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Item 5. Market for Registrant’s Common Equity

2020-11-23 compared with 2019-11-27 · 57 added, 33 removed, 19 unchanged (83% of the section changed)

MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES

There is no established public trading market for any class of our common equity.

As of November 27, 2019 , there were 1,060 shares of our common stock outstanding.

Affiliates of Access currently own 100% of our common stock.

The Company’s ability to pay dividends is restricted by covenants in the indentures governing its notes and in the credit agreements for the Senior Term Loan Facility and the Revolving Credit Facility.

On September 23, 2019 , the Company’s board of directors declared a cash dividend of $206.25 million which was paid to stockholders on October 4, 2019 and recorded as an accrual as of September 30, 2019 .

For fiscal year 2019 , the Company paid an aggregate of $93.75 million in cash dividends to stockholders.

For fiscal year 2018 , the Company paid an aggregate of $925 million in cash dividends to stockholders, which reflected proceeds from the sale of Spotify shares acquired in the ordinary course of business.

For fiscal year 2017 , the Company paid an aggregate of $84 million in cash dividends to stockholders.

In the first quarter of fiscal year 2019, the Company instituted a regular quarterly dividend policy whereby it intends to pay a modest regular quarterly dividend in each fiscal quarter and a variable dividend for the fourth fiscal quarter in an amount commensurate with cash expected to be generated from operations in such fiscal year, in each case, after taking into account other potential uses for cash, including acquisitions, investment in our business and repayment of indebtedness.

The declaration of each dividend will continue to be at the discretion of the Board.

Market Information for Common Stock

The Company's Class A Common Stock began trading on the Nasdaq stock market under the symbol “WMG” on June 3, 2020.

The Company's Class B Common Stock is not listed on any stock exchange nor traded on any public market.

Holders of Record

As of November 19, 2020, there were approximately 10 stockholders of record of the Company's Class A Common Stock.

Because many of our shares of Class A Common Stock are held by brokers and other institutions on behalf of individuals and entities, we excluded the total number of beneficial owners represented by these record holders.

As of November 19, 2020, there were 10 stockholders of record of our Class B Common Stock.

Dividend Policy

The Company’s ability to pay dividends may be restricted by covenants in certain of the indentures governing its notes and in the credit agreements for the Senior Term Loan Facility and the Revolving Credit Facility.

In the first quarter of fiscal year 2019, the Company instituted a regular quarterly dividend policy whereby it intended to pay a modest regular quarterly dividend in each of the first three fiscal quarters and a variable dividend for the fourth fiscal quarter in an amount commensurate with cash expected to be generated from operations in such fiscal year, in each case, after taking into account other potential uses for cash, including acquisitions, investment in our business and repayment of indebtedness.

In connection with the IPO, the Company amended its dividend policy whereby it intends to pay quarterly cash dividends to holders of its Class A Common Stock and Class B Common Stock.

The Company paid the first dividend under this policy of $0.12 per share in September 2020.

The declaration of each dividend will continue to be at the discretion of the Company’s board of directors and will depend on the Company’s financial condition, earnings, liquidity and capital requirements, level of indebtedness, contractual restrictions with respect to payment of dividends, restrictions imposed by Delaware law, general business conditions and any other factors that the Company’s board of directors deems relevant in making such a determination.

Therefore, there can be no assurance that the Company will pay any dividends to holders of the Company’s common stock, or as to the amount of any such dividends.

Stock Performance Graph

This performance graph shall not be deemed to be "filed" with the SEC for purposes of Section 18 of the Exchange Act, or otherwise subject to the liabilities under that Section, and shall not be deemed to be incorporated by reference into any filing of the Company under the Securities Act or the Exchange Act.

The following graph shows a comparison of the cumulative total return on our Class A Common Stock from June 3, 2020 (the date our Class A Common Stock commenced trading on the Nasdaq Global Select Market) through September 30, 2020 with the cumulative total return of the Standard & Poor's 500 Index (“S&P 500 Index”) and the Nasdaq Composite Index over the same period, assuming the investment of $100 in our Class A Common Stock and in each index on June 3, 2020 and the reinvestment of dividends in each of our Class A Common Stock and each index.

The graph uses the closing market price on June 3, 2020 of $30.12 per share as the initial value of our common stock, which had an initial public offering price of $25.00.

The monthly intervals below are based on the Company’s 52-53 week fiscal year in which each reporting period ends on the last Friday of the respective period.

The comparisons in the graph below are based on historical data and are not indicative of, nor intended to forecast, future performance of our Class A Common Stock.

6/3/2020 6/26/2020 7/31/2020 8/28/2020 9/25/2020

Warner Music Group Corp.

$ 100 $ 101 $ 100 $ 98 $ 90

S&P 500 Index 100 96 105 112 106

NASDAQ Composite Index 100 101 112 124 115

Securities Authorized for Issuance Under Equity Compensation Plans

Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters.

SELECTED FINANCIAL DATA

Our summary balance sheet data as of September 30, 2019 and September 30, 2018 and the statements of operations and other data for the fiscal years ended September 30, 2019 , September 30, 2018 and September 30, 2017 have been derived from our audited financial statements included in this Annual Report and should be read in conjunction with the audited financial statements and other financial information presented elsewhere herein.

The selected financial information set forth below for all other periods has been derived from our audited financial statements that are not included in this Annual Report.

The following table sets forth our selected historical financial and other data as of the dates and for the periods ended:

Fiscal Year Ended

September 30, 2019

Fiscal Year Ended

September 30, 2018

Fiscal Year Ended

September 30, 2017

Fiscal Year Ended

September 30, 2016

Fiscal Year Ended

September 30, 2015

(in millions)

Statement of Operations Data:

Net income (loss) attributable to Warner Music Group Corp.

Balance Sheet Data (at period end):

The following selected financial data should be read in conjunction with “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and the consolidated financial statements and related notes thereto included elsewhere in this Annual Report.

The following selected financial data have been derived from the Company’s consolidated financial statements.

The financial data for the fiscal years ended September 30, 2020, September 30, 2019 and September 30, 2018, and as of September 30, 2020 and September 30, 2019 have been derived from the Company’s consolidated financial statements included elsewhere in this Annual Report.

The financial data for the fiscal years ended September 30, 2017 and September 30, 2016, and as of September 30, 2018, September 30, 2017 and September 30, 2016 have been derived from the Company’s consolidated financial statements not included in this Annual Report.

Historical results are not indicative of future operating results.

Fiscal Year Ended September 30,

2020 2019 2018 2017 2016

(in millions, except per share data)

Consolidated Statements of Operations Data:

Revenues $ 4,463 $ 4,475 $ 4,005 $ 3,576 $ 3,246

Interest expense, net (127) (142) (138) (149) (173)

Net (loss) income (470) 258 312 149 30

Income attributable to noncontrolling interest (5) (2) (5) (6) (5)

Net (loss) income attributable to Warner Music Group Corp.

(1) (475) 256 307 143 25

Net (loss) income per share attributable to common stockholders:

Class A – Basic and Diluted $ (0.82) $ — $ — $ — $ —

Class B – Basic and Diluted (0.95) 0.51 0.61 0.29 0.05

Cash dividends declared per common share:

Class A Common Stock $ 0.12 $ — $ — $ — $ —

Class B Common Stock 0.27 0.59 1.84 0.17 —

Consolidated Balance Sheet Data (at period end):

Cash and equivalents $ 553 $ 619 $ 514 $ 647 $ 359

Total assets 6,410 6,017 5,344 5,718 5,335

Total debt (including current portion of long-term debt) 3,104 2,974 2,819 2,811 2,778

Warner Music Group Corp.

(deficit) equity

Cash Flow Data:

Total (deficit) equity (45) (269) (320) 308 210

Consolidated Statements of Cash Flows Data:

Cash flows provided by (used in):

2 unchanged sentences

Financing activities (316) 88 (955) (128) (216)

Depreciation and amortization 261 269 261 251 293

Capital expenditures (85) (104) (74) (44) (42)

______________________________________

(1) Net loss attributable to Warner Music Group Corp.

for the fiscal year ended September 30, 2020 includes a net loss on extinguishment of debt of $34 million, non-cash stock-based compensation expense of $608 million, and a one-time management agreement termination fee and IPO-related expenses of $89 million.

Net income attributable to Warner Music Group Corp.

5 unchanged sentences

for the fiscal year ended September 30, 2017 includes a benefit due to the reversal of the U.S.

valuation allowance of $125 million, net loss on extinguishment of debt of $35 million, variable compensation costs associated with the Senior Management Free Cash Flow Plan of $102 million and net gain on divestitures primarily related to PLG of $6 million.

PLG of $6 million.

Net income attributable to Warner Music Group Corp.

for the fiscal year ended September 30, 2016 includes net loss on extinguishment of debt of $18 million, gain on sale of real estate of $24 million and net gain on divestitures primarily related to PLG of $9 million.

Net loss attributable to Warner Music Group Corp.

for the fiscal year ended September 30, 2015 includes $2 million of PLG restructuring charges and $5 million of PLG-related professional fees and integration costs.

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 5. Market for Registrant’s Common Equity