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Warner Music Group Corp. – ‘10-K’ for 9/30/13 – ‘R13’

On:  Thursday, 12/12/13, at 8:02am ET   ·   For:  9/30/13   ·   Accession #:  1193125-13-470757   ·   File #:  1-32502

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  As Of               Filer                 Filing    For·On·As Docs:Size             Issuer                      Filing Agent

12/12/13  Warner Music Group Corp.          10-K        9/30/13  123:26M                                    Donnelley … Solutions/FA

Annual Report   —   Form 10-K   —   Sect. 13 / 15(d) – SEA’34
Filing Table of Contents

Document/Exhibit                   Description                      Pages   Size 

 1: 10-K        Annual Report                                       HTML   2.83M 
 2: EX-10.10    Material Contract                                   HTML     55K 
 3: EX-10.12    Material Contract                                   HTML     55K 
 4: EX-10.48    Material Contract                                   HTML    192K 
 5: EX-21.1     Subsidiaries List                                   HTML     61K 
 6: EX-31.1     Certification -- §302 - SOA'02                      HTML     38K 
 7: EX-31.2     Certification -- §302 - SOA'02                      HTML     39K 
 8: EX-32.1     Certification -- §906 - SOA'02                      HTML     35K 
 9: EX-32.2     Certification -- §906 - SOA'02                      HTML     35K 
118: R1          Document and Entity Information                     HTML     65K  
75: R2          Consolidated Balance Sheets                         HTML    160K 
71: R3          Consolidated Balance Sheets (Parenthetical)         HTML     48K 
24: R4          Consolidated Statements of Operations               HTML    104K 
73: R5          Consolidated Statements of Operations               HTML     37K 
                (Parenthetical)                                                  
53: R6          Consolidated Statement of Comprehensive Loss        HTML     69K 
99: R7          Consolidated Statements of Cash Flows               HTML    161K 
54: R8          Consolidated Statements of Cash Flows               HTML     37K 
                (Parenthetical)                                                  
57: R9          Consolidated Statement of Equity                    HTML    122K 
25: R10         Description of Business                             HTML     52K 
55: R11         Basis of Presentation                               HTML     40K 
98: R12         Summary of Significant Accounting Policies          HTML    104K 
89: R13         Acquisition of Parlophone Label Group               HTML     70K 
72: R14         Merger                                              HTML     62K 
114: R15         Property, Plant and Equipment                       HTML     48K  
95: R16         Goodwill and Intangible Assets                      HTML     77K 
21: R17         Other Noncurrent Liabilities                        HTML     44K 
29: R18         Debt                                                HTML     68K 
113: R19         Income Taxes                                        HTML    120K  
117: R20         Employee Benefit Plans                              HTML     40K  
120: R21         Restructuring                                       HTML     54K  
116: R22         Share-Based Compensation Plans                      HTML     61K  
80: R23         Related Party Transactions                          HTML     52K 
26: R24         Commitments and Contingencies                       HTML     64K 
52: R25         Derivative Financial Instruments                    HTML     57K 
37: R26         Segment Information                                 HTML    109K 
36: R27         Additional Financial Information                    HTML     39K 
59: R28         Fair Value Measurements                             HTML     76K 
79: R29         Subsequent Events                                   HTML     39K 
92: R30         Quarterly Financial Information                     HTML     95K 
43: R31         Guarantor And Non-Guarantor Subsidiaries Financial  HTML   1.21M 
                Information                                                      
60: R32         Schedule II - Valuation and Qualifying Accounts     HTML     63K 
105: R33         Basis of Presentation (Policies)                    HTML    183K  
40: R34         Summary of Significant Accounting Policies          HTML     61K 
                (Tables)                                                         
87: R35         Acquisition of Parlophone Label Group (Tables)      HTML     60K 
88: R36         Merger (Tables)                                     HTML     61K 
63: R37         Property, Plant and Equipment (Tables)              HTML     47K 
35: R38         Goodwill and Intangible Assets (Tables)             HTML     76K 
86: R39         Other Noncurrent Liabilities (Tables)               HTML     43K 
41: R40         Debt (Tables)                                       HTML     58K 
58: R41         Income Taxes (Tables)                               HTML    123K 
93: R42         Restructuring (Tables)                              HTML     50K 
47: R43         Share-Based Compensation Plans (Tables)             HTML     51K 
82: R44         Commitments and Contingencies (Tables)              HTML     52K 
70: R45         Segment Information (Tables)                        HTML    106K 
39: R46         Fair Value Measurements (Tables)                    HTML     71K 
102: R47         Quarterly Financial Information (Tables)            HTML     93K  
31: R48         Guarantor And Non-Guarantor Subsidiaries Financial  HTML   1.21M 
                Information (Tables)                                             
42: R49         Description of Business - Additional Information    HTML     44K 
                (Detail)                                                         
69: R50         Summary of Significant Accounting Policies -        HTML     44K 
                Additional Information (Detail)                                  
76: R51         Summary of Significant Accounting Policies -        HTML     48K 
                Schedule of Comprehensive Income (Loss) (Detail)                 
101: R52         Acquisition of Parlophone Label Group - Additional  HTML     51K  
                Information (Detail)                                             
22: R53         Acquisition of Parlophone Label Group -             HTML     86K 
                Preliminary Estimate of Acquisition Consideration                
                and Preliminary Purchase Price Allocation to                     
                Estimated Fair Value of Assets Acquired and                      
                Liabilities Assumed (Detail)                                     
84: R54         Acquisition of Parlophone Label Group - Components  HTML     44K 
                of Intangible Assets Identified and Useful Lives                 
                (Detail)                                                         
66: R55         Acquisition of Parlophone Label Group - Business    HTML     42K 
                Acquisition Pro Forma Financial Information                      
                (Detail)                                                         
28: R56         Merger - Additional Information (Detail)            HTML     40K 
34: R57         Merger - Consideration Transferred and Fair Value   HTML     91K 
                of Assets and Liabilities Acquired (Detail)                      
74: R58         Merger - Components of Intangible Assets            HTML     51K 
                Identified (Detail)                                              
111: R59         Property, Plant and Equipment - Schedule of         HTML     50K  
                Property, Plant and Equipment (Detail)                           
122: R60         Goodwill and Intangible Assets - Changes in         HTML     50K  
                Goodwill for Each Reportable Segment (Detail)                    
121: R61         Goodwill and Intangible Assets - Additional         HTML     37K  
                Information (Detail)                                             
90: R62         Goodwill and Intangible Assets - Schedule of Other  HTML     56K 
                Intangible Assets (Detail)                                       
46: R63         Goodwill and Intangible Assets - Expected           HTML     51K 
                Amortization of Intangible Assets (Detail)                       
44: R64         Other Noncurrent Liabilities - Summary of Other     HTML     53K 
                Noncurrent Liabilities (Detail)                                  
85: R65         Debt - Long-term Debt (Detail)                      HTML     60K 
110: R66         Debt - Long-term Debt (Parenthetical) (Detail)      HTML     69K  
27: R67         Debt - 2012 Debt Refinancing - Additional           HTML    131K 
                Information (Detail)                                             
115: R68         Debt - Interest Rates - Additional Information      HTML     42K  
                (Detail)                                                         
48: R69         Debt - Additional Information (Detail)              HTML     54K 
64: R70         Income Taxes - Schedule of Domestic and Foreign     HTML     49K 
                Pretax (Loss) Income from Continuing Operations                  
                (Detail)                                                         
61: R71         Income Taxes - Current and Deferred Income Taxes    HTML     76K 
                (Detail)                                                         
45: R72         Income Taxes - Current and Deferred Income Taxes    HTML     37K 
                (Parenthetical) (Detail)                                         
56: R73         Income Taxes - Differences between U.S. Federal     HTML     72K 
                Statutory Income Tax Rate of 35% and Income Taxes                
                Provided (Detail)                                                
97: R74         Income Taxes - Significant Components of Company's  HTML     72K 
                Net Deferred Tax Assets/(Liabilities) (Detail)                   
78: R75         Income Taxes - Additional Information (Detail)      HTML     46K 
17: R76         Income Taxes - Reconciliation of Unrecognized Tax   HTML     48K 
                Benefits (Detail)                                                
83: R77         Employee Benefit Plans - Additional Information     HTML     47K 
                (Detail)                                                         
18: R78         Restructuring - Additional Information (Detail)     HTML     46K 
77: R79         Restructuring - Summary of Restructuring Activity   HTML     49K 
                (Detail)                                                         
32: R80         Restructuring - Summary of Charges in Consolidated  HTML     38K 
                Statement of Operations (Detail)                                 
108: R81         Share-Based Compensation Plans - Additional         HTML     64K  
                Information (Detail)                                             
104: R82         Share-Based Compensation Plans - Summary of         HTML     78K  
                Company's Share Awards (Detail)                                  
112: R83         Related Party Transactions - Additional             HTML     76K  
                Information (Detail)                                             
119: R84         Commitments and Contingencies - Additional          HTML     46K  
                Information (Detail)                                             
123: R85         Commitments and Contingencies - Future Minimum      HTML     70K  
                Payments Under Non-Cancelable Capital and                        
                Operating Leases (Net of Sublease Income) (Detail)               
16: R86         Commitments and Contingencies - Schedule of         HTML     42K 
                Capital Lease Amounts Included in Property, Plant                
                and Equipment (Detail)                                           
30: R87         Derivative Financial Instruments - Additional       HTML     63K 
                Information (Detail)                                             
109: R88         Segment Information - Schedule of Segment           HTML     70K  
                Information (Detail)                                             
91: R89         Segment Information - Long-Lived Assets and         HTML     49K 
                Revenue by Geographical Areas (Detail)                           
100: R90         Segment Information - Additional Information        HTML     39K  
                (Detail)                                                         
96: R91         Additional Financial Information - Additional       HTML     43K 
                Information (Detail)                                             
19: R92         Fair Value Measurements - Schedule of Fair Value    HTML     70K 
                of Financial Instruments (Detail)                                
49: R93         Fair Value Measurements - Reconciliation of Net     HTML     41K 
                Assets and Liabilities Classified as Level 3                     
                (Detail)                                                         
50: R94         Fair Value Measurements - Additional Information    HTML     37K 
                (Detail)                                                         
65: R95         Subsequent Events - Additional Information          HTML     57K 
                (Detail)                                                         
51: R96         Quarterly Financial Information - Quarterly         HTML     98K 
                Information (Detail)                                             
107: R97         Quarterly Financial Information - Quarterly         HTML     41K  
                Information (Parenthetical) (Detail)                             
38: R98         Guarantor And Non-Guarantor Subsidiaries Financial  HTML     43K 
                Information - Additional Information (Detail)                    
20: R99         Guarantor And Non-Guarantor Subsidiaries Financial  HTML    225K 
                Information - Consolidating Balance Sheet (Detail)               
106: R100        Guarantor And Non-Guarantor Subsidiaries Financial  HTML    128K  
                Information - Consolidating Statement of                         
                Operations (Detail)                                              
62: R101        Guarantor And Non-Guarantor Subsidiaries Financial  HTML     91K 
                Information - Consolidating Statement of                         
                Comprehensive Income (Detail)                                    
94: R102        Guarantor And Non-Guarantor Subsidiaries Financial  HTML    285K 
                Information - Consolidating Statement of Cash                    
                Flows (Detail)                                                   
81: R103        Guarantor And Non-Guarantor Subsidiaries Financial  HTML     42K 
                Information - Consolidating Statement of Cash                    
                Flows (Parenthetical) (Detail)                                   
103: R104        Valuation and Qualifying Accounts (Detail)          HTML     49K  
68: XML         IDEA XML File -- Filing Summary                      XML    197K 
23: EXCEL       IDEA Workbook of Financial Reports                  XLSX    537K 
67: EXCEL       IDEA Workbook of Financial Reports (.xls)            XLS   4.70M 
10: EX-101.INS  XBRL Instance -- wmg-20130930                        XML   7.15M 
12: EX-101.CAL  XBRL Calculations -- wmg-20130930_cal                XML    405K 
13: EX-101.DEF  XBRL Definitions -- wmg-20130930_def                 XML   1.41M 
14: EX-101.LAB  XBRL Labels -- wmg-20130930_lab                      XML   1.89M 
15: EX-101.PRE  XBRL Presentations -- wmg-20130930_pre               XML   1.76M 
11: EX-101.SCH  XBRL Schema -- wmg-20130930                          XSD    299K 
33: ZIP         XBRL Zipped Folder -- 0001193125-13-470757-xbrl      Zip    369K

‘R13’   —   Acquisition of Parlophone Label Group

This is an IDEA Financial Report.  [ Alternative Formats ]

 
v2.4.0.8
Acquisition of Parlophone Label Group
 12 Months Ended
Business Combinations [Abstract]  
Acquisition of Parlophone Label Group

4. Acquisition of Parlophone Label Group

On February 6, 2013, the Company signed a definitive agreement to acquire 100% of the shares of the Parlophone Label Group from Universal Music Group, a division of Vivendi, for £487 million, subject to a closing working capital adjustment, in an all-cash transaction (the “Acquisition”) pursuant to a Share Sale and Purchase Agreement (the “PLG Agreement”) by and among Warner Music Holdings Limited, an English company and wholly-owned subsidiary of the Company (“WM Holdings UK”), certain related entities identified in the PLG Agreement (such entities, together with WM Holdings UK, the “Buyers”), Acquisition Corp., as Buyers’ Guarantor, and EGH1 BV, a Dutch company, EMI Group Holdings BV, a Dutch company, and Delta Holdings BV, a Dutch company, as Sellers (as defined therein) (collectively, the “PLG Sellers”), and Universal International Music BV, a Dutch company, as Sellers’ Guarantor (as defined therein), pursuant to which the PLG Sellers agreed to sell, and the Buyers agreed to buy, the outstanding shares of capital stock of PLG Holdco Limited, an English company (“PLG Holdco”) and certain related entities identified in the PLG Agreement (such entities, together with PLG Holdco, “PLG”).

 

On June 28, 2013, the parties to the PLG Agreement entered into a Deed of Variation, resulting in an Amended and Restated Share Sale and Purchase Agreement (the “PLG Amended Agreement”). The PLG Amended Agreement provides for, among other amendments, a revision to the definition of “Aggregate Payments” to increase this amount from the consideration paid for the outstanding shares of capital stock in PLG Holdco and certain related entities identified in the PLG Amended Agreement to an amount that reflects the entire purchase price. The adjustment to this definition results in a greater potential cap on liability for the PLG Sellers in connection with certain claims that may be brought under the PLG Amended Agreement. On July 1, 2013, the Company completed the Acquisition.

In connection with the Acquisition, the Company incurred $38 million in professional fees and integration costs, as well as an $11 million fee under the Management Agreement (defined below) during the fiscal year ended September 30, 2013.

The Acquisition was accounted for in accordance with ASC 805, using the acquisition method of accounting. The assets and liabilities of the Company, including identifiable intangible assets, have been measured at their fair value primarily using Level 3 inputs (see Note 19 for additional information on fair value inputs). Determining the fair value of the assets acquired and liabilities assumed requires judgment and involved the use of significant estimates and assumptions, including assumptions with respect to future cash inflows and outflows, discount rates, asset useful lives and market multiples, among other items. The use of different estimates and judgments could yield materially different results.

The table below presents (i) the preliminary estimate of the Acquisition consideration as it relates to the acquisition of PLG by the Buyers and (ii) the preliminary allocation of the purchase price to the estimated fair values of the assets acquired and liabilities assumed on the closing date of July 1, 2013 (in millions):

 

Purchase Price

    £ 487   

Preliminary Working Capital Adjustment

      13   
  

 

 

  

Adjusted Purchase Price

    £ 500   

Foreign Exchange Rate at July 1, 2013

      1.53   
  

 

 

  

Adjusted Purchase Price in U.S. dollars

    $ 765   
  

 

 

  

Fair Value of assets acquired and liabilities assumed:

   

Cash

      46   

Accounts receivable

      80   

Other current assets

      8   

Property, plant and equipment

      39   

Intangible assets

      764   

Accounts payable

      (83 ) 

Royalties payable

      (147 ) 

Other current liabilities

      (21 ) 

Deferred revenue

      (25 ) 

Deferred tax liabilities

      (139 ) 

Other noncurrent liabilities

      (20 ) 
  

 

 

  

Fair value of net assets acquired

      502   

Goodwill recorded

      263   
  

 

 

  

Total purchase price allocated

    $ 765   
  

 

 

  

The excess of the purchase price, over the fair value of net assets acquired, including the amount assigned to identifiable intangible assets and deferred tax adjustments, has been recorded to goodwill. The goodwill recorded as part of the Acquisition reflects the expected value to be generated from the continuing transition of the music industry and the expected resulting cost savings; cost and revenue synergies to be realized; as well as any intangible assets that do not qualify for separate recognition. The resulting goodwill has been allocated to our Recorded Music reportable segment. The Company does not expect the goodwill recognized to be deductible for income tax purposes. Any impairment charges made in future periods associated with goodwill will not be tax deductible.

The final allocation of the purchase price is pending determination of the final consideration, including the determination of the final working capital adjustment pursuant to the mechanism set forth in the PLG Agreement.

The components of the intangible assets identified in the table above and the related useful lives, allocated to the Company’s Recorded Music reportable segment, are as follows:

 

     Value      Useful Life  
     (in millions)         

Trademark and trade name

    $ 17         Indefinite   

Catalog

      442         13 years   

Artist contracts

      305         10 years   

Pro Forma Financial Information (unaudited)

The following unaudited pro forma information has been presented as if the Acquisition occurred on October 1, 2011. This information is based on historical results of operations, adjusted to give effect to pro forma events that are (i) directly attributable to the Acquisition; (ii) factually supportable; and (iii) expected to have a continuing impact on the Company’s combined results. Additionally, certain pro forma adjustments have been made to the historical results of PLG in order to (i) convert them to U.S. GAAP; (ii) conform their accounting policies to those applied by the Company; (iii) present them in U.S. dollars; and (iv) align accounting periods. The unaudited pro forma results do not reflect the realization of any cost savings as a result of restructuring activities and other cost savings initiatives planned subsequent to the Acquisition or the related estimated restructuring charges contemplated in association with any such expected cost savings. Such charges will be expensed in the appropriate accounting periods. The pro forma information as presented below is for informational purposes only and is not indicative of the results of operations that would have been achieved if the Acquisition had taken place at the beginning of fiscal 2012.

 

     September 30,
 2013		     September 30,
 2012		  
     (in millions)  

Revenue

    $ 3,131      $ 3,130   

Operating income (loss)

      135        (392 ) 

Net loss attributable to Warner Music Group Corp.

      (154 )      (609 ) 

Actual results related to PLG included in the Consolidated Statements of Operations for the fiscal year ended September 30, 2013 relate to the transition period from July 1, 2013 to September 30, 2013 and consist of revenues of $59 million and operating loss of $32 million.

Dates Referenced Herein   and   Documents Incorporated by Reference

This ‘10-K’ Filing    Date    Other Filings
Filed on:12/12/138-K
For Period end:9/30/13
7/1/138-K,  8-K/A
6/28/138-K
2/6/138-K
9/30/1210-K
10/1/11
 List all Filings 

2 Subsequent Filings that Reference this Filing

  As Of               Filer                 Filing    For·On·As Docs:Size             Issuer                      Filing Agent

 3/25/14  SEC                               UPLOAD10/06/17    1:36K  Warner Music Group Corp.
 3/17/14  SEC                               UPLOAD10/06/17    1:159K Warner Music Group Corp.
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