|
Jun. 30, 2019 |
Jun. 30, 2018 |
Jun. 30, 2019 |
Jun. 30, 2018 |
|||
Income Statement [Abstract] | ||||||
Revenue | $ 1,058 | $ 958 | $ 3,351 | $ 2,966 | ||
Costs and expenses: | ||||||
Cost of revenue | (577) | (531) | (1,762) | (1,588) | ||
Selling, general and administrative expenses | [1] | (372) | (343) | (1,102) | (1,013) | |
Amortization expense | (51) | (56) | (160) | (164) | ||
Total costs and expenses | (1,000) | (930) | (3,024) | (2,765) | ||
Operating income | 58 | 28 | 327 | 201 | ||
Loss on extinguishment of debt | (4) | (7) | (7) | (31) | ||
Interest expense, net | (36) | (33) | (108) | (105) | ||
Other (expense) income, net | (16) | 394 | 41 | 392 | ||
Income before income taxes | 2 | 382 | 253 | 457 | ||
Income tax benefit (expense) | 12 | (61) | (86) | (132) | ||
Net income | 14 | 321 | 167 | 325 | ||
Less: Income attributable to noncontrolling interest | (1) | (1) | (1) | (4) | ||
Net income attributable to Warner Music Group Corp. | $ 13 | $ 320 | $ 166 | $ 321 | ||
|
Consolidated Statements of Operations (Unaudited) (Parenthetical) - USD ($) $ in Millions |
3 Months Ended | 9 Months Ended | ||
---|---|---|---|---|
Jun. 30, 2019 |
Jun. 30, 2018 |
Jun. 30, 2019 |
Jun. 30, 2018 |
|
Income Statement [Abstract] | ||||
Depreciation expense | $ (15) | $ (15) | $ (43) | $ (41) |
Consolidated Statements of Comprehensive Income (Unaudited) - USD ($) $ in Millions |
3 Months Ended | 9 Months Ended | ||
---|---|---|---|---|
Jun. 30, 2019 |
Jun. 30, 2018 |
Jun. 30, 2019 |
Jun. 30, 2018 |
|
Statement of Comprehensive Income [Abstract] | ||||
Net income | $ 14 | $ 321 | $ 167 | $ 325 |
Other comprehensive income (loss), net of tax: | ||||
Foreign currency adjustment | 9 | (31) | (17) | (13) |
Deferred loss on derivative | (3) | (3) | (12) | (1) |
Other comprehensive income (loss), net of tax | 6 | (34) | (29) | (14) |
Total comprehensive income | 20 | 287 | 138 | 311 |
Less: Income attributable to noncontrolling interest | (1) | (1) | (1) | (4) |
Comprehensive income attributable to Warner Music Group Corp. | $ 19 | $ 286 | $ 137 | $ 307 |
Consolidated Statements of Cash Flows (Unaudited) (Parenthetical) |
Jun. 30, 2019 |
Jun. 30, 2018 |
---|---|---|
3.625% Senior Secured Notes | ||
Interest rate | 3.625% | 3.625% |
4.125% Senior Secured Notes | ||
Interest rate | 4.125% | 4.125% |
4.875% Senior Secured Notes | ||
Interest rate | 4.875% | 4.875% |
5.625% Senior Secured Notes | ||
Interest rate | 5.625% | 5.625% |
5.50% Senior Notes | ||
Interest rate | 5.50% | 5.50% |
6.75% Senior Notes | ||
Interest rate | 6.75% | 6.75% |
Description of Business |
9 Months Ended |
---|---|
Jun. 30, 2019 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Description of Business | 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 Records and Atlantic Records. In October 2018, the Company launched Elektra Music Group in the United States as a standalone label group, which comprises the Elektra, Fueled by Ramen and Roadrunner labels. 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, Erato, FFRR, Nonesuch, Parlophone, Reprise, 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. The Company’s Recorded Music products are sold in digital form to an expanded universe of digital partners, including digital streaming services such as Amazon, Apple Music, Deezer, Napster, Soundcloud, Spotify, Tencent 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. In addition, Recorded Music products are sold in physical retail outlets and in physical form to online physical retailers such as Amazon.com and bestbuy.com 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 digital 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, merchandising 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 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 Music, 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 Music 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 Accounting Policies |
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Accounting Policies [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Summary of Significant Accounting Policies | Summary of Significant Accounting Policies Interim Financial Statements The accompanying unaudited consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States (“U.S. GAAP”) for interim financial information and with the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all the information and notes required by U.S. GAAP for complete financial statements. In the opinion of management, all adjustments (consisting of normal recurring accruals) considered necessary for a fair presentation have been included. Operating results for the three and nine month periods ended June 30, 2019 are not necessarily indicative of the results that may be expected for the fiscal year ending September 30, 2019. The consolidated balance sheet at September 30, 2018 has been derived from the audited consolidated financial statements at that date but does not include all the information and notes required by U.S. GAAP for complete financial statements. For further information, refer to the consolidated financial statements and notes thereto included in our Annual Report on Form 10-K for the fiscal year ended September 30, 2018 (File No. 001-32502). Basis of Consolidation The accompanying financial statements present the consolidated accounts of all entities in which the Company has a controlling voting interest and/or variable interest required to be consolidated in accordance with U.S. GAAP. All intercompany balances and transactions have been eliminated. Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) Topic 810, Consolidation (“ASC 810”), requires the Company first evaluate its investments to determine if any investments qualify as a variable interest entity (“VIE”). A VIE is consolidated if the Company is deemed to be the primary beneficiary of the VIE, which is the party involved with the VIE that has both (i) the power to control the most significant activities of the VIE and (ii) either the obligation to absorb losses or the right to receive benefits that could potentially be significant to the VIE. If an entity is not deemed to be a VIE, the Company consolidates the entity if the Company has a controlling voting interest. The Company maintains a 52-53 week fiscal year ending on the last Friday in each reporting period. As such, all references to June 30, 2019 and June 30, 2018 relate to the periods ended June 28, 2019 and June 29, 2018, respectively. For convenience purposes, the Company continues to date its financial statements as of June 30. The fiscal year ended September 30, 2018 ended on September 28, 2018. The Company has performed a review of all subsequent events through the date the financial statements were issued and has determined that no additional disclosures are necessary. Income Taxes At the end of each interim period, the Company makes its best estimate of the effective tax rate expected to be applicable for the full fiscal year and uses that rate to provide for income taxes on a current year-to-date basis before discrete items. On December 22, 2017, the U.S. government enacted comprehensive tax legislation commonly referred to as the Tax Cuts and Jobs Act (the “Tax Act”). In accordance with ASC Topic 740, Income Taxes (“ASC 740”) the Company recorded the impacts in the period of enactment. New Accounting Pronouncements Adoption of New Revenue Recognition Standard In May 2014, the FASB issued guidance codified in ASC 606, Revenue from Contracts with Customers (“ASC 606”), which replaces the guidance in former ASC 605, Revenue Recognition and ASC 928-605, Entertainment – Music. The amendment was the result of a joint effort by the FASB and the International Accounting Standards Board to improve financial reporting by creating common revenue recognition guidance for U.S. GAAP and international financial reporting standards ("IFRS"). The joint project clarifies the principles for recognizing revenue and develops a common revenue standard for U.S. GAAP and IFRS. The Company adopted ASC 606 on October 1, 2018, using the modified retrospective method to all contracts not completed as of the date of adoption. The reported results as of and for the three and nine months ended June 30, 2019 reflect the application of the new standard, while the reported results for the three and nine months ended June 30, 2018 have not been adjusted to reflect the new standard and were prepared under prior revenue recognition accounting guidance. The adoption of ASC 606 resulted in a change in the timing of revenue recognition in the Company’s Music Publishing segment as well as international broadcast rights within Recorded Music. Under the new revenue recognition rules, revenue is recorded based on best estimates available in the period of sale or usage whereas revenue was previously recorded when cash was received for both the licensing of publishing rights and international Recorded Music broadcast fees. Additionally, for certain licenses where the consideration is fixed and the intellectual property being licensed is static, revenue is recognized at the point in time when control of the licensed content is transferred to the customer. As a result of adopting ASC 606, the Company recorded a decrease to the opening accumulated deficit of approximately $139 million, net of tax, as of October 1, 2018. The Company also reclassified $28 million from accounts receivable to other current liabilities related to estimated refund liabilities for our physical sales. The following table provides the cumulative effect of the changes made to the opening balance sheet, as of October 1, 2018, from the adoption of ASC 606 and which primarily relates to the accrual of licensing revenue in the period of sale or usage.
The disclosure of the impact of adoption on the consolidated statement of operations for the three and nine months ended June 30, 2019, the consolidated balance sheet as of June 30, 2019, and the consolidated statement of cash flows for the nine months ended June 30, 2019 are as follows (in millions):
Recently Adopted Accounting Pronouncements In January 2016, the FASB issued ASU 2016-01, Recognition and Measurement of Financial Assets and Financial Liabilities (“ASU 2016-01”). This ASU will require that equity investments, except those investments under the equity method of accounting, are measured at fair value with changes in fair value recognized in net income. The Company may elect to measure equity investments that do not have a readily determinable fair value at cost minus impairment, if any, plus or minus changes resulting from observable prices. The Company adopted ASU 2016-01 on October 1, 2018 and has elected to use the measurement alternative to measure our equity investments without readily determinable fair values. This guidance was applied prospectively and did not have a significant impact on the Company’s financial statements. For the nine months ended June 30, 2019, there were no observable price change events that were completed related to our equity investments without readily determinable fair values. In August 2016, the FASB issued ASU 2016-15, Statement of Cash Flows: Classification of Certain Cash Receipts and Cash Payments ("ASU 2016-15"). This ASU provides specific guidance of how certain cash receipts and cash payments should be presented and classified in the statement of cash flows. ASU 2016-15 is effective for annual periods beginning after December 15, 2017, and interim periods within those years. The Company adopted ASU 2016-15 in the first quarter of fiscal 2019 and this adoption did not have a significant impact on the Company’s financial statements. In October 2016, the FASB issued ASU 2016-16, Income Taxes: Intra-Entity Transfers of Assets Other Than Inventory ("ASU 2016-16"). This ASU requires the recognition of current and deferred income taxes for intra-entity asset transfers when the transaction occurs. ASU 2016-16 is effective for annual periods beginning after December 15, 2017, and interim periods within those years. The Company adopted ASU 2016-16 in the first quarter of fiscal 2019 and this adoption did not have a significant impact on the Company’s financial statements. In January of 2017, the FASB issued ASU 2017-01, Business Combinations (“ASU 2017-01”), to clarify the definition of a business, which establishes a process to determine when an integrated set of assets and activities can be deemed a business combination. The Company adopted ASU 2017-01 in the first quarter of fiscal 2019 and this adoption did not have a significant impact on the Company’s financial statements. In February 2018, FASB issued ASU 2018-02, Income Statement – Reporting Comprehensive Income (“ASU 2018-02”). This ASU allows a reclassification from accumulated other comprehensive income to accumulated deficit for stranded tax effects resulting from the Tax Act. ASU 2018-02 is effective for all entities for fiscal years beginning after December 15, 2018 and interim periods within those fiscal years. Early adoption is permitted, including adoption in any interim period. The Company adopted ASU 2018-02 in the first quarter of fiscal 2019 and this adoption did not have a significant impact on the Company’s financial statements. Accounting Pronouncements Not Yet Adopted In February 2016, the FASB issued ASU 2016-02, Leases (“ASU 2016-02”), which established a new ASC Topic 842 (ASC 842). This ASU establishes a right-of-use (“ROU”) model that requires a lessee to record a ROU asset and a lease liability on the balance sheet for all leases with terms longer than 12 months. Leases will be classified as either finance or operating, with classification affecting the pattern of expense recognition in the statement of operations. ASU 2016-02 will be effective for annual periods beginning after December 15, 2018, and interim periods within those years. Earlier adoption is permitted. In July 2018, the FASB issued ASU 2018-11, Leases - Targeted Improvements (“ASU 2018-11”), which allows for retrospective application with the recognition of a cumulative-effect adjustment to the opening balance of retained earnings in the period of adoption. Under this option, entities would not need to apply ASC 842 (along with its disclosure requirements) to the comparative prior periods presented. Upon adoption, the Company expects that most of our operating leases will be recognized as operating lease liabilities and ROU assets on our consolidated balance sheet. The Company continues to evaluate the impact of the adoption of this standard on its financial statements and disclosures and expects to elect the optional transition method that allows for a cumulative-effect adjustment upon adoption. In August 2017, the FASB issued ASU 2017-12, Targeted Improvements to Accounting for Hedging Activities (“ASU 2017-12”). This ASU improves certain aspects of the hedge accounting model including making more risk management strategies eligible for hedge accounting and simplifying the assessment of hedge effectiveness. ASU 2017-12 is effective for all annual periods beginning after December 15, 2018 and interim periods within those fiscal years. Early adoption is permitted and requires a prospective adoption with a cumulative-effect adjustment to accumulated deficit as of the beginning of the fiscal year of adoption for existing hedging relationships. The Company is evaluating the impact of the adoption of this standard on its financial statements and disclosures. |
Revenue Recognition |
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Revenue Recognition | Revenue Recognition For our operating segments, Recorded Music and Music Publishing, the Company accounts for a contract when it has legally enforceable rights and obligations and collectability of consideration is probable. The Company identifies the performance obligations and determines the transaction price associated with the contract, which is then allocated to each performance obligation, using management’s best estimate of standalone selling price for arrangements with multiple performance obligations. Revenue is recognized when, or as, control of the promised services or goods is transferred to our customers, and in an amount that reflects the consideration the Company is contractually due in exchange for those services or goods. An estimate of variable consideration is included in the transaction price if, in the Company’s judgment, it is probable that a significant future reversal of cumulative revenue under the contract will not occur. Certain of our arrangements include licenses of intellectual property with consideration in the form of sales- and usage-based royalties. Royalty revenue is recognized when the subsequent sale or usage occurs using the best estimates available of the amounts that will be received by the Company. Disaggregation of Revenue Our revenue consists of the following categories, which aggregate into our segments - Recorded Music and Music Publishing (in millions):
Recorded Music Recorded Music mainly involves selling, marketing, distribution and licensing of recorded music produced by our artists. Recorded Music revenues are derived from four main sources, which include digital, physical, artist services and expanded rights and licensing. Digital revenues are generated from the expanded universe of digital partners, including digital streaming services and digital download services. These licenses typically contain a single performance obligation, which is ongoing access to all intellectual property in an evolving content library, predicated on: (1)the business practice and contractual ability to remove specific content without a requirement to replace the content and without impact to minimum royalty guarantees and (2)the contracts not containing a specific listing of content subject to the license. Digital licensing contracts are generally long-term with consideration in the form of sales- and usage-based royalties that are typically received monthly. Certain contracts contain non-recoupable fixed fees or minimum guarantees, which are recoupable against royalties. Upon contract inception, the Company will assess whether a shortfall or breakage is expected (i.e., where the minimum guarantee will not be recouped through royalties) in order to determine timing of revenue recognition for the fixed fee or minimum guarantee. For fixed fee and minimum guarantee contracts where breakage is expected, the total transaction price (fixed fee or minimum guarantee) is typically recognized on a straight-line basis over the contractual term. The Company updates its assessment of the transaction price each reporting period to see if anticipated royalty earnings exceed the minimum guarantee. For contracts where breakage is not expected, royalties are recognized as revenue as sales or usage occurs based upon the licensee’s usage reports and, when these reports are not available, historical data, industry information and other relevant trends. Additionally, for certain licenses where the consideration is fixed and the intellectual property being licensed is static, revenue is recognized at the point in time when control of the licensed content is transferred to the customer. Physical revenues are generated from the sale of physical products such as CDs, vinyl and DVDs. Revenues from the sale of physical Recorded Music products are recognized upon transfer of control to the customer, which typically occurs once the product has been shipped and the ability to direct use and obtain substantially all of the benefit from the asset 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. Artist services and expanded-rights revenues are generated from artist services businesses and participations in expanded-rights associated with artists, including sponsorship, fan clubs, artist websites, merchandising, touring, concert promotion, ticketing, and artist and brand management. Artist services and expanded-rights contracts are generally short term. Revenue is recognized as or when services are provided (e.g., at time of an artist’s event) assuming collectability is probable. In some cases, the Company is reliant on the artist to report revenue generating activities. For certain artist services and expanded-rights contracts, collectability is not considered probable until notification is received from the artist’s management. Licensing revenues represent royalties or fees for the right to use sound recordings in combination with visual images such as in films or television programs, television commercials and videogames. In certain territories, the Company may also receive royalties when sound recordings are performed publicly through broadcast of music on television, radio and cable, and in public spaces such as shops, workplaces, restaurants, bars and clubs. Licensing contracts are generally short term. For fixed fee contracts, revenue is recognized at the point in time when control of the licensed content is transferred to the customer. Royalty based contracts are recognized as the underlying sales or usage occurs. Music Publishing Music Publishing acts as a copyright owner and/or administrator of the musical compositions and generates revenues related to the exploitation of musical compositions (as opposed to recorded music). Music publishers generally receive royalties from the use of the composition in public performances, digital and physical recordings and in combination with visual images. Music publishing revenues are derived from five main sources: mechanical, performance, synchronization, digital and other. Performance revenues are received when the composition is performed publicly through broadcast of music on television, radio and cable, live performance at a concert or other venue (e.g., arena concerts and nightclubs), and performance of music in staged theatrical productions. Digital revenues are generated with respect to the compositions being embodied in recordings sold in digital streaming services, digital download services and digital performance. Mechanical revenues are generated with respect to the compositions embodied in recordings sold in any physical format or configuration such as CDs, vinyl and DVDs. Synchronization revenues represent the right to use the composition in combination with visual images such as in films or television programs, television commercials and videogames as well as from other uses such as in toys or novelty items and merchandise. Other revenues represent earnings for use in printed sheet music and other uses. Digital and synchronization revenue recognition is similar for both Recorded Music and Music Publishing, therefore refer to the discussion within Recorded Music. Included in these revenue streams, excluding synchronization and other, are licenses with music societies (e.g., ASCAP, BMI, SESAC, GEMA), which are long term contracts containing a single performance obligation, which is ongoing access to all intellectual property in an evolving content library. The most common form of consideration for these contracts is sales and usage-based royalties. The music societies submit usage reports, typically with payment for royalties due, often on a quarterly or bi-annual reporting period, in arears. Royalties are recognized as the sale or usage occurs based upon usage reports and, when these reports are not available, royalties are estimated based on historical data, such as recent royalties reported, Company specific information with respect to changes in repertoire, industry information and other relevant trends. Also included in these revenue streams are smaller, short term contracts for specified content, which generally involve a fixed fee. For fixed fee contracts, revenue is recognized at the point in time when control of the license is transferred to the customer. The Company excludes from the measurement of transaction price all taxes assessed by governmental authorities that are both (i) imposed on and concurrent with a specific revenue-producing transaction and (ii) collected from customers. Sales Returns and Uncollectible Accounts In accordance with practice in the recorded music industry and as customary in many territories, certain physical revenue products (such as CDs and DVDs) are sold to customers with the right to return unsold items. Revenues from such sales are recognized when the products are shipped based on gross sales less a provision for future estimated returns. 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 the company's 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 and records an asset for the value of the returned goods and liability for the amounts expected to be refunded. Similarly, management evaluates accounts receivables to determine if they will ultimately be collected. In performing this evaluation, significant judgments and estimates are involved, including an analysis of specific risks on a customer-by-customer basis for larger accounts and customers and a receivables aging analysis that determines the percent that has historically been uncollected by aged category. The time between the Company issuance of an invoice and payment due date is not significant; customer payments that are not collected in advance of the transfer of promised services or goods are generally due no later than 30 days from invoice date. Based on this information, management provides a reserve for the estimated amounts believed to be uncollectible. Based on management’s analysis of sales returns, refund liabilities of $25 million were established at June 30, 2019 and refund liabilities of $28 million were established at September 30, 2018. Based on management’s analysis of uncollectible accounts, reserves of $21 million and $17 million were established at June 30, 2019 and September 30, 2018, respectively. Principal versus Agent Revenue Recognition The Company reports revenue on a gross or net basis based on management’s assessment of whether the Company acts as a principal or agent in the transaction. The determination of whether the Company acts as a principal or an agent in a transaction is based on an evaluation of whether the Company controls the good or service before transfer to the customer. When the Company concludes that it controls the good or service before transfer to the customer, the Company is considered a principal in the transaction and records revenue on a gross basis. When the Company concludes that it does not control the good or service before transfer to the customer but arranges for another entity to provide the good or service, the Company acts as an agent and records revenue on a net basis in the amount it earns for its agency service. In the normal course of business, the Company acts as an intermediary with respect to certain payments received from third parties. For example, the Company distributes music content on behalf of third-party record labels. Based on the above guidance, the Company records the distribution of content on behalf of third-party record labels on a gross basis, subject to the terms of the contract, as the Company controls the content before transfer to the customer. Conversely, recorded music compilations distributed by other record companies where the Company has a right to participate in the profits are recorded on a net basis. Deferred Revenue Deferred revenue principally relates to fixed fees and minimum guarantees received in advance of the Company’s performance or usage by the licensee. Reductions in deferred revenue are a result of the Company’s performance under the contract or usage by the licensee. Deferred revenue increased $247 million during the nine months ended June 30, 2019 related to cash received from our customers for fixed fees and minimum guarantees in advance of performance, including amounts recognized in the period. Revenues of $142 million were recognized during the nine months ended June 30, 2019 related to the balance of deferred revenue at October 1, 2018. There were no other significant changes to deferred revenue during the reporting period. Performance Obligations The Company recognized revenue of $10 million and $45 million from performance obligations satisfied in previous periods for the three and nine month periods ended June 30, 2019, respectively. Wholly and partially unsatisfied performance obligations represent future revenues not yet recorded under long term intellectual property licensing contracts. Revenues expected to be recognized in the future related to performance obligations that are unsatisfied at June 30, 2019 are as follows (in millions):
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Acquisition of EMP |
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Acquisition of EMP | Acquisition of EMP On October 10, 2018, Warner Music Group Germany Holding GmbH (“WMG Germany”), a limited liability company under the laws of Germany and an indirect subsidiary of Warner Music Group Corp., closed its previously announced acquisition (the “Acquisition”) of certain shares of E.M.P. Merchandising Handelsgesellschaft mbH, a limited liability company under the laws of Germany, all of the share capital of MIG Merchandising Investment GmbH, a limited liability company under the laws of Germany (“MIG”), certain shares of Large Popmarchandising BVBA, a limited liability company under the laws of Belgium (“Large”), and each of EMP Merchandising Handelsgesellschaft mbH and MIG’s direct and indirect subsidiaries (the “Subsidiaries” and, together with EMP Merchandising Handelsgesellschaft mbH, MIG and Large, “EMP”) from funds associated with Sycamore Partners, pursuant to the Sale and Purchase Agreement, dated as of September 11, 2018, by and between SP Merchandising Holding GmbH & Co. KG, a limited partnership under the laws of Germany, and WMG Germany (“Acquisition Agreement”). The cash consideration paid at closing of the Acquisition was approximately €166 million, which reflects an agreed enterprise value of EMP of approximately €155 million (equivalent to approximately $180 million), as adjusted for, among other items, net debt and estimates of working capital of EMP. The final purchase price paid was determined to be €165 million after finalization of purchase price adjustments, including working capital and other items. The Acquisition was accounted for in accordance with ASC 805, using the acquisition method of accounting. The assets and liabilities of the Company, including identifiable intangible assets, have been measured at their fair value primarily using Level 3 inputs (see Note 13 for additional information on fair value inputs). Determining the fair value of the assets acquired and liabilities assumed requires judgment and involved the use of significant estimates and assumptions, including assumptions with respect to future cash inflows and outflows, discount rates, asset useful lives and market multiples, among other items. The use of different estimates and judgments could yield materially different results. The excess of the purchase price, over the fair value of net assets acquired, including the amount assigned to identifiable intangible assets and deferred tax adjustments, has been recorded to goodwill. The resulting goodwill has been allocated to our Recorded Music reportable segment. The recognized goodwill will not be deductible for income tax purposes. Any impairment charges made in future periods associated with goodwill will not be tax deductible. The table below presents (i) the preliminary estimate of the Acquisition consideration as it relates to the acquisition of EMP by WMG Germany and (ii) the preliminary allocation of the purchase price to the estimated fair values of the assets acquired and liabilities assumed on the closing date of October 10, 2018 (in millions):
At June 30, 2019, the Company updated the preliminary allocation recorded at December 31, 2018 based on revised estimates of fair value, which resulted in an increase in property plant and equipment, intangibles, deferred tax liabilities and a decrease to goodwill and resulted in a $2 million benefit to amortization in the quarter due to the update in the useful lives of the intangibles. 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, including the determination of the final working capital adjustment pursuant to the mechanism set forth in the Acquisition Agreement. Pro Forma Financial Information The following unaudited pro forma information has been presented as if the Acquisition occurred on October 1, 2017. This information is based on historical results of operations, adjusted to give effect to pro forma events that are (i) directly attributable to the Acquisition; (ii) factually supportable; and (iii) expected to have a continuing impact on the Company’s combined results. The pro forma information as presented below is for informational purposes only and is not indicative of the results of operations that would have been achieved if the Acquisition had taken place at the beginning of fiscal 2018.
Actual results related to EMP included in the Consolidated Statements of Operations for the three months ended June 30, 2019 consist of revenues of $59 million and operating income of $4 million. Actual results related to EMP included in the Consolidated Statements of Operations for the nine months ended June 30, 2019 relate to the transition period from October 10, 2018 to June 30, 2019 and consist of revenues of $186 million and operating income of $8 million. |
Comprehensive Income |
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Comprehensive Income | Comprehensive Income Comprehensive income, which is reported in the accompanying consolidated statements of (deficit) equity, consists of net income and other gains and losses affecting equity that, under U.S. GAAP, are excluded from net income. For the Company, the components of other comprehensive income primarily consist of foreign currency translation gains and 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 approximately $1 million:
__________________________ (a)Includes historical foreign currency translation related to certain intra-entity transactions. |
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Goodwill and Intangible Assets Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Goodwill and Intangible Assets | Goodwill and Intangible Assets Goodwill The following analysis details the changes in goodwill for each reportable segment:
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The Company performs its annual goodwill impairment test in accordance with ASC 350, Intangibles—Goodwill and other (“ASC 350”) during the fourth quarter of each fiscal year as of July 1. The Company may conduct an earlier review if events or circumstances occur that would suggest the carrying value of the Company’s goodwill may not be recoverable. No indicators of impairment were identified during the current period that required the Company to perform an interim assessment or recoverability test. Intangible Assets Intangible assets consist of the following:
As of June 30, 2019, the Company disposed of $7 million of gross intangible assets that were fully amortized. |
Debt |
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Debt Disclosure [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Debt | 7. Debt Debt Capitalization Long-term debt, all of which was issued by Acquisition Corp., consists of the following:
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December 2017 Senior Term Loan Credit Agreement Amendment On December 6, 2017, Acquisition Corp. entered into an amendment (the “December 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, change certain incurrence thresholds governing the ability to incur debt and liens, change certain EBITDA add-backs and increase the thresholds above which the excess cash flow sweep is triggered. The Company recorded a loss on extinguishment of debt of approximately $1 million, which represented the discount and unamortized deferred financing costs related to the prior tranche of debt of the lenders that was replaced. New Revolving Credit Agreement On January 31, 2018, the Company entered into a new revolving credit agreement (the “Revolving Credit Agreement”) for its Revolving Credit Facility and terminated its existing revolving credit agreement (the “Old Revolving Credit Agreement”). The Revolving Credit Agreement differs from the Old Revolving Credit Agreement in that it, among other things, reduces the interest rate margin applicable to the loans, extends the maturity date thereunder, provides for the option to increase the commitments under the Company’s then existing revolving credit agreement, provides for greater flexibility to amend and extend the Company’s then existing revolving credit agreement and create additional tranches thereunder, provides for greater flexibility over future amendments, increases the springing financial maintenance covenant to 4.75:1.00 and provides that the covenant shall not be tested unless at the end of a fiscal quarter the outstanding amount of loans and drawings under letters of credit which have not been reimbursed exceeds $54 million and aligns the other negative covenants with those of the Senior Term Loan Credit Agreement. References to “Revolving Credit Facility” below in this Note 7 are to our new revolving credit facility. March 2018 Senior Term Loan Credit Agreement Amendment On March 14, 2018, Acquisition Corp. incurred $320 million of supplemental term loans (the “Supplemental Term Loans”) pursuant to an increase supplement (the “March 2018 Senior Term Loan Credit Agreement Supplement”) 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 (as amended, the “Senior Term Loan Credit Agreement”). The principal amount outstanding under the Senior Term Loan Credit Agreement including the Supplemental Term Loans is $1.326 billion. Notes Offering On March 14, 2018, Acquisition Corp. issued $325 million in aggregate principal amount of its 5.500% Senior Notes due 2026. Acquisition Corp. used the net proceeds to pay the consideration in the tender offer for its 6.750% Senior Notes due 2022 (the “6.750% Senior Notes”) and to redeem the remaining 6.750% Senior Notes as described below. Tender Offer and Notes Redemption On March 14, 2018, Acquisition Corp. accepted for purchase in connection with the tender offer for the 6.750% Senior Notes that had been validly tendered and not validly withdrawn at or prior to 5:00 p.m., New York City time on March 13, 2018 (the “Expiration Time”) thereby reducing the aggregate principal amount of the 6.750% Senior Notes by $523 million. Acquisition Corp. then issued a notice of redemption on March 14, 2018 with respect to the remaining $112 million of 6.750% Senior Notes outstanding that were not accepted for payment pursuant to the tender offer. Following payment of the 6.750% Senior Notes tendered at or prior to the Expiration Time, Acquisition Corp. deposited with the Trustee funds of $119 million to satisfy all obligations under the applicable indenture governing the 6.750% Senior Notes, including call premiums and interest through the date of redemption on April 15, 2018, for the remaining 6.750% Senior Notes not accepted for purchase in the tender offer. On April 15, 2018, Acquisition Corp. redeemed the remaining outstanding 6.750% Senior Notes. The Company recorded a loss on extinguishment of debt in connection with the tender offer of approximately $23 million as a result of the partial debt redemption, which represents the premium paid on early redemption and unamortized deferred financing costs in March 2018. The Company incurred an additional loss on extinguishment of approximately $5 million in April 2018 related to the redemption on the remaining 6.750% Senior Notes, which represents the premium paid on early redemption and unamortized deferred financing costs. June 2018 Senior Term Loan Credit Agreement Amendment On June 7, 2018, Acquisition Corp. entered into an amendment (the “June 2018 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, change certain incurrence thresholds governing the ability to incur debt and liens and exclude from the definition of “Senior Secured Indebtedness” certain liens that have junior lien priority on the collateral in relation to the outstanding term loans and the relevant guarantees, as applicable. The Company recorded a loss on extinguishment of debt of approximately $2 million, which represented the discount and unamortized deferred financing costs related to the prior tranche of debt of the lenders that was replaced. 3.625% Senior Secured Notes Offerings On October 9, 2018, Acquisition Corp. issued and sold €250 million in aggregate principal amount of 3.625% Senior Secured Notes due 2026 (the “3.625% Secured Notes”). Net proceeds of the offering were used to pay the purchase price of the acquisition of EMP, to redeem €34.5 million of the 4.125% Secured Notes (as described below), purchase $30 million of the Company’s 4.875% Senior Secured Notes (as described above) on the open market, and to redeem $26.55 million of the 5.625% Senior Secured Notes (as described below). On April 30, 2019, Acquisition Corp. issued and sold €195 million in aggregate principal amount of additional 3.625% Senior Secured Notes due 2026 (the "Additional Notes"). The Additional Notes and the 3.625% Secured Notes were treated as the same series for all purposes under the indenture that governs the 3.625% Secured Notes and the Additional Notes. Net proceeds of the offering were used to redeem all of the 5.625% Secured Notes due 2022. Partial Redemption of 4.125% Senior Secured Notes On October 12, 2018, Acquisition Corp. redeemed €34.5 million aggregate principal amount of its 4.125% Senior Secured Notes due 2024 (the “4.125% Secured Notes”) using a portion of the proceeds from the offering of the 3.625% Secured Notes described above. The redemption price for the 4.125% Secured Notes was approximately €36.17 million, equivalent to 103% of the principal amount of the 4.125% Secured Notes, plus accrued but unpaid interest thereon to, but excluding, the redemption date, which was October 12, 2018. Following the partial redemption of the 4.125% Secured Notes, €310.5 million of the 4.125% Secured Notes remain outstanding. The Company recorded a loss on extinguishment of debt of approximately $2 million, which represents the premium paid on early redemption and unamortized deferred financing costs related to the partial redemption of this note. Open Market Purchase On October 9, 2018, Acquisition Corp. purchased, in the open market, $30 million aggregate principal amount of its outstanding 4.875% Senior Secured Notes due 2024 (the “4.875% Secured Notes”). The acquired notes were subsequently retired. Following retirement of the acquired notes, $220 million of the 4.875% Secured Notes remain outstanding. The Company recorded a loss on extinguishment of debt of less than $1 million, which represents the unamortized deferred financing costs related to the open market purchase. Redemption of 5.625% Senior Secured Notes On November 5, 2018, Acquisition Corp. redeemed $26.55 million aggregate principal amount of its 5.625% Senior Secured Notes due 2022 (the “5.625% Secured Notes”). The redemption price for the 5.625% Secured Notes was approximately $27.38 million, equivalent to 102.813% of the principal amount of the 5.625% Secured Notes, plus accrued but unpaid interest thereon to, but excluding, the redemption date, which was November 5, 2018. Following the partial redemption of the 5.625% Secured Notes, $220.95 million of the 5.625% Secured Notes remain outstanding. 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 related to the partial redemption of this note. On April 16, 2019, the Company issued a conditional notice of redemption for all of its 5.625% Secured Notes due 2022 currently outstanding. Settlement of the called 5.625% Secured Notes occurred on May 16, 2019. The Company recorded a loss on extinguishment of debt of approximately $4 million, which represents the premium paid on early redemption and unamortized deferred financing costs. Interest Rates The loans under the Revolving Credit Facility bear interest at Acquisition Corp.’s election at a rate equal to (i) the rate for deposits in the borrowing currency in the London interbank market (adjusted for maximum reserves) for the applicable interest period (“Revolving LIBOR”) subject to a zero floor, plus 1.75% 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, 0.75% 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”) subject to a zero floor, plus 2.125% per annum, or (ii) the base rate, which is the highest of (x) the corporate base rate established by the administrative agent as its prime rate in effect at its principal office in New York City from time to time, (y) 0.50% in excess of the overnight federal funds rate and (z) one-month Term Loan LIBOR, plus 1.00% per annum, plus, in each case, 1.125% 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. The Company has entered into, and in the future may enter into, interest rate swaps to manage interest rate risk. Maturity of Senior Term Loan Facility The loans outstanding under the Senior Term Loan Facility mature on November 1, 2023. Maturity of Revolving Credit Facility The maturity date of the Revolving Credit Facility is January 31, 2023. Maturities of Senior Notes and Senior Secured Notes As of June 30, 2019, there are no scheduled maturities of notes until 2023, when $300 million is scheduled to mature. Thereafter, $1.404 billion is scheduled to mature. Interest Expense, net Total interest expense, net, was $36 million and $33 million for the three months ended June 30, 2019 and June 30, 2018, respectively. Total interest expense, net, was $108 million and $105 million for the nine months ended June 30, 2019 and June 30, 2018, respectively. The weighted-average interest rate of the Company’s total debt was 4.5% at June 30, 2019 and 4.7% at September 30, 2018 and June 30, 2018. |
Commitments and Contingencies |
9 Months Ended |
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Jun. 30, 2019 | |
Commitments and Contingencies Disclosure [Abstract] | |
Commitments and Contingencies | Commitments and Contingencies 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 resolved all past claims as to Sirius XM’s use of pre-1972 recordings owned or controlled by the plaintiffs and enabled Sirius XM, without any additional payment, to reproduce, perform and broadcast such recordings in the United States through December 31, 2017. 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 of $1 million was recognized 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. As part of the settlement, plaintiffs agreed to negotiate in good faith to grant Sirius XM a license to publicly perform the plaintiffs’ pre-1972 sound recordings for the five-year period running from January 1, 2018 to December 31, 2022. Pursuant to the settlement, if the parties were unable to reach an agreement on license terms, the royalty rate for each license would be determined by binding arbitration on a willing buyer/willing seller standard. On December 21, 2017, Sirius XM commenced a single arbitration against all of the plaintiffs in California through JAMS to determine the rate for the five-year period. On May 1, 2018, the Company filed a lawsuit against Sirius XM in New York state court to stay the California arbitration and to compel a separate arbitration in New York solely between Sirius XM and the Company. On August 23, 2018, the Company filed a Stipulation of Discontinuance without Prejudice as to the New York state court action after Sirius XM agreed to participate in a separate arbitration with the Company in New York if the parties were unable to reach an agreement on pre-1972 license terms. On March 28, 2019, the Company and Sirius XM entered into an agreement granting Sirius XM a license to publicly perform the Company’s pre-1972 sound recordings for the five-year period running from January 1, 2018 to December 31, 2022. Other Matters In addition to the matters discussed above, the Company is involved in various litigation and regulatory proceedings arising in the normal course of business. Where it is determined, in consultation with counsel based on litigation and settlement risks, that a loss is probable and estimable in a given matter, the Company establishes an accrual. In 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. |
Income Taxes |
9 Months Ended |
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Jun. 30, 2019 | |
Income Tax Disclosure [Abstract] | |
Income Taxes | Income Taxes On December 22, 2017, the U.S. government enacted comprehensive tax legislation commonly referred to as the Tax Cuts and Jobs Act (“Tax Act”). The Tax Act contains significant revisions to U.S. federal corporate income tax provisions, including, but not limited to, a reduction of the U.S. federal corporate statutory tax rate from 35% to 21%, a one-time transition tax on accumulated foreign earnings, an income inclusion of global intangible low-taxed income (“GILTI”), a deduction against foreign-derived intangible income (“FDII”) and a new minimum tax, the base erosion anti-abuse tax (“BEAT”). In accordance with ASC 740, the Company recorded the effects of the Tax Act during the three months ended December 31, 2017. The reduction in U.S. federal corporate statutory tax rate from 35% to 21% was effective January 1, 2018. The Tax Act requires companies with a fiscal year that begins before and ends after the effective date of the rate change to calculate a blended tax rate based on the pro rata number of days in the fiscal year before and after the effective date. As a result, for the fiscal year ending September 30, 2018, the Company’s U.S. federal statutory income tax rate was 24.5%. For the fiscal year ending September 30, 2019, the Company will be subject to the U.S. federal corporate statutory tax rate of 21%. The reduction in the U.S. federal corporate statutory tax rate required the Company to adjust its U.S. deferred tax assets and liabilities using the newly enacted tax rate of 21%. As a result, the Company recorded a U.S. income tax expense of $23 million for the reduction of its net U.S. deferred tax assets for the year ended September 30, 2018. The Company has not recorded any income tax liability related to the one-time transition tax on accumulated foreign earnings (“Transition Tax”) due to an overall deficit in accumulated foreign earnings. GILTI, FDII and BEAT are effective for the Company’s fiscal year ending September 30, 2019. The Company expects that the impact of GILTI offset by FDII will increase its U.S. federal tax in fiscal 2019 due primarily to the negative impact of U.S. net operating loss carryforward utilization on the allowable GILTI and FDII deductions. The Company has elected to recognize the GILTI impact in the specific period in which it occurs. For the three and nine months ended June 30, 2019, the Company recorded an income tax benefit of $12 million and expense of $86 million, respectively. The income tax benefit for the three months ended June 30, 2019 is lower than the expected tax at the statutory tax rate of 21% primarily due to a change in components of forecasted income that resulted in a decrease of the GILTI impact and higher foreign tax credit utilization. The income tax expense for the nine months ended June 30, 2019 is higher than the expected tax at the statutory tax rate of 21% primarily due to GILTI, non-deductible long term incentive plan, U.S. state and local taxes, foreign income taxed at rates higher than the U.S. statutory tax rate, income withholding taxes, foreign losses with no tax benefit offset by the tax benefit of a reduction in foreign income tax rates. For the three and nine months ended June 30, 2018, the Company recorded an income tax expense of $61 million and $132 million, respectively. The income tax expense for the three months ended June 30, 2018 is lower than the expected tax at the blended statutory tax rate of 24.5% primarily due to recognition of a deferred tax asset related to a prior year intergroup transfer, $9 million change in provisional amount for the U.S. income tax reform and a release of uncertain tax positions partially offset by state tax expense. The income tax expense for the nine months ended June 30, 2018 is greater than the expected income tax expense at the blended statutory tax rate of 24.5% primarily due to a U.S. income tax expense of $17 million arising from a reduction in net U.S. deferred tax assets due to the change in the U.S. statutory tax rate, state tax expense, foreign income taxed at rates higher than the U.S. statutory tax rate, income withholding taxes, foreign losses with no tax benefit reduced by recognition of the deferred tax asset related to a prior year intergroup transfer and a release in uncertain tax positions. The Company has determined that it is reasonably possible that the gross unrecognized tax benefits as of June 30, 2019 could decrease by up to approximately $2 million related to various ongoing audits and settlement discussions in various foreign jurisdictions during the next twelve months. |
Derivative Financial Instruments |
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Derivative Instruments and Hedging Activities Disclosure [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Derivative Financial Instruments | Derivative Financial Instruments The Company uses derivative financial instruments, primarily foreign currency forward exchange contracts and interest rate swaps, for the purposes of managing foreign currency exchange rate risk and interest rate risk on expected future cash flows. However, the Company may choose not to hedge certain exposures for a variety of reasons including, but not limited to, accounting considerations and the prohibitive economic cost of hedging particular exposures. There can be no assurance the hedges will offset more than a portion of the financial impact resulting from movements in foreign currency exchange or interest 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, Australian dollar, Brazilian real, Korean wan and Norwegian krone. 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 records these contracts at fair value on its balance sheet and gains or losses on these contracts are deferred in equity (as a component of comprehensive loss). These deferred gains and losses are recognized in income in the period in which the related royalties and license fees being hedged are received and recognized in income. However, to the extent that any of these contracts are not considered to be perfectly effective in offsetting the change in the value of the royalties and license fees being hedged, any changes in fair value relating to the ineffective portion of these contracts are immediately recognized in the statement of operations. The Company may at times choose to hedge foreign currency risk associated with financing transactions such as third-party 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 Company has entered into, and in the future may enter into, interest rate swaps to manage interest rate risk. These instruments may offset a portion of changes in income or expense, or changes in fair value of the Company’s long-term debt. The interest rate swap instruments are designated and qualify as cash flow hedges under the criteria prescribed in ASC 815, Derivatives and Hedging. The Company records these contracts at fair value on its balance sheet and gains or losses on these contracts are deferred in equity (as a component of comprehensive loss). 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 13. 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’s hedged interest rate transactions as of June 30, 2019 are expected to be recognized within 4 years. The fair value of interest rate swaps is based on dealer quotes of market rates (i.e., Level 2 inputs) which is discussed further in Note 13. Interest income or expense related to interest rate swaps is recognized in interest income, net in the same period as the related expense is recognized. The ineffective portions of interest rate swaps are recognized in other income/(expense), net in the period measured. The Company monitors its positions with, and the credit quality of, the financial institutions that are party to any of its financial transactions. As of June 30, 2019, the Company had outstanding hedge contracts for the sale of $153 million and the purchase of $93 million of foreign currencies at fixed rates that will be settled by September 2019. As of June 30, 2019, the Company had $1 million of unrealized deferred losses in comprehensive income related to foreign exchange hedging. As of September 30, 2018, the Company had no outstanding hedge contracts and no deferred gains or losses in comprehensive loss related to foreign exchange hedging. As of June 30, 2019 and September 30, 2018, the Company had outstanding $320 million in pay-fixed receive-variable interest rate swaps with unrealized deferred losses in comprehensive income related to the interest rate swap of $8 million and unrealized deferred gains in comprehensive income related to the interest rate swap of $3 million, respectively. The unrealized pre-tax losses of the Company’s foreign exchange forward exchange contracts designated as cash flow hedges recorded in other comprehensive income during the nine months ended June 30, 2019 was $1 million. The unrealized pre-tax loss of the Company’s foreign exchange forward contracts designated as cash flow hedges recorded in other comprehensive income during the nine months ended June 30, 2018 was $1 million. The unrealized pre-tax losses of the Company’s derivative interest rate swaps designated as cash flow hedges recorded in other comprehensive income during the nine months ended June 30, 2019 was $15 million. The pre-tax gains of the Company’s derivative interest rate swaps designated as cash flow hedges recorded in other comprehensive income and the Consolidated Statement of Comprehensive Income during the nine months ended June 30, 2018 was $2 million. The following is a summary of amounts recorded in the Consolidated Balance Sheets pertaining to the Company’s designated cash flows hedges at June 30, 2019 and September 30, 2018:
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Segment Information |
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Segment Reporting [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Segment Information | 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.
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Additional Financial Information |
9 Months Ended |
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Jun. 30, 2019 | |
Additional Financial Information [Abstract] | |
Additional Financial Information | Additional Financial Information Cash Interest and Taxes The Company made interest payments of approximately $50 million and $41 million during the three months ended June 30, 2019 and June 30, 2018, respectively. The Company made interest payments of approximately $120 million and $126 million during the nine months ended June 30, 2019 and June 30, 2018, respectively. The Company paid approximately $22 million of income and withholding taxes during the three months ended June 30, 2019 and paid approximately $15 million of income and withholding taxes during the three months ended June 30, 2018. The Company paid approximately $40 million of income and withholding taxes during the nine months ended June 30, 2019 and paid approximately $33 million of income and withholding taxes during the nine months ended June 30, 2018. Special Cash Dividends On January 8, 2018, the Company’s Board of Directors approved a special cash dividend of $125 million, which was paid on January 12, 2018 to stockholders of record as of January 11, 2018. On May 7, 2018, the Company’s Board of Directors approved a special cash dividend of $300 million, which was paid on May 11, 2018 to stockholders of record as of May 7, 2018. On August 7, 2018, the Company’s Board of Directors approved a special cash dividend of $500 million, which was paid on August 10, 2018 to stockholders of record as of August 7, 2018. Dividend Policy The Company’s ability to pay dividends is restricted by covenants in the indentures governing our notes and in the credit agreements for our Senior Term Loan Facility and the Revolving Credit Facility. In the first quarter of 2019, the Company instituted a regular quarterly dividend policy whereby it intends to pay a modest regular quarterly dividend in each fiscal quarter and a variable dividend for the fourth fiscal quarter in an amount commensurate with cash expected to be generated from operations in such fiscal year, in each case, after taking into account other potential uses for cash, including acquisitions, investment in our business and repayment of indebtedness. On December 20, 2018 the Company’s Board of Directors approved the first dividend of $31.25 million which was paid on January 4, 2019. On March 26, 2019, the Company’s Board of Directors approved a dividend of $31.25 million which was paid on April 5, 2019. On June 28, 2019, the Company’s Board of Directors approved a dividend of $31.25 million paid on July 5, 2019 and recorded as an accrual on June 30, 2019. The declaration of each dividend will continue to be at the discretion of the Company’s Board of Directors. Spotify Share Sale During the three months ended June 30, 2018, the Company sold all of its shares of common stock in Spotify Technology S.A. (“Spotify”) for cash proceeds of $504 million. In February 2016, the Company publicly announced that it would pay royalties in connection with these proceeds. The sale of shares resulted in an estimated pre-tax gain, net of the estimated royalty expense and other related costs, of $378 million, which has been recorded as other income (expense) in the quarter. As of June 30, 2018, the estimated royalty expense and other related costs had been accrued, and were subsequently paid. The processing of the royalty expense resulted in advance recoveries of previously expensed royalty advances. The Company estimated the advance recoveries to be approximately $16 million, and recorded these advance recoveries as a credit within operating expense in the three and nine months ended June 30, 2018. The Company also recorded estimated tax expense of $77 million associated with the net income on the sale of shares in the quarter. |
Fair Value Measurements |
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Fair Value Disclosures [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Fair Value Measurements | Fair Value Measurements ASC 820, Fair Value Measurement (“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:
In accordance with the fair value hierarchy, described above, the following table shows the fair value of the Company’s financial instruments that are required to be measured at fair value as of June 30, 2019 and September 30, 2018.
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The following table reconciles the beginning and ending balances of net assets and liabilities classified as Level 3:
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. Equity Investments Without Readily Determinable Fair Value The Company evaluates its equity investments without readily determinable fair values for impairment if factors indicate that a significant decrease in value has occurred. Beginning in October 2018, the Company prospectively adopted a new accounting standard on the accounting for equity investments that do not have readily determinable fair values. Refer to Note 2, “Summary of Significant Accounting Policies”, for further details. Under the new standard, the Company has elected to use the measurement alternative to fair value that will allow these investments to be recorded at cost, less impairment, and adjusted for subsequent observable price changes. The Company did not record any impairment charges on these investments during the nine months ended June 30, 2019. In addition, there were no observable price changes events that were completed during the nine months ended June 30, 2019. Fair Value of Debt Based on the level of interest rates prevailing at June 30, 2019, the fair value of the Company’s debt was $3.083 billion. Based on the level of interest rates prevailing at September 30, 2018, the fair value of the Company’s debt was $2.862 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. |
Related Party |
9 Months Ended |
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Jun. 30, 2019 | |
Related Party Transactions [Abstract] | |
Related Party | Related Party On March 29, 2019, an affiliate of Access acquired the Ford Factory Building from an unaffiliated third party, located on 777 S. Santa Fe Avenue in Los Angeles, California. The Ford Factory is the Company’s Los Angeles, California headquarters and as such, the Company is the sole tenant of the building acquired by Access. The existing lease agreement was assumed by Access upon purchase of the building and was not modified as a result of the purchase. Rental payments by the Company under the existing lease total approximately $10 million per year, subject to annual fixed increases. The remaining lease term is approximately 11 years, after which the Company may exercise a single option to extend the term of the lease for 10 years thereafter. |
Guarantor and Non-Guarantor Subsidiaries Financial Information |
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Condensed Financial Information 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. As of June 30, 2019, Acquisition Corp. had issued and outstanding the 5.00% Senior Secured Notes due 2023, the 4.125% Senior Secured Notes due 2024, the 4.875% Senior Secured Notes due 2024, the 3.625% Senior Secured Notes due 2026 and the 5.50% Senior Notes due 2026 (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 is 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 (Unaudited) June 30, 2019
Consolidating Balance Sheet September 30, 2018
Consolidating Statement of Operations (Unaudited) For The Three Months Ended June 30, 2019
Consolidating Statement of Operations (Unaudited) For Three Months Ended June 30, 2018
Consolidating Statement of Operations (Unaudited) For The Nine Months Ended June 30, 2019
Consolidating Statement of Operations (Unaudited) For The Nine Months Ended June 30, 2018
Consolidating Statement of Comprehensive Income (Unaudited) For The Three Months Ended June 30, 2019
Consolidating Statement of Comprehensive Income (Unaudited) For The Three Months Ended June 30, 2018
Consolidating Statement of Comprehensive Income (Unaudited) For The Nine Months Ended June 30, 2019
Consolidating Statement of Comprehensive Income (Unaudited) For The Nine Months Ended June 30, 2018
Consolidating Statement of Cash Flows (Unaudited) For The Nine Months Ended June 30, 2019
Consolidating Statement of Cash Flows (Unaudited) For The Nine Months Ended June 30, 2018
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Summary of Significant Accounting Policies (Policies) |
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Accounting Policies [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Interim Financial Statements | Interim Financial Statements The accompanying unaudited consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States (“U.S. GAAP”) for interim financial information and with the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all the information and notes required by U.S. GAAP for complete financial statements. In the opinion of management, all adjustments (consisting of normal recurring accruals) considered necessary for a fair presentation have been included. Operating results for the three and nine month periods ended June 30, 2019 are not necessarily indicative of the results that may be expected for the fiscal year ending September 30, 2019. The consolidated balance sheet at September 30, 2018 has been derived from the audited consolidated financial statements at that date but does not include all the information and notes required by U.S. GAAP for complete financial statements. For further information, refer to the consolidated financial statements and notes thereto included in our Annual Report on Form 10-K for the fiscal year ended September 30, 2018 (File No. 001-32502). |
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Basis of Consolidation | Basis of Consolidation The accompanying financial statements present the consolidated accounts of all entities in which the Company has a controlling voting interest and/or variable interest required to be consolidated in accordance with U.S. GAAP. All intercompany balances and transactions have been eliminated. Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) Topic 810, Consolidation (“ASC 810”), requires the Company first evaluate its investments to determine if any investments qualify as a variable interest entity (“VIE”). A VIE is consolidated if the Company is deemed to be the primary beneficiary of the VIE, which is the party involved with the VIE that has both (i) the power to control the most significant activities of the VIE and (ii) either the obligation to absorb losses or the right to receive benefits that could potentially be significant to the VIE. If an entity is not deemed to be a VIE, the Company consolidates the entity if the Company has a controlling voting interest. The Company maintains a 52-53 week fiscal year ending on the last Friday in each reporting period. As such, all references to June 30, 2019 and June 30, 2018 relate to the periods ended June 28, 2019 and June 29, 2018, respectively. For convenience purposes, the Company continues to date its financial statements as of June 30. The fiscal year ended September 30, 2018 ended on September 28, 2018. The Company has performed a review of all subsequent events through the date the financial statements were issued and has determined that no additional disclosures are necessary. |
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Income Taxes | Income Taxes At the end of each interim period, the Company makes its best estimate of the effective tax rate expected to be applicable for the full fiscal year and uses that rate to provide for income taxes on a current year-to-date basis before discrete items. On December 22, 2017, the U.S. government enacted comprehensive tax legislation commonly referred to as the Tax Cuts and Jobs Act (the “Tax Act”). In accordance with ASC Topic 740, Income Taxes (“ASC 740”) the Company recorded the impacts in the period of enactment. |
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New Accounting Pronouncements | New Accounting Pronouncements Adoption of New Revenue Recognition Standard In May 2014, the FASB issued guidance codified in ASC 606, Revenue from Contracts with Customers (“ASC 606”), which replaces the guidance in former ASC 605, Revenue Recognition and ASC 928-605, Entertainment – Music. The amendment was the result of a joint effort by the FASB and the International Accounting Standards Board to improve financial reporting by creating common revenue recognition guidance for U.S. GAAP and international financial reporting standards ("IFRS"). The joint project clarifies the principles for recognizing revenue and develops a common revenue standard for U.S. GAAP and IFRS. The Company adopted ASC 606 on October 1, 2018, using the modified retrospective method to all contracts not completed as of the date of adoption. The reported results as of and for the three and nine months ended June 30, 2019 reflect the application of the new standard, while the reported results for the three and nine months ended June 30, 2018 have not been adjusted to reflect the new standard and were prepared under prior revenue recognition accounting guidance. The adoption of ASC 606 resulted in a change in the timing of revenue recognition in the Company’s Music Publishing segment as well as international broadcast rights within Recorded Music. Under the new revenue recognition rules, revenue is recorded based on best estimates available in the period of sale or usage whereas revenue was previously recorded when cash was received for both the licensing of publishing rights and international Recorded Music broadcast fees. Additionally, for certain licenses where the consideration is fixed and the intellectual property being licensed is static, revenue is recognized at the point in time when control of the licensed content is transferred to the customer. As a result of adopting ASC 606, the Company recorded a decrease to the opening accumulated deficit of approximately $139 million, net of tax, as of October 1, 2018. The Company also reclassified $28 million from accounts receivable to other current liabilities related to estimated refund liabilities for our physical sales. The following table provides the cumulative effect of the changes made to the opening balance sheet, as of October 1, 2018, from the adoption of ASC 606 and which primarily relates to the accrual of licensing revenue in the period of sale or usage.
The disclosure of the impact of adoption on the consolidated statement of operations for the three and nine months ended June 30, 2019, the consolidated balance sheet as of June 30, 2019, and the consolidated statement of cash flows for the nine months ended June 30, 2019 are as follows (in millions):
Recently Adopted Accounting Pronouncements In January 2016, the FASB issued ASU 2016-01, Recognition and Measurement of Financial Assets and Financial Liabilities (“ASU 2016-01”). This ASU will require that equity investments, except those investments under the equity method of accounting, are measured at fair value with changes in fair value recognized in net income. The Company may elect to measure equity investments that do not have a readily determinable fair value at cost minus impairment, if any, plus or minus changes resulting from observable prices. The Company adopted ASU 2016-01 on October 1, 2018 and has elected to use the measurement alternative to measure our equity investments without readily determinable fair values. This guidance was applied prospectively and did not have a significant impact on the Company’s financial statements. For the nine months ended June 30, 2019, there were no observable price change events that were completed related to our equity investments without readily determinable fair values. In August 2016, the FASB issued ASU 2016-15, Statement of Cash Flows: Classification of Certain Cash Receipts and Cash Payments ("ASU 2016-15"). This ASU provides specific guidance of how certain cash receipts and cash payments should be presented and classified in the statement of cash flows. ASU 2016-15 is effective for annual periods beginning after December 15, 2017, and interim periods within those years. The Company adopted ASU 2016-15 in the first quarter of fiscal 2019 and this adoption did not have a significant impact on the Company’s financial statements. In October 2016, the FASB issued ASU 2016-16, Income Taxes: Intra-Entity Transfers of Assets Other Than Inventory ("ASU 2016-16"). This ASU requires the recognition of current and deferred income taxes for intra-entity asset transfers when the transaction occurs. ASU 2016-16 is effective for annual periods beginning after December 15, 2017, and interim periods within those years. The Company adopted ASU 2016-16 in the first quarter of fiscal 2019 and this adoption did not have a significant impact on the Company’s financial statements. In January of 2017, the FASB issued ASU 2017-01, Business Combinations (“ASU 2017-01”), to clarify the definition of a business, which establishes a process to determine when an integrated set of assets and activities can be deemed a business combination. The Company adopted ASU 2017-01 in the first quarter of fiscal 2019 and this adoption did not have a significant impact on the Company’s financial statements. In February 2018, FASB issued ASU 2018-02, Income Statement – Reporting Comprehensive Income (“ASU 2018-02”). This ASU allows a reclassification from accumulated other comprehensive income to accumulated deficit for stranded tax effects resulting from the Tax Act. ASU 2018-02 is effective for all entities for fiscal years beginning after December 15, 2018 and interim periods within those fiscal years. Early adoption is permitted, including adoption in any interim period. The Company adopted ASU 2018-02 in the first quarter of fiscal 2019 and this adoption did not have a significant impact on the Company’s financial statements. Accounting Pronouncements Not Yet Adopted In February 2016, the FASB issued ASU 2016-02, Leases (“ASU 2016-02”), which established a new ASC Topic 842 (ASC 842). This ASU establishes a right-of-use (“ROU”) model that requires a lessee to record a ROU asset and a lease liability on the balance sheet for all leases with terms longer than 12 months. Leases will be classified as either finance or operating, with classification affecting the pattern of expense recognition in the statement of operations. ASU 2016-02 will be effective for annual periods beginning after December 15, 2018, and interim periods within those years. Earlier adoption is permitted. In July 2018, the FASB issued ASU 2018-11, Leases - Targeted Improvements (“ASU 2018-11”), which allows for retrospective application with the recognition of a cumulative-effect adjustment to the opening balance of retained earnings in the period of adoption. Under this option, entities would not need to apply ASC 842 (along with its disclosure requirements) to the comparative prior periods presented. Upon adoption, the Company expects that most of our operating leases will be recognized as operating lease liabilities and ROU assets on our consolidated balance sheet. The Company continues to evaluate the impact of the adoption of this standard on its financial statements and disclosures and expects to elect the optional transition method that allows for a cumulative-effect adjustment upon adoption. In August 2017, the FASB issued ASU 2017-12, Targeted Improvements to Accounting for Hedging Activities (“ASU 2017-12”). This ASU improves certain aspects of the hedge accounting model including making more risk management strategies eligible for hedge accounting and simplifying the assessment of hedge effectiveness. ASU 2017-12 is effective for all annual periods beginning after December 15, 2018 and interim periods within those fiscal years. Early adoption is permitted and requires a prospective adoption with a cumulative-effect adjustment to accumulated deficit as of the beginning of the fiscal year of adoption for existing hedging relationships. The Company is evaluating the impact of the adoption of this standard on its financial statements and disclosures. |
Summary of Significant Accounting Policies (Tables) |
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Accounting Policies [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Cumulative Effect of Changes to Opening Balance Sheet from Adoption of ASC 606 | The following table provides the cumulative effect of the changes made to the opening balance sheet, as of October 1, 2018, from the adoption of ASC 606 and which primarily relates to the accrual of licensing revenue in the period of sale or usage.
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Schedule of Impact of Adoption on Consolidated Statement of Operations, Balance Sheet and Statement of Cash Flows | The disclosure of the impact of adoption on the consolidated statement of operations for the three and nine months ended June 30, 2019, the consolidated balance sheet as of June 30, 2019, and the consolidated statement of cash flows for the nine months ended June 30, 2019 are as follows (in millions):
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Revenue Recognition (Tables) |
9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Jun. 30, 2019 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Revenue from Contract with Customer [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Summary of Disaggregation of Revenue | Our revenue consists of the following categories, which aggregate into our segments - Recorded Music and Music Publishing (in millions):
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Summary of Revenues Expected to be Recognized in Future Related to Performance Obligations | Revenues expected to be recognized in the future related to performance obligations that are unsatisfied at June 30, 2019 are as follows (in millions):
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Acquisition of EMP (Tables) |
9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Jun. 30, 2019 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Business Combinations [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Estimated Fair Values of the Assets Acquired and Liabilities Assumed | The table below presents (i) the preliminary estimate of the Acquisition consideration as it relates to the acquisition of EMP by WMG Germany and (ii) the preliminary allocation of the purchase price to the estimated fair values of the assets acquired and liabilities assumed on the closing date of October 10, 2018 (in millions):
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Schedule of Pro Forma Financial Information | The pro forma information as presented below is for informational purposes only and is not indicative of the results of operations that would have been achieved if the Acquisition had taken place at the beginning of fiscal 2018.
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Comprehensive Income (Tables) |
9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Jun. 30, 2019 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Equity [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Accumulated Other Comprehensive Loss | The following summary sets forth the changes in the components of accumulated other comprehensive loss, net of related taxes of approximately $1 million:
__________________________ (a)Includes historical foreign currency translation related to certain intra-entity transactions. |
Goodwill and Intangible Assets (Tables) |
9 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Jun. 30, 2019 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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:
_______________________
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Schedule of Indefinite Intangible Assets | Intangible assets consist of the following:
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Schedule of Finite-Lived Intangible Assets | Intangible assets consist of the following:
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Debt (Tables) |
9 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Jun. 30, 2019 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Debt Disclosure [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Long-term Debt | Long-term debt, all of which was issued by Acquisition Corp., consists of the following:
_______________________
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Derivative Financial Instruments (Tables) |
9 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Jun. 30, 2019 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Derivative Instruments and Hedging Activities Disclosure [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Summary of Amounts Recorded in Consolidated Balance Sheets | The following is a summary of amounts recorded in the Consolidated Balance Sheets pertaining to the Company’s designated cash flows hedges at June 30, 2019 and September 30, 2018:
_______________________
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Segment Information (Tables) |
9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Jun. 30, 2019 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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.
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Fair Value Measurements (Tables) |
9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Jun. 30, 2019 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Fair Value Disclosures [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Fair Value of Financial Instruments | In accordance with the fair value hierarchy, described above, the following table shows the fair value of the Company’s financial instruments that are required to be measured at fair value as of June 30, 2019 and September 30, 2018.
_______________________
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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:
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Guarantor and Non-Guarantor Subsidiaries Financial Information (Tables) |
9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Jun. 30, 2019 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Condensed Financial Information Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Consolidating Balance Sheet | Consolidating Balance Sheet (Unaudited) June 30, 2019
Consolidating Balance Sheet September 30, 2018
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Schedule of Consolidating Statement of Operations | Consolidating Statement of Operations (Unaudited) For The Three Months Ended June 30, 2019
Consolidating Statement of Operations (Unaudited) For Three Months Ended June 30, 2018
Consolidating Statement of Operations (Unaudited) For The Nine Months Ended June 30, 2019
Consolidating Statement of Operations (Unaudited) For The Nine Months Ended June 30, 2018
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Schedule of Consolidating Statement of Comprehensive Income | Consolidating Statement of Comprehensive Income (Unaudited) For The Three Months Ended June 30, 2019
Consolidating Statement of Comprehensive Income (Unaudited) For The Three Months Ended June 30, 2018
Consolidating Statement of Comprehensive Income (Unaudited) For The Nine Months Ended June 30, 2019
Consolidating Statement of Comprehensive Income (Unaudited) For The Nine Months Ended June 30, 2018
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Schedule of Consolidating Statement of Cash Flows | Consolidating Statement of Cash Flows (Unaudited) For The Nine Months Ended June 30, 2019
Consolidating Statement of Cash Flows (Unaudited) For The Nine Months Ended June 30, 2018
|
Description of Business - Additional Information (Detail) |
9 Months Ended |
---|---|
Jun. 30, 2019
musical_composition
country
songwriter
| |
Organization, Consolidation and Presentation of Financial Statements [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 | songwriter | 70,000 |
Summary of Significant Accounting Policies - Additional Information (Detail) - USD ($) $ in Millions |
Jun. 30, 2019 |
Oct. 01, 2018 |
Sep. 30, 2018 |
---|---|---|---|
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | |||
Accumulated deficit | $ (1,061) | $ (1,272) | |
Topic 606 | |||
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | |||
Accumulated deficit | $ (1,133) | ||
Reclassified from accounts receivable to other current liabilities | 28 | ||
Impact of Adoption | Topic 606 | |||
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | |||
Accumulated deficit | $ 160 | $ 139 |
Revenue Recognition - Additional Information (Detail) - USD ($) $ in Millions |
3 Months Ended | 9 Months Ended | |
---|---|---|---|
Jun. 30, 2019 |
Jun. 30, 2019 |
Sep. 30, 2018 |
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Revenue from Contract with Customer [Abstract] | |||
Refund liabilities | $ 25 | $ 25 | $ 28 |
Uncollectible accounts, reserves | 21 | 21 | $ 17 |
Deferred revenue increased related to cash received from customers | 247 | ||
Revenue recognized related to deferred revenue | 142 | ||
Revenue recognized from performance obligations satisfied in previous periods | $ 10 | $ 45 |
Acquisition of EMP - Additional Information (Detail) € in Millions, $ in Millions |
3 Months Ended | 9 Months Ended | ||||
---|---|---|---|---|---|---|
Oct. 10, 2018
USD ($)
|
Oct. 10, 2018
EUR (€)
|
Jun. 30, 2019
USD ($)
|
Jun. 30, 2018
USD ($)
|
Jun. 30, 2019
USD ($)
|
Jun. 30, 2018
USD ($)
|
|
Business Acquisition [Line Items] | ||||||
Benefit to amortization | $ 2 | |||||
Revenues | 1,058 | $ 958 | $ 3,351 | $ 2,966 | ||
Operating income | 58 | $ 28 | 327 | $ 201 | ||
EMP | ||||||
Business Acquisition [Line Items] | ||||||
Revenues | 59 | 186 | ||||
Operating income | $ 4 | $ 8 | ||||
EMP | ||||||
Business Acquisition [Line Items] | ||||||
Purchase and Sale Agreement Date | Sep. 11, 2018 | Sep. 11, 2018 | ||||
Purchase price of selected assets | € | € 166 | |||||
Agreed enterprise value for certain shares acquired | $ 180 | 155 | ||||
Final purchase price | $ 190 | € 165 |
Acquisition of EMP - Schedule of Estimated Fair Values of the Assets Acquired and Liabilities Assumed (Detail) € in Millions, $ in Millions |
Oct. 10, 2018
USD ($)
|
Oct. 10, 2018
EUR (€)
|
Jun. 30, 2019
USD ($)
|
Sep. 30, 2018
USD ($)
|
---|---|---|---|---|
Fair value of assets acquired and liabilities assumed | ||||
Goodwill recorded | $ 1,772 | $ 1,692 | ||
EMP | ||||
Business Acquisition [Line Items] | ||||
Purchase Price | $ 180 | € 155 | ||
Working Capital | € | 10 | |||
Final Purchase Price | $ 190 | € 165 | ||
Foreign Currency Rate at October 10, 2018 | 1.15 | |||
Fair value of assets acquired and liabilities assumed | ||||
Cash and equivalents | $ 7 | |||
Accounts receivable, net | 3 | |||
Inventories | 37 | |||
Other current assets | 5 | |||
Property plant and equipment | 32 | |||
Intangible assets | 81 | |||
Accounts payable | (18) | |||
Other current liabilities | (11) | |||
Deferred revenue | (7) | |||
Deferred tax liabilities | (25) | |||
Other noncurrent liabilities | (3) | |||
Fair value of assets acquired and liabilities assumed | 101 | |||
Goodwill recorded | 89 | |||
Total purchase price allocated | $ 190 |
Acquisition of EMP - Schedule of Pro Forma Financial Information (Detail) - EMP - USD ($) $ in Millions |
3 Months Ended | 9 Months Ended | ||
---|---|---|---|---|
Jun. 30, 2019 |
Jun. 30, 2018 |
Jun. 30, 2019 |
Jun. 30, 2018 |
|
Business Acquisition [Line Items] | ||||
Revenue | $ 1,058 | $ 1,011 | $ 3,356 | $ 3,153 |
Operating income | 58 | 29 | 327 | 201 |
Net income attributable to Warner Music Group | $ 13 | $ 321 | $ 166 | $ 320 |
Comprehensive Income - Additional Information (Detail) $ in Millions |
9 Months Ended |
---|---|
Jun. 30, 2019
USD ($)
| |
Maximum | |
Accumulated Other Comprehensive Income (Loss) [Line Items] | |
Changes in accumulated other comprehensive loss, net of related taxes | $ 1 |
Goodwill and Intangible Assets - Changes in Goodwill for Each Reportable Segment (Detail) $ in Millions |
9 Months Ended | |||||
---|---|---|---|---|---|---|
Jun. 30, 2019
USD ($)
| ||||||
Goodwill [Roll Forward] | ||||||
Beginning balance | $ 1,692 | |||||
Acquisitions | 89 | [1] | ||||
Divestitures | 0 | |||||
Other adjustments | (9) | [2] | ||||
Ending balance | 1,772 | |||||
Recorded Music | ||||||
Goodwill [Roll Forward] | ||||||
Beginning balance | 1,228 | |||||
Acquisitions | 89 | [1] | ||||
Divestitures | 0 | |||||
Other adjustments | (9) | [2] | ||||
Ending balance | 1,308 | |||||
Music Publishing | ||||||
Goodwill [Roll Forward] | ||||||
Beginning balance | 464 | |||||
Acquisitions | 0 | |||||
Divestitures | 0 | |||||
Other adjustments | 0 | |||||
Ending balance | $ 464 | |||||
|
Goodwill and Intangible Assets - Schedule of Intangible Assets (Detail) - USD ($) $ in Millions |
9 Months Ended | |
---|---|---|
Jun. 30, 2019 |
Sep. 30, 2018 |
|
Finite Lived And Indefinite Lived Intangible Assets [Line Items] | ||
Total gross intangible asset subject to amortization | $ 3,379 | $ 3,312 |
Accumulated amortization | (1,599) | (1,461) |
Total net intangible assets subject to amortization | 1,780 | 1,851 |
Intangible assets not subject to amortization | 153 | 154 |
Total net intangible assets | 1,933 | 2,005 |
Disposal of intangible assets | 7 | |
Trademarks and tradenames | ||
Finite Lived And Indefinite Lived Intangible Assets [Line Items] | ||
Intangible assets not subject to amortization | $ 153 | 154 |
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 | $ 861 | 870 |
Music publishing copyrights | ||
Finite Lived And Indefinite Lived Intangible Assets [Line Items] | ||
Intangible assets, Useful Life | 26 years | |
Total gross intangible asset subject to amortization | $ 1,555 | 1,540 |
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 | $ 853 | 864 |
Trademarks | ||
Finite Lived And Indefinite Lived Intangible Assets [Line Items] | ||
Intangible assets, Useful Life | 18 years | |
Total gross intangible asset subject to amortization | $ 52 | 12 |
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 | $ 58 | $ 26 |
Debt - Long-term Debt (Detail) - USD ($) $ in Millions |
9 Months Ended | |||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Nov. 05, 2018 |
Oct. 12, 2018 |
Oct. 09, 2018 |
Mar. 14, 2018 |
Jun. 30, 2019 |
May 16, 2019 |
Apr. 30, 2019 |
Sep. 30, 2018 |
Jun. 30, 2018 |
||||||||||||||||||||||
5.625% Senior Secured Notes due 2022 | ||||||||||||||||||||||||||||||
Debt Instrument [Line Items] | ||||||||||||||||||||||||||||||
Interest rate | 5.625% | 5.625% | ||||||||||||||||||||||||||||
4.875% Senior Secured Notes due 2024 | ||||||||||||||||||||||||||||||
Debt Instrument [Line Items] | ||||||||||||||||||||||||||||||
Interest rate | 4.875% | 4.875% | ||||||||||||||||||||||||||||
Acquisition Corp. | ||||||||||||||||||||||||||||||
Debt Instrument [Line Items] | ||||||||||||||||||||||||||||||
Total debt | [1] | $ 3,006 | $ 2,819 | |||||||||||||||||||||||||||
Acquisition Corp. | Revolving Credit Facility | ||||||||||||||||||||||||||||||
Debt Instrument [Line Items] | ||||||||||||||||||||||||||||||
Total debt | [2] | 0 | 0 | |||||||||||||||||||||||||||
Acquisition Corp. | Senior Term Loan Facility due 2023 | ||||||||||||||||||||||||||||||
Debt Instrument [Line Items] | ||||||||||||||||||||||||||||||
Total debt | [3] | 1,313 | 1,310 | |||||||||||||||||||||||||||
Acquisition Corp. | 5.625% Senior Secured Notes due 2022 | ||||||||||||||||||||||||||||||
Debt Instrument [Line Items] | ||||||||||||||||||||||||||||||
Total debt | $ 0 | [4] | $ 221 | 246 | [4] | |||||||||||||||||||||||||
Interest rate | 5.625% | 5.625% | 5.625% | 5.625% | ||||||||||||||||||||||||||
Due date of senior secured notes | 2022 | 2022 | ||||||||||||||||||||||||||||
Acquisition Corp. | 5.000% Senior Secured Notes due 2023 | ||||||||||||||||||||||||||||||
Debt Instrument [Line Items] | ||||||||||||||||||||||||||||||
Total debt | [5] | $ 298 | 297 | |||||||||||||||||||||||||||
Interest rate | 5.00% | |||||||||||||||||||||||||||||
Due date of senior secured notes | 2023 | |||||||||||||||||||||||||||||
Acquisition Corp. | 4.125% Senior Secured Notes due 2024 | ||||||||||||||||||||||||||||||
Debt Instrument [Line Items] | ||||||||||||||||||||||||||||||
Total debt | [6] | $ 349 | 399 | |||||||||||||||||||||||||||
Interest rate | 4.125% | 4.125% | 4.125% | |||||||||||||||||||||||||||
Due date of senior secured notes | 2024 | 2024 | ||||||||||||||||||||||||||||
Acquisition Corp. | 4.875% Senior Secured Notes due 2024 | ||||||||||||||||||||||||||||||
Debt Instrument [Line Items] | ||||||||||||||||||||||||||||||
Total debt | [7] | $ 218 | 247 | |||||||||||||||||||||||||||
Interest rate | 4.875% | 4.875% | ||||||||||||||||||||||||||||
Due date of senior secured notes | 2024 | 2024 | ||||||||||||||||||||||||||||
Acquisition Corp. | 3.625% Senior Secured Notes due 2026 | ||||||||||||||||||||||||||||||
Debt Instrument [Line Items] | ||||||||||||||||||||||||||||||
Total debt | [8] | $ 507 | 0 | |||||||||||||||||||||||||||
Interest rate | 3.625% | |||||||||||||||||||||||||||||
Due date of senior secured notes | 2026 | |||||||||||||||||||||||||||||
Acquisition Corp. | 5.500% Senior Notes due 2026 | ||||||||||||||||||||||||||||||
Debt Instrument [Line Items] | ||||||||||||||||||||||||||||||
Total debt | [9] | $ 321 | $ 320 | |||||||||||||||||||||||||||
Interest rate | 5.50% | 5.50% | ||||||||||||||||||||||||||||
Due date of senior secured notes | 2026 | 2026 | ||||||||||||||||||||||||||||
|
Debt - Long-term Debt Footnote (Detail) |
3 Months Ended | 9 Months Ended | |||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Nov. 05, 2018
USD ($)
|
Oct. 12, 2018
USD ($)
|
Jun. 30, 2019
USD ($)
|
Jun. 30, 2018
USD ($)
|
Jun. 30, 2019
USD ($)
|
Jun. 30, 2018
USD ($)
|
Jun. 30, 2019
EUR (€)
|
May 16, 2019
USD ($)
|
Apr. 30, 2019 |
Oct. 09, 2018
USD ($)
|
Sep. 30, 2018
USD ($)
|
Sep. 30, 2018
EUR (€)
|
Mar. 14, 2018
USD ($)
|
|||||||||||||||||||||||
Debt Instrument [Line Items] | |||||||||||||||||||||||||||||||||||
Loss on extinguishment of debt | $ 4,000,000 | $ 7,000,000 | $ 7,000,000 | $ 31,000,000 | |||||||||||||||||||||||||||||||
Acquisition Corp. | |||||||||||||||||||||||||||||||||||
Debt Instrument [Line Items] | |||||||||||||||||||||||||||||||||||
Face or principal amount of debt instrument | 3,030,000,000 | 3,030,000,000 | $ 2,851,000,000 | ||||||||||||||||||||||||||||||||
Unamortized discount | 3,000,000 | 3,000,000 | 4,000,000 | ||||||||||||||||||||||||||||||||
Unamortized deferred financing costs | 29,000,000 | 29,000,000 | 28,000,000 | ||||||||||||||||||||||||||||||||
Unamortized premium | 0 | ||||||||||||||||||||||||||||||||||
Debt outstanding | [1] | 3,006,000,000 | 3,006,000,000 | 2,819,000,000 | |||||||||||||||||||||||||||||||
Acquisition Corp. | Revolving Credit Facility | |||||||||||||||||||||||||||||||||||
Debt Instrument [Line Items] | |||||||||||||||||||||||||||||||||||
Commitments under revolving credit facility | 180,000,000 | 180,000,000 | 180,000,000 | ||||||||||||||||||||||||||||||||
Letters of credit outstanding | 13,000,000 | 13,000,000 | 8,000,000 | ||||||||||||||||||||||||||||||||
Revolving credit facility outstanding | 0 | 0 | 0 | ||||||||||||||||||||||||||||||||
Debt outstanding | [2] | 0 | 0 | 0 | |||||||||||||||||||||||||||||||
Senior Term Loan Facility due 2023 | Acquisition Corp. | |||||||||||||||||||||||||||||||||||
Debt Instrument [Line Items] | |||||||||||||||||||||||||||||||||||
Face or principal amount of debt instrument | 1,326,000,000 | 1,326,000,000 | |||||||||||||||||||||||||||||||||
Unamortized discount | 3,000,000 | 3,000,000 | |||||||||||||||||||||||||||||||||
Unamortized deferred financing costs | 10,000,000 | 10,000,000 | 12,000,000 | ||||||||||||||||||||||||||||||||
Debt outstanding | [3] | $ 1,313,000,000 | $ 1,313,000,000 | 1,310,000,000 | |||||||||||||||||||||||||||||||
5.625% Senior Secured Notes due 2022 | |||||||||||||||||||||||||||||||||||
Debt Instrument [Line Items] | |||||||||||||||||||||||||||||||||||
Interest rate | 5.625% | 5.625% | 5.625% | 5.625% | 5.625% | ||||||||||||||||||||||||||||||
5.625% Senior Secured Notes due 2022 | Acquisition Corp. | |||||||||||||||||||||||||||||||||||
Debt Instrument [Line Items] | |||||||||||||||||||||||||||||||||||
Interest rate | 5.625% | 5.625% | 5.625% | 5.625% | 5.625% | 5.625% | |||||||||||||||||||||||||||||
Loss on extinguishment of debt | $ 1,000,000 | $ 4,000,000 | |||||||||||||||||||||||||||||||||
Debt outstanding | $ 0 | [4] | $ 0 | [4] | $ 221,000,000 | 246,000,000 | [4] | ||||||||||||||||||||||||||||
5.000% Senior Secured Notes due 2023 | Acquisition Corp. | |||||||||||||||||||||||||||||||||||
Debt Instrument [Line Items] | |||||||||||||||||||||||||||||||||||
Interest rate | 5.00% | 5.00% | 5.00% | ||||||||||||||||||||||||||||||||
Face or principal amount of debt instrument | $ 300,000,000 | $ 300,000,000 | |||||||||||||||||||||||||||||||||
Unamortized deferred financing costs | 2,000,000 | 2,000,000 | 2,000,000 | ||||||||||||||||||||||||||||||||
Debt outstanding | [5] | $ 298,000,000 | $ 298,000,000 | 297,000,000 | |||||||||||||||||||||||||||||||
4.125% Senior Secured Notes due 2024 | Acquisition Corp. | |||||||||||||||||||||||||||||||||||
Debt Instrument [Line Items] | |||||||||||||||||||||||||||||||||||
Interest rate | 4.125% | 4.125% | 4.125% | 4.125% | 4.125% | ||||||||||||||||||||||||||||||
Loss on extinguishment of debt | $ 2,000,000 | ||||||||||||||||||||||||||||||||||
Face or principal amount of debt instrument | $ 353,000,000 | $ 353,000,000 | € 310,500,000 | 402,000,000 | € 345,000,000 | ||||||||||||||||||||||||||||||
Unamortized deferred financing costs | 4,000,000 | 4,000,000 | 3,000,000 | ||||||||||||||||||||||||||||||||
Debt outstanding | [6] | $ 349,000,000 | $ 349,000,000 | 399,000,000 | |||||||||||||||||||||||||||||||
4.875% Senior Secured Notes due 2024 | |||||||||||||||||||||||||||||||||||
Debt Instrument [Line Items] | |||||||||||||||||||||||||||||||||||
Interest rate | 4.875% | 4.875% | 4.875% | 4.875% | 4.875% | ||||||||||||||||||||||||||||||
4.875% Senior Secured Notes due 2024 | Acquisition Corp. | |||||||||||||||||||||||||||||||||||
Debt Instrument [Line Items] | |||||||||||||||||||||||||||||||||||
Interest rate | 4.875% | 4.875% | 4.875% | 4.875% | |||||||||||||||||||||||||||||||
Face or principal amount of debt instrument | $ 220,000,000 | $ 220,000,000 | $ 30,000,000 | 250,000,000 | |||||||||||||||||||||||||||||||
Unamortized deferred financing costs | 2,000,000 | 2,000,000 | 3,000,000 | ||||||||||||||||||||||||||||||||
Debt outstanding | [7] | $ 218,000,000 | $ 218,000,000 | 247,000,000 | |||||||||||||||||||||||||||||||
3.625% Senior Secured Notes due 2026 | Acquisition Corp. | |||||||||||||||||||||||||||||||||||
Debt Instrument [Line Items] | |||||||||||||||||||||||||||||||||||
Interest rate | 3.625% | 3.625% | 3.625% | ||||||||||||||||||||||||||||||||
Face or principal amount of debt instrument | $ 506,000,000 | $ 506,000,000 | € 445,000,000 | ||||||||||||||||||||||||||||||||
Unamortized deferred financing costs | 7,000,000 | 7,000,000 | |||||||||||||||||||||||||||||||||
Unamortized premium | 8,000,000 | 8,000,000 | |||||||||||||||||||||||||||||||||
Debt outstanding | [8] | $ 507,000,000 | $ 507,000,000 | 0 | |||||||||||||||||||||||||||||||
5.500% Senior Notes due 2026 | Acquisition Corp. | |||||||||||||||||||||||||||||||||||
Debt Instrument [Line Items] | |||||||||||||||||||||||||||||||||||
Interest rate | 5.50% | 5.50% | 5.50% | 5.50% | |||||||||||||||||||||||||||||||
Face or principal amount of debt instrument | $ 325,000,000 | $ 325,000,000 | 325,000,000 | $ 325,000,000 | |||||||||||||||||||||||||||||||
Unamortized deferred financing costs | 4,000,000 | 4,000,000 | 5,000,000 | ||||||||||||||||||||||||||||||||
Debt outstanding | [9] | $ 321,000,000 | $ 321,000,000 | $ 320,000,000 | |||||||||||||||||||||||||||||||
|
Debt - December 2017 Senior Term Loan Credit Agreement Amendment - Additional Information (Detail) - USD ($) $ in Millions |
3 Months Ended | 9 Months Ended | ||
---|---|---|---|---|
Jun. 30, 2019 |
Jun. 30, 2018 |
Jun. 30, 2019 |
Jun. 30, 2018 |
|
Debt Instrument [Line Items] | ||||
Loss on extinguishment of debt | $ 4 | $ 7 | $ 7 | $ 31 |
December 2017 Senior Term Loan Credit Agreement Amendment | ||||
Debt Instrument [Line Items] | ||||
Loss on extinguishment of debt | $ 1 |
Debt - New Revolving Credit Agreement - Additional Information (Detail) - New Revolving Credit Agreement - Revolving Credit Facility $ in Millions |
Jan. 31, 2018
USD ($)
|
---|---|
Debt Instrument [Line Items] | |
Debt instrument, agreement date | Jan. 31, 2018 |
Credit agreement covenant terms | The Revolving Credit Agreement differs from the Old Revolving Credit Agreement in that it, among other things, reduces the interest rate margin applicable to the loans, extends the maturity date thereunder, provides for the option to increase the commitments under the Company’s then existing revolving credit agreement, provides for greater flexibility to amend and extend the Company’s then existing revolving credit agreement and create additional tranches thereunder, provides for greater flexibility over future amendments, increases the springing financial maintenance covenant to 4.75:1.00 and provides that the covenant shall not be tested unless at the end of a fiscal quarter the outstanding amount of loans and drawings under letters of credit which have not been reimbursed exceeds $54 million and aligns the other negative covenants with those of the Senior Term Loan Credit Agreement. |
Debt instrument, springing financial maintenance covenant | 4.75% |
Maximum | |
Debt Instrument [Line Items] | |
Debt instrument, reimbursed amount | $ 54 |
Debt - March 2018 Senior Term Loan Credit Agreement Amendment - Additional Information (Detail) - Acquisition Corp. - USD ($) |
Jun. 30, 2019 |
Sep. 30, 2018 |
Mar. 14, 2018 |
---|---|---|---|
Debt Instrument [Line Items] | |||
Face or principal amount of debt instrument | $ 3,030,000,000 | $ 2,851,000,000 | |
March 2018 Senior Term Loan Credit Agreement Amendment | |||
Debt Instrument [Line Items] | |||
Face or principal amount of debt instrument | $ 320,000,000 | ||
Revolving credit facility outstanding | $ 1,326,000,000 |
Debt - Notes Offering - Additional Information (Detail) - USD ($) |
9 Months Ended | ||
---|---|---|---|
Mar. 14, 2018 |
Jun. 30, 2019 |
Sep. 30, 2018 |
|
Acquisition Corp. | |||
Debt Instrument [Line Items] | |||
Face or principal amount of debt instrument | $ 3,030,000,000 | $ 2,851,000,000 | |
5.500% Senior Notes due 2026 | Acquisition Corp. | |||
Debt Instrument [Line Items] | |||
Face or principal amount of debt instrument | $ 325,000,000 | $ 325,000,000 | $ 325,000,000 |
Interest rate | 5.50% | 5.50% | |
Due date of senior secured notes | 2026 | 2026 | |
6.750% Senior Notes due 2022 | |||
Debt Instrument [Line Items] | |||
Face or principal amount of debt instrument | $ 523,000,000 | ||
Interest rate | 6.75% | ||
6.750% Senior Notes due 2022 | Acquisition Corp. | |||
Debt Instrument [Line Items] | |||
Face or principal amount of debt instrument | $ 112,000,000 |
Debt - Tender Offer and Notes Redemption - Additional Information (Detail) - USD ($) |
1 Months Ended | 3 Months Ended | 9 Months Ended | |||||
---|---|---|---|---|---|---|---|---|
Apr. 30, 2018 |
Mar. 31, 2018 |
Jun. 30, 2019 |
Jun. 30, 2018 |
Jun. 30, 2019 |
Jun. 30, 2018 |
Sep. 30, 2018 |
Mar. 14, 2018 |
|
Debt Instrument [Line Items] | ||||||||
Loss on extinguishment of debt | $ 4,000,000 | $ 7,000,000 | $ 7,000,000 | $ 31,000,000 | ||||
Acquisition Corp. | ||||||||
Debt Instrument [Line Items] | ||||||||
Face or principal amount of debt instrument | $ 3,030,000,000 | $ 3,030,000,000 | $ 2,851,000,000 | |||||
6.750% Senior Notes due 2022 | ||||||||
Debt Instrument [Line Items] | ||||||||
Interest rate | 6.75% | |||||||
Face or principal amount of debt instrument | $ 523,000,000 | |||||||
Loss on extinguishment of debt | $ 5,000,000 | $ 23,000,000 | ||||||
6.750% Senior Notes due 2022 | Acquisition Corp. | ||||||||
Debt Instrument [Line Items] | ||||||||
Face or principal amount of debt instrument | 112,000,000 | |||||||
Redemption deposit | $ 119,000,000 |
Debt - June 2018 Senior Term Loan Credit Agreement Amendment - Additional Information (Detail) - USD ($) $ in Millions |
3 Months Ended | 9 Months Ended | ||
---|---|---|---|---|
Jun. 30, 2019 |
Jun. 30, 2018 |
Jun. 30, 2019 |
Jun. 30, 2018 |
|
Debt Instrument [Line Items] | ||||
Loss on extinguishment of debt | $ 4 | $ 7 | $ 7 | $ 31 |
June 2018 Senior Term Loan Credit Agreement Amendment | ||||
Debt Instrument [Line Items] | ||||
Loss on extinguishment of debt | $ 2 |
Debt - 3.625% Senior Secured Notes Offering - Additional Information (Detail) |
9 Months Ended | ||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|
Nov. 05, 2018
USD ($)
|
Oct. 12, 2018
EUR (€)
|
Oct. 09, 2018
USD ($)
|
Oct. 09, 2018
EUR (€)
|
Jun. 30, 2019
USD ($)
|
Jun. 30, 2019
EUR (€)
|
Apr. 30, 2019
EUR (€)
|
Oct. 09, 2018
EUR (€)
|
Sep. 30, 2018
USD ($)
|
Sep. 30, 2018
EUR (€)
|
Jun. 30, 2018 |
|
Acquisition Corp. | |||||||||||
Debt Instrument [Line Items] | |||||||||||
Aggregate principal amount of debt instrument | $ 3,030,000,000 | $ 2,851,000,000 | |||||||||
3.625% Senior Secured Notes due 2026 | |||||||||||
Debt Instrument [Line Items] | |||||||||||
Interest rate | 3.625% | 3.625% | |||||||||
3.625% Senior Secured Notes due 2026 | Acquisition Corp. | |||||||||||
Debt Instrument [Line Items] | |||||||||||
Aggregate principal amount of debt instrument | € | € 195,000,000 | € 250,000,000 | |||||||||
Interest rate | 3.625% | 3.625% | 3.625% | 3.625% | 3.625% | ||||||
4.125% Senior Secured Notes due 2024 | Acquisition Corp. | |||||||||||
Debt Instrument [Line Items] | |||||||||||
Aggregate principal amount of debt instrument | $ 353,000,000 | € 310,500,000 | 402,000,000 | € 345,000,000 | |||||||
Due date of senior secured notes | 2024 | 2024 | |||||||||
Interest rate | 4.125% | 4.125% | 4.125% | 4.125% | 4.125% | ||||||
Redemptions of senior notes | € | € 34,500,000 | € 34,500,000 | |||||||||
4.875% Senior Secured Notes due 2024 | |||||||||||
Debt Instrument [Line Items] | |||||||||||
Interest rate | 4.875% | 4.875% | 4.875% | ||||||||
4.875% Senior Secured Notes due 2024 | Acquisition Corp. | |||||||||||
Debt Instrument [Line Items] | |||||||||||
Aggregate principal amount of debt instrument | $ 30,000,000 | $ 220,000,000 | $ 250,000,000 | ||||||||
Due date of senior secured notes | 2024 | 2024 | 2024 | ||||||||
Interest rate | 4.875% | 4.875% | 4.875% | 4.875% | |||||||
5.625% Senior Secured Notes | |||||||||||
Debt Instrument [Line Items] | |||||||||||
Interest rate | 5.625% | 5.625% | 5.625% | ||||||||
5.625% Senior Secured Notes | Acquisition Corp. | |||||||||||
Debt Instrument [Line Items] | |||||||||||
Due date of senior secured notes | 2022 | 2022 | |||||||||
Interest rate | 5.625% | 5.625% | 5.625% | 5.625% | 5.625% | 5.625% | |||||
Redemptions of senior notes | $ 26,550,000 | $ 26,550,000 |
Debt - Partial Redemption of 4.125% Senior Secured Notes - Additional Information (Detail) € in Thousands, $ in Millions |
3 Months Ended | 9 Months Ended | ||||||
---|---|---|---|---|---|---|---|---|
Oct. 12, 2018
USD ($)
|
Oct. 12, 2018
EUR (€)
|
Oct. 09, 2018
EUR (€)
|
Jun. 30, 2019
USD ($)
|
Jun. 30, 2018
USD ($)
|
Jun. 30, 2019
USD ($)
|
Jun. 30, 2018
USD ($)
|
Apr. 30, 2019 |
|
Debt Instrument [Line Items] | ||||||||
Loss on extinguishment of debt | $ | $ 4 | $ 7 | $ 7 | $ 31 | ||||
4.125% Senior Secured Notes due 2024 | Acquisition Corp. | ||||||||
Debt Instrument [Line Items] | ||||||||
Due date of senior secured notes | 2024 | 2024 | 2024 | |||||
Redemptions of senior notes | € 34,500 | € 34,500 | ||||||
Interest rate | 4.125% | 4.125% | 4.125% | 4.125% | ||||
Senior notes redemption price | € 36,170 | |||||||
Redemption price, percentage of principal amount redeemed | 103.00% | 103.00% | ||||||
Debt instrument remaining outstanding amount | € 310,500 | |||||||
Loss on extinguishment of debt | $ | $ 2 | |||||||
3.625% Senior Secured Notes due 2026 | ||||||||
Debt Instrument [Line Items] | ||||||||
Interest rate | 3.625% | 3.625% | ||||||
3.625% Senior Secured Notes due 2026 | Acquisition Corp. | ||||||||
Debt Instrument [Line Items] | ||||||||
Interest rate | 3.625% | 3.625% | 3.625% | 3.625% |
Debt - Open Market Purchase - Additional Information (Detail) - USD ($) |
3 Months Ended | 9 Months Ended | ||||
---|---|---|---|---|---|---|
Oct. 09, 2018 |
Jun. 30, 2019 |
Jun. 30, 2018 |
Jun. 30, 2019 |
Jun. 30, 2018 |
Sep. 30, 2018 |
|
Debt Instrument [Line Items] | ||||||
Loss on extinguishment of debt | $ 4,000,000 | $ 7,000,000 | $ 7,000,000 | $ 31,000,000 | ||
Acquisition Corp. | ||||||
Debt Instrument [Line Items] | ||||||
Aggregate principal amount of debt instrument | $ 3,030,000,000 | $ 3,030,000,000 | $ 2,851,000,000 | |||
4.875% Senior Secured Notes due 2024 | ||||||
Debt Instrument [Line Items] | ||||||
Interest rate | 4.875% | 4.875% | 4.875% | 4.875% | ||
4.875% Senior Secured Notes due 2024 | Acquisition Corp. | ||||||
Debt Instrument [Line Items] | ||||||
Aggregate principal amount of debt instrument | $ 30,000,000 | $ 220,000,000 | $ 220,000,000 | $ 250,000,000 | ||
Due date of senior secured notes | 2024 | 2024 | ||||
Interest rate | 4.875% | 4.875% | 4.875% | |||
Debt instrument remaining outstanding amount | $ 220,000,000 | |||||
4.875% Senior Secured Notes due 2024 | Acquisition Corp. | Maximum | ||||||
Debt Instrument [Line Items] | ||||||
Loss on extinguishment of debt | $ 1,000,000 |
Debt - Redemption of 5.625% Senior Secured Notes - Additional Information (Detail) - USD ($) $ in Thousands |
3 Months Ended | 9 Months Ended | |||||
---|---|---|---|---|---|---|---|
Nov. 05, 2018 |
Oct. 09, 2018 |
Jun. 30, 2019 |
Jun. 30, 2018 |
Jun. 30, 2019 |
Jun. 30, 2018 |
Apr. 30, 2019 |
|
Debt Instrument [Line Items] | |||||||
Loss on extinguishment of debt | $ 4,000 | $ 7,000 | $ 7,000 | $ 31,000 | |||
5.625% Senior Secured Notes | |||||||
Debt Instrument [Line Items] | |||||||
Interest rate | 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 | 2022 | 2022 | |||||
Redemptions of senior notes | $ 26,550 | $ 26,550 | |||||
Interest rate | 5.625% | 5.625% | 5.625% | 5.625% | 5.625% | ||
Senior notes redemption price | $ 27,380 | ||||||
Redemption price, percentage of principal amount redeemed | 102.813% | ||||||
Debt instrument remaining outstanding amount | $ 220,950 | ||||||
Loss on extinguishment of debt | $ 1,000 | $ 4,000 |
Debt - Interest Rates - Additional Information (Detail) - Acquisition Corp. |
9 Months Ended |
---|---|
Jun. 30, 2019 | |
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”) subject to a zero floor, plus 2.125% per annum, or (ii) the base rate, which is the highest of (x) the corporate base rate established by the administrative agent as its prime rate in effect at its principal office in New York City from time to time, (y) 0.50% in excess of the overnight federal funds rate and (z) one-month Term Loan LIBOR, plus 1.00% per annum, plus, in each case, 1.125% 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 | 2.125% |
Base Rate | Senior Term Loan Facility due 2020 | |
Debt Instrument [Line Items] | |
Debt instrument, marginal interest rate | 1.125% |
Additional Interest rate on other overdue amounts | 2.00% |
Federal Funds Effective Swap Rate | Senior Term Loan Facility due 2020 | |
Debt Instrument [Line Items] | |
Debt instrument, marginal interest rate | 0.50% |
Revolving Credit Facility | |
Debt Instrument [Line Items] | |
Debt instrument, marginal interest rate | 0.75% |
Description of variable rate basis | The loans under the Revolving Credit Facility bear interest at Acquisition Corp.’s election at a rate equal to (i) the rate for deposits in the borrowing currency in the London interbank market (adjusted for maximum reserves) for the applicable interest period (“Revolving LIBOR”) subject to a zero floor, plus 1.75% 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, 0.75% 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 | 1.75% |
Revolving Credit Facility | Base Rate | |
Debt Instrument [Line Items] | |
Debt instrument, marginal interest rate | 1.00% |
Additional Interest rate on other overdue amounts | 2.00% |
Revolving Credit Facility | Federal Funds Effective Swap Rate | |
Debt Instrument [Line Items] | |
Debt instrument, marginal interest rate | 0.50% |
Debt - Additional Information (Detail) - USD ($) |
3 Months Ended | 9 Months Ended | |||
---|---|---|---|---|---|
Jun. 30, 2019 |
Jun. 30, 2018 |
Jun. 30, 2019 |
Jun. 30, 2018 |
Sep. 30, 2018 |
|
Debt Instrument [Line Items] | |||||
Scheduled maturities of long-term debt in 2021 | $ 0 | $ 0 | |||
Interest expense, net | $ 36,000,000 | $ 33,000,000 | $ 108,000,000 | $ 105,000,000 | |
Weighted-average interest rate of total debt | 4.50% | 4.70% | 4.50% | 4.70% | 4.70% |
Senior Notes | |||||
Debt Instrument [Line Items] | |||||
Scheduled maturities of long-term debt in 2019 | $ 0 | $ 0 | |||
Scheduled maturities of long-term debt in 2020 | 0 | 0 | |||
Scheduled maturities of long-term debt in 2021 | 0 | 0 | |||
Scheduled maturities of long-term debt in 2023 | 300,000,000 | 300,000,000 | |||
Scheduled maturities of long-term debt, thereafter | $ 1,404,000,000 | $ 1,404,000,000 | |||
Acquisition Corp. | Revolving Credit Facility | |||||
Debt Instrument [Line Items] | |||||
Extended maturity date of credit facility | Jan. 31, 2023 | ||||
Acquisition Corp. | Term Loan Facility | |||||
Debt Instrument [Line Items] | |||||
Credit facility maturity date | Nov. 01, 2023 |
Commitments and Contingencies - Additional Information (Detail) - USD ($) $ in Millions |
3 Months Ended | 9 Months Ended | 12 Months Ended | ||||||
---|---|---|---|---|---|---|---|---|---|
Jul. 29, 2015 |
Jun. 17, 2015 |
Jun. 30, 2019 |
Jun. 30, 2018 |
Dec. 31, 2017 |
Jun. 30, 2019 |
Jun. 30, 2018 |
Sep. 30, 2017 |
Sep. 30, 2016 |
|
Loss Contingencies [Line Items] | |||||||||
Revenues | $ 1,058 | $ 958 | $ 3,351 | $ 2,966 | |||||
Sirius XM | Settled Litigation | |||||||||
Loss Contingencies [Line Items] | |||||||||
Receipts from plaintiff | $ 210 | ||||||||
Cash distribution | $ 33 | ||||||||
Revenues | $ 1 | $ 4 | $ 28 | ||||||
Length of sound recording agreement | 5 years |
Income Taxes - Additional Information (Detail) - USD ($) |
3 Months Ended | 9 Months Ended | 12 Months Ended | |||||
---|---|---|---|---|---|---|---|---|
Jun. 30, 2019 |
Dec. 31, 2018 |
Jun. 30, 2018 |
Dec. 31, 2017 |
Jun. 30, 2019 |
Jun. 30, 2018 |
Sep. 30, 2019 |
Sep. 30, 2018 |
|
Income Tax Contingency [Line Items] | ||||||||
U.S. federal corporate statutory tax rate | 21.00% | 24.50% | 35.00% | 21.00% | 24.50% | 24.50% | ||
Enacted tax rate | 21.00% | |||||||
Income tax expense related to deferred tax assets | $ 23,000,000 | |||||||
Tax Act, income tax expense | $ 9,000,000 | |||||||
Income tax liability related to Transition Tax | $ 0 | $ 0 | ||||||
Income tax expense | (12,000,000) | $ 61,000,000 | 86,000,000 | $ 132,000,000 | ||||
Tax benefit due to reversal of deferred tax assets valuation allowance | $ 17,000,000 | |||||||
Maximum | ||||||||
Income Tax Contingency [Line Items] | ||||||||
Reasonably possible decrease in gross unrecognized tax benefits from ongoing audits and settlement | $ 2,000,000 | $ 2,000,000 | ||||||
Forecast | ||||||||
Income Tax Contingency [Line Items] | ||||||||
U.S. federal corporate statutory tax rate | 21.00% |
Derivative Financial Instruments - Additional Information (Detail) - USD ($) |
3 Months Ended | 9 Months Ended | 12 Months Ended | ||
---|---|---|---|---|---|
Jun. 30, 2019 |
Jun. 30, 2018 |
Jun. 30, 2019 |
Jun. 30, 2018 |
Sep. 30, 2018 |
|
Derivatives, Fair Value [Line Items] | |||||
Companys hedged interest rate transactions | 4 years | ||||
Outstanding hedge contracts | $ 0 | ||||
Unrealized deferred losses in comprehensive income related to foreign exchange hedging | $ 1,000,000 | ||||
Deferred gains (losses) in comprehensive loss related to foreign exchange hedging | 0 | ||||
Deferred (losses) gains on derivative financial instruments | $ (3,000,000) | $ (3,000,000) | (12,000,000) | $ (1,000,000) | |
Unrealized pre-tax (losses) gains of the company foreign exchange forward contracts | (1,000,000) | (1,000,000) | |||
Unrealized pre-tax (losses) gains of the company derivative interest rate | (15,000,000) | $ 2,000,000 | |||
Interest Rate Swap | |||||
Derivatives, Fair Value [Line Items] | |||||
Outstanding hedge contracts | 320,000,000 | 320,000,000 | 320,000,000 | ||
Deferred (losses) gains on derivative financial instruments | (8,000,000) | $ 3,000,000 | |||
Sale | |||||
Derivatives, Fair Value [Line Items] | |||||
Outstanding hedge contracts | 153,000,000 | 153,000,000 | |||
Purchase | |||||
Derivatives, Fair Value [Line Items] | |||||
Outstanding hedge contracts | $ 93,000,000 | $ 93,000,000 |
Derivative Financial Instruments - Summary of Amounts Recorded in Consolidated Balance Sheets (Detail) - USD ($) $ in Millions |
Jun. 30, 2019 |
[1] | Sep. 30, 2018 |
[3] | ||||||
---|---|---|---|---|---|---|---|---|---|---|
Other current assets | ||||||||||
Derivatives, Fair Value [Line Items] | ||||||||||
Other assets | $ 1 | [2] | $ 0 | |||||||
Other current liabilities | ||||||||||
Derivatives, Fair Value [Line Items] | ||||||||||
Other liabilities | 0 | 0 | ||||||||
Other noncurrent assets | ||||||||||
Derivatives, Fair Value [Line Items] | ||||||||||
Other assets | 0 | 4 | ||||||||
Other noncurrent liabilities | ||||||||||
Derivatives, Fair Value [Line Items] | ||||||||||
Other liabilities | $ 11 | $ 0 | ||||||||
|
Derivative Financial Instruments - Summary of Amounts Recorded in Consolidated Balance Sheets Footnote (Detail) - USD ($) $ in Millions |
Jun. 30, 2019 |
Sep. 30, 2018 |
---|---|---|
Derivatives, Fair Value [Line Items] | ||
Foreign exchange derivative contracts in asset | $ 4 | |
Foreign exchange derivative contracts in liability | 3 | |
Interest Rate Swap | ||
Derivatives, Fair Value [Line Items] | ||
Foreign exchange derivative contracts in asset | $ 4 | |
Foreign exchange derivative contracts in liability | $ 11 |
Segment Information - Additional Information (Detail) |
9 Months Ended |
---|---|
Jun. 30, 2019
segment
| |
Segment Reporting [Abstract] | |
Number of fundamental operations | 2 |
Segment Information - Schedule of Segment Information (Detail) - USD ($) $ in Millions |
3 Months Ended | 9 Months Ended | ||
---|---|---|---|---|
Jun. 30, 2019 |
Jun. 30, 2018 |
Jun. 30, 2019 |
Jun. 30, 2018 |
|
Segment Reporting Information [Line Items] | ||||
Revenue | $ 1,058 | $ 958 | $ 3,351 | $ 2,966 |
Operating income (loss) | 58 | 28 | 327 | 201 |
Amortization of intangible assets | 51 | 56 | 160 | 164 |
Depreciation of property, plant and equipment | 15 | 15 | 43 | 41 |
OIBDA | 124 | 99 | 530 | 406 |
Operating Segments | Recorded Music | ||||
Segment Reporting Information [Line Items] | ||||
Revenue | 913 | 802 | 2,887 | 2,497 |
Operating income (loss) | 85 | 67 | 382 | 276 |
Amortization of intangible assets | 34 | 39 | 109 | 113 |
Depreciation of property, plant and equipment | 12 | 9 | 31 | 26 |
OIBDA | 131 | 115 | 522 | 415 |
Operating Segments | Music Publishing | ||||
Segment Reporting Information [Line Items] | ||||
Revenue | 147 | 159 | 470 | 476 |
Operating income (loss) | 18 | 5 | 67 | 45 |
Amortization of intangible assets | 17 | 17 | 51 | 51 |
Depreciation of property, plant and equipment | 1 | 2 | 4 | 5 |
OIBDA | 36 | 24 | 122 | 101 |
Corporate expenses and eliminations | ||||
Segment Reporting Information [Line Items] | ||||
Revenue | (2) | (3) | (6) | (7) |
Operating income (loss) | (45) | (44) | (122) | (120) |
Amortization of intangible assets | 0 | 0 | 0 | 0 |
Depreciation of property, plant and equipment | 2 | 4 | 8 | 10 |
OIBDA | $ (43) | $ (40) | $ (114) | $ (110) |
Additional Financial Information - Additional Information (Detail) - USD ($) $ in Thousands |
3 Months Ended | 9 Months Ended | ||||||||
---|---|---|---|---|---|---|---|---|---|---|
Jun. 28, 2019 |
Mar. 26, 2019 |
Dec. 20, 2018 |
Aug. 07, 2018 |
May 07, 2018 |
Jan. 08, 2018 |
Jun. 30, 2019 |
Jun. 30, 2018 |
Jun. 30, 2019 |
Jun. 30, 2018 |
|
Supplemental Cash Flow Information [Abstract] | ||||||||||
Accrued interest paid | $ 50,000 | $ 41,000 | $ 120,000 | $ 126,000 | ||||||
Income taxes paid net of refunds | $ 22,000 | 15,000 | $ 40,000 | 33,000 | ||||||
Special cash dividends | $ 31,250 | $ 31,250 | $ 31,250 | $ 500,000 | $ 300,000 | $ 125,000 | ||||
Special cash dividends, date to be paid | Jul. 05, 2019 | Apr. 05, 2019 | Jan. 04, 2019 | Aug. 10, 2018 | May 11, 2018 | Jan. 12, 2018 | ||||
Special cash dividends, date of record | Aug. 07, 2018 | May 07, 2018 | Jan. 11, 2018 | |||||||
Sale of common shares, consideration received | 504,000 | |||||||||
Estimated pre-tax gain, net of estimated royalty expense and other related cost | 378,000 | 378,000 | ||||||||
Estimated advance royalty recoveries | 16,000 | $ 16,000 | ||||||||
Estimated tax expense associated with net income on sale of shares | $ 77,000 |
Fair Value Measurements - Schedule of Fair Value of Financial Instruments (Detail) - USD ($) $ in Millions |
Jun. 30, 2019 |
Sep. 30, 2018 |
|||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |||||||||||||||||
Total | $ 26 | $ (4) | |||||||||||||||
Level 1 | |||||||||||||||||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |||||||||||||||||
Total | 0 | 0 | |||||||||||||||
Level 2 | |||||||||||||||||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |||||||||||||||||
Total | 35 | 4 | |||||||||||||||
Level 3 | |||||||||||||||||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |||||||||||||||||
Total | (9) | (8) | |||||||||||||||
Other current assets | |||||||||||||||||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |||||||||||||||||
Foreign Currency Forward Exchange Contracts | 1 | [1],[2] | 0 | [3] | |||||||||||||
Other current assets | Level 1 | |||||||||||||||||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |||||||||||||||||
Foreign Currency Forward Exchange Contracts | [2] | 0 | |||||||||||||||
Other current assets | Level 2 | |||||||||||||||||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |||||||||||||||||
Foreign Currency Forward Exchange Contracts | [2] | 1 | |||||||||||||||
Other current assets | Level 3 | |||||||||||||||||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |||||||||||||||||
Foreign Currency Forward Exchange Contracts | [2] | 0 | |||||||||||||||
Other current liabilities | |||||||||||||||||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |||||||||||||||||
Contractual Obligations | [4] | (3) | (2) | ||||||||||||||
Other current liabilities | Level 1 | |||||||||||||||||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |||||||||||||||||
Contractual Obligations | [4] | 0 | 0 | ||||||||||||||
Other current liabilities | Level 2 | |||||||||||||||||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |||||||||||||||||
Contractual Obligations | [4] | 0 | 0 | ||||||||||||||
Other current liabilities | Level 3 | |||||||||||||||||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |||||||||||||||||
Contractual Obligations | [4] | (3) | (2) | ||||||||||||||
Other noncurrent assets | |||||||||||||||||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |||||||||||||||||
Foreign Currency Forward Exchange Contracts | 0 | [1] | 4 | [3] | |||||||||||||
Equity Method Investment | [5] | 45 | |||||||||||||||
Other noncurrent assets | Level 1 | |||||||||||||||||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |||||||||||||||||
Equity Method Investment | [5] | 0 | |||||||||||||||
Other noncurrent assets | Level 2 | |||||||||||||||||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |||||||||||||||||
Equity Method Investment | [5] | 45 | |||||||||||||||
Other noncurrent assets | Level 3 | |||||||||||||||||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |||||||||||||||||
Equity Method Investment | [5] | 0 | |||||||||||||||
Other noncurrent liabilities | |||||||||||||||||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |||||||||||||||||
Contractual Obligations | [4] | (6) | (6) | ||||||||||||||
Other noncurrent liabilities | Level 1 | |||||||||||||||||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |||||||||||||||||
Contractual Obligations | [4] | 0 | 0 | ||||||||||||||
Other noncurrent liabilities | Level 2 | |||||||||||||||||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |||||||||||||||||
Contractual Obligations | [4] | 0 | 0 | ||||||||||||||
Other noncurrent liabilities | Level 3 | |||||||||||||||||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |||||||||||||||||
Contractual Obligations | [4] | (6) | (6) | ||||||||||||||
Interest Rate Swap | Other noncurrent assets | |||||||||||||||||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |||||||||||||||||
Derivative asset | [6] | 4 | |||||||||||||||
Interest Rate Swap | Other noncurrent assets | Level 1 | |||||||||||||||||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |||||||||||||||||
Derivative asset | [6] | 0 | |||||||||||||||
Interest Rate Swap | Other noncurrent assets | Level 2 | |||||||||||||||||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |||||||||||||||||
Derivative asset | [6] | 4 | |||||||||||||||
Interest Rate Swap | Other noncurrent assets | Level 3 | |||||||||||||||||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |||||||||||||||||
Derivative asset | [6] | $ 0 | |||||||||||||||
Interest Rate Swap | Other noncurrent liabilities | |||||||||||||||||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |||||||||||||||||
Derivative liability | [6] | (11) | |||||||||||||||
Interest Rate Swap | Other noncurrent liabilities | Level 1 | |||||||||||||||||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |||||||||||||||||
Derivative liability | [6] | 0 | |||||||||||||||
Interest Rate Swap | Other noncurrent liabilities | Level 2 | |||||||||||||||||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |||||||||||||||||
Derivative liability | [6] | (11) | |||||||||||||||
Interest Rate Swap | Other noncurrent liabilities | Level 3 | |||||||||||||||||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |||||||||||||||||
Derivative liability | [6] | $ 0 | |||||||||||||||
|
Fair Value Measurements - Reconciliation of Net Liabilities Classified as Level 3 (Detail) - Level 3 $ in Millions |
9 Months Ended |
---|---|
Jun. 30, 2019
USD ($)
| |
Fair Value, Liabilities Measured on Recurring Basis, Unobservable Input Reconciliation, Calculation [Roll Forward] | |
Balance at September 30, 2018 | $ (8) |
Additions | (2) |
Reductions | 0 |
Payments | 1 |
Balance at March 31, 2019 | $ (9) |
Fair Value Measurements - Additional Information (Detail) - USD ($) $ in Millions |
Jun. 30, 2019 |
Sep. 30, 2018 |
---|---|---|
Level 2 measurement | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Debt instrument, fair value disclosure | $ 3,083 | $ 2,862 |
Related Party - Additional Information (Detail) - Ford Factory Building $ in Millions |
9 Months Ended |
---|---|
Jun. 30, 2019
USD ($)
| |
Related Party Transaction [Line Items] | |
Existing rental lease payments | $ 10 |
Remaining lease term | 11 years |
Lease existence of option to extend | true |
Lease option to extend | single option to extend the term of the lease for 10 years thereafter |
Guarantor and Non-Guarantor Subsidiaries Financial Information - Additional Information (Detail) |
Jun. 30, 2019 |
Apr. 30, 2019 |
Oct. 12, 2018 |
Oct. 09, 2018 |
Jun. 30, 2018 |
---|---|---|---|---|---|
5.00% Senior Secured Notes due 2023 | Acquisition Corp. | |||||
Condensed Financial Statements, Captions [Line Items] | |||||
Interest rate | 5.00% | ||||
4.125% Senior Secured Notes due 2024 | Acquisition Corp. | |||||
Condensed Financial Statements, Captions [Line Items] | |||||
Interest rate | 4.125% | 4.125% | 4.125% | ||
4.875% Senior Secured Notes due 2024 | |||||
Condensed Financial Statements, Captions [Line Items] | |||||
Interest rate | 4.875% | 4.875% | |||
4.875% Senior Secured Notes due 2024 | Acquisition Corp. | |||||
Condensed Financial Statements, Captions [Line Items] | |||||
Interest rate | 4.875% | 4.875% | |||
3.625% Senior Secured Notes due 2026 | |||||
Condensed Financial Statements, Captions [Line Items] | |||||
Interest rate | 3.625% | ||||
3.625% Senior Secured Notes due 2026 | Acquisition Corp. | |||||
Condensed Financial Statements, Captions [Line Items] | |||||
Interest rate | 3.625% | 3.625% | 3.625% | ||
5.50% Senior Notes due 2026 | Acquisition Corp. | |||||
Condensed Financial Statements, Captions [Line Items] | |||||
Interest rate | 5.50% |
Guarantor and Non-Guarantor Subsidiaries Financial Information - Consolidating Balance Sheet Unaudited (Detail) - USD ($) $ in Millions |
Jun. 30, 2019 |
Mar. 31, 2019 |
Sep. 30, 2018 |
Jun. 30, 2018 |
Mar. 31, 2018 |
Sep. 30, 2017 |
---|---|---|---|---|---|---|
Current assets: | ||||||
Cash and equivalents | $ 541 | $ 514 | ||||
Accounts receivable, net | 744 | 447 | ||||
Inventories | 67 | 42 | ||||
Royalty advances expected to be recouped within one year | 171 | 123 | ||||
Prepaid and other current assets | 57 | 50 | ||||
Total current assets | 1,580 | 1,176 | ||||
Royalty advances expected to be recouped after one year | 209 | 153 | ||||
Property, plant and equipment, net | 296 | 229 | ||||
Goodwill | 1,772 | 1,692 | ||||
Intangible assets subject to amortization, net | 1,780 | 1,851 | ||||
Intangible assets not subject to amortization | 153 | 154 | ||||
Deferred tax assets, net | 7 | 11 | ||||
Other assets | 158 | 78 | ||||
Total assets | 5,955 | 5,344 | ||||
Current liabilities: | ||||||
Accounts payable | 208 | 281 | ||||
Accrued royalties | 1,577 | 1,396 | ||||
Accrued liabilities | 448 | 423 | ||||
Accrued interest | 18 | 31 | ||||
Deferred revenue | 170 | 208 | ||||
Other current liabilities | 123 | 34 | ||||
Total current liabilities | 2,544 | 2,373 | ||||
Long-term debt | 3,006 | 2,819 | ||||
Deferred tax liabilities, net | 236 | 165 | ||||
Other noncurrent liabilities | 302 | 307 | ||||
Total liabilities | 6,088 | 5,664 | ||||
Total Warner Music Group Corp. (deficit) equity | (152) | (334) | ||||
Noncontrolling interest | 19 | 14 | ||||
Total equity | (133) | $ (120) | (320) | $ 191 | $ 205 | $ 308 |
Total liabilities and equity | 5,955 | 5,344 | ||||
Reportable Legal Entities | Guarantor Subsidiaries | ||||||
Current assets: | ||||||
Cash and equivalents | 297 | 169 | ||||
Accounts receivable, net | 331 | 262 | ||||
Inventories | 13 | 18 | ||||
Royalty advances expected to be recouped within one year | 103 | 79 | ||||
Prepaid and other current assets | 10 | 15 | ||||
Total current assets | 754 | 543 | ||||
Due from (to) parent companies | (430) | (214) | ||||
Investments in and advances to consolidated subsidiaries | 2,394 | 2,192 | ||||
Royalty advances expected to be recouped after one year | 126 | 93 | ||||
Property, plant and equipment, net | 195 | 155 | ||||
Goodwill | 1,370 | 1,370 | ||||
Intangible assets subject to amortization, net | 902 | 956 | ||||
Intangible assets not subject to amortization | 71 | 71 | ||||
Other assets | 124 | 55 | ||||
Total assets | 5,506 | 5,221 | ||||
Current liabilities: | ||||||
Accounts payable | 127 | 200 | ||||
Accrued royalties | 803 | 869 | ||||
Accrued liabilities | 234 | 195 | ||||
Deferred revenue | 51 | 94 | ||||
Other current liabilities | 42 | 2 | ||||
Total current liabilities | 1,257 | 1,360 | ||||
Deferred tax liabilities, net | 61 | 3 | ||||
Other noncurrent liabilities | 182 | 197 | ||||
Total liabilities | 1,500 | 1,560 | ||||
Total Warner Music Group Corp. (deficit) equity | 4,002 | 3,656 | ||||
Noncontrolling interest | 4 | 5 | ||||
Total equity | 4,006 | 3,661 | ||||
Total liabilities and equity | 5,506 | 5,221 | ||||
Reportable Legal Entities | Non-Guarantor Subsidiaries | ||||||
Current assets: | ||||||
Cash and equivalents | 244 | 345 | ||||
Accounts receivable, net | 413 | 185 | ||||
Inventories | 54 | 24 | ||||
Royalty advances expected to be recouped within one year | 68 | 44 | ||||
Prepaid and other current assets | 47 | 35 | ||||
Total current assets | 826 | 633 | ||||
Due from (to) parent companies | (43) | (274) | ||||
Royalty advances expected to be recouped after one year | 83 | 60 | ||||
Property, plant and equipment, net | 101 | 74 | ||||
Goodwill | 402 | 322 | ||||
Intangible assets subject to amortization, net | 878 | 895 | ||||
Intangible assets not subject to amortization | 82 | 83 | ||||
Deferred tax assets, net | 7 | 11 | ||||
Other assets | 29 | 11 | ||||
Total assets | 2,365 | 1,815 | ||||
Current liabilities: | ||||||
Accounts payable | 81 | 81 | ||||
Accrued royalties | 769 | 527 | ||||
Accrued liabilities | 214 | 228 | ||||
Deferred revenue | 119 | 114 | ||||
Other current liabilities | 81 | 32 | ||||
Total current liabilities | 1,264 | 982 | ||||
Deferred tax liabilities, net | 175 | 162 | ||||
Other noncurrent liabilities | 110 | 108 | ||||
Total liabilities | 1,549 | 1,252 | ||||
Total Warner Music Group Corp. (deficit) equity | 801 | 554 | ||||
Noncontrolling interest | 15 | 9 | ||||
Total equity | 816 | 563 | ||||
Total liabilities and equity | 2,365 | 1,815 | ||||
Reportable Legal Entities | Warner Music Group Corp. | ||||||
Current assets: | ||||||
Investments in and advances to consolidated subsidiaries | 809 | 675 | ||||
Total assets | 809 | 675 | ||||
Current liabilities: | ||||||
Total Warner Music Group Corp. (deficit) equity | 809 | 675 | ||||
Total equity | 809 | 675 | ||||
Total liabilities and equity | 809 | 675 | ||||
Reportable Legal Entities | WMG Acquisition Corp. | ||||||
Current assets: | ||||||
Cash and equivalents | 0 | |||||
Total current assets | 0 | |||||
Due from (to) parent companies | 473 | 488 | ||||
Investments in and advances to consolidated subsidiaries | 2,409 | 2,018 | ||||
Other assets | 5 | 12 | ||||
Total assets | 2,887 | 2,518 | ||||
Current liabilities: | ||||||
Accrued royalties | 5 | |||||
Accrued interest | 18 | 31 | ||||
Total current liabilities | 23 | 31 | ||||
Long-term debt | 3,006 | 2,819 | ||||
Other noncurrent liabilities | 10 | 2 | ||||
Total liabilities | 3,039 | 2,852 | ||||
Total Warner Music Group Corp. (deficit) equity | (152) | (334) | ||||
Total equity | (152) | (334) | ||||
Total liabilities and equity | 2,887 | 2,518 | ||||
Reportable Legal Entities | WMG Acquisition Corp. Consolidated | ||||||
Current assets: | ||||||
Cash and equivalents | 541 | 514 | ||||
Accounts receivable, net | 744 | 447 | ||||
Inventories | 67 | 42 | ||||
Royalty advances expected to be recouped within one year | 171 | 123 | ||||
Prepaid and other current assets | 57 | 50 | ||||
Total current assets | 1,580 | 1,176 | ||||
Royalty advances expected to be recouped after one year | 209 | 153 | ||||
Property, plant and equipment, net | 296 | 229 | ||||
Goodwill | 1,772 | 1,692 | ||||
Intangible assets subject to amortization, net | 1,780 | 1,851 | ||||
Intangible assets not subject to amortization | 153 | 154 | ||||
Deferred tax assets, net | 7 | 11 | ||||
Other assets | 158 | 78 | ||||
Total assets | 5,955 | 5,344 | ||||
Current liabilities: | ||||||
Accounts payable | 208 | 281 | ||||
Accrued royalties | 1,577 | 1,396 | ||||
Accrued liabilities | 448 | 423 | ||||
Accrued interest | 18 | 31 | ||||
Deferred revenue | 170 | 208 | ||||
Other current liabilities | 123 | 34 | ||||
Total current liabilities | 2,544 | 2,373 | ||||
Long-term debt | 3,006 | 2,819 | ||||
Deferred tax liabilities, net | 236 | 165 | ||||
Other noncurrent liabilities | 302 | 307 | ||||
Total liabilities | 6,088 | 5,664 | ||||
Total Warner Music Group Corp. (deficit) equity | (152) | (334) | ||||
Noncontrolling interest | 19 | 14 | ||||
Total equity | (133) | (320) | ||||
Total liabilities and equity | 5,955 | 5,344 | ||||
Reportable Legal Entities | WMG Holdings Corp. | ||||||
Current assets: | ||||||
Investments in and advances to consolidated subsidiaries | 809 | 675 | ||||
Total assets | 809 | 675 | ||||
Current liabilities: | ||||||
Total Warner Music Group Corp. (deficit) equity | 809 | 675 | ||||
Total equity | 809 | 675 | ||||
Total liabilities and equity | 809 | 675 | ||||
Eliminations | ||||||
Current assets: | ||||||
Investments in and advances to consolidated subsidiaries | (1,618) | (1,350) | ||||
Total assets | (1,618) | (1,350) | ||||
Current liabilities: | ||||||
Total Warner Music Group Corp. (deficit) equity | (1,618) | (1,350) | ||||
Total equity | (1,618) | (1,350) | ||||
Total liabilities and equity | (1,618) | (1,350) | ||||
Eliminations | WMG Acquisition Corp. | ||||||
Current assets: | ||||||
Investments in and advances to consolidated subsidiaries | (4,803) | (4,210) | ||||
Total assets | (4,803) | (4,210) | ||||
Current liabilities: | ||||||
Total Warner Music Group Corp. (deficit) equity | (4,803) | (4,210) | ||||
Total equity | (4,803) | (4,210) | ||||
Total liabilities and equity | $ (4,803) | $ (4,210) |
Guarantor and Non-Guarantor Subsidiaries Financial Information - Consolidating Statement of Operations Unaudited (Detail) - USD ($) $ in Millions |
3 Months Ended | 9 Months Ended | ||||
---|---|---|---|---|---|---|
Jun. 30, 2019 |
Jun. 30, 2018 |
Jun. 30, 2019 |
Jun. 30, 2018 |
|||
Condensed Income Statements, Captions [Line Items] | ||||||
Revenue | $ 1,058 | $ 958 | $ 3,351 | $ 2,966 | ||
Costs and expenses: | ||||||
Cost of revenue | (577) | (531) | (1,762) | (1,588) | ||
Selling, general and administrative expenses | [1] | (372) | (343) | (1,102) | (1,013) | |
Amortization of intangible assets | (51) | (56) | (160) | (164) | ||
Total costs and expenses | (1,000) | (930) | (3,024) | (2,765) | ||
Operating income | 58 | 28 | 327 | 201 | ||
Loss on extinguishment of debt | (4) | (7) | (7) | (31) | ||
Interest (expense) income, net | (36) | (33) | (108) | (105) | ||
Other income (expense), net | (16) | 394 | 41 | 392 | ||
Income before income taxes | 2 | 382 | 253 | 457 | ||
Income tax expense | 12 | (61) | (86) | (132) | ||
Net income | 14 | 321 | 167 | 325 | ||
Less: Income attributable to noncontrolling interest | (1) | (1) | (1) | (4) | ||
Net income attributable to Warner Music Group Corp. | 13 | 320 | 166 | 321 | ||
Reportable Legal Entities | ||||||
Costs and expenses: | ||||||
Net income | 13 | 320 | 166 | 321 | ||
Reportable Legal Entities | Guarantor Subsidiaries | ||||||
Condensed Income Statements, Captions [Line Items] | ||||||
Revenue | 410 | 544 | 1,352 | 1,626 | ||
Costs and expenses: | ||||||
Cost of revenue | (216) | (261) | (653) | (760) | ||
Selling, general and administrative expenses | (198) | (252) | (573) | (731) | ||
Amortization of intangible assets | (24) | (23) | (74) | (70) | ||
Total costs and expenses | (438) | (536) | (1,300) | (1,561) | ||
Operating income | (28) | 8 | 52 | 65 | ||
Interest (expense) income, net | 2 | 2 | 3 | |||
Equity gains (losses) from equity method investments | 58 | 23 | 201 | 99 | ||
Other income (expense), net | 37 | (1) | 107 | 8 | ||
Income before income taxes | 67 | 32 | 362 | 175 | ||
Income tax expense | 15 | (62) | (79) | (131) | ||
Net income | 82 | (30) | 283 | 44 | ||
Less: Income attributable to noncontrolling interest | (1) | |||||
Net income attributable to Warner Music Group Corp. | 82 | (30) | 283 | 43 | ||
Reportable Legal Entities | Non-Guarantor Subsidiaries | ||||||
Condensed Income Statements, Captions [Line Items] | ||||||
Revenue | 760 | 533 | 2,286 | 1,703 | ||
Costs and expenses: | ||||||
Cost of revenue | (442) | (346) | (1,338) | (1,066) | ||
Selling, general and administrative expenses | (203) | (133) | (586) | (406) | ||
Amortization of intangible assets | (27) | (33) | (86) | (94) | ||
Total costs and expenses | (672) | (512) | (2,010) | (1,566) | ||
Operating income | 88 | 21 | 276 | 137 | ||
Loss on extinguishment of debt | (34) | |||||
Interest (expense) income, net | (6) | (8) | (18) | (21) | ||
Other income (expense), net | (45) | 19 | (72) | 8 | ||
Income before income taxes | 37 | 32 | 186 | 124 | ||
Income tax expense | 9 | 7 | (41) | (21) | ||
Net income | 46 | 39 | 145 | 103 | ||
Less: Income attributable to noncontrolling interest | (1) | (1) | (1) | (3) | ||
Net income attributable to Warner Music Group Corp. | 45 | 38 | 144 | 100 | ||
Reportable Legal Entities | Warner Music Group Corp. | ||||||
Costs and expenses: | ||||||
Equity gains (losses) from equity method investments | 13 | 320 | 166 | 321 | ||
Income before income taxes | 13 | 320 | 166 | 321 | ||
Net income | 13 | 320 | 166 | 321 | ||
Net income attributable to Warner Music Group Corp. | 13 | 320 | 166 | 321 | ||
Reportable Legal Entities | WMG Acquisition Corp. | ||||||
Costs and expenses: | ||||||
Selling, general and administrative expenses | 0 | 0 | ||||
Total costs and expenses | 0 | 0 | ||||
Operating income | 0 | 0 | ||||
Loss on extinguishment of debt | (4) | (7) | (7) | (31) | ||
Interest (expense) income, net | (30) | (27) | (92) | (87) | ||
Equity gains (losses) from equity method investments | 43 | 39 | 345 | 195 | ||
Other income (expense), net | (8) | 376 | 6 | 376 | ||
Income before income taxes | 1 | 381 | 252 | 453 | ||
Income tax expense | 12 | (61) | (86) | (132) | ||
Net income | 13 | 320 | 166 | 321 | ||
Net income attributable to Warner Music Group Corp. | 13 | 320 | 166 | 321 | ||
Reportable Legal Entities | WMG Acquisition Corp. Consolidated | ||||||
Condensed Income Statements, Captions [Line Items] | ||||||
Revenue | 1,058 | 958 | 3,351 | 2,966 | ||
Costs and expenses: | ||||||
Cost of revenue | (577) | (531) | (1,762) | (1,588) | ||
Selling, general and administrative expenses | (372) | (343) | (1,102) | (1,013) | ||
Amortization of intangible assets | (51) | (56) | (160) | (164) | ||
Total costs and expenses | (1,000) | (930) | (3,024) | (2,765) | ||
Operating income | 58 | 28 | 327 | 201 | ||
Loss on extinguishment of debt | (4) | (7) | (7) | (31) | ||
Interest (expense) income, net | (36) | (33) | (108) | (105) | ||
Other income (expense), net | (16) | 394 | 41 | 392 | ||
Income before income taxes | 2 | 382 | 253 | 457 | ||
Income tax expense | 12 | (61) | (86) | (132) | ||
Net income | 14 | 321 | 167 | 325 | ||
Less: Income attributable to noncontrolling interest | (1) | (1) | (1) | (4) | ||
Net income attributable to Warner Music Group Corp. | 13 | 320 | 166 | 321 | ||
Reportable Legal Entities | WMG Holdings Corp. | ||||||
Costs and expenses: | ||||||
Equity gains (losses) from equity method investments | 13 | 320 | 166 | 321 | ||
Income before income taxes | 13 | 320 | 166 | 321 | ||
Net income | 13 | 320 | 166 | 321 | ||
Net income attributable to Warner Music Group Corp. | 13 | 320 | 166 | 321 | ||
Eliminations | ||||||
Costs and expenses: | ||||||
Equity gains (losses) from equity method investments | (26) | (640) | (332) | (642) | ||
Income before income taxes | (26) | (640) | (332) | (642) | ||
Net income | (26) | (640) | (332) | (642) | ||
Net income attributable to Warner Music Group Corp. | (26) | (640) | (332) | (642) | ||
Eliminations | WMG Acquisition Corp. | ||||||
Condensed Income Statements, Captions [Line Items] | ||||||
Revenue | (112) | (119) | (287) | (363) | ||
Costs and expenses: | ||||||
Cost of revenue | 81 | 76 | 229 | 238 | ||
Selling, general and administrative expenses | 29 | 42 | 57 | 124 | ||
Total costs and expenses | 110 | 118 | 286 | 362 | ||
Operating income | (2) | (1) | (1) | (1) | ||
Equity gains (losses) from equity method investments | (101) | (62) | (546) | (294) | ||
Income before income taxes | (103) | (63) | (547) | (295) | ||
Income tax expense | (24) | 55 | 120 | 152 | ||
Net income | (127) | (8) | (427) | (143) | ||
Net income attributable to Warner Music Group Corp. | $ (127) | $ (8) | $ (427) | $ (143) | ||
|
Guarantor and Non-Guarantor Subsidiaries Financial Information - Consolidating Statement of Comprehensive Income Unaudited (Detail) - USD ($) $ in Millions |
3 Months Ended | 9 Months Ended | ||
---|---|---|---|---|
Jun. 30, 2019 |
Jun. 30, 2018 |
Jun. 30, 2019 |
Jun. 30, 2018 |
|
Condensed Statement of Income Captions [Line Items] | ||||
Net income | $ 14 | $ 321 | $ 167 | $ 325 |
Other comprehensive income (loss), net of tax: | ||||
Foreign currency adjustment | 9 | (31) | (17) | (13) |
Deferred (loss) gain on derivative | (3) | (3) | (12) | (1) |
Other comprehensive income (loss), net of tax | 6 | (34) | (29) | (14) |
Total comprehensive income | 20 | 287 | 138 | 311 |
Less: Income attributable to noncontrolling interest | (1) | (1) | (1) | (4) |
Comprehensive income attributable to Warner Music Group Corp. | 19 | 286 | 137 | 307 |
Reportable Legal Entities | ||||
Condensed Statement of Income Captions [Line Items] | ||||
Net income | 13 | 320 | 166 | 321 |
Other comprehensive income (loss), net of tax: | ||||
Foreign currency adjustment | 9 | (31) | (17) | (13) |
Deferred (loss) gain on derivative | (3) | (3) | (12) | (1) |
Other comprehensive income (loss), net of tax | 6 | (34) | (29) | (14) |
Total comprehensive income | 19 | 286 | 137 | 307 |
Comprehensive income attributable to Warner Music Group Corp. | 19 | 286 | 137 | 307 |
Reportable Legal Entities | Guarantor Subsidiaries | ||||
Condensed Statement of Income Captions [Line Items] | ||||
Net income | 82 | (30) | 283 | 44 |
Other comprehensive income (loss), net of tax: | ||||
Total comprehensive income | 82 | (30) | 283 | 44 |
Less: Income attributable to noncontrolling interest | (1) | |||
Comprehensive income attributable to Warner Music Group Corp. | 82 | (30) | 283 | 43 |
Reportable Legal Entities | Non-Guarantor Subsidiaries | ||||
Condensed Statement of Income Captions [Line Items] | ||||
Net income | 46 | 39 | 145 | 103 |
Other comprehensive income (loss), net of tax: | ||||
Foreign currency adjustment | (9) | 31 | 17 | 13 |
Deferred (loss) gain on derivative | 1 | (1) | ||
Other comprehensive income (loss), net of tax | (8) | 31 | 16 | 13 |
Total comprehensive income | 38 | 70 | 161 | 116 |
Less: Income attributable to noncontrolling interest | (1) | (1) | (1) | (3) |
Comprehensive income attributable to Warner Music Group Corp. | 37 | 69 | 160 | 113 |
Reportable Legal Entities | Warner Music Group Corp. | ||||
Condensed Statement of Income Captions [Line Items] | ||||
Net income | 13 | 320 | 166 | 321 |
Other comprehensive income (loss), net of tax: | ||||
Foreign currency adjustment | 10 | (31) | (19) | (13) |
Deferred (loss) gain on derivative | (3) | (3) | (12) | (1) |
Other comprehensive income (loss), net of tax | 7 | (34) | (31) | (14) |
Total comprehensive income | 20 | 286 | 135 | 307 |
Comprehensive income attributable to Warner Music Group Corp. | 20 | 286 | 135 | 307 |
Reportable Legal Entities | WMG Acquisition Corp. | ||||
Condensed Statement of Income Captions [Line Items] | ||||
Net income | 13 | 320 | 166 | 321 |
Reportable Legal Entities | WMG Acquisition Corp. Consolidated | ||||
Condensed Statement of Income Captions [Line Items] | ||||
Net income | 14 | 321 | 167 | 325 |
Other comprehensive income (loss), net of tax: | ||||
Foreign currency adjustment | 9 | (31) | (17) | (13) |
Deferred (loss) gain on derivative | (3) | (3) | (12) | (1) |
Other comprehensive income (loss), net of tax | 6 | (34) | (29) | (14) |
Total comprehensive income | 20 | 287 | 138 | 311 |
Less: Income attributable to noncontrolling interest | (1) | (1) | (1) | (4) |
Comprehensive income attributable to Warner Music Group Corp. | 19 | 286 | 137 | 307 |
Reportable Legal Entities | WMG Holdings Corp. | ||||
Condensed Statement of Income Captions [Line Items] | ||||
Net income | 13 | 320 | 166 | 321 |
Other comprehensive income (loss), net of tax: | ||||
Foreign currency adjustment | 10 | (31) | (19) | (13) |
Deferred (loss) gain on derivative | (3) | (3) | (12) | (1) |
Other comprehensive income (loss), net of tax | 7 | (34) | (31) | (14) |
Total comprehensive income | 20 | 286 | 135 | 307 |
Comprehensive income attributable to Warner Music Group Corp. | 20 | 286 | 135 | 307 |
Eliminations | ||||
Condensed Statement of Income Captions [Line Items] | ||||
Net income | (26) | (640) | (332) | (642) |
Other comprehensive income (loss), net of tax: | ||||
Foreign currency adjustment | (20) | 62 | 38 | 26 |
Deferred (loss) gain on derivative | 6 | 6 | 24 | 2 |
Other comprehensive income (loss), net of tax | (14) | 68 | 62 | 28 |
Total comprehensive income | (40) | (572) | (270) | (614) |
Comprehensive income attributable to Warner Music Group Corp. | (40) | (572) | (270) | (614) |
Eliminations | WMG Acquisition Corp. | ||||
Condensed Statement of Income Captions [Line Items] | ||||
Net income | (127) | (8) | (427) | (143) |
Other comprehensive income (loss), net of tax: | ||||
Foreign currency adjustment | 9 | (31) | (17) | (13) |
Deferred (loss) gain on derivative | (1) | 1 | ||
Other comprehensive income (loss), net of tax | 8 | (31) | (16) | (13) |
Total comprehensive income | (119) | (39) | (443) | (156) |
Comprehensive income attributable to Warner Music Group Corp. | $ (119) | $ (39) | $ (443) | $ (156) |
Guarantor and Non-Guarantor Subsidiaries Financial Information - Consolidating Statement of Cash Flows Unaudited (Detail) - USD ($) $ in Millions |
3 Months Ended | 9 Months Ended | ||
---|---|---|---|---|
Jun. 30, 2019 |
Jun. 30, 2018 |
Jun. 30, 2019 |
Jun. 30, 2018 |
|
Cash flows from operating activities | ||||
Net income | $ 14 | $ 321 | $ 167 | $ 325 |
Adjustments to reconcile net income to net cash provided by operating activities: | ||||
Depreciation and amortization | 203 | 205 | ||
Unrealized gains on remeasurement of foreign denominated loans | (6) | (6) | ||
Deferred income taxes | 25 | 105 | ||
Loss on extinguishment of debt | 4 | 7 | 7 | 31 |
Net gain on divestitures and investments | (27) | (385) | ||
Non-cash interest expense | 5 | 5 | ||
Equity-based compensation expense | 28 | 52 | ||
Changes in operating assets and liabilities: | ||||
Accounts receivable, net | (50) | (43) | ||
Inventories | 12 | (1) | ||
Royalty advances | (107) | 0 | ||
Accounts payable and accrued liabilities | (94) | (84) | ||
Royalty payables | 117 | 113 | ||
Accrued interest | (13) | (22) | ||
Deferred revenue | (17) | 0 | ||
Other balance sheet changes | (1) | (30) | ||
Net cash provided by operating activities | 249 | 265 | ||
Cash flows from investing activities | ||||
Acquisition of music publishing rights, net | (24) | (11) | ||
Capital expenditures | (82) | (40) | ||
Investments and acquisitions of businesses, net | (234) | (14) | ||
Proceeds from the sale of investments | 0 | 516 | ||
Net cash (used in) provided by investing activities | (340) | 451 | ||
Cash flows from financing activities | ||||
Call premiums paid on and redemption deposit for early redemption of debt | (5) | (23) | ||
Deferred financing costs paid | (7) | (12) | ||
Distribution to noncontrolling interest holder | (3) | (3) | ||
Dividends paid | (63) | (425) | ||
Net cash provided by (used in) financing activities | 119 | (453) | ||
Proceeds from supplement of Acquisition Corp. Senior Term Loan Facility | 0 | 320 | ||
Effect of exchange rate changes on cash and equivalents | (1) | (5) | ||
Net increase in cash and equivalents | 27 | 258 | ||
Cash and equivalents at beginning of period | 514 | 647 | ||
Cash and equivalents at end of period | 541 | 905 | 541 | 905 |
3.625% Senior Secured Notes due 2026 | ||||
Cash flows from financing activities | ||||
Proceeds from issuance of Acquisition Corp | 514 | |||
4.125% Senior Secured Notes | ||||
Cash flows from financing activities | ||||
Repayment of Senior Secured Notes | (40) | |||
4.875% Senior Secured Notes | ||||
Cash flows from financing activities | ||||
Repayment of Senior Secured Notes | (30) | |||
5.625% Senior Secured Notes | ||||
Cash flows from financing activities | ||||
Repayment of Senior Secured Notes | (247) | |||
5.50% Senior Notes | ||||
Cash flows from financing activities | ||||
Proceeds from issuance of Acquisition Corp | 0 | 325 | ||
6.75% Senior Notes | ||||
Cash flows from financing activities | ||||
Repayment of and redemption deposit for Acquisition Corp. Senior Notes | 0 | (635) | ||
Reportable Legal Entities | ||||
Cash flows from operating activities | ||||
Net income | 13 | 320 | 166 | 321 |
Reportable Legal Entities | Guarantor Subsidiaries | ||||
Cash flows from operating activities | ||||
Net income | 82 | (30) | 283 | 44 |
Adjustments to reconcile net income to net cash provided by operating activities: | ||||
Depreciation and amortization | 103 | 101 | ||
Unrealized gains on remeasurement of foreign denominated loans | (1) | (3) | ||
Net gain on divestitures and investments | (25) | 84 | ||
Equity-based compensation expense | 28 | 52 | ||
Equity gains, including distributions | (201) | (99) | ||
Changes in operating assets and liabilities: | ||||
Accounts receivable, net | 11 | (39) | ||
Inventories | 5 | (5) | ||
Royalty advances | (57) | |||
Accounts payable and accrued liabilities | 239 | 256 | ||
Royalty payables | (82) | 32 | ||
Deferred revenue | (45) | 30 | ||
Other balance sheet changes | 54 | 82 | ||
Net cash provided by operating activities | 312 | 535 | ||
Cash flows from investing activities | ||||
Acquisition of music publishing rights, net | (19) | (7) | ||
Capital expenditures | (70) | (30) | ||
Investments and acquisitions of businesses, net | (40) | (14) | ||
Proceeds from the sale of investments | 12 | |||
Net cash (used in) provided by investing activities | (129) | (39) | ||
Cash flows from financing activities | ||||
Distribution to noncontrolling interest holder | 0 | |||
Dividends paid | (63) | (397) | ||
Change in due to (from) issuer | 8 | 108 | ||
Net cash provided by (used in) financing activities | (55) | (289) | ||
Net increase in cash and equivalents | 128 | 207 | ||
Cash and equivalents at beginning of period | 169 | 347 | ||
Cash and equivalents at end of period | 297 | 554 | 297 | 554 |
Reportable Legal Entities | Non-Guarantor Subsidiaries | ||||
Cash flows from operating activities | ||||
Net income | 46 | 39 | 145 | 103 |
Adjustments to reconcile net income to net cash provided by operating activities: | ||||
Depreciation and amortization | 100 | 104 | ||
Unrealized gains on remeasurement of foreign denominated loans | 2 | |||
Deferred income taxes | 25 | 105 | ||
Loss on extinguishment of debt | 34 | |||
Net gain on divestitures and investments | (2) | |||
Changes in operating assets and liabilities: | ||||
Accounts receivable, net | (61) | (4) | ||
Inventories | 7 | 4 | ||
Royalty advances | (50) | |||
Accounts payable and accrued liabilities | (214) | (189) | ||
Royalty payables | 194 | 81 | ||
Deferred revenue | 28 | (30) | ||
Other balance sheet changes | (58) | (109) | ||
Net cash provided by operating activities | 114 | 101 | ||
Cash flows from investing activities | ||||
Acquisition of music publishing rights, net | (5) | (4) | ||
Capital expenditures | (12) | (10) | ||
Investments and acquisitions of businesses, net | (194) | |||
Net cash (used in) provided by investing activities | (211) | (14) | ||
Cash flows from financing activities | ||||
Distribution to noncontrolling interest holder | (3) | (3) | ||
Dividends paid | (28) | |||
Net cash provided by (used in) financing activities | (3) | (31) | ||
Effect of exchange rate changes on cash and equivalents | (1) | (5) | ||
Net increase in cash and equivalents | (101) | 51 | ||
Cash and equivalents at beginning of period | 345 | 300 | ||
Cash and equivalents at end of period | 244 | 351 | 244 | 351 |
Reportable Legal Entities | Warner Music Group Corp. | ||||
Cash flows from operating activities | ||||
Net income | 13 | 320 | 166 | 321 |
Adjustments to reconcile net income to net cash provided by operating activities: | ||||
Equity gains, including distributions | (166) | (321) | ||
Reportable Legal Entities | WMG Acquisition Corp. | ||||
Cash flows from operating activities | ||||
Net income | 13 | 320 | 166 | 321 |
Adjustments to reconcile net income to net cash provided by operating activities: | ||||
Unrealized gains on remeasurement of foreign denominated loans | (5) | (5) | ||
Loss on extinguishment of debt | 4 | 7 | 7 | 31 |
Net gain on divestitures and investments | (503) | |||
Non-cash interest expense | 5 | 5 | ||
Equity gains, including distributions | (345) | (195) | ||
Changes in operating assets and liabilities: | ||||
Royalty payables | 5 | |||
Accrued interest | (13) | (22) | ||
Other balance sheet changes | 3 | (3) | ||
Net cash provided by operating activities | (177) | (371) | ||
Cash flows from investing activities | ||||
Proceeds from the sale of investments | 504 | |||
Advances from issuer | (8) | (108) | ||
Net cash (used in) provided by investing activities | (8) | 396 | ||
Cash flows from financing activities | ||||
Call premiums paid on and redemption deposit for early redemption of debt | (5) | (23) | ||
Deferred financing costs paid | (7) | (12) | ||
Net cash provided by (used in) financing activities | 185 | (25) | ||
Proceeds from supplement of Acquisition Corp. Senior Term Loan Facility | 320 | |||
Net increase in cash and equivalents | 0 | |||
Cash and equivalents at end of period | 0 | 0 | ||
Reportable Legal Entities | WMG Acquisition Corp. | 3.625% Senior Secured Notes due 2026 | ||||
Cash flows from financing activities | ||||
Proceeds from issuance of Acquisition Corp | 514 | |||
Reportable Legal Entities | WMG Acquisition Corp. | 4.125% Senior Secured Notes | ||||
Cash flows from financing activities | ||||
Repayment of Senior Secured Notes | (40) | |||
Reportable Legal Entities | WMG Acquisition Corp. | 4.875% Senior Secured Notes | ||||
Cash flows from financing activities | ||||
Repayment of Senior Secured Notes | (30) | |||
Reportable Legal Entities | WMG Acquisition Corp. | 5.625% Senior Secured Notes | ||||
Cash flows from financing activities | ||||
Repayment of Senior Secured Notes | (247) | |||
Reportable Legal Entities | WMG Acquisition Corp. | 5.50% Senior Notes | ||||
Cash flows from financing activities | ||||
Proceeds from issuance of Acquisition Corp | 325 | |||
Reportable Legal Entities | WMG Acquisition Corp. | 6.75% Senior Notes | ||||
Cash flows from financing activities | ||||
Repayment of and redemption deposit for Acquisition Corp. Senior Notes | (635) | |||
Reportable Legal Entities | WMG Acquisition Corp. Consolidated | ||||
Cash flows from operating activities | ||||
Net income | 14 | 321 | 167 | 325 |
Adjustments to reconcile net income to net cash provided by operating activities: | ||||
Depreciation and amortization | 203 | 205 | ||
Unrealized gains on remeasurement of foreign denominated loans | (6) | (6) | ||
Deferred income taxes | 25 | 105 | ||
Loss on extinguishment of debt | 4 | 7 | 7 | 31 |
Net gain on divestitures and investments | (27) | (385) | ||
Non-cash interest expense | 5 | 5 | ||
Equity-based compensation expense | 28 | 52 | ||
Changes in operating assets and liabilities: | ||||
Accounts receivable, net | (50) | (43) | ||
Inventories | 12 | (1) | ||
Royalty advances | (107) | |||
Accounts payable and accrued liabilities | (94) | (84) | ||
Royalty payables | 117 | 113 | ||
Accrued interest | (13) | (22) | ||
Deferred revenue | (17) | 0 | ||
Other balance sheet changes | (1) | (30) | ||
Net cash provided by operating activities | 249 | 265 | ||
Cash flows from investing activities | ||||
Acquisition of music publishing rights, net | (24) | (11) | ||
Capital expenditures | (82) | (40) | ||
Investments and acquisitions of businesses, net | (234) | (14) | ||
Proceeds from the sale of investments | 516 | |||
Net cash (used in) provided by investing activities | (340) | 451 | ||
Cash flows from financing activities | ||||
Call premiums paid on and redemption deposit for early redemption of debt | (5) | (23) | ||
Deferred financing costs paid | (7) | (12) | ||
Distribution to noncontrolling interest holder | (3) | (3) | ||
Dividends paid | (63) | (425) | ||
Net cash provided by (used in) financing activities | 119 | (453) | ||
Proceeds from supplement of Acquisition Corp. Senior Term Loan Facility | 320 | |||
Effect of exchange rate changes on cash and equivalents | (1) | (5) | ||
Net increase in cash and equivalents | 27 | 258 | ||
Cash and equivalents at beginning of period | 514 | 647 | ||
Cash and equivalents at end of period | 541 | 905 | 541 | 905 |
Reportable Legal Entities | WMG Acquisition Corp. Consolidated | 3.625% Senior Secured Notes due 2026 | ||||
Cash flows from financing activities | ||||
Proceeds from issuance of Acquisition Corp | 514 | |||
Reportable Legal Entities | WMG Acquisition Corp. Consolidated | 4.125% Senior Secured Notes | ||||
Cash flows from financing activities | ||||
Repayment of Senior Secured Notes | (40) | |||
Reportable Legal Entities | WMG Acquisition Corp. Consolidated | 4.875% Senior Secured Notes | ||||
Cash flows from financing activities | ||||
Repayment of Senior Secured Notes | (30) | |||
Reportable Legal Entities | WMG Acquisition Corp. Consolidated | 5.625% Senior Secured Notes | ||||
Cash flows from financing activities | ||||
Repayment of Senior Secured Notes | (247) | |||
Reportable Legal Entities | WMG Acquisition Corp. Consolidated | 5.50% Senior Notes | ||||
Cash flows from financing activities | ||||
Proceeds from issuance of Acquisition Corp | 325 | |||
Reportable Legal Entities | WMG Acquisition Corp. Consolidated | 6.75% Senior Notes | ||||
Cash flows from financing activities | ||||
Repayment of and redemption deposit for Acquisition Corp. Senior Notes | (635) | |||
Reportable Legal Entities | WMG Holdings Corp. | ||||
Cash flows from operating activities | ||||
Net income | 13 | 320 | 166 | 321 |
Adjustments to reconcile net income to net cash provided by operating activities: | ||||
Equity gains, including distributions | (166) | (321) | ||
Eliminations | ||||
Cash flows from operating activities | ||||
Net income | (26) | (640) | (332) | (642) |
Adjustments to reconcile net income to net cash provided by operating activities: | ||||
Equity gains, including distributions | 332 | 642 | ||
Eliminations | WMG Acquisition Corp. | ||||
Cash flows from operating activities | ||||
Net income | $ (127) | $ (8) | (427) | (143) |
Adjustments to reconcile net income to net cash provided by operating activities: | ||||
Unrealized gains on remeasurement of foreign denominated loans | 0 | |||
Equity gains, including distributions | 546 | 294 | ||
Changes in operating assets and liabilities: | ||||
Accounts payable and accrued liabilities | (119) | (151) | ||
Cash flows from investing activities | ||||
Advances from issuer | 8 | 108 | ||
Net cash (used in) provided by investing activities | 8 | 108 | ||
Cash flows from financing activities | ||||
Change in due to (from) issuer | (8) | (108) | ||
Net cash provided by (used in) financing activities | $ (8) | $ (108) |
Guarantor and Non-Guarantor Subsidiaries Financial Information - Consolidating Statement of Cash Flows Footnote Unaudited (Detail) |
Jun. 30, 2019 |
Jun. 30, 2018 |
---|---|---|
3.625% Senior Secured Notes due 2026 | ||
Condensed Cash Flow Statements, Captions [Line Items] | ||
Interest rate | 3.625% | |
4.125% Senior Secured Notes | ||
Condensed Cash Flow Statements, Captions [Line Items] | ||
Interest rate | 4.125% | |
4.875% Senior Secured Notes | ||
Condensed Cash Flow Statements, Captions [Line Items] | ||
Interest rate | 4.875% | |
5.625% Senior Secured Notes | ||
Condensed Cash Flow Statements, Captions [Line Items] | ||
Interest rate | 5.625% | |
5.50% Senior Notes | ||
Condensed Cash Flow Statements, Captions [Line Items] | ||
Interest rate | 5.50% | 5.50% |
6.75% Senior Notes | ||
Condensed Cash Flow Statements, Captions [Line Items] | ||
Interest rate | 6.75% | 6.75% |
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