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Figure 1. Warner Music Group Corp. - Consolidated Statements of Operations, Three Months Ended 12/31/12 versus 12/31/11(dollars in millions) For the Three For the Three Months Ended Months Ended December 31, December 31, 2012 2011 % Change ------------- ------------- --------- (unaudited) (unaudited)Revenues $ 769 $ 775 (1%)Costs and expenses:Cost of revenues (408) (420) (3%)Selling, general and administrative expenses (262) (268) (2%)Amortization expense (48) (48) - ------------- ------------- ---------Total costs and expenses $ (718) $ (736) (2%) ------------- ------------- ---------Operating income $ 51 $ 39 31%Loss on extinguishment of debt (83) - -Interest expense, net (53) (57) (7%)Other expense, net (5) (2) 150% ------------- ------------- ---------Loss before income taxes $ (90) $ (20) 350%Income tax benefit (expense) 11 (6) (283%) ------------- ------------- ---------Net loss $ (79) $ (26) 204%Less: income attributable to noncontrolling interest (1) - - ------------- ------------- ---------Net loss attributable to Warner Music Group Corp. $ (80) $ (26) 208% ============= ============= =========Figure 2. Warner Music Group Corp. - Consolidated Balance Sheets as of 12/31/12 and 09/30/12(dollars in millions) December 31, September 30, 2012 2012 % Change ------------- ------------- --------- (unaudited) (unaudited)Assets:Current assets Cash & cash equivalents $ 189 $ 302 (37%) Accounts receivable, net 418 398 5% Inventories 27 28 (4%) Royalty advances (expected to be recouped w/in 1 year) 132 116 14% Deferred tax assets 51 51 - Other current assets 52 44 18% ------------- ------------- ---------Total current assets $ 869 $ 939 (7%)Royalty advances (expected to be recouped after 1 year) 162 142 14%Property, plant & equipment, net 147 152 (3%)Goodwill 1,384 1,380 0%Intangible assets subject to amortization, net 2,453 2,499 (2%)Intangible assets not subject to amortization 102 102 -Other assets 82 64 28% ------------- ------------- ---------Total assets $ 5,199 $ 5,278 (1%) ============= ============= =========Liabilities and Equity:Current liabilities Accounts payable $ 149 $ 156 (4%) Accrued royalties 1,027 997 3% Accrued liabilities 215 258 (17%) Accrued interest 40 89 (55%) Current portion of long-term debt 30 - - Deferred revenue 158 101 56% Other current liabilities 22 5 340% ------------- ------------- ---------Total current liabilities $ 1,641 $ 1,606 2%Long-term debt 2,195 2,206 (0%)Deferred tax liabilities 358 375 (5%)Other noncurrent liabilities 141 147 (4%) ------------- ------------- ---------Total liabilities $ 4,335 $ 4,334 0%Common stock - - -Additional paid-in capital 1,127 1,129 (0%)Accumulated deficit (223) (143) 56%Accumulated other comprehensive loss, net (57) (59) (3%) ------------- ------------- ---------Total Warner Music Group Corp. equity $ 847 $ 927 (9%)Noncontrolling interest 17 17 - ------------- ------------- ---------Total equity 864 944 (8%) ------------- ------------- ---------Total liabilities and equity $ 5,199 $ 5,278 (1%) ============= ============= =========Figure 3. Warner Music Group Corp. - Summarized Statements of Cash Flows, Three Months Ended 12/31/12 versus 12/31/11(dollars in millions) For the Three For the Three Months Ended Months Ended December 31, December 31, 2012 2011 ------------- ------------- (unaudited) (unaudited)Net cash (used in) provided by operating activities $ (10) $ 25Net cash used in investing activities (15) (11)Net cash used in financing activities (86) (1)Effect of foreign currency exchange rates on cash and equivalents (2) 1 ------------- -------------Net (decrease) increase in cash and equivalents $ (113) $ 14 ============= =============
