EX-99.1 2 wmg-ex991_6.htm EX-99.1 wmg-ex991_6.htm

Exhibit 99.1

 

WARNER MUSIC GROUP CORP. REPORTS RESULTS FOR FISCAL FIRST QUARTER ENDED DECEMBER 31, 2018

 

 

Total revenue grew 15.1% or was up 17.8% in constant currency

 

Digital revenue grew 17.6% or was up 19.9% in constant currency

 

Net income was $86 million versus $5 million in the prior-year quarter

 

OIBDA was $215 million versus $155 million in the prior-year quarter

 

NEW YORK, New York, February 5, 2019—Warner Music Group Corp. today announced its first-quarter financial results for the period ended December 31, 2018.  

 

“I’m pleased that we are off to a great start for fiscal ‘19,” said Steve Cooper, Warner Music Group’s CEO.  “We have best in class operators working with amazing music from our extraordinary artists and songwriters across a diverse set of genres, generations and geographies.”  

 

“Our first-quarter results are evidence that our long-term strategy is paying off,” added Eric Levin, Warner Music Group’s Executive Vice President and CFO.  “Our Recorded Music business alone exceeded $1 billion in revenue, and we also had strong OIBDA and cash flow.”

Total WMG

 

Total WMG Summary Results

 

 

 

 

 

 

 

 

 

 

 

(dollars in millions)

 

 

 

 

 

 

 

 

 

 

 

 

For the Three Months Ended December 31, 2018

 

 

For the Three Months Ended December 31, 2017

 

 

% Change

 

 

(unaudited)

 

 

(unaudited)

 

 

 

 

 

Revenue

$

1,203

 

 

$

1,045

 

 

 

15

%

Digital revenue

 

627

 

 

 

533

 

 

 

18

%

Operating income

 

147

 

 

 

90

 

 

 

63

%

Adjusted operating income(1)

 

156

 

 

 

103

 

 

 

51

%

OIBDA(1)

 

215

 

 

 

155

 

 

 

39

%

Adjusted OIBDA(1)

 

224

 

 

 

168

 

 

 

33

%

Net income

 

86

 

 

 

5

 

 

-

 

Adjusted net income(1)

 

95

 

 

 

18

 

 

-

 

Net cash provided by operating activities

 

92

 

 

 

136

 

 

 

-32

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(1) See "Supplemental Disclosures Regarding Non-GAAP Financial Measures" at the end of this release for details regarding these measures.

 

 

Revenue grew 15.1% (or 17.8% in constant currency).  Growth in Recorded Music digital, physical and artist services and expanded-rights revenue and growth in Music Publishing digital, performance and synchronization revenue were partially offset by a decline in Recorded Music licensing revenue and Music Publishing mechanical revenue.  Revenue included a net 6 percentage point benefit from M&A, primarily related to the acquisition of EMP and a 2 percentage point benefit from the adoption of


FASB’s new revenue recognition standard, ASC 606.  Revenue grew in all regions.  Digital revenue grew 17.6% (or 19.9% in constant currency), and represented 52.1% of total revenue, compared to 51.0% in the prior-year quarter. 

 

Operating income was $147 million compared to $90 million in the prior-year quarter.  OIBDA was $215 million, up 38.7% from $155 million in the prior-year quarter and OIBDA margin increased 3.1 percentage points to 17.9% from 14.8% in the prior-year quarter. OIBDA included a net $8 million benefit from M&A and an $18 million benefit from the adoption of ASC 606.  The increase in operating income, OIBDA and OIBDA margin was also the result of revenue growth and revenue mix.  Adjusted OIBDA rose 33.3% to $224 million and Adjusted OIBDA margin increased 2.5 percentage points to 18.6% from 16.1% due to the same factors which impacted OIBDA and OIBDA margin.

 

Net income was $86 million compared to $5 million in the prior-year quarter and Adjusted net income was $95 million compared to $18 million in the prior-year quarter.  The improvement was due to higher operating income and higher other income associated with the Company’s Euro-denominated debt due primarily to changes in exchange rates and an unrealized gain on investment.

 

Adjusted operating income, Adjusted OIBDA and Adjusted net income exclude restructuring and related costs and certain costs related to the Company’s Los Angeles office consolidation in the quarter, and certain costs related to the relocation of the Company’s U.S. shared service center to Nashville, Los Angeles office consolidation, restructuring and costs associated with management changes in the prior-year quarter.  See below for calculations and reconciliations of OIBDA, Adjusted operating income, Adjusted OIBDA and Adjusted net income. 

 

As of December 31, 2018, the Company reported a cash balance of $548 million, total debt of $2.998 billion and net debt (defined as total long-term debt, net of deferred financing costs, minus cash) of $2.450 billion. 

 

Cash provided by operating activities was $92 million compared to $136 million in the prior-year quarter.  The change was largely a result of timing of working capital and the payment of royalties to artists related to the Company’s Spotify share sale in the third quarter of the prior fiscal year.  Free Cash Flow, defined below, was negative $146 million compared to $130 million in the prior-year quarter, reflecting higher cash paid for investments related to the acquisition of EMP and higher capital expenditures related to the Company’s Los Angeles office consolidation.  

 

Recorded Music

 

Recorded Music Summary Results

 

 

 

 

 

 

 

 

 

 

 

(dollars in millions)

 

 

 

 

 

 

 

 

 

 

 

 

For the Three Months Ended December 31, 2018

 

 

For the Three Months Ended December 31, 2017

 

 

% Change

 

 

(unaudited)

 

 

(unaudited)

 

 

 

 

 

Revenue

$

1,041

 

 

$

904

 

 

 

15

%

Digital revenue

 

563

 

 

 

481

 

 

 

17

%

Operating income

 

163

 

 

 

129

 

 

 

26

%

Adjusted operating income(1)

 

167

 

 

 

139

 

 

 

20

%

OIBDA(1)

 

211

 

 

 

173

 

 

 

22

%

Adjusted OIBDA(1)

 

215

 

 

 

183

 

 

 

17

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(1) See "Supplemental Disclosures Regarding Non-GAAP Financial Measures" at the end of this release for details regarding these measures.

 

 

 

2


Recorded Music revenue grew $137 million or 15.2% (or 17.8% in constant currency).  This includes a $76 million increase related to the acquisition of EMP, partially offset by an $18 million decrease related to concert promotion divestitures and a $6 million decrease due to the adoption of ASC 606.  Growth in digital, physical and artist services and expanded-rights revenue was partially offset by a decline in licensing revenue.  Digital growth reflects a continuing shift to streaming.  The increase in physical revenue reflects a strong release schedule.  The increase in artist services and expanded-rights revenue was largely attributable to the acquisition of EMP and higher merchandising revenue in the U.S., which was partially offset by timing of tours, concert promotion divestitures and changes in exchange rates.  The decline in licensing revenue was primarily due to a $10 million decrease from the adoption of ASC 606 and the impact of changes in exchange rates.  Recorded Music revenue grew in all regions.  Major sellers included Johnny Hallyday, Ed Sheeran, The Greatest Showman soundtrack, Michael Bublé and KOBUKURO.

 

Recorded Music operating income was $163 million, up 26.4% from $129 million in the prior-year quarter and operating margin was up 1.4 percentage points to 15.7% versus 14.3% in the prior-year quarter.  OIBDA increased 22.0% to $211 million from $173 million in the prior-year quarter and OIBDA margin increased 1.1 percentage points to 20.2%.  Adjusted OIBDA was $215 million versus $183 million in the prior-year quarter with Adjusted OIBDA margin up 0.5 percentage points to 20.7%. Operating income, OIBDA and Adjusted OIBDA includes a net $8 million increase related to M&A, which was partially offset by a $6 million decrease due to the adoption of ASC 606.  The increase in operating income, OIBDA and Adjusted OIBDA was also driven by revenue growth and revenue mix.  

 

Music Publishing

 

Music Publishing Summary Results

 

 

 

 

 

 

 

 

 

 

 

(dollars in millions)

 

 

 

 

 

 

 

 

 

 

 

 

For the Three Months Ended December 31, 2018

 

 

For the Three Months Ended December 31, 2017

 

 

% Change

 

 

(unaudited)

 

 

(unaudited)

 

 

 

 

 

Revenue

$

165

 

 

$

143

 

 

 

15

%

Digital revenue

 

65

 

 

 

53

 

 

 

23

%

Operating income

 

22

 

 

 

(1

)

 

-

 

OIBDA(1)

 

39

 

 

 

17

 

 

-

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(1) See "Supplemental Disclosures Regarding Non-GAAP Financial Measures" at the end of this release for details regarding these measures.

 

 

Music Publishing revenue rose $22 million, or 15.4% (18.7% in constant currency) due to the adoption of ASC 606, which resulted in a $26 million benefit.  Revenue grew in digital, performance and synchronization, but declined in the mechanical segment, which only relates to physical sales due to the ongoing shift to streaming.  Performance revenue grew due to the adoption of ASC 606, but was negatively impacted by lower market share and loss of administration rights in certain catalogs.  

 

Music Publishing operating income was $22 million compared with a net operating loss of $1 million in the prior-year quarter.  Operating margin improved to 13.3% from negative 0.7%.  Music Publishing OIBDA increased by $22 million to $39 million and OIBDA margin improved to 23.6% from 11.9%.  The increase in operating income and OIBDA was largely due to the adoption of ASC 606, which resulted in a $24 million benefit.  Adjusting for the adoption of ASC 606, Music Publishing OIBDA declined due to revenue mix.

 

 

 

3


Financial details for the quarter can be found in the Company’s current Form 10-Q, for the period ended December 31, 2018, filed today with the Securities and Exchange Commission.

 

This morning, management will be hosting a conference call to discuss the results at 8:30 A.M. EST.  The call will be webcast on www.wmg.com.

About Warner Music Group

With its broad roster of new stars and legendary artists, Warner Music Group is home to a collection of the best-known record labels in the music industry, including Asylum, Atlantic, Big Beat, Canvasback, East West, Elektra, Erato, FFRR, Fueled by Ramen, Nonesuch, Parlophone, Reprise, Rhino, Roadrunner, Sire, Spinnin’, Warner Bros., Warner Classics and Warner Music Nashville, as well as Warner/Chappell Music, one of the world's leading music publishers with a catalogue of more than one million copyrights worldwide.  

"Safe Harbor" Statement under Private Securities Litigation Reform Act of 1995

This communication includes forward-looking statements that reflect the current views of Warner Music Group about future events and financial performance.  Words such as "estimates," "expects," "anticipates," "projects," "plans," "intends," "believes," "forecasts" and variations of such words or similar expressions that predict or indicate future events or trends, or that do not relate to historical matters, identify forward-looking statements.  All forward-looking statements are made as of today, and we disclaim any duty to update such statements.  Our expectations, beliefs and projections are expressed in good faith and we believe there is a reasonable basis for them.  However, we cannot assure you that management's expectations, beliefs and projections will result or be achieved. Investors should not rely on forward-looking statements because they are subject to a variety of risks, uncertainties, and other factors that could cause actual results to differ materially from our expectations.  Please refer to our Annual Report on Form 10-K, Quarterly Report on Form 10-Qs and our other filings with the U.S. Securities and Exchange Commission concerning factors that could cause actual results to differ materially from those described in our forward-looking statements.

We maintain an Internet site at www.wmg.com.  We use our website as a channel of distribution for material company information.  Financial and other material information regarding Warner Music Group is routinely posted on and accessible at http://investors.wmg.com.  In addition, you may automatically receive email alerts and other information about Warner Music Group by enrolling your email address through the “email alerts” section at http://investors.wmg.com.  Our website and the information posted on it or connected to it shall not be deemed to be incorporated by reference into this communication.  

 

Basis of Presentation

The Company maintains a 52-53 week fiscal year ending on the last Friday in each reporting period.  As such, all references to December 31, 2018 and December 31, 2017 relate to the periods ended December 28, 2018 and December 29, 2017, respectively. For convenience purposes, the Company continues to date its financial statements as of December 31.  The fiscal year ended September 30, 2018 ended on September 28, 2018.

 

4


 

Figure 1.  Warner Music Group Corp. - Consolidated Statements of Operations, Three Months Ended December 31, 2018 versus December 31, 2017

 

(dollars in millions)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

For the Three Months Ended December 31, 2018

 

 

For the Three Months Ended December 31, 2017

 

 

% Change

 

 

 

(unaudited)

 

 

(unaudited)

 

 

 

 

 

Revenue

 

$

1,203

 

 

$

1,045

 

 

 

15

%

Cost and expenses:

 

 

 

 

 

 

 

 

 

 

 

 

Cost of revenue

 

 

(626

)

 

 

(569

)

 

 

-10

%

Selling, general and administrative expenses

 

 

(376

)

 

 

(333

)

 

 

-13

%

Amortization expense

 

 

(54

)

 

 

(53

)

 

 

-2

%

Total costs and expenses

 

$

(1,056

)

 

$

(955

)

 

 

-11

%

Operating income

 

$

147

 

 

$

90

 

 

 

63

%

Loss on extinguishment of debt

 

 

(3

)

 

 

(1

)

 

-

 

Interest expense, net

 

 

(36

)

 

 

(36

)

 

-

 

Other income, net

 

 

28

 

 

 

4

 

 

-

 

Income before income taxes

 

$

136

 

 

$

57

 

 

-

 

Income tax expense

 

 

(50

)

 

 

(52

)

 

 

4

%

Net income

 

$

86

 

 

$

5

 

 

-

 

Less: Income attributable to noncontrolling interest

 

 

-

 

 

 

(1

)

 

 

100

%

Net income attributable to Warner Music Group Corp.

 

$

86

 

 

$

4

 

 

-

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

5


 

Figure 2.  Warner Music Group Corp. - Consolidated Balance Sheets at December 31, 2018 versus September 30, 2018

 

(dollars in millions)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

December 31,

 

 

September 30,

 

 

 

 

 

 

 

2018

 

 

2018

 

 

% Change

 

 

 

(unaudited)

 

 

(unaudited)

 

 

 

 

 

Assets

 

 

 

 

 

 

 

 

 

 

 

 

Current assets:

 

 

 

 

 

 

 

 

 

 

 

 

Cash and equivalents

 

$

548

 

 

$

514

 

 

 

7

%

Accounts receivable, net

 

 

789

 

 

 

447

 

 

 

77

%

Inventories

 

 

66

 

 

 

42

 

 

 

57

%

Royalty advances expected to be recouped within one year

 

 

136

 

 

 

123

 

 

 

11

%

Prepaid and other current assets

 

 

53

 

 

 

50

 

 

 

6

%

Total current assets

 

$

1,592

 

 

$

1,176

 

 

 

35

%

Royalty advances expected to be recouped after one year

 

 

166

 

 

 

153

 

 

 

9

%

Property, plant and equipment, net

 

 

268

 

 

 

229

 

 

 

17

%

Goodwill

 

 

1,793

 

 

 

1,692

 

 

 

6

%

Intangible assets subject to amortization, net

 

 

1,839

 

 

 

1,851

 

 

 

-1

%

Intangible assets not subject to amortization

 

 

153

 

 

 

154

 

 

 

-1

%

Deferred tax assets, net

 

 

10

 

 

 

11

 

 

 

-9

%

Other assets

 

 

125

 

 

 

78

 

 

 

60

%

Total assets

 

$

5,946

 

 

$

5,344

 

 

 

11

%

Liabilities and Equity

 

 

 

 

 

 

 

 

 

 

 

 

Current liabilities:

 

 

 

 

 

 

 

 

 

 

 

 

Accounts payable

 

$

179

 

 

$

281

 

 

 

-36

%

Accrued royalties

 

 

1,551

 

 

 

1,396

 

 

 

11

%

Accrued liabilities

 

 

495

 

 

 

423

 

 

 

17

%

Accrued interest

 

 

24

 

 

 

31

 

 

 

-23

%

Deferred revenue

 

 

182

 

 

 

208

 

 

 

-13

%

Other current liabilities

 

 

162

 

 

 

34

 

 

-

 

Total current liabilities

 

$

2,593

 

 

$

2,373

 

 

 

9

%

Long-term debt

 

 

2,998

 

 

 

2,819

 

 

 

6

%

Deferred tax liabilities, net

 

 

219

 

 

 

165

 

 

 

33

%

Other noncurrent liabilities

 

 

275

 

 

 

307

 

 

 

-10

%

Total liabilities

 

$

6,085

 

 

$

5,664

 

 

 

7

%

Equity:

 

 

 

 

 

 

 

 

 

 

 

 

Common stock

 

 

-

 

 

 

-

 

 

-

 

Additional paid-in capital

 

 

1,128

 

 

 

1,128

 

 

 

0

%

Accumulated deficit

 

 

(1,078

)

 

 

(1,272

)

 

 

15

%

Accumulated other comprehensive loss, net

 

 

(212

)

 

 

(190

)

 

 

-12

%

Total Warner Music Group Corp. deficit

 

$

(162

)

 

$

(334

)

 

 

-51

%

Noncontrolling interest

 

 

23

 

 

 

14

 

 

 

64

%

Total equity

 

 

(139

)

 

 

(320

)

 

 

-57

%

Total liabilities and equity

 

$

5,946

 

 

$

5,344

 

 

 

11

%

 

 

Figure 3.  Warner Music Group Corp. - Summarized Statements of Cash Flows, Three Months Ended December 31, 2018 versus December 31, 2017

 

(dollars in millions)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

For the Three Months Ended December 31, 2018

 

 

For the Three Months Ended December 31, 2017

 

 

 

(unaudited)

 

 

(unaudited)

 

Net cash provided by operating activities

 

$

92

 

 

$

136

 

Net cash used in investing activities

 

 

(238

)

 

 

(6

)

Net cash provided by (used in) financing activities

 

 

182

 

 

 

(3

)

Effect of foreign currency exchange rates on cash and equivalents

 

 

(2

)

 

 

2

 

Net increase in cash and equivalents

 

$

34

 

 

$

129

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

6


 

Figure 4.  Warner Music Group Corp. - Recorded Music Digital Revenue Summary, Three Months Ended December 31, 2018 versus December 31, 2017

 

(dollars in millions)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

For the Three Months Ended December 31, 2018

 

 

For the Three Months Ended December 31, 2017

 

 

 

(unaudited)

 

 

(unaudited)

 

Streaming

 

$

502

 

 

$

404

 

Downloads and Other Digital

 

 

61

 

 

 

77

 

Total Recorded Music Digital Revenue

 

$

563

 

 

$

481

 

 

 

 

 

 

 

 

 

 

Supplemental Disclosures Regarding Non-GAAP Financial Measures

We evaluate our operating performance based on several factors, including the following non-GAAP financial measures:

OIBDA

OIBDA reflects our operating income before non-cash depreciation of tangible assets and non-cash amortization of intangible assets.  We consider OIBDA to be an important indicator of the operational strengths and performance of our businesses, and believe the presentation of OIBDA helps improve the ability to understand our operating performance and evaluate our performance in comparison to comparable periods.  However, a limitation of the use of OIBDA as a performance measure is that it does not reflect the periodic costs of certain capitalized tangible and intangible assets used in generating revenue in our businesses.  Accordingly, OIBDA should be considered in addition to, not as a substitute for, operating income (loss), net income (loss) and other measures of financial performance reported in accordance with U.S. GAAP.  In addition, OIBDA, as we calculate it, may not be comparable to similarly titled measures employed by other companies.  

 

Figure 5.  Warner Music Group Corp. - Reconciliation of Net Income to OIBDA, Three Months Ended December 31, 2018 versus December 31, 2017

 

(dollars in millions)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

For the Three Months Ended December 31, 2018

 

 

For the Three Months Ended December 31, 2017

 

 

% Change

 

 

 

(unaudited)

 

 

(unaudited)

 

 

 

 

 

Net income attributable to Warner Music Group Corp.

 

$

86

 

 

$

4

 

 

-

 

Income attributable to noncontrolling interest

 

 

-

 

 

 

1

 

 

 

-100

%

Net income

 

$

86

 

 

$

5

 

 

-

 

Income tax expense

 

 

50

 

 

 

52

 

 

 

4

%

Income including income taxes

 

$

136

 

 

$

57

 

 

-

 

Other (income) expense, net

 

 

(28

)

 

 

(4

)

 

-

 

Interest expense, net

 

 

36

 

 

 

36

 

 

-

 

Loss on extinguishment of debt

 

 

3

 

 

 

1

 

 

-

 

Operating income

 

$

147

 

 

$

90

 

 

 

63

%

Amortization expense

 

 

54

 

 

 

53

 

 

 

-2

%

Depreciation expense

 

 

14

 

 

 

12

 

 

 

-17

%

OIBDA

 

$

215

 

 

$

155

 

 

 

39

%

Operating income margin

 

 

12.2

%

 

 

8.6

%

 

 

 

 

OIBDA margin

 

 

17.9

%

 

 

14.8

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

7


 

Figure 6.  Warner Music Group Corp. - Reconciliation of Segment Operating Income to OIBDA, Three Months Ended December 31, 2018 versus December 31, 2017

 

(dollars in millions)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

For the Three Months Ended December 31, 2018

 

 

For the Three Months Ended December 31, 2017

 

 

% Change

 

 

 

(unaudited)

 

 

(unaudited)

 

 

 

 

 

Total WMG operating income – GAAP

 

$

147

 

 

$

90

 

 

 

63

%

Depreciation and amortization expense

 

 

(68

)

 

 

(65

)

 

 

-5

%

Total WMG OIBDA

 

$

215

 

 

$

155

 

 

 

39

%

Operating income margin

 

 

12.2

%

 

 

8.6

%

 

 

 

 

OIBDA margin

 

 

17.9

%

 

 

14.8

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Recorded Music operating income - GAAP

 

$

163

 

 

$

129

 

 

 

26

%

Depreciation and amortization expense

 

 

(48

)

 

 

(44

)

 

 

-9

%

Recorded Music OIBDA

 

$

211

 

 

$

173

 

 

 

22

%

Recorded Music operating income margin

 

 

15.7

%

 

 

14.3

%

 

 

 

 

Recorded Music OIBDA margin

 

 

20.3

%

 

 

19.1

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Music Publishing operating income - GAAP

 

$

22

 

 

$

(1

)

 

-

 

Depreciation and amortization expense

 

 

(17

)

 

 

(18

)

 

 

6

%

Music Publishing OIBDA

 

$

39

 

 

$

17

 

 

-

 

Music Publishing operating income margin

 

 

13.3

%

 

 

-0.7

%

 

 

 

 

Music Publishing OIBDA margin

 

 

23.6

%

 

 

11.9

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

8


Adjusted Operating Income (Loss), Adjusted OIBDA and Adjusted Net Income (Loss)

Adjusted operating income (loss), Adjusted OIBDA and Adjusted net income (loss) is operating income (loss), OIBDA and net income (loss), respectively, adjusted to exclude the impact of certain items that affect comparability.  Factors affecting period-to-period comparability of the unadjusted measures in the quarter included the items listed in Figure 7 below.  We use Adjusted operating income (loss), Adjusted OIBDA and Adjusted net income (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 U.S. GAAP, they should not be considered in isolation of, or as a substitute for, operating income (loss), OIBDA and net income (loss) attributable to Warner Music Group Corp. as indicators of operating performance, and they may not be comparable to similarly titled measures employed by other companies.

 

Figure 7.  Warner Music Group Corp. - Reconciliation of Reported to Adjusted Results, Three Months Ended December 31, 2018 versus December 31, 2017

 

(dollars in millions)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

For the Three Months Ended December 31, 2018

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total WMG Operating Income

 

 

Recorded

Music

Operating Income

 

 

Music

Publishing Operating Income

 

 

Total WMG

OIBDA

 

 

Recorded

Music OIBDA

 

 

Music

Publishing

OIBDA

 

 

Net income

 

 

(unaudited)

 

 

(unaudited)

 

 

(unaudited)

 

 

(unaudited)

 

 

(unaudited)

 

 

(unaudited)

 

 

(unaudited)

 

Reported Results

$

147

 

 

$

163

 

 

$

22

 

 

$

215

 

 

$

211

 

 

$

39

 

 

$

86

 

Factors Affecting Comparability:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Restructuring and Other Related Costs

 

6

 

 

 

1

 

 

 

-

 

 

 

6

 

 

 

1

 

 

 

-

 

 

 

6

 

L.A. Office Consolidation

 

3

 

 

 

3

 

 

 

-

 

 

 

3

 

 

 

3

 

 

 

-

 

 

 

3

 

Adjusted Results

$

156

 

 

$

167

 

 

$

22

 

 

$

224

 

 

$

215

 

 

$

39

 

 

$

95

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Adjusted Margin

 

13.0

%

 

 

16.0

%

 

 

13.3

%

 

 

18.6

%

 

 

20.7

%

 

 

23.6

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

For the Three Months Ended December 31, 2017

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total WMG Operating Income

 

 

Recorded

Music

Operating Income

 

 

Music Publishing Operating Income

 

 

Total WMG

OIBDA

 

 

Recorded

Music OIBDA

 

 

Music

Publishing

OIBDA

 

 

Net income

 

 

(unaudited)

 

 

(unaudited)

 

 

(unaudited)

 

 

(unaudited)

 

 

(unaudited)

 

 

(unaudited)

 

 

(unaudited)

 

Reported Results

$

90

 

 

$

129

 

 

$

(1

)

 

$

155

 

 

$

173

 

 

$

17

 

 

$

5

 

Factors Affecting Comparability:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Restructuring and Other Related Costs

 

3

 

 

 

2

 

 

 

-

 

 

 

3

 

 

 

2

 

 

 

-

 

 

 

3

 

One-Time Compensation Payment

 

3

 

 

 

3

 

 

 

-

 

 

 

3

 

 

 

3

 

 

 

-

 

 

 

3

 

L.A. Office Consolidation

 

4

 

 

 

4

 

 

 

-

 

 

 

4

 

 

 

4

 

 

 

-

 

 

 

4

 

Nashville Shared Service Costs

 

3