Edgar Filing: Warner Music Group Corp.

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Form 10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark One)

x	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended December 31, 2012

¨	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

Commission File Number 001-32502

Warner Music Group Corp.

(Exact name of Registrant as specified in its charter)

Delaware

13-4271875

(State or other jurisdiction of

incorporation or organization)

(I.R.S. Employer

Identification No.)

75 Rockefeller Plaza

New York, NY 10019

(Address of principal executive offices)

(212) 275-2000

(Registrant’s telephone number, including area code)

Indicate by check mark whether the Registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the Registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ¨ No x

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes x No ¨

Indicate by check mark whether the Registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer or a smaller reporting company. See the definitions of “large accelerated filer”, “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.

Indicate by check mark whether the Registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act.) Yes ¨ No x

There is no public market for the Registrant’s common stock. As of February 14, 2013 the number of shares of the Registrant’s common stock, par value $0.001 per share, outstanding was 1,055. All of the Registrant’s common stock is owned by affiliates of Access Industries, Inc. The Registrant has filed all Exchange Act reports for the preceding 12 months.

WARNER MUSIC GROUP CORP.

INDEX


		Page

Part I.	Financial Information
Item 1.	Financial Statements (Unaudited)		3
	Consolidated Balance Sheets as of December 31, 2012 and September 30, 2012		3
	Consolidated Statements of Operations for the Three Months Ended December 31, 2012 and December 31, 2011		4
	Consolidated Statement of Comprehensive Income for the Three Months Ended December 31, 2012 and December 31, 2011		5
	Consolidated Statements of Cash Flows for the Three Months Ended December 31, 2012 and December 31, 2011		6
	Consolidated Statement of Equity for the Three Months Ended December 31, 2012		7
	Notes to Consolidated Interim Financial Statements		8
	Supplementary Information—Consolidating Financial Statements		18
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations		27
Item 3.	Quantitative and Qualitative Disclosures About Market Risk		54
Item 4.	Controls and Procedures		54
Part II.	Other Information		55
Item 1.	Legal Proceedings		55
Item 1A.	Risk Factors		56
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds		68
Item 3.	Defaults Upon Senior Securities		68
Item 4.	Mine Safety Disclosures		68
Item 5.	Other Information		68
Item 6.	Exhibits		69
Signatures			73

ITEM 1.

FINANCIAL STATEMENTS

Warner Music Group Corp.

Consolidated Balance Sheets (Unaudited)


	December 31, 2012			September 30, 2012
	(in millions)
Assets
Current assets:
Cash and equivalents	$	189		$	302
Accounts receivable, less allowances of $91 and $63 million		418			398
Inventories		27			28
Royalty advances expected to be recouped within one year		132			116
Deferred tax assets		51			51
Other current assets		52			44

Total current assets		869			939
Royalty advances expected to be recouped after one year		162			142
Property, plant and equipment, net		147			152
Goodwill		1,384			1,380
Intangible assets subject to amortization, net		2,453			2,499
Intangible assets not subject to amortization		102			102
Other assets		82			64

Total assets	$	5,199		$	5,278

Liabilities and Equity
Current liabilities:
Accounts payable	$	149		$	156
Accrued royalties		1,027			997
Accrued liabilities		215			258
Accrued interest		40			89
Deferred revenue		158			101
Current portion of long-term debt		30			—
Other current liabilities		22			5

Total current liabilities		1,641			1,606
Long-term debt		2,195			2,206
Deferred tax liabilities		358			375
Other noncurrent liabilities		141			147

Total liabilities		4,335			4,334

Equity:
Common stock ($0.001 par value; 10,000 shares authorized; 1,055 shares issued and outstanding)		—			—
Additional paid-in capital		1,127			1,129
Accumulated deficit		(223	)		(143	)
Accumulated other comprehensive loss, net		(57	)		(59	)

Total Warner Music Group Corp. equity		847			927
Noncontrolling interest		17			17

Total equity		864			944

Total liabilities and equity	$	5,199		$	5,278

See accompanying notes

Warner Music Group Corp.

Consolidated Statements of Operations (Unaudited)


	Three Months Ended December 31, 2012			Three Months Ended December 31, 2011
	(in millions)
Revenues	$	769		$	775
Costs and expenses:
Cost of revenues		(408	)		(420	)
Selling, general and administrative expenses (a)		(262	)		(268	)
Amortization of intangible assets		(48	)		(48	)

Total costs and expenses		(718	)		(736	)

Operating income		51			39
Loss on extinguishment of debt		(83	)		—
Interest expense, net		(53	)		(57	)
Other expense, net		(5	)		(2	)

Loss before income taxes		(90	)		(20	)
Income tax benefit (expense)		11			(6	)

Net loss		(79	)		(26	)
Less: income attributable to noncontrolling interest		(1	)		—

Net loss attributable to Warner Music Group Corp.	$	(80	)	$	(26	)

(a) Includes depreciation expense of:	$	(13	)	$	(12	)

Warner Music Group Corp.

Consolidated Statement of Comprehensive Loss (Unaudited)


	Three Months Ended December 31, 2012			Three Months Ended December 31, 2011
	(in millions)
Net loss	$	(79	)	$	(26	)
Other comprehensive income (loss), net of tax:
Foreign currency translation adjustment		2			(14	)
Deferred gains on derivative financial instruments		—			—
Minimum pension liability		—			—

Other comprehensive loss, net of tax:		2			(14	)

Total comprehensive loss		(77	)		(40	)
Less: comprehensive income attributable to noncontrolling interest		(1	)		—

Comprehensive loss attributable to Warner Music Group Corp.	$	(78	)	$	(40	)

See accompanying notes

Warner Music Group Corp.

Consolidated Statements of Cash Flows (Unaudited)


	Three Months Ended December 31, 2012			Three Months Ended December 31, 2011
	(in millions)
Cash flows from operating activities
Net loss	$	(79	)	$	(26	)
Adjustments to reconcile net loss to net cash (used in) provided by operating activities:
Loss on extinguishment of debt		83			—
Depreciation and amortization		61			60
Deferred income taxes		(10	)		(2	)
Non-cash interest (income) expense		2			(1	)
Changes in operating assets and liabilities:
Accounts receivable		(23	)		(42	)
Inventories		1			—
Royalty advances		(35	)		(13	)
Accounts payable and accrued liabilities		(53	)		(25	)
Royalty payables		32			66
Accrued interest		(49	)		(23	)
Deferred income		55			30
Other balance sheet changes		5			1

Net cash (used in) provided by operating activities		(10	)		25

Cash flows from investing activities
Acquisition of publishing rights		(8	)		(7	)
Proceeds from the sale of music catalog		—			2
Capital expenditures		(7	)		(6	)

Net cash used in investing activities		(15	)		(11	)

Cash flows from financing activities
Proceeds from draw down of the New Revolving Credit Facility		31			—
Repayment of the New Revolving Credit Facility		(31	)		—
Proceeds from issuance of Acquisition Corp 6.00% Senior Secured Notes		500			—
Proceeds from issuance of Acquisition Corp 6.25% Senior Secured Notes		227			—
Proceeds from Acquisition Corp Term Loan Facility, net		594			—
Repayment of Acquisition Corp 9.5% Senior Subordinated Notes		(1,250	)		—
Financing fees paid for early redemption of debt		(127	)		—
Deferred financing costs paid		(30	)		—
Distribution to noncontrolling interest holder		—			(1	)

Net cash used in financing activities		(86	)		(1	)

Effect of exchange rate changes on cash and equivalents		(2	)		1

Net (decrease) increase in cash and equivalents		(113	)		14
Cash and equivalents at beginning of period		302			154

Cash and equivalents at end of period	$	189		$	168

See accompanying notes

Warner Music Group Corp.

Consolidated Statement of Equity (Unaudited)


	Common Stock				Additional Paid-in			Accumulated			Accumulated Other Comprehensive			Total Warner Music Group Corp.			Noncontrolling			Total
	Shares		Value		Capital			Deficit			Loss			Equity			Interests			Equity
	(in millions, except per share amounts)
Balance at September 30, 2012		1,000	$	0.001	$	1,129		$	(143	)	$	(59	)	$	927		$	17		$	944
Net (loss) income		—		—		—			(80	)		—			(80	)		1			(79	)
Deconsolidation of entity		—		—		(2	)		—			—			(2	)		—			(2	)
Other comprehensive loss		—		—		—			—			2			2			—			2
Noncontrolling interests		—		—		—			—			—			—			(1	)		(1	)
Stock dividend		55		—		—			—			—			—			—			—

Balance at December 31, 2012		1,055	$	0.001	$	1,127		$	(223	)	$	(57	)	$	847		$	17		$	864

See accompanying notes

Warner Music Group Corp.

Notes to Consolidated Interim Financial Statements (Unaudited)

1. Description of Business

Warner Music Group Corp. (the “Company”) was formed on November 21, 2003. The Company is the direct parent of WMG Holdings Corp. (“Holdings”), which is the direct parent of WMG Acquisition Corp. (“Acquisition Corp.”). Acquisition Corp. is one of the world’s major music-based content companies.

Pursuant to the Agreement and Plan of Merger, dated as of May 6, 2011 (the “Merger Agreement”), by and among the Company, AI Entertainment Holdings LLC, a Delaware limited liability company (“Parent”) and an affiliate of Access Industries, Inc. (“Access”), and Airplanes Merger Sub, Inc., a Delaware corporation and a wholly owned subsidiary of Parent (“Merger Sub”), on July 20, 2011 (the “Merger Closing Date”), Merger Sub merged with and into the Company with the Company surviving as a wholly owned subsidiary of Parent (the “Merger”).

On the Merger Closing Date, in connection with the Merger, each outstanding share of common stock of the Company (other than any shares owned by the Company or its wholly owned subsidiaries, or by Parent and its affiliates, or by any stockholders who were entitled to and who properly exercised appraisal rights under Delaware law, and shares of unvested restricted stock granted under the Company’s equity plan) was cancelled and converted automatically into the right to receive $8.25 in cash, without interest and less applicable withholding taxes (collectively, the “Merger Consideration”). Parent funded the Merger Consideration through cash on hand at the Company at closing, equity financing obtained from Parent and debt financing obtained from third-party lenders.

On the Merger Closing Date, the Company notified the New York Stock Exchange, Inc. (the “NYSE”) of its intent to remove the Company’s common stock from listing on the NYSE and requested that the NYSE file with the SEC an application on Form 25 to report the delisting of the Company’s common stock from the NYSE. On July 21, 2011, in accordance with the Company’s request, the NYSE filed the Form 25 with the SEC in order to provide notification of such delisting and to effect the deregistration of the Company’s common stock under Section 12(b) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). On August 2, 2011 the Company filed a Form 15 with the SEC in order to provide notification of a suspension of its duty to file reports under Section 15(d) of the Exchange Act. Following such suspension, the Company continued to file reports with the SEC pursuant to the Exchange Act in accordance with certain covenants contained in the instruments governing the Company’s outstanding indebtedness. Additionally, the Company filed two exchange offer registration statements with the SEC in connection with the registration of the 11.50% Senior Unsecured Notes due 2018 issued by Acquisition Corp. (the “Unsecured WMG Notes”) and the 13.75% Senior Notes due 2019 issued by Holdings (the “Holdings Notes”) and the related guarantees by the Company, both of which became effective on March 16, 2012. As a result, the Company’s obligations to file reports pursuant to Section 15(d) of the Exchange Act were reinstated until the end of our fiscal year ended September 30, 2012 and it has continued to file Exchange Act reports with the SEC in accordance with certain covenants contained in the instruments covering its outstanding indebtedness.

The Company classifies its business interests into two fundamental operations: Recorded Music and Music Publishing. A brief description of these operations is presented below.

Recorded Music Operations

The Company’s Recorded Music business primarily consists of the discovery and development of artists and the related marketing, distribution and licensing of recorded music produced by such artists.

In the U.S., Recorded Music operations are conducted principally through the Company’s major record labels—Warner Bros. Records and the Atlantic Records Group. The Company’s Recorded Music operations also include Rhino, a division that specializes in marketing the Company’s music catalog through compilations and reissuances of previously released music and video titles, as well as in the licensing of recordings to and from third parties for various uses, including film and television soundtracks. Rhino has also become the Company’s primary licensing division focused on acquiring broader licensing rights from certain catalog artists. For example, the Company has a 50% interest in Frank Sinatra Enterprises, an entity that administers licenses for use of Frank Sinatra’s name and likeness and manages all aspects of his music, film and stage content. The Company also conducts its Recorded Music operations through a collection of additional record labels, including, among others, Asylum, East West, Elektra, Nonesuch, Reprise, Roadrunner, Rykodisc, Sire and Word.

Outside the U.S., Recorded Music activities are conducted in more than 50 countries primarily through various subsidiaries, affiliates and non-affiliated licensees. Internationally the Company engages in the same activities as in the U.S.: discovering and signing artists and distributing, marketing and selling their recorded music. In most cases, the Company also markets and distributes the records of those artists for whom the Company’s U.S. record labels have international rights. In certain smaller markets, the Company licenses to unaffiliated third-party record labels the right to distribute its records. The Company’s international artist

services operations also include a network of concert promoters through which the Company provides resources to coordinate tours for the Company’s artists and other artists.

Recorded Music distribution operations include WEA Corp., which markets and sells music and DVD products to retailers and wholesale distributors in the U.S., ADA, which distributes the products of independent labels to retail and wholesale distributors in the U.S.; various distribution centers and ventures operated internationally, an 80% interest in Word, which specializes in the distribution of music products in the Christian retail marketplace, and ADA Global, which provides distribution services outside of the U.S. through a network of affiliated and non-affiliated distributors.

The Company plays an integral role in virtually all aspects of the recorded music value chain from discovering and developing talent to producing albums and promoting artists and their products. After an artist has entered into a contract with one of the Company’s record labels, a master recording of the artist’s music is created. The recording is then replicated for sale to consumers primarily in CD and digital formats. In the U.S., WEA Corp., ADA and Word market, sell and deliver product, either directly or through sub-distributors and wholesalers, to record stores, mass merchants and other retailers. The Company’s Recorded Music products are also sold in physical form to online physical retailers such as Amazon.com, barnesandnoble.com and bestbuy.com and in digital form to online digital retailers like Apple’s iTunes and online subscription services like Spotify, Rhapsody and Deezer, and Internet radio services like Pandora and iHeart Radio. In the case of expanded-rights deals where the Company acquires broader rights in a recording artist’s career, the Company may provide more comprehensive career support and actively develop new opportunities for an artist through touring, fan clubs, merchandising and sponsorships, among other areas. The Company believes expanded-rights deals create better partnerships with its artists, which allow the Company and its artists to work together more closely to create and sustain artistic and commercial success.

The Company has integrated the sale of digital content into all aspects of its Recorded Music and Music Publishing businesses including A&R, marketing, promotion and distribution. The Company’s new media executives work closely with A&R departments to make sure that while a record is being made, digital assets are also created with all distribution channels in mind, including subscription services, social networking sites, online portals and music-centered destinations. The Company works side by side with its mobile and online partners to test new concepts. The Company believes existing and new digital businesses will be a significant source of growth for at least the next several years and will provide new opportunities to successfully monetize its assets and create new revenue streams. As a music-based content company, the Company has assets that go beyond its recorded music and music publishing catalogs, such as its music video library, which it has begun to monetize through digital channels. The proportion of digital revenues attributed to each distribution channel varies by region and since digital music is in the relatively early stages of growth, proportions may change as the roll out of new technologies continues. As an owner of musical content, the Company believes it is well positioned to take advantage of growth in digital distribution and emerging technologies to maximize the value of its assets.

The Company is also diversifying its revenues beyond its traditional businesses by entering into artist services and expanded-rights deals with recording artists in order to partner with artists in other areas of their careers. Under these agreements, the Company provides services to and participates in artists’ activities outside the traditional recorded music business. The Company has developed an artist services business to exploit this broader set of music-related rights and to participate more broadly in the monetization of the artist brands it helps create. In developing the Company’s artist services business, the Company has both built and expanded in-house capabilities and expertise and has acquired a number of existing artist services companies involved in artist management, merchandising, strategic marketing and brand management, ticketing, concert promotion, fan clubs, original programming and video entertainment.

The Company believes that entering into expanded-rights deals and enhancing its artist services capabilities associated with the Company’s artists and other artists will permit it to diversify revenue streams to better capitalize on the growth areas of the music industry and permit it to build stronger, long-term relationships with artists and more effectively connect artists and fans.

Music Publishing Operations

Where recorded music is focused on exploiting a particular recording of a composition, music publishing is an intellectual property business focused on the exploitation of the composition itself. In return for promoting, placing, marketing and administering the creative output of a songwriter, or engaging in those activities for other rights holders, the Company’s Music Publishing business garners a share of the revenues generated from use of the composition.

The Company’s Music Publishing operations include Warner/Chappell, its global Music Publishing company, headquartered in Los Angeles with operations in over 50 countries through various subsidiaries, affiliates and non-affiliated licensees. The Company owns or controls rights to more than one million musical compositions, including numerous pop hits, American standards, folk songs and motion picture and theatrical compositions. Assembled over decades, its award-winning catalog includes over 65,000 songwriters and composers and a diverse range of genres including pop, rock, jazz, country, R&B, hip-hop, rap, reggae, Latin, folk, blues, symphonic, soul, Broadway, techno, alternative, gospel and other Christian music. In January 2011, the Company acquired Southside Independent Music Publishing, a leading independent music publishing company, further adding to its catalog. Warner/Chappell also administers the music and soundtracks of several third-party television and film producers and studios, including Lucasfilm, Ltd.,

Hallmark Entertainment and Disney Music Publishing. In July 2012, the Company announced that Warner/Chappell had acquired the master and publishing rights with respect to film music owned by Miramax Films, which contains the film scores and certain masters from numerous critically acclaimed films. The Company’s production music library business includes Non-Stop Music, Groove Addicts Production Music Library, Carlin Recorded Music Library and 615 Music, and is collectively branded as Warner/Chappell Production Music.

2. Basis of Presentation

Interim Financial Statements

The accompanying unaudited consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the U.S. (“U.S. GAAP”) for interim financial information and with the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all of the information and notes required by U.S. GAAP for complete financial statements. In the opinion of management, all adjustments (consisting of normal recurring accruals) considered necessary for a fair presentation have been included. Operating results for the three month period ended December 31, 2012 are not necessarily indicative of the results that may be expected for the fiscal year ended September 30, 2013.

The consolidated balance sheet at September 30, 2012 has been derived from the audited consolidated financial statements at that date but does not include all of the information and footnotes required by U.S. GAAP for complete financial statements.

For further information, refer to the consolidated financial statements and footnotes thereto included in our Annual Report on Form 10-K for the fiscal year ended September 30, 2012 (File No. 001-32502).

Basis of Consolidation

The accompanying financial statements present the consolidated accounts of all entities in which the Company has a controlling voting interest and/or variable interest entities required to be consolidated in accordance with U.S. GAAP. All inter-company balances and transactions have been eliminated. Certain reclassifications have been made to the prior fiscal years’ consolidated financial statements to conform with the current fiscal-year presentation.

Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) Topic 810, Consolidation (“ASC 810”) requires the Company first evaluate its investments to determine if any investments qualify as a variable interest entity (“VIE”). A VIE is consolidated if the Company is deemed to be the primary beneficiary of the VIE, which is the party involved with the VIE that has both (i) the power to control the most significant activities of the VIE and (ii) either the obligation to absorb losses or the right to receive benefits that could potentially be significant to the VIE. If an entity is not deemed to be a VIE, the Company consolidates the entity if the Company has a controlling voting interest.

The Company maintains a 52-53 week fiscal year ending on the Friday nearest to each reporting date. As such, all references to December 31, 2012 and December 31, 2011 relate to the three-month periods ended December 28, 2012 and December 30, 2011, respectively. For convenience purposes, the Company continues to date its financial statements as of December 31.

The Company has performed a review of all subsequent events through the date the financial statements were issued, and has determined that other than described in Note 11, no additional disclosures are necessary.

New Accounting Pronouncements

During the first quarter of fiscal 2013, the Company adopted ASU 2011-05, Presentation of Comprehensive Income. ASU 2011-05 requires entities to present items of net income and other comprehensive income either in one continuous statement, referred to as the statement of comprehensive income, or in two separate, but consecutive, statements of operations and other comprehensive income. The Company simultaneously adopted ASU 2011-12, Deferral of the Effective Date for Amendments to the Presentation of Reclassifications of Items Out of Accumulated Other Comprehensive Income in Accounting Standards Update No. 2011-05. ASU 2011-12 defers the requirement to present components of reclassifications of comprehensive income on the statement of comprehensive income, with all other requirements of ASU 2011-05 unaffected. The adoption of these standard updates did not have a significant impact on the Company’s financial statements, other than presentation.

During the first quarter of fiscal 2013, the Company adopted ASU 2011-08, Testing Goodwill for Impairment. ASU 2011-08 provides entities with an option to perform a qualitative assessment to determine whether further impairment testing is necessary. The adoption of this standard update did not have an impact on the Company’s financial statements.

During the first quarter of fiscal 2013, the Company adopted ASU 2012-02, Intangibles-Goodwill and Other (Topic 350): Testing Indefinite-Lived Intangible Assets for Impairment, which provides the option to perform a qualitative assessment to determine whether it is more likely than not that the indefinite-lived intangible asset is impaired. The adoption of this standard update did not have an impact on the Company’s financial statements.

In December 2011, the FASB issued ASU 2011-11, Disclosures about Offsetting Assets and Liabilities. In January 2013, the FASB issued ASU 2013-01, Clarifying the Scope of Disclosures about Offsetting Assets and Liabilities, to clarify which financial assets and financial liabilities are included within the scope of ASU 2011-11. These ASUs require additional quantitative and qualitative disclosures over financial instruments and derivative instruments that are offset on the balance

In February 2013, the FASB issued ASU 2013-02, Reporting of Amounts Reclassified Out of Accumulated Other Comprehensive Income. This ASU requires entities to disclose, in one place, information about the amounts reclassified out of accumulated other comprehensive income by component. ASU 2013-02 is effective for reporting periods beginning after December 15, 2012. The adoption of this standard is not expected to have a significant impact on the Company’s financial statements, other than disclosure.

sheet or subject to master netting arrangements. Both ASUs are effective for annual and interim reporting periods for fiscal years beginning on or after January 1, 2013. The adoption of these standards is not expected to have a significant impact on the Company’s financial statements, other than presentation.

3. Comprehensive (Loss) Income

Comprehensive (loss) income consists of net loss and other gains and losses affecting equity that, under U.S. GAAP, are excluded from net (loss) income. For the Company, the components of other comprehensive (loss) income primarily consist of foreign currency translation gains and losses and deferred gains and losses on financial instruments designated as hedges under FASB ASC Topic 815, Derivatives and Hedging (“ASC 815”), which include foreign exchange contracts. The following summary sets forth the components of accumulated other comprehensive loss, net of related taxes (in millions):


	Foreign Currency Translation Loss			Minimum Pension Liability			Deferred Gains On Derivative Financial Instruments		Accumulated Other Comprehensive (Loss)/Income
	(in millions)
Balance at September 30, 2012	$	(54	)	$	(6	)	$	1	$	(59	)
Activity through December 31, 2012		2			—			—		2

Balance at December 31, 2012	$	(52	)	$	(6	)	$	1	$	(57	)

4. Goodwill and Intangible Assets

Goodwill

The following analysis details the changes in goodwill for each reportable segment during the three months ended December 31, 2012 (in millions):


	Recorded Music		Music Publishing		Total
	(in millions)
Balance at September 30, 2012	$	916	$	464	$	1,380
Acquisitions		—		—		—
Dispositions		—		—		—
Other adjustments		4		—		4

Balance at December 31, 2012	$	920	$	464	$	1,384

The Company performs its annual goodwill impairment test in accordance with FASB ASC Topic 350, Intangibles—Goodwill and other (“ASC 350”) during the fourth quarter of each fiscal year. The Company may conduct an earlier review if events or circumstances occur that would suggest the carrying value of the Company’s goodwill may not be recoverable. No indicators of impairment were identified during the current period that required the Company to perform an interim assessment or recoverability test.

Other Intangible Assets

Other intangible assets consist of the following (in millions):


	December 31, 2012			September 30, 2012
	(in millions)
Intangible assets subject to amortization:
Recorded music catalog	$	544		$	547
Music publishing copyrights		1,518			1,508
Artist and songwriter contracts		661			667
Trademarks		7			7

		2,730			2,729
Accumulated amortization		(277	)		(230	)

Total net intangible assets subject to amortization		2,453			2,499
Intangible assets not subject to amortization:
Trademarks and brands		102			102

Total net other intangible assets	$	2,555		$	2,601

5. Debt

Debt Capitalization

Long-term debt, including the current portion, consisted of the following (in millions):


	December 31, 2012		September 30, 2012
	(in millions)
Old Revolving Credit Facility (a)	$	—	$	—
New Revolving Credit Facility (b)		—		—
Term Loan Facility due 2018—Acquisition Corp (c)		594		—
9.5% Senior Secured Notes due 2016—Acquisition Corp (d)		—		1,151
9.5% Senior Secured Notes due 2016—Acquisition Corp (e)		—		156
6.00% Senior Secured Notes due 2021—Acquisition Corp		500		—
6.25% Senior Secured Notes due 2021—Acquisition Corp (f)		231		—
11.5% Senior Notes due 2018—Acquisition Corp (g)		750		749
13.75% Senior Notes due 2019—Holdings		150		150

Total debt	$	2,225	$	2,206
Less: current portion		30		—

Total long term debt	$	2,195	$	2,206

(a)

Reflects $60 million of commitments under the Old Revolving Credit Facility, less letters of credit outstanding of approximately $1 million at September 30, 2012. There were no loans outstanding under the Old Revolving Credit Facility as of September 30, 2012. The Old Revolving Credit Facility was retired in connection with the 2012 Refinancing and replaced with the New Revolving Credit Facility.

(b)	Reflects $150 million of commitments under the New Revolving Credit Facility, less letters of credit outstanding of approximately $1 million at December 31, 2012. There were no loans outstanding under the New Revolving Credit Facility as of December 31, 2012.

(c)	Face amount of $600 million less unamortized discount of $6 million. Of this amount, $30 million, representing the scheduled amortization of the Term Loans, was included in the current portion of long term debt at December 31, 2012.

(d)	Face amount of $1.1 billion plus unamortized premiums of $51 million at September 30, 2012. All outstanding amounts were repaid in full as part of the 2012 Refinancing.

(e)	Face amount of $150 million plus unamortized premiums of $6 million at September 30, 2012. All outstanding amounts were repaid in full as part of the 2012 Refinancing.

(f)	Face amount of €175 million. Amount above represents the dollar equivalent of such notes at December 31, 2012.

(g)	Face amount of $765 million less unamortized discounts of $15 million and $16 million at December 31, 2012 and September 30, 2012, respectively.

2012 Debt Refinancing

On November 1, 2012, the Company completed a refinancing of its then outstanding Senior Secured Notes due 2016 (the “2012 Refinancing”). In connection with the 2012 Refinancing, the Company issued new senior secured notes consisting of $500 million aggregate principal amount of Senior Secured Notes due 2021 and €175 million aggregate principal amount of Senior Secured Notes due 2021 (the “New Secured Notes”) and entered into new senior secured credit facilities consisting of a $600 million term loan facility (the “Term Loan Facility”) and a $150 million revolving credit facility (the “New Revolving Credit Facility” and, together with Term Loan Facility, the “New Senior Credit Facilities”). The proceeds from the 2012 Refinancing, together with $101 million of the Company’s available cash, were used to pay the total consideration due in connection with the tender offers for all of the Company’s previously outstanding $1.250 billion 9.50% senior secured notes due 2016 (the “Old Secured Notes”) as well as associated fees and expenses and to redeem all of the remaining notes not tendered in the tender offers. The Company also retired its existing $60 million Revolving Credit Facility in connection with the 2012 Refinancing, replacing it with the New Revolving Credit Facility. The Company also borrowed $31 million under the New Revolving Credit Facility as part of the 2012 Refinancing, which loans were repaid in full on December 3, 2012.

In connection with the 2012 Refinancing, the Company made a redemption payment of $1.377 billion, which included the repayment of the Company’s previously outstanding $1.250 billion Old Secured Notes, tender/call premiums of $93 million and consent fees of approximately $34 million. The Company also paid approximately $45 million in accrued interest through the closing date.

The Company recorded a loss on extinguishment of debt of approximately $83 million in the three months ended December 31, 2012, which represents the difference between the redemption payment and the carrying value of the debt at the refinancing date, which included the principal value of $1.250 billion, plus unamortized premiums of $55 million, less unamortized debt issuance costs of $11 million related to the Old Secured Notes.

Interest Rates

The loans under the Revolving Credit Agreement bear interest at Revolving Borrower’s election at a rate equal to (i) the rate for deposits in the currency in which the applicable borrowing is denominated in the London interbank market (adjusted for maximum reserves) for the applicable interest period (“Revolving LIBOR Rate”), plus 3.50% per annum, or (ii) the base rate, which is the highest of (x) the corporate base rate established by the administrative agent from time to time, (y) the overnight federal funds rate plus 0.50% and (z) the one-month Revolving LIBOR Rate plus 1.0% per annum, plus, in each case, 2.50% per annum.

If there is a payment default at any time, then the interest rate applicable to overdue principal will be the rate otherwise applicable to such loan plus 2.0% per annum. Default interest will also be payable on other overdue amounts at a rate of 2.0% per annum above the amount that would apply to an alternative base rate loan.

The New Revolving Credit Facility bears a facility fee equal to 0.50%, payable quarterly in arrears, based on the daily commitments during the preceding quarter. The New Revolving Credit Facility bears customary letter of credit fees. Acquisition Corp. is also required to pay certain upfront fees to lenders and agency fees to the agent under the New Revolving Credit Facility, in the amounts and at the times agreed between the relevant parties.

The loans under the Term Loan Credit Agreement bear interest at Term Loan Borrower’s election at a rate equal to (i) the rate for deposits in U.S. dollars in the London interbank market (adjusted for maximum reserves) for the applicable interest period (“Term Loan LIBOR Rate”), plus 4.00% per annum, or (ii) the base rate, which is the highest of (x) the corporate base rate established by the administrative agent from time to time, (y) the overnight federal funds rate plus 0.50% and (z) the one-month Term Loan LIBOR Rate plus 1.0% per annum, plus, in each case, 3.00% per annum. The Term Loan LIBOR Rate shall be deemed to be not less than 1.25%.

If there is a payment default at any time, then the interest rate applicable to overdue principal and interest will be the rate otherwise applicable to such loan plus 2.0% per annum. Default interest will also be payable on other overdue amounts at a rate of 2.0% per annum above the amount that would apply to an alternative base rate loan.

Customary fees will be payable in respect of the Term Loan Facility.

See also “Financial Condition and Liquidity” for a further discussion.

Scheduled Amortization of Term Loan

The Term Loans under the Term Loan Facility will amortize in equal quarterly installments in aggregate annual amounts equal to 5.00% of the original principal amount of the Term Loan Facility with the balance payable on maturity date of the Term Loans. The first quarterly installment will be due March 31, 2013. $30 million is scheduled to be repaid in each of the successive five years, in quarterly installments, with $450 million payable thereafter.

Maturities of Credit Agreements

The Term Loan Facility matures on November 1, 2018. The New Revolving Credit Facility matures on November 1, 2017.

Maturities of Senior Notes

As of December 31, 2012, there are no scheduled maturities until 2018 ($750 million). Thereafter, $881 million is scheduled to mature.

Interest Expense

Total interest expense, net was $53 million and $57 million for the three months ended December 31, 2012 and December 31, 2011, respectively. The weighted-average interest rate of the Company’s total debt was 8.2% and 10.5% for the three months ended December 31, 2012 and December 31, 2011, respectively.

6. Commitments and Contingencies

Pricing of Digital Music Downloads

On December 20, 2005 and February 3, 2006, the Attorney General of the State of New York served the Company with requests for information in connection with an industry-wide investigation as to the pricing of digital music downloads. On February 28, 2006, the Antitrust Division of the U.S. Department of Justice served us with a Civil Investigative Demand, also seeking information relating to the pricing of digitally downloaded music. Both investigations were ultimately closed, but subsequent to the announcements of the investigations, more than thirty putative class action lawsuits were filed concerning the pricing of digital music downloads. The lawsuits were consolidated in the Southern District of New York. The consolidated amended complaint, filed on April 13, 2007, alleges conspiracy among record companies to delay the release of their content for digital distribution, inflate their pricing of CDs and fix prices for digital downloads. The complaint seeks unspecified compensatory, statutory and treble damages. On October 9, 2008, the District Court issued an order dismissing the case as to all defendants, including us. However, on January 12, 2010, the Second Circuit vacated the judgment of the District Court and remanded the case for further proceedings and on January 10, 2011, the Supreme Court denied the defendants’ petition for Certiorari.

Upon remand to the District Court, all defendants, including the Company, filed a renewed motion to dismiss challenging, among other things, plaintiffs’ state law claims and standing to bring certain claims. The renewed motion was based mainly on arguments made in defendants’ original motion to dismiss, but not addressed by the District Court. On July 18, 2011, the District Court granted defendants’ motion in part, and denied it in part. Notably, all claims on behalf of the CD-purchaser class were dismissed with prejudice. However, a wide variety of state and federal claims remain, for the class of Internet Music purchasers. The parties have filed amended pleadings complying with the court’s order, and the case is currently in discovery. The Company intends to defend against these lawsuits vigorously, but is unable to predict the outcome of these suits. Regardless of the merits of the claims, this and any related litigation could continue to be costly, and divert the time and resources of management.

Music Download Putative Class Action Suits

Five putative class action lawsuits have been filed against the Company in Federal Court in the Northern District of California between February 2, 2012 and March 10, 2012. The lawsuits, which were brought by various recording artists, all allege that the Company has improperly calculated the royalties due to them for certain digital music sales under the terms of their recording contracts. The named plaintiffs purport to raise these claims on their own behalf and, as a putative class action, on behalf of other similarly situated artists. Plaintiffs base their claims on a previous ruling that held another recorded music company had breached the specific recording contracts at issue in that case through its payment of royalties for music downloads and ringtones. In the wake of that ruling, a number of recording artists have initiated suits seeking similar relief against all of the major record companies, including us. Plaintiffs seek to have the interpretation of the contracts in that prior case applied to their different and separate contracts.

On April 10, 2012, the Company filed a motion to dismiss various claims in one of the lawsuits, with the intention of filing similar motions in the remaining suits, on the various applicable response dates. Meanwhile, certain plaintiffs’ counsel moved to be appointed as interim lead counsel, and other plaintiffs’ counsel moved to consolidate the various actions. In a June 1, 2012 Order, the Court consolidated the cases and appointed interim co-lead class counsel. Plaintiffs filed a consolidated, master complaint on August 21, 2012. All deadlines have been stayed until February 28, 2013 to allow for mediation of this dispute. If a settlement has not been reached by that date and if the parties agree that further settlement discussions would be fruitful, the parties can file a joint statement/stipulation seeking additional time for further settlement negotiations. In the alternative, the parties would file a joint statement/stipulation with the Court alerting the Court to the fact that settlement could not be reached and resetting a litigation schedule. The parties participated in a mediation on January 3, 2013, and discussions are ongoing. The Company intends to defend

against these lawsuits vigorously, but is unable to predict the outcome of these suits. Regardless of the merits of the claims, this and any related litigation could continue to be costly, and divert the time and resources of management.

Other Matters

In addition to the matters discussed above, we are involved in various litigation and regulatory proceedings arising in the normal course of business. Where it is determined, in consultation with counsel based on litigation and settlement risks, that a loss is probable and estimable in a given matter, we establish an accrual. In none of the currently pending proceedings is the amount of accrual material. An estimate of the reasonably possible loss or range of loss in excess of the amounts already accrued cannot be made at this time due to various factors typical in contested proceedings, including (1) uncertain damage theories and demands; (2) a less than complete factual record; (3) uncertainty concerning legal theories and their resolution by courts or regulators; and (4) the unpredictable nature of the opposing party and its demands. However, we cannot predict with certainty the outcome of any litigation or the potential for future litigation. As such, we continuously monitor these proceedings as they develop and adjust any accrual or disclosure as needed. Regardless of the outcome, litigation could have an adverse impact on us, including our brand value, because of defense costs, diversion of management resources and other factors and it could have a material effect on our results of operations for a given reporting period.

7. Derivative Financial Instruments

The Company uses derivative financial instruments, primarily foreign currency forward exchange contracts (“FX Contracts”) for the purpose of managing foreign currency exchange risk by reducing the effects of fluctuations in foreign currency exchange rates.

The Company enters into FX Contracts primarily to hedge its royalty payments and balance sheet items denominated in foreign currency, including Euro denominated debt. The Company applies hedge accounting to FX Contracts for cash flows related to royalty payments. The Company records these FX Contracts in the consolidated balance sheet at fair value and changes in fair value are recognized in Other Comprehensive Income (“OCI”) for unrealized items and recognized in earnings for realized items. The Company elects to not apply hedge accounting to foreign currency exposures related to balance sheet items. The Company records these FX Contracts in the consolidated balance sheet at fair value and changes in fair value are immediately recognized in earnings. Fair value is determined by using observable market transactions of spot and forward rates (i.e., Level 2 inputs) which is discussed further in Note 10.

Netting provisions are provided for in existing International Swap and Derivative Association Inc. (“ISDA”) agreements in situations where the Company executes multiple contracts with the same counterparty. As a result, net assets or liabilities resulting from foreign exchange derivatives subject to these netting agreements are classified within other current assets or other current liabilities in the Company’s consolidated balance sheets.

The Company monitors its positions with, and the credit quality of, the financial institutions that are party to any of its financial transactions.

Interest Rate Risk Management

The Company has $2.225 billion of debt outstanding at December 31, 2012, of which $594 million is variable rate debt. As such, the Company is exposed to changes in interest rates. The Company manages this exposure through the fixed-to-floating debt ratio; currently 73% of our debt is at a fixed rate.

In addition to the $594 million of variable rate debt, the Company also had $1.631 billion of fixed-rate debt. Based on the level of interest rates prevailing at December 31, 2012, the fair value of this fixed-rate debt was approximately $1.831 billion. Further, based on the amount of its fixed-rate debt, a 25 basis point increase or decrease in the level of interest rates would increase or decrease the fair value of the fixed-rate debt by approximately $14 million. This potential increase or decrease is based on the simplified assumption that the level of fixed-rate debt remains constant with an immediate across the board increase or decrease in the level of interest rates with no subsequent changes in rates for the remainder of the period.

The Company monitors its positions with, and the credit quality of, the financial institutions that are party to any of its financial transactions.

Foreign Currency Risk Management

Historically, the Company has used, and continues to use, foreign exchange forward contracts and foreign exchange options primarily to hedge the risk that unremitted or future royalties and license fees owed to its domestic companies for the sale, or anticipated sale, of U.S.-copyrighted products abroad may be adversely affected by changes in foreign currency exchange rates. The Company focuses on managing the level of exposure to the risk of foreign currency exchange rate fluctuations on its major currencies, which include the Euro, British pound sterling, Japanese yen, Canadian dollar, Swedish krona and Australian dollar. In addition, the Company currently hedges foreign currency risk associated with financing transactions such as third-party and inter-company debt and other balance sheet items.

For royalty related hedges, the Company records foreign exchange contracts at fair value on its balance sheet and the related gains or losses on these contracts are deferred in equity (as a component of comprehensive loss). These deferred gains and losses are recognized in income in the period in which the related royalties and license fees being hedged are received and recognized in income. However, to the extent that any of these contracts are not considered to be perfectly effective in offsetting the change in the value of the royalties and license fees being hedged, any changes in fair value relating to the ineffective portion of these contracts are immediately recognized in income. For hedges of financing transactions and other balance sheet items, hedge gains and losses are taken directly to the statement of operations where there is an equal and offsetting entry related to the underlying exposure. Gains and losses on foreign exchange contracts generally are included as a component of other income (expense), net, in the Company’s consolidated statement of operations.

As of December 31, 2012, the Company had outstanding hedge contracts for the sale of $357 million and the purchase of $260 million of foreign currencies at fixed rates. As of December 31, 2012, the Company had $1 million of deferred gains in comprehensive loss related to foreign exchange hedging. As of September 30, 2012, the Company had outstanding hedge contracts for the sale of $349 million and the purchase of $21 million of foreign currencies at fixed rates. As of September 30, 2012, the Company had $1 million of deferred gains in comprehensive loss related to foreign exchange hedging.

8. Segment Information

As discussed more fully in Note 1, based on the nature of its products and services, the Company classifies its business interests into two fundamental operations: Recorded Music and Music Publishing. Information as to each of these operations is set forth below. The Company evaluates performance based on several factors, of which the primary financial measure is operating income (loss) before non-cash depreciation of tangible assets, non-cash amortization of intangible assets and non-cash impairment charges to reduce the carrying value of goodwill and intangible assets (“OIBDA”). The Company has supplemented its analysis of OIBDA results by segment with an analysis of operating income (loss) by segment.

The accounting policies of the Company’s business segments are the same as those described in the summary of significant accounting policies included in the Company’s Annual Report on Form 10-K for the fiscal year ended September 30, 2012. The Company accounts for intersegment sales at fair value as if the sales were to third parties. While inter-company transactions are treated like third-party transactions to determine segment performance, the revenues (and corresponding expenses recognized by the segment that is counterparty to the transaction) are eliminated in consolidation, therefore, do not themselves impact the consolidated results. Segment information consists of the following (in millions):


Three Months Ended	Recorded music			Music publishing			Corporate expenses and eliminations			Total
	(in millions)
December 31, 2012

Revenues	$	657		$	116		$	(4	)	$	769
OIBDA		114			16			(18	)		112
Depreciation of property, plant and equipment		(7	)		(2	)		(4	)		(13	)
Amortization of intangible assets		(33	)		(15	)		—			(48	)

Operating income (loss)	$	74		$	(1	)	$	(22	)	$	51

December 31, 2011

Revenues	$	659		$	121		$	(5	)	$	775
OIBDA		104			16			(21	)		99
Depreciation of property, plant and equipment		(8	)		(1	)		(3	)		(12	)
Amortization of intangible assets		(33	)		(15	)		—			(48	)

Operating income (loss)	$	63		$	—		$	(24	)	$	39

9. Additional Financial Information

Cash Interest and Taxes

The Company made interest payments of approximately $100 million and $79 million during the three months ended December 31, 2012 and December 31, 2011, respectively. The increase in cash interest is due to timing of interest payments resulting from the refinancing of debt in the current period and the financing at the time of the Merger. The Company paid approximately $5 million and $20 million of income and withholding taxes, net of refunds, during the three months ended December 31, 2012 and December 31, 2011, respectively. The $20 million of cash tax payments during the 3 months ended December 31, 2011 includes $15 million of a payment relating to the settlement of an income tax audit in Germany. This payment was fully reimbursed to the Company by Time Warner under the terms of the 2004 acquisition of

substantially all of the interests of the recorded music and music publishing businesses of Time Warner Inc. (the “2004 Acquisition Agreement”).

10. Fair Value Measurements

ASC 820 defines fair value as the price that would be received upon sale of an asset or paid upon transfer of a liability in an orderly transaction between market participants at the measurement date and in the principal or most advantageous market for that asset or liability. The fair value should be calculated based on assumptions that market participants would use in pricing the asset or liability, not on assumptions specific to the entity.

In addition to defining fair value, ASC 820 expands the disclosure requirements around fair value and establishes a fair value hierarchy for valuation inputs. The hierarchy prioritizes the inputs into three levels based on the extent to which inputs used in measuring fair value are observable in the market. Each fair value measurement is reported in one of the three levels which is determined by the lowest level input that is significant to the fair value measurement in its entirety. These levels are:

•

Level 1—inputs are based upon unadjusted quoted prices for identical instruments traded in active markets.

•

Level 2—inputs are based upon quoted prices for similar instruments in active markets, quoted prices for identical or similar instruments in markets that are not active and model-based valuation techniques for which all significant assumptions are observable in the market or can be corroborated by observable market data for substantially the full term of the assets or liabilities.

•

Level 3—inputs are generally unobservable and typically reflect management’s estimates of assumptions that market participants would use in pricing the asset or liability. The fair values are therefore determined using model-based techniques that include option pricing models, discounted cash flow models and similar techniques.

In accordance with the fair value hierarchy, described above, the following table shows the fair value of the Company’s financial instruments that are required to be measured at fair value as of December 31, 2012 and September 30, 2012. Balances in other current and other non-current liabilities represent purchase obligations and contingent consideration related to our various acquisitions. Derivatives not designated as hedging instruments represent the balances in other current assets and other current liabilities below and the gains and losses on these financial instruments are included as a component of other income, net in the statement of operations.


	Fair Value Measurements as of December 31, 2012
	(Level 1)		(Level 2)			(Level 3)			Total
	(in millions)
Other Current Assets:
Foreign Currency Forward Exchange Contracts (a)	$	—	$	2		$	—		$	2
Other Current Liabilities:
Foreign Currency Forward Exchange Contracts (a)	$	—	$	(4	)	$	—		$	(4	)
Other Current Liabilities:
Contractual Obligations (b)	$	—	$	—		$	(6	)	$	(6	)
Other Non-Current Liabilities:
Contractual Obligations (b)	$	—	$	—		$	(10	)	$	(10	)


	Fair Value Measurements as of September 30, 2012
	(Level 1)		(Level 2)			(Level 3)			Total
	(in millions)
Other Current Assets:
Foreign Currency Forward Exchange Contracts (a)	$	—	$	—		$	—		$	—
Other Current Liabilities:
Foreign Currency Forward Exchange Contracts (a)	$	—	$	(5	)	$	—		$	(5	)
Other Non-Current Liabilities:
Contractual Obligations (b)	$	—	$	—		$	(11	)	$	(11	)

(a)	The fair value of the foreign currency forward exchange contracts is based on dealer quotes of market forward rates and reflects the amount that the Company would receive or pay at their maturity dates for contracts involving the same currencies and maturity dates.

(b)

This represents purchase obligations and contingent consideration related to our various acquisitions. This is based on a discounted cash flow (“DCF”) approach and it is adjusted to fair value on a recurring basis and any adjustments are included as a component of operating income in the statement of operations. These amounts were mainly calculated using unobservable inputs such as future earnings performance of our various acquisitions and the expected timing of the payment. The change represents the increase in contingent consideration on a previous acquisition.

The majority of the Company’s non-financial instruments, which include goodwill, intangible assets, inventories, and property, plant, and equipment, are not required to be re-measured to fair value on a recurring basis. These assets are evaluated for impairment if certain triggering events occur. If such evaluation indicates that an impairment exists, the asset is written down to its fair value. In addition, an impairment analysis is performed at least annually for goodwill and indefinite-lived intangible assets.

11. Subsequent Events

Acquisition of Parlophone Label Group

On February 7, 2013, the Company announced that it had signed a definitive agreement to acquire the Parlophone Label Group from Universal Music Group, a division of Vivendi, for £487 million, or approximately $765 million, in an all-cash transaction (the “Transaction”). References below to the “Transaction” include the transactions contemplated by the EMI France Agreement unless the context otherwise requires.

In connection with the Transaction, a wholly owned subsidiary, Warner Music Holdings Limited, together with certain other Company subsidiaries, as buyers, and WMG Acquisition Corp., as guarantor, entered into a Share Purchase Agreement, dated as of February 6, 2013 (the “PLG Agreement”), with certain subsidiaries of Universal Music Group, relating to the purchase of the outstanding shares of capital stock of PLG Holdco Limited and related entities composing the Parlophone Label Group. Warner Music Holdings BV also entered into a put option (the “Put Option”) with EMI Music France Holdco Limited (the “EMI France Seller”) in respect of the outstanding shares of EMI Music France SAS (“EMI France”). Pursuant to the terms of the Put Option, the EMI France Seller will, upon satisfaction of conditions with respect to the workers council consultation process, exercise the put option and execute the sale and purchase agreement (the “EMI France Agreement”) (the form of which has been agreed) between the same parties to the Put Option to transfer the outstanding shares of EMI France to Warner Music Holdings BV (the “EMI France Transaction”). It is intended that the transactions contemplated by the EMI France Agreement shall be consummated in connection with the consummation of the transactions contemplated by the PLG Agreement.

The Transaction is being undertaken by Universal Music Group in order to comply with divestiture conditions imposed by the European Commission in connection with the acquisition by Universal Music Group of the recorded music business of EMI in 2012.

The Parlophone Label Group includes a broad range of some of the world’s best-known recordings and classic and contemporary artists spanning a wide array of musical genres, as well as some of the industry’s leading executive talent. The Parlophone Label Group is comprised of the historic Parlophone label and Chrysalis and Ensign labels as well as EMI’s recorded music operations in Belgium, Czech Republic, Denmark, France, Norway, Poland, Portugal, Slovakia, Spain and Sweden. Its artist roster and catalog of recordings include, among many others, Air, Coldplay, Daft Punk, Danger Mouse, David Guetta, Deep Purple, Duran Duran, Edith Piaf, Gorillaz, Iron Maiden, Itzhak Perlman, Jethro Tull, Kate Bush, Kylie Minogue, Maria Callas, Pet Shop Boys, Pink Floyd, Radiohead, Shirley Bassey, Tina Turner and Tinie Tempah.

Consummation of the Transaction is subject to certain regulatory approvals and customary conditions, including, without limitation, approval of the Transaction by the European Commission pursuant to Council Regulation (EC) No. 139/2004, as amended, and the expiration or termination of any applicable waiting period under the Hart-Scott-Rodino Antitrust Improvements Act. Consummation of the EMI France Transaction is subject to conclusion of the consultation process with the workers’ council (comite d’entreprise) of EMI France.

The PLG Agreement provides that the buyers thereunder may assign to an entity under common control with the Company the PLG Agreement and all of their rights and obligations thereunder without the prior written consent of the seller under certain circumstances.

The Company has obtained commitments to finance the Transaction through an incremental term loan facility under its existing Term Loan Credit Agreement. The commitments are subject to customary conditions, including the execution and delivery of customary documentation.

WARNER MUSIC GROUP CORP.

Supplementary Information

Consolidating Financial Statements

The Company is the direct parent of Holdings, which is the direct parent of Acquisition Corp. Holdings has issued and outstanding the13.75% Senior Notes due 2019 (the “Holdings Notes”). In addition, Acquisition Corp. has issued and outstanding the 6.00% Senior Secured Notes due 2021, the 6.25% Senior Secured Notes due 2012, and the 11.50% Senior Notes due 2018 (together, the “Acquisition Corp. Notes”).

The Holdings Notes are guaranteed by the Company. These guarantees are full, unconditional, joint and several. The following condensed consolidating financial statements are presented for the information of the holders of the Holdings Notes and present the results of operations, financial position and cash flows of (i) the Company, which is the guarantor of the Holdings Notes, (ii) Holdings, which is the issuer of the Holdings Notes, (iii) the subsidiaries of Holdings (Acquisition Corp. is the only direct subsidiary of Holdings) and (iv) the eliminations necessary to arrive at the information for the Company on a consolidated basis. Investments in consolidated or combined subsidiaries are presented under the equity method of accounting. The Company has revised its presentation for the Guarantor and Non-Guarantor Financial Information from what was filed in our Form 10-Q for December 31, 2011. The Company uses the equity method to account for its investment in its subsidiaries. The revised presentation reflects adjustments to certain equity, intercompany and investment balances primarily to properly reflect the impact of purchase accounting in the consolidating balance sheet. We have also revised the presentation of our statement of cash flows and reclassified the activity for our Parent Company from Operating Activities to Investing Activities and for our Guarantor subsidiaries from Operating Activities to Financing Activities. The principal elimination entries eliminate investments in subsidiaries and intercompany balances.

The Acquisition Corp. Notes are also guaranteed by the Company and, in addition, are guaranteed by all of Acquisition Corp.’s domestic wholly owned subsidiaries. The secured notes are guaranteed on a senior secured basis and the unsecured notes are guaranteed on an unsecured senior basis. These guarantees are full, unconditional, joint and several. The following condensed consolidating financial statements are also presented for the information of the holders of the Acquisition Corp. Notes and present the results of operations, financial position and cash flows of (i) Acquisition Corp., which is the issuer of the Acquisition Corp. Notes, (ii) the guarantor subsidiaries of Acquisition Corp., (iii) the non-guarantor subsidiaries of Acquisition Corp. and (iv) the eliminations necessary to arrive at the information for Acquisition Corp. on a consolidated basis. Investments in consolidated subsidiaries are presented under the equity method of accounting. There are no restrictions on Acquisition Corp.’s ability to obtain funds from any of its wholly owned subsidiaries through dividends, loans or advances.

The Company and Holdings are holding companies that conduct substantially all of their business operations through Acquisition Corp. Accordingly, the ability of the Company and Holdings to obtain funds from their subsidiaries is restricted by the indentures for the Acquisition Corp. Notes and the credit agreements for the Acquisition Corp. New Senior Credit Facilities, and, with respect to the Company, the indenture for the Holdings Notes.

WARNER MUSIC GROUP CORP.

Supplementary Information

Consolidating Balance Sheet (Unaudited)

December 31, 2012


	WMG Acquisition Corp. (issuer)		Guarantor Subsidiaries		Non- Guarantor Subsidiaries			Eliminations			WMG Acquisition Corp. Consolidated		WMG Holdings Corp. (issuer)		Warner Music Group Corp.		Eliminations			Warner Music Group Corp. Consolidated
	(in millions)
Assets:
Current assets:
Cash and equivalents	$	—	$	44	$	145		$	—		$	189	$	—	$	—	$	—		$	189
Accounts receivable, net		—		171		247			—			418		—		—		—			418
Inventories		—		10		17			—			27		—		—		—			27
Royalty advances expected to be recouped within one year		—		78		54			—			132		—		—		—			132
Deferred tax assets		—		35		16			—			51		—		—		—			51
Other current assets		—		10		42			—			52		—		—		—			52

Total current assets		—		348		521			—			869		—		—		—			869
Royalty advances expected to be recouped after one year		—		96		66			—			162		—		—		—			162
Investments in and advances to (from) consolidated subsidiaries		3,066		708		—			(3,774	)		—		994		847		(1,841	)		—
Property, plant and equipment, net		—		103		44			—			147		—		—		—			147
Goodwill		—		1,379		5			—			1,384		—		—		—			1,384
Intangible assets subject to amortization, net		—		1,068		1,385			—			2,453		—		—		—			2,453
Intangible assets not subject to amortization		—		75		27			—			102		—		—		—			102
Due (to) from parent companies		—		112		(112	)		—			—		—		—		—			—
Other assets		51		11		12			—			74		8		—		—			82

Total assets	$	3,117	$	3,900	$	1,948		$	(3,774	)	$	5,191	$	1,002	$	847	$	(1,841	)	$	5,199


Liabilities and Deficit:
Current liabilities:
Accounts payable	$	—	$	84	$	65		$	—		$	149	$	—	$	—	$	—		$	149
Accrued royalties		—		554		473			—			1,027		—		—		—			1,027
Accrued liabilities		2		77		136			—			215		—		—		—			215
Accrued interest		35		—		—			—			35		5		—		—			40
Deferred revenue		—		103		55			—			158		—		—		—			158
Current portion of long-term debt		30		—		—			—			30		—		—		—			30
Other current liabilities		—		11		5			6			22		—		—		—			22

Total current liabilities		67		829		734			6			1,636		5		—		—			1,641
Long-term debt		2,045		—		—			—			2,045		150		—		—			2,195
Deferred tax liabilities, net		—		146		212			—			358		—		—		—			358
Other noncurrent liabilities		11		42		78			10			141		—		—		—			141

Total liabilities		2,123		1,017		1,024			16			4,180		155		—		—			4,335

Total Warner Music Group Corp. equity (deficit)		994		2,883		907			(3,790	)		994		847		847		(1,841	)		847

Noncontrolling interest		—		—		17			—			17		—		—		—			17
Total equity (deficit)		994		2,883		924			(3,790	)		1,011		847		847		(1,841	)		864

Total liabilities and equity (deficit)	$	3,117	$	3,900	$	1,948		$	(3,774	)	$	5,191	$	1,002	$	847	$	(1,841	)	$	5,199

WARNER MUSIC GROUP CORP.

Supplementary Information

Consolidating Balance Sheet

September 30, 2012


	WMG Acquisition Corp. (issuer)		Guarantor Subsidiaries		Non- Guarantor Subsidiaries			Eliminations			WMG Acquisition Corp. Consolidated		WMG Holdings Corp. (issuer)		Warner Music Group Corp.		Eliminations			Warner Music Group Corp. Consolidated
	(in millions)
Assets:
Current assets:
Cash and equivalents	$	44	$	105	$	143		$	—		$	292	$	10	$	—	$	—		$	302
Accounts receivable, net		—		158		240			—			398		—		—		—			398
Inventories		—		11		17			—			28		—		—		—			28
Royalty advances expected to be recouped within one year		—		67		49			—			116		—		—		—			116
Deferred tax assets		—		35		16			—			51		—		—		—			51
Other current assets		7		8		29			—			44		—		—		—			44

Total current assets		51		384		494			—			929		10		—		—			939
Royalty advances expected to be recouped after one year		—		82		60			—			142		—		—		—			142
Investments in and advances to (from) consolidated subsidiaries		3,133		621		—			(3,754	)		—		1,070		926		(1,996	)		—
Property, plant and equipment, net		—		108		44			—			152		—		—		—			152
Goodwill		—		1,375		5			—			1,380		—		—		—			1,380
Intangible assets subject to amortization, net		—		1,097		1,402			—			2,499		—		—		—			2,499
Intangible assets not subject to amortization		—		75		27			—			102		—		—		—			102
Due from (to) parent companies		—		176		(176	)		—			—		—		—		—			—
Other assets		32		12		13			—			57		6		1		—			64

Total assets	$	3,216	$	3,930	$	1,869		$	(3,754	)	$	5,261	$	1,086	$	927	$	(1,996	)	$	5,278

Liabilities and Deficit:
Current liabilities:
Accounts payable	$	—	$	81	$	75		$	—		$	156	$	—	$	—	$	—		$	156
Accrued royalties		—		591		406			—			997		—		—		—			997
Accrued liabilities		—		113		145			—			258		—		—		—			258
Accrued interest		79		—		—			—			79		10		—		—			89
Deferred revenue		—		63		38			—			101		—		—		—			101
Other current liabilities		—		9		(7	)		3			5		—		—		—			5

Total current liabilities		79		857		657			3			1,596		10		—		—			1,606
Long-term debt		2,056		—		—			—			2,056		150		—		—			2,206
Deferred tax liabilities, net		—		159		216			—			375		—		—		—			375
Other noncurrent liabilities		11		47		81			8			147		—		—		—			147

Total liabilities		2,146		1,063		954			11			4,174		160		—		—			4,334

Total Warner Music Group Corp. equity (deficit)		1,070		2,867		898			(3,765	)		1,070		926		927		(1,996	)		927

Noncontrolling interest		—		—		17			—			17		—		—		—			17
Total equity (deficit)		1,070		2,867		915			(3,765	)		1,087		926		927		(1,996	)		944

Total liabilities and equity (deficit)	$	3,216	$	3,930	$	1,869		$	(3,754	)	$	5,261	$	1,086	$	927	$	(1,996	)	$	5,278

WARNER MUSIC GROUP CORP.

Supplementary Information

Consolidating Statements of Operations (Unaudited)

For The Three Months Ended December 31, 2012


	WMG Acquisition Corp. (issuer)			Guarantor Subsidiaries			Non- Guarantor Subsidiaries			Eliminations			WMG Acquisition Corp. Consolidated			WMG Holdings Corp. (issuer)			Warner Music Group Corp.			Eliminations		Warner Music Group Corp. Consolidated
	(in millions)
Revenues	$	—		$	344		$	481		$	(56	)	$	769		$	—		$	—		$	—	$	769
Costs and expenses:
Cost of revenues		—			(162	)		(295	)		49			(408	)		—			—			—		(408	)
Selling, general and administrative expenses		—			(123	)		(154	)		15			(262	)		—			—			—		(262	)
Amortization of intangible assets		—			(30	)		(18	)		—			(48	)		—			—			—		(48	)

Total costs and expenses		—			(315	)		(467	)		64			(718	)		—			—			—		(718	)

Operating income		—			29			14			8			51			—			—			—		51
Loss on extinguishment of debt		(83	)		—			—			—			(83	)		—			—			—		(83	)
Interest expense, net		(43	)		1			(5	)		—			(47	)		(6	)		—			—		(53	)
Equity gains (losses) from consolidated subsidiaries		41			(17	)		—			(24	)		—			(74	)		(80	)		154		—
Other expense, net		—			(5	)		—			—			(5	)		—			—			—		(5	)

(Loss) income before income taxes		(85	)		8			9			(16	)		(84	)		(80	)		(80	)		154		(90	)
Income tax benefit (expense)		11			10			(1	)		(9	)		11			—			—			—		11

Net (loss) income		(74	)		18			8			(25	)		(73	)		(80	)		(80	)		154		(79	)
Less: loss attributable to noncontrolling interest		—			—			(1	)		—			(1	)		—			—			—		(1	)

Net (loss) income attributable to Warner Music Group Corp.	$	(74	)	$	18		$	7		$	(25	)	$	(74	)	$	(80	)	$	(80	)	$	154	$	(80	)

WARNER MUSIC GROUP CORP.

Supplementary Information

Consolidating Statements of Operations (Unaudited)

For The Three Months Ended December 31, 2011


	WMG Acquisition Corp. (issuer)			Guarantor Subsidiaries			Non- Guarantor Subsidiaries			Eliminations			WMG Acquisition Corp. Consolidated			WMG Holdings Corp. (issuer)			Warner Music Group Corp.			Eliminations		Warner Music Group Corp. Consolidated
	(in millions)
Revenues	$	—		$	333		$	495		$	(53	)	$	775		$	—		$	—		$	—	$	775
Costs and expenses:
Cost of revenues		—			(165	)		(303	)		48			(420	)		—			—			—		(420	)
Selling, general and administrative expenses		—			(124	)		(149	)		5			(268	)		—			—			—		(268	)
Amortization of intangible assets		—			(15	)		(33	)		—			(48	)		—			—			—		(48	)

Total costs and expenses		—			(304	)		(485	)		53			(736	)		—			—			—		(736	)

Operating income		—			29			10			—			39			—			—			—		39
Interest expense, net		(49	)		1			(3	)		—			(51	)		(6	)		—			—		(57	)
Equity gains (losses) from consolidated subsidiaries		34			(13	)		—			(21	)		—			(20	)		(26	)		46		—
Other income (expense), net		1			24			(27	)		—			(2	)		—			—			—		(2	)

(Loss) income before income taxes		(14	)		41			(20	)		(21	)		(14	)		(26	)		(26	)		46		(20	)
Income tax (expense) benefit		(6	)		(7	)		(2	)		9			(6	)		—			—			—		(6	)

Net (loss) income		(20	)		34			(22	)		(12	)		(20	)		(26	)		(26	)		46		(26	)
Less: loss attributable to noncontrolling interest		—			—			—			—			—			—			—			—		—

Net (loss) income attributable to Warner Music Group Corp.	$	(20	)	$	34		$	(22	)	$	(12	)	$	(20	)	$	(26	)	$	(26	)	$	46	$	(26	)

WARNER MUSIC GROUP CORP.

Supplementary Information

Consolidating Statement of Comprehensive Income (Unaudited)

For The Three Months Ended December 31, 2012


	WMG Acquisition Corp. (issuer)			Guarantor Subsidiaries		Non- Guarantor Subsidiaries			Eliminations			WMG Acquisition Corp. Consolidated			WMG Holdings Corp. (issuer)			Warner Music Group Corp.			Eliminations		Warner Music Group Corp. Consolidated
	(in millions)
Net (loss) income	$	(74	)	$	18	$	8		$	(25	)	$	(73	)	$	(80	)	$	(80	)	$	154	$	(79	)
Other comprehensive income, net of tax:
Foreign currency translation adjustment		—			—		2			—			2			—			—			—		2
Deferred gains on derivative financial instruments		—			—		—			—			—			—			—			—		—
Minimum pension liability		—			—		—			—			—			—			—			—		—

Other comprehensive income, net of tax:		—			—		2			—			2			—			—			—		2

Total comprehensive (loss) income		(74	)		18		10			(25	)		(71	)		(80	)		(80	)		154		(77	)
Comprehensive loss attributable to noncontrolling interest		—			—		(1	)		—			(1	)		—			—			—		(1	)

Comprehensive (loss) income attributable to Warner Music Group Corp.	$	(74	)	$	18	$	9		$	(25	)	$	(72	)	$	(80	)	$	(80	)	$	154	$	(78	)

WARNER MUSIC GROUP CORP.

Supplementary Information

Consolidating Statement of Comprehensive Income (Unaudited)

For The Three Months Ended December 31, 2011


	WMG Acquisition Corp. (issuer)			Guarantor Subsidiaries		Non- Guarantor Subsidiaries			Eliminations			WMG Acquisition Corp. Consolidated			WMG Holdings Corp. (issuer)			Warner Music Group Corp.			Eliminations		Warner Music Group Corp. Consolidated
	(in millions)
Net (loss) income	$	(20	)	$	34	$	(22	)	$	(12	)	$	(20	)	$	(26	)	$	(26	)	$	46	$	(26	)
Other comprehensive loss, net of tax:
Foreign currency translation adjustment		—			—		(14	)		—			(14	)		—			—			—		(14	)
Deferred gains on derivative financial instruments		—			—		—			—			—			—			—			—		—
Minimum pension liability		—			—		—			—			—			—			—			—		—

Other comprehensive loss, net of tax:		—			—		(14	)		—			(14	)		—			—			—		(14	)

Total comprehensive (loss) income		(20	)		34		(36	)		(12	)		(34	)		(26	)		(26	)		46		(40	)
Comprehensive income attributable to noncontrolling interest		—			—		—			—			—			—			—			—		—

Comprehensive (loss) income attributable to Warner Music Group Corp.	$	(20	)	$	34	$	(36	)	$	(12	)	$	(34	)	$	(26	)	$	(26	)	$	46	$	(40	)

WARNER MUSIC GROUP CORP.

Supplementary Information

Consolidating Statement of Cash Flows (Unaudited)

For The Three Months Ended December 31, 2012


	WMG Acquisition Corp. (issuer)			Guarantor Subsidiaries			Non- Guarantor Subsidiaries			Eliminations			WMG Acquisition Corp. Consolidated			WMG Holdings Corp. (issuer)			Warner Music Group Corp.			Eliminations			Warner Music Group Corp. Consolidated
	(in millions)
Cash flows from operating activities:
Net (loss) income	$	(74	)	$	18		$	8		$	(25	)	$	(73	)	$	(80	)	$	(80	)	$	154		$	(79	)
Adjustments to reconcile net (loss) income to net cash used in operating activities:
Loss on extinguishment of debt		83			—			—			—			83			—			—			—			83
Depreciation and amortization		—			39			22			—			61			—			—			—			61
Deferred income taxes		—			—			(10	)		—			(10	)		—			—			—			(10	)
Non-cash interest expense		2			—			—			—			2			—			—			—			2
Equity (gains) losses from consolidated subsidiaries		(41	)		17			—			24			—			74			80			(154	)		—
Changes in operating assets and liabilities:
Accounts receivable		—			(14	)		(9	)		—			(23	)		—			—			—			(23	)
Inventories		—			1			—			—			1			—			—			—			1
Royalty advances		—			(25	)		(10	)		—			(35	)		—			—			—			(35	)
Accounts payable and accrued liabilities		—			29			(80	)		(2	)		(53	)		—			—			—			(53	)
Royalty payables		—			(36	)		68			—			32			—			—			—			32
Accrued interest		(44	)		—			—			—			(44	)		(5	)		—			—			(49	)
Deferred income		—			40			15			—			55			—			—			—			55
Other balance sheet changes		11			(14	)		5			3			5			—			—			—			5

Net cash (used in) provided by operating activities		(63	)		55			9			—			1			(11	)		—			—			(10	)

Cash flows from investing activities:
Acquisition of publishing rights		—			(6	)		(2	)		—			(8	)		—			—			—			(8	)
Proceeds from the sale of music catalog		—			—			—			—			—			—			—			—			—
Advances to issuer		106			—			—			(106	)		—			—			—			—			—
Capital expenditures		—			(4	)		(3	)		—			(7	)		—			—			—			(7	)

Net cash provided by (used in) investing activities		106			(10	)		(5	)		(106	)		(15	)		—			—			—			(15	)

Cash flows from financing activities:
Dividend by Acquisition Corp to Holdings Corp		(2	)		—			—			—			(2	)		2			—			—			—
Change in due (from) to issuer		—			(106	)		—			106			—			—			—			—			—
Proceeds from draw down of the Revolving Credit Facility		31			—			—			—			31			—			—			—			31
Repayment of the Revolving Credit Facility		(31	)		—			—			—			(31	)		—			—			—			(31	)
Proceeds from issuance of Acquisition Corp 6.0% Senior Secured Notes		500			—			—			—			500			—			—			—			500
Proceeds from issuance of Acquisition Corp 6.25% Senior Secured Notes		227			—			—			—			227			—			—			—			227
Proceeds from Acquisition Corp Term Loan Facility		594			—			—			—			594			—			—			—			594
Repayment of Acquisition Corp. 9.5% Senior Subordinated Notes		(1,250	)		—			—			—			(1,250	)		—			—			—			(1,250	)
Financing fees paid for early redemption of debt		(127	)		—			—			—			(127	)		—			—			—			(127	)
Financing costs paid		(29	)		—			—			—			(29	)		(1	)		—			—			(30	)

Net cash (used in) provided by financing activities		(87	)		(106	)		—			106			(87	)		1			—			—			(86	)
Effect of foreign currency exchange rate changes on cash		—			—			(2	)		—			(2	)		—			—			—			(2	)

Net (decrease) increase in cash and equivalents		(44	)		(61	)		2			—			(103	)		(10	)		—			—			(113	)
Cash and equivalents at beginning of period		44			105			143			—			292			10			—			—			302

Cash and equivalents at end of period	$	—		$	44		$	145		$	—		$	189		$	—		$	—		$	—		$	189

WARNER MUSIC GROUP CORP.

Supplementary Information

Consolidating Statement of Cash Flows (Unaudited)

For The Three Months Ended December 31, 2011


	WMG Acquisition Corp. (issuer)			Guarantor Subsidiaries			Non- Guarantor Subsidiaries			Eliminations			WMG Acquisition Corp. Consolidated			WMG Holdings Corp. (issuer)			Warner Music Group Corp.			Eliminations			Warner Music Group Corp. Consolidated
	(in millions)
Cash flows from operating activities:
Net (loss) income	$	(20	)	$	34		$	(22	)	$	(12	)	$	(20	)	$	(26	)	$	(26	)	$	46		$	(26	)
Adjustments to reconcile net (loss) income to net cash used in operating activities:
Depreciation and amortization		—			23			37			—			60			—			—			—			60
Deferred income taxes		—			—			(2	)		—			(2	)		—			—			—			(2	)
Non-cash interest expense		(1	)		—			—			—			(1	)		—			—			—			(1	)
Equity losses (gains) from consolidated subsidiaries		(34	)		13			—			21			—			20			26			(46	)		—
Changes in operating assets and liabilities:
Accounts receivable		15			5			(62	)		—			(42	)		—			—			—			(42	)
Inventories		—			—			—			—			—			—			—			—			—
Royalty advances		—			12			(25	)		—			(13	)		—			—			—			(13	)
Accounts payable and accrued liabilities		—			(75	)		59			(9	)		(25	)		—			—			—			(25	)
Royalty payables		—			(24	)		90			—			66			—			—			—			66
Accrued interest		(23	)		—			—			—			(23	)		—			—			—			(23	)
Deferred income		—			20			10			—			30						—			—			30
Other balance sheet changes		—			24			(25	)		—			(1	)		2			—			—			1

Net cash (used in) provided by operating activities		(63	)		32			60			—			29			(4	)		—			—			25

Cash flows from investing activities:
Acquisition of publishing rights		—			(2	)		(5	)		—			(7	)		—			—			—			(7	)
Proceeds from the sale of music catalog		—			2			—			—			2			—			—			—			2
Advances to issuer		46			—			—			(46	)		—			—			—			—			—
Capital expenditures		—			(4	)		(2	)		—			(6	)		—			—			—			(6	)

Net cash provided by (used in) investing activities		46			(4	)		(7	)		(46	)		(11	)		—			—			—			(11	)

Cash flows from financing activities:
Distribution to noncontrolling interest holder		—			—			(1	)		—			(1	)		—			—			—			(1	)
Change in due (from) to issuer		—			(46	)		—			46			—			—			—			—			—

Large accelerated filer

Accelerated filer

Non-accelerated filer

x (Do not check if a smaller reporting company)

Smaller reporting company