Constant Currency
Because exchange rates are an important factor in understanding period-to-period comparisons, we believe the presentation of revenue on a constant-currency basis in addition to reported revenue helps improve the ability to understand our operating results and evaluate our performance in comparison to prior periods. Constant-currency information compares results between periods as if exchange rates had remained constant period over period. We use results on a constant-currency basis as one measure to evaluate our performance. We calculate constant-currency results by applying current-year foreign currency exchange rates to prior-year results. However, a limitation of the use of the constant-currency results as a performance measure is that it does not reflect the impact of exchange rates on our revenue, including, for example, the $37 million, $28 million and $9 million unfavorable impact of exchange rates on our Total, Recorded Music and Music Publishing revenue, in the three months ended September 30, 2012 compared to the prior-year quarter. These results should be considered in addition to, not as a substitute for, results reported in accordance with GAAP. Results on a constant-currency basis, as we present them, may not be comparable to similarly titled measures used by other companies and are not a measure of performance presented in accordance with GAAP.
Figure 7. Warner Music Group Corp. - Revenue by Geography and Segment, Three & Twelve Months Ended 9/30/12 versus 9/30/11 as Reported and Constant Currency(dollars in millions) Successor Predecessor Predecessor ----------------------- ----------- ----------- For the For the For the Combined Combined Three From July From July Three Three Months 20, 2011 1, 2011 Months Months Ended through through ended ended September September July 19, September September 30, 2012 30, 2011 2011 30, 2011 30, 2011 ----------- ----------- ----------- ----------- ----------- As reported As reported As reported As reported Constant $ (unaudited) (unaudited) (unaudited) (unaudited) (unaudited)US revenue Recorded Music $ 227 $ 175 $ 52 $ 227 $ 227 Music Publishing 51 41 6 47 47International revenue Recorded Music 378 281 74 355 327 Music Publishing 82 63 31 94 85Intersegment eliminations (7) (4) (1) (5) (5) ----------- ----------- ----------- ----------- -----------Total Revenue $ 731 $ 556 $ 162 $ 718 $ 681 =========== =========== =========== =========== ===========Revenue by Segment:Recorded Music Physical $ 270 $ 193 $ 46 $ 239 $ 228 Digital 222 147 47 194 189 ----------- ----------- ----------- ----------- ----------- Total Physical and Digital 492 340 93 433 417 Artist Services and Expanded Rights 66 75 22 97 89 Licensing 47 41 11 52 48 ----------- ----------- ----------- ----------- -----------Total Recorded Music 605 456 126 582 554Music Publishing Performance 53 41 20 61 57 Mechanical 30 24 7 31 28 Synchroni- zation 25 21 7 28 26 Digital 22 15 2 17 17 Other 3 3 1 4 4 ----------- ----------- ----------- ----------- -----------Total Music Publishing 133 104 37 141 132Intersegment eliminations (7) (4) (1) (5) (5) ----------- ----------- ----------- ----------- -----------Total Revenue $ 731 $ 556 $ 162 $ 718 $ 681 =========== =========== =========== =========== =========== ----------- ----------- ----------- ----------- -----------Total Digital Revenue $ 241 $ 161 $ 49 $ 210 $ 204 =========== =========== =========== =========== =========== Successor Predecessor Predecessor ----------------------- ----------- ----------- For the For the For the From Combined Combined Twelve From July October 1, Twelve Twelve Months 20, 2011 2010 Months Months Ended through through ended ended September September July 19, September September 30, 2012 30, 2011 2011 30, 2011 30, 2011 ----------- ----------- ----------- ----------- ----------- As reported As reported As reported As reported Constant $ (unaudited) (unaudited) (unaudited) (unaudited) (unaudited)US revenue Recorded Music $ 909 $ 175 $ 781 $ 956 $ 956 Music Publishing 204 41 155 196 196International revenue Recorded Music 1,366 281 1,105 1,386 1,339 Music Publishing 320 63 285 348 331Intersegment eliminations (19) (4) (15) (19) (19) ----------- ----------- ----------- ----------- -----------Total Revenue $ 2,780 $ 556 $ 2,311 $ 2,867 $ 2,803 =========== =========== =========== =========== ===========Revenue by Segment:Recorded Music Physical $ 966 $ 193 $ 839 $ 1,032 $ 1,015 Digital 864 147 621 768 760 ----------- ----------- ----------- ----------- ----------- Total Physical and Digital 1,830 340 1,460 1,800 1,775 Artist Services and Expanded Rights 244 75 235 310 295 Licensing 201 41 191 232 225 ----------- ----------- ----------- ----------- -----------Total Recorded Music 2,275 456 1,886 2,342 2,295Music Publishing Performance 202 41 173 214 205 Mechanical 129 24 118 142 137 Synchroni- zation 112 21 92 113 111 Digital 67 15 45 60 60 Other 14 3 12 15 14 ----------- ----------- ----------- ----------- -----------Total Music Publishing 524 104 440 544 527Intersegment eliminations (19) (4) (15) (19) (19) ----------- ----------- ----------- ----------- -----------Total Revenue $ 2,780 $ 556 $ 2,311 $ 2,867 $ 2,803 =========== =========== =========== =========== =========== ----------- ----------- ----------- ----------- -----------Total Digital Revenue $ 925 $ 161 $ 659 $ 820 $ 811 =========== =========== =========== =========== ===========
