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Adjusted Operating Income, Adjusted OIBDA and Adjusted Net Income (Loss)
Adjusted operating income, adjusted OIBDA and adjusted net (loss) income is operating income, OIBDA and net (loss) income, respectively, adjusted to exclude the impact of certain items that affect comparability ("Factors Affecting Comparability"). Factors affecting period-to-period comparability of the unadjusted measures in fiscal year 2012 included expenses related to our acquisition by Access Industries, share-based compensation expense, which existed in fiscal year 2011 but not 2012, as well as expenses incurred in relation to the sale of EMI. We use adjusted operating income, adjusted OIBDA and adjusted net loss to evaluate our actual operating performance. We believe that the adjusted results provide relevant and useful information for investors because they clarify our actual operating performance, make it easier to compare our results with those of other companies in our industry and allow investors to review performance in the same way as our management. Since these are not measures of performance calculated in accordance with GAAP, they should not be considered in isolation of, or as a substitute for, operating income, OIBDA and net loss attributable to WMG as indicators of operating performance, and they may not be comparable to similarly titled measures employed by other companies.
Figure 6. Warner Music Group Corp. - Reconciliation of Reported Results to Adjusted Results, Three and Twelve Months 9/30/12 and 9/30/11(dollars in millions) For the Three Months ended September 30, 2012---------------------------------------------------------------------------- Recorded Music Total WMG Music Publishing Operating Operating Operating Total WMG Income Income Income OIBDA ----------- ----------- ----------- ----------- (unaudited) (unaudited) (unaudited) (unaudited)Reported Results $ 41 $ 35 $ 37 $ 103Factors Affecting Comparability: EMI Sale-Related Expenses(1) 8 - - 8 ----------- ----------- ----------- -----------Adjusted Results $ 49 $ 35 $ 37 $ 111----------------------------------------------------------------------------For the Three Months ended September 30, 2011---------------------------------------------------------------------------- Recorded Music Total WMG Music Publishing Operating Operating Operating Total WMG Income Income Income OIBDA ----------- ----------- ----------- ----------- (unaudited) (unaudited) (unaudited) (unaudited)Reported Results $ (21) $ 13 $ 40 $ 41Factors Affecting Comparability: Acquisition Expenses(2) 46 - 2 46 Share-Based Compensation Expense(3) 14 8 1 14 EMI Sale-Related Expenses(1) 1 - - 1 ----------- ----------- ----------- -----------Adjusted Results $ 40 $ 21 $ 43 $ 102----------------------------------------------------------------------------For the Twelve Months ended September 30, 2012---------------------------------------------------------------------------- Recorded Music Total WMG Music Publishing Operating Operating Operating Total WMG Income Income Income OIBDA ----------- ----------- ----------- ----------- (unaudited) (unaudited) (unaudited) (unaudited)Reported Results $ 109 $ 120 $ 85 $ 353Factors Affecting Comparability: Acquisition Expenses(2) 1 - - 1 EMI Sale-Related Expenses(1) 14 - - 14 ----------- ----------- ----------- -----------Adjusted Results $ 124 $ 120 $ 85 $ 368----------------------------------------------------------------------------For the Twelve Months ended September 30, 2011---------------------------------------------------------------------------- Recorded Music Total WMG Music Publishing Operating Operating Operating Total WMG Income Income Income OIBDA ----------- ----------- ----------- ----------- (unaudited) (unaudited) (unaudited) (unaudited)Reported Results $ 32 $ 110 $ 73 $ 290Factors Affecting Comparability: Acquisition Expenses(2) 53 - 2 53 Share-Based Compensation Expense(3) 14 8 1 14 EMI Sale-Related Expenses(1) 1 - - 1 ----------- ----------- ----------- -----------Adjusted Results $ 100 $ 118 $ 76 $ 358---------------------------------------------------------------------------- For the Three Months ended September 30, 2012---------------------------------------------------------------- Net loss attributable Music to Warner Recorded Publishing Music Group Music OIBDA OIBDA Corp. ----------- ----------- ------------ (unaudited) (unaudited) (unaudited)Reported Results $ 77 $ 54 $ (18)Factors Affecting Comparability: EMI Sale-Related Expenses(1) - - 8 ----------- ----------- ------------Adjusted Results $ 77 $ 54 $ (10)----------------------------------------------------------------For the Three Months ended September 30, 2011---------------------------------------------------------------- Net loss attributable Music to Warner Recorded Publishing Music Group Music OIBDA OIBDA Corp. ----------- ----------- ------------ (unaudited) (unaudited) (unaudited)Reported Results $ 54 $ 57 $ (103)Factors Affecting Comparability: Acquisition Expenses(2) - 2 46 Share-Based Compensation Expense(3) 8 1 14 EMI Sale-Related Expenses(1) - - 1 ----------- ----------- ------------Adjusted Results $ 62 $ 60 $ (42)----------------------------------------------------------------For the Twelve Months ended September 30, 2012---------------------------------------------------------------- Net loss attributable Music to Warner Recorded Publishing Music Group Music OIBDA OIBDA Corp. ----------- ----------- ------------ (unaudited) (unaudited) (unaudited)Reported Results $ 283 $ 152 $ (112)Factors Affecting Comparability: Acquisition Expenses(2) - - 1 EMI Sale-Related Expenses(1) - - 14 ----------- ----------- ------------Adjusted Results $ 283 $ 152 $ (97)----------------------------------------------------------------For the Twelve Months ended September 30, 2011---------------------------------------------------------------- Net loss attributable Music to Warner Recorded Publishing Music Group Music OIBDA OIBDA Corp. ----------- ----------- ------------ (unaudited) (unaudited) (unaudited)Reported Results $ 282 $ 147 $ (205)Factors Affecting Comparability: Acquisition Expenses(2) - 2 53 Share-Based Compensation Expense(3) 8 1 14 EMI Sale-Related Expenses(1) - - 1 ----------- ----------- ------------Adjusted Results $ 290 $ 150 $ (137)----------------------------------------------------------------(1) Adjusted Results for the three months and twelve months ended September 30, 2012 exclude $8 million (all corporate) and $14 million (all corporate), respectively, and for the three months and twelve months ended September 30, 2011 exclude $1 million (all corporate) in professional and other fees incurred in connection with the sale of EMI and subsequent regulatory review. These costs primarily included advisory, legal and other professional fees.(2) Adjusted Results for the twelve months ended September 30, 2012 exclude $1 million (all corporate) and for the three months and twelve months ended September 30, 2011 exclude $46 million ($44 million corporate and $2 million Music Publishing) and $53 million ($51 million corporate and $2 million Music Publishing), respectively, in fees incurred in connection with the acquisition of the Company by Access Industries. These costs primarily included advisory, accounting, legal and other professional fees.(3) Adjusted Results for the three months and twelve months ended September 30, 2011 exclude $14 million ($5 million corporate, $8 million Recorded Music and $1 million Music Publishing) in share-based compensation expense incurred in connection with the acquisition of the Company by Access Industries.
