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 $8 million, $7 million and $1 million unfavorable impact of exchange rates on our Total, Recorded Music and Music Publishing revenue, in the three months ended December 31, 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 6. Warner Music Group Corp. - Revenue by Geography and Segment, Three Months Ended 12/31/12 versus 12/31/11 as Reported and Constant Currency(dollars in millions) For the Three For the Three For the Three Months Ended Months Ended Months Ended December 31, December 31, December 31, 2012 2011 2011 ------------- ------------- ------------- As reported As reported Constant $ (unaudited) (unaudited) (unaudited)US revenue Recorded Music $ 259 $ 256 $ 256 Music Publishing 35 39 39International revenue Recorded Music 398 403 396 Music Publishing 81 82 81Intersegment eliminations (4) (5) (5) ------------- ------------- -------------Total Revenue $ 769 $ 775 $ 767 ============= ============= =============Revenue by Segment:Recorded Music Physical $ 300 $ 341 $ 336 Digital 237 205 205 ------------- ------------- ------------- Total Physical & Digital 537 546 541 Licensing 60 53 52 Artist services & expanded rights 60 60 59 ------------- ------------- -------------Total Recorded Music 657 659 652Music Publishing Performance 47 48 47 Mechanical 26 33 32 Synchronization 22 23 23 Digital 19 15 16 Other 2 2 2 ------------- ------------- -------------Total Music Publishing 116 121 120Intersegment eliminations (4) (5) (5) ------------- ------------- -------------Total Revenue $ 769 $ 775 $ 767 ============= ============= ============= ------------- ------------- -------------Total Digital Revenue $ 255 $ 219 $ 218 ============= ============= =============
