What changed in this filing

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Item 1. Financial Statements

2025-02-06 compared with 2024-08-07 · 134 added, 273 removed, 446 unchanged (48% of the section changed)

36 unchanged sentences

Class A common stock, $ 0.001 par value;

1,000,000 shares authorized, 141,603 and 138,345 shares issued and outstanding as of June 30, 2024 and September 30, 2023, respectively

1,000,000 shares authorized, 144,301 and 142,559 shares issued and outstanding as of December 31, 2024 and September 30, 2024, respectively

Class B common stock, $ 0.001 par value;

1,000,000 shares authorized, 376,315 and 377,650 issued and outstanding as of June 30, 2024 and September 30, 2023, respectively

1,000,000 shares authorized, 375,380 and 375,380 issued and outstanding as of December 31, 2024 and September 30, 2024, respectively

Additional paid-in capital 2,091 2,077

11 unchanged sentences

Three Months Ended

June 30, Nine Months Ended

2024 2023 2024 2023

Revenue $ 1,666 $ 1,748

3 unchanged sentences

Restructuring and impairments

( 1 ) — ( 96 ) ( 41 )

Amortization expense ( 57 ) ( 55 )

2 unchanged sentences

Operating income 214 354

Loss on extinguishment of debt — ( 4 ) — ( 4 )

Interest expense, net ( 37 ) ( 39 )

5 unchanged sentences

Net income attributable to Warner Music Group Corp.

$ 139 $ 122 $ 394 $ 278

Net income per share attributable to common stockholders:

11 unchanged sentences

Three Months Ended

June 30, Nine Months Ended

2024 2023 2024 2023

Net income $ 241 $ 193

7 unchanged sentences

Comprehensive income attributable to Warner Music Group Corp.

$ 129 $ 106 $ 405 $ 348

See accompanying notes

2 unchanged sentences

(In millions)

Nine Months Ended

Three Months Ended

Cash flows from operating activities

4 unchanged sentences

Deferred income taxes 23 5

Loss on extinguishment of debt — 4

Net loss (gain) on investments

Net loss (gain) on divestitures

( 32 ) ( 41 )

Non-cash interest expense 2 —

6 unchanged sentences

Other noncurrent assets

( 85 ) ( 10 )

Accounts payable and accrued liabilities ( 183 ) ( 31 )

6 unchanged sentences

Cash flows from investing activities

Acquisition of music publishing rights and music catalogs, net ( 123 ) ( 53 )

Acquisition of music publishing rights and music catalogs

( 41 ) ( 59 )

Capital expenditures ( 36 ) ( 29 )

4 unchanged sentences

Cash flows from financing activities

Partial proceeds from Senior Term Loan Facility refinancing

Partial repayment of Senior Term Loan Facility refinancing

Deferred financing costs paid ( 2 ) ( 3 )

Distribution to noncontrolling interest holders ( 7 ) ( 4 )

Dividends paid ( 94 ) ( 89 )

Payment of deferred consideration

Taxes paid related to net share settlement of restricted stock units and common stock

Proceeds from Term Loan Mortgage

Payment of deferred and contingent consideration — ( 133 )

Common stock repurchased and retired

Other financing activity

Net cash used in financing activities ( 127 ) ( 93 )

Effect of exchange rate changes on cash and equivalents ( 16 ) 5

Net (decrease) increase in cash and equivalents ( 34 ) 16

Net increase in cash and equivalents 108 113

Cash and equivalents at beginning of period 694 641

4 unchanged sentences

(In millions, except share amounts which are reflected in thousands, and per share data)

Nine Months Ended June 30, 2024

Three Months Ended December 31, 2024

Common Stock Class B

15 unchanged sentences

Distribution to noncontrolling interest holders — — — — — — — — ( 8 ) ( 8 )

Acquisition of noncontrolling interests — — — — — — — — ( 1 ) ( 1 )

Shares issued under the Plan 1,738 — — — — — — — — —

Exchange of Class B shares for Class A shares 1,335 — ( 1,335 ) — — — — — — —

Shares issued under Omnibus Incentive Plan 185 — — — ( 5 ) — — ( 5 ) — ( 5 )

Balance at June 30, 2024 141,603 $ — 376,315 $ 1 $ 2,053 $ ( 1,260 ) $ ( 311 ) $ 483 $ 152 $ 635

Three Months Ended June 30, 2024

Common Stock Class B

Common Stock Additional

Capital Accumulated

Deficit Accumulated

Comprehensive

Equity Non-controlling

Interest Total

Shares Value Shares Value

Balance at March 31, 2024 141,596 $ — 376,315 $ 1 $ 2,043 $ ( 1,310 ) $ ( 301 ) $ 433 $ 152 $ 585

Net income — — — — — 139 — 139 2 141

Other comprehensive income, net of tax

— — — — — — ( 10 ) ( 10 ) — ( 10 )

Dividends ($ 0.17 per share)

Vesting of restricted stock units, net of shares withheld for employee taxes

64 — — — ( 2 ) — — ( 2 ) — ( 2 )

Stock-based compensation

Shares issued under the Plan

1,738 — — — — — — — — —

Distribution to noncontrolling interest holders — — — — — — — — ( 1 ) ( 1 )

Acquisition of noncontrolling interests — — — — — — — — ( 1 ) ( 1 )

Shares issued under Omnibus Incentive Plan 7 — — — — — — — — —

Balance at June 30, 2024 141,603 $ — 376,315 $ 1 $ 2,053 $ ( 1,260 ) $ ( 311 ) $ 483 $ 152 $ 635

Nine Months Ended June 30, 2023

Common shares repurchased and retired ( 60 ) — — — ( 2 ) — — ( 2 ) — ( 2 )

Other — — — — ( 2 ) — — ( 2 ) ( 2 ) ( 4 )

Balance at December 31, 2024 144,301 $ — 375,380 $ 1 $ 2,091 $ ( 1,171 ) $ ( 376 ) $ 545 $ 152 $ 697

Three Months Ended December 31, 2023

Common Stock Class B

15 unchanged sentences

Shares issued under the Plan

Shares issued under Omnibus Incentive Plan 273 — — — — — — — — —

Balance at June 30, 2023 138,341 $ — 377,650 $ 1 $ 2,007 $ ( 1,450 ) $ ( 277 ) $ 281 $ 18 $ 299

Three Months Ended June 30, 2023

Common Stock Class B

Common Stock Additional

Capital Accumulated

Deficit Accumulated

Comprehensive

Equity Non-controlling

Interest Total

Shares Value Shares Value

Balance at March 31, 2023 138,324 $ — 377,650 $ 1 $ 2,000 $ ( 1,488 ) $ ( 261 ) $ 252 $ 14 $ 266

Net income — — — — — 122 — 122 2 124

Other comprehensive loss, net of tax — — — — — — ( 16 ) ( 16 ) — ( 16 )

Dividends ($ 0.16 per share)

1,738 — — — — — — — — —

Stock-based compensation

— — — — 7 — — 7 — 7

Distribution to noncontrolling interest holders — — — — — — — — ( 4 ) ( 4 )

Exchange of Class B shares for Class A shares 547 — ( 547 ) — — — — — — —

Shares issued under Omnibus Incentive Plan 7 — — — — — — — — —

Balance at June 30, 2023

138,341 $ — 377,650 $ 1 $ 2,007 $ ( 1,450 ) $ ( 277 ) $ 281 $ 18 $ 299

Balance at December 31, 2023 140,637 $ — 377,103 $ 1 $ 2,039 $ ( 1,317 ) $ ( 260 ) $ 463 $ 153 $ 616

See accompanying notes

24 unchanged sentences

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 and nine months ended June 30, 2024 are not necessarily indicative of the results that may be expected for the fiscal year ending September 30, 2024.

Operating results for the three months ended December 31, 2024 are not necessarily indicative of the results that may be expected for the fiscal year ending September 30, 2025.

The consolidated balance sheet at September 30, 2024 has been derived from the audited consolidated financial statements at that date but does not include all the information and notes required by U.S.

7 unchanged sentences

If an entity is not deemed to be a VIE, the Company consolidates the entity if the Company has a controlling voting interest.

As of June 30, 2024 and September 30, 2023, there were approximately $ 72 million and $ 5 million of assets and $ 2 million and $ 2 million of liabilities, respectively, related to VIEs included in our condensed consolidated balance sheets.

As of December 31, 2024 and September 30, 2024, there were approximately $ 66 million and $ 77 million of assets, respectively, and $ 2 million and $ 2 million of liabilities, respectively, related to VIEs included in our condensed consolidated balance sheets.

The Company has performed a review of all subsequent events through the date the financial statements were issued and has determined that no additional disclosures are necessary.

10 unchanged sentences

Improvements to Reportable Segment Disclosures .

The amendment enhances reportable segment disclosure requirements, primarily by requiring enhanced disclosures about significant segment expenses, reporting for interim periods, and Chief Operating Decision Maker (“CODM”) related information.

The amendments in this ASU are effective for fiscal years beginning after December 15, 2023 and interim periods within fiscal years beginning after December 15, 2024.

5 unchanged sentences

The Company is in the process of evaluating the effect that the adoption of these standards will have on its consolidated financial statements.

In November 2024, the FASB issued ASU 2024-03, Income Statement—Reporting Comprehensive Income—Expense Disaggregation Disclosures (Subtopic 220-40):

Disaggregation of Income Statement Expenses.

The amendment requires new financial statement disclosures to provide disaggregated information for certain types of expenses, including purchases of inventory, employee compensation, depreciation, and amortization in commonly presented expense captions such as cost of revenue and selling, general and administrative expenses.

The amendments in this ASU are effective for fiscal years beginning after December 15, 2026, and interim periods within fiscal years beginning after December 15, 2027.

The Company is in the process of evaluating the effect that the adoption of these standards will have on its consolidated financial statements.

Earnings per Share

2 unchanged sentences

Diluted earnings per share is computed by dividing net income available to each class of stock, less earnings available to participating securities, divided by the weighted average number of outstanding common shares, plus dilutive potential common shares, which is calculated using the treasury-stock method.

The potentially dilutive common shares did not have a dilutive effect on the Company’s EPS calculation for the three and nine months ended June 30, 2024 and 2023, respectively.

The following table sets forth the calculation of basic and diluted net income per common share under the two-class method for the three and nine months ended June 30, 2024 and 2023 (in millions, except share amounts, which are reflected in thousands, and per share data):

Three Months Ended June 30,

Class A Class B Class A Class B

Basic and Diluted EPS:

Net income attributable to Warner Music Group Corp.

$ 39 $ 100 $ 34 $ 88

Net income attributable to participating securities (a)

( 2 ) — ( 2 ) —

Net income attributable to common stockholders $ 37 $ 100 $ 32 $ 88

Weighted average shares outstanding 141,568 376,315 138,290 377,650

Basic and Diluted EPS $ 0.27 $ 0.27 $ 0.23 $ 0.23

Nine Months Ended June 30,

The potentially dilutive common shares did not have a dilutive effect on the Company’s EPS calculation for the three months ended December 31, 2024 and 2023, respectively.

The following table sets forth the calculation of basic and diluted net income per common share under the two-class method for the three months ended December 31, 2024 and 2023 (in millions, except share amounts, which are reflected in thousands, and per share data):

Three Months Ended December 31,

Class A Class B Class A Class B

13 unchanged sentences

Three Months Ended

June 30, Nine Months Ended

2024 2023 2024 2023

(in millions)

3 unchanged sentences

Total digital and physical

1,002 972 3,023 2,822

Artist services and expanded-rights 196 204

5 unchanged sentences

Synchronization 39 39

Other 4 4 11 11

Total Music Publishing 323 304

5 unchanged sentences

Music Publishing 173 172

678 704 2,155 2,033

International Recorded Music 813 818

1 unchanged sentence

Total international

878 861 2,645 2,421

Intersegment eliminations ( 2 ) ( 1 )

2 unchanged sentences

Sales Returns and Uncollectible Accounts

Based on management’s analysis of sales returns, refund liabilities of $ 19 million and $ 19 million were established at June 30, 2024 and September 30, 2023, respectively.

Based on management’s analysis of estimated credit losses, reserves of $ 23 million and $ 19 million were established at June 30, 2024 and September 30, 2023, respectively.

Based on management’s analysis of sales returns, refund liabilities of $ 22 million and $ 20 million were established at December 31, 2024 and September 30, 2024, respectively.

Based on management’s analysis of estimated credit losses, reserves of $ 24 million and $ 26 million were established at December 31, 2024 and September 30, 2024, respectively.

Deferred Revenue

Deferred revenue increased by $ 391 million during the nine months ended June 30, 2024 related to cash received from customers for fixed fees and minimum guarantees in advance of performance, including amounts recognized in the period.

Revenues of $ 314 million were recognized during the nine months ended June 30, 2024 related to the balance of deferred revenue at September 30, 2023.

Deferred revenue increased by $ 244 million during the three months ended December 31, 2024 related to cash received from customers for fixed fees and minimum guarantees in advance of performance, including amounts recognized in the period.

Revenues of $ 88 million were recognized during the three months ended December 31, 2024 related to the balance of deferred revenue at September 30, 2024.

There were no other significant changes to deferred revenue during the reporting period.

Performance Obligations

For the three months ended June 30, 2024 and June 30, 2023, the Company recognized revenue of $ 35 million and $ 27 million, respectively, from performance obligations satisfied in previous periods.

For the nine months ended June 30, 2024 and June 30, 2023, the Company recognized revenue of $ 109 million and $ 68 million, respectively, from performance obligations satisfied in previous periods.

Revenues expected to be recognized in the future related to performance obligations that are unsatisfied at June 30, 2024 are as follows:

For the three months ended December 31, 2024 and December 31, 2023, the Company recognized revenue of $ 40 million and $ 30 million, respectively, from performance obligations satisfied in previous periods.

Revenues expected to be recognized in the future related to performance obligations that are unsatisfied at December 31, 2024 are as follows:

Thereafter Total

2 unchanged sentences

Total $ 329 $ 153 $ 5 $ 1 $ 488

On August 25, 2023, the Company purchased 51 % of the issued and outstanding equity securities of TenThousand Projects Holdings LLC (“TenThousand Projects”), an independent U.S.

record label pursuant to the terms of the unit purchase agreement of the same date among Warner Music Inc., a wholly-owned subsidiary of the Company, TenThousand Projects LLC, and Ten Thousand Projects Holdings LLC.

The consideration transferred on the acquisition date was approximately $ 98 million which was comprised of the base purchase price of $ 102 million and the preliminary working capital adjustments, primarily comprised of cash acquired, net of a deferred purchase price of $ 12 million which is payable on or prior to one year from the acquisition date.

The deferred purchase was adjusted to $ 11 million after the finalization of purchase price adjustments, including working capital and other items.

At June 30, 2024, the Company updated the purchase price allocation recorded at September 30, 2023, which resulted in a net decrease to intangible assets of approximately $ 1 million, a net decrease to goodwill of approximately $ 1 million, a net increase to other acquired assets and liabilities of $ 1 million, and a net decrease to the fair value of noncontrolling interest in the acquiree of $ 1 million.

The acquisition accounting is subject to revision based on final determinations of fair value and allocations of purchase price to the identifiable assets and liabilities acquired.

See Note 5, “Acquisitions,” to the consolidated financial statements included in the Company’s Annual Report on Form 10-K for the fiscal year ended September 30, 2023 for the preliminary purchase price allocation, valuation methodology, and other information related to the TenThousand Projects acquisition.

Comprehensive Income

2 unchanged sentences

For the Company, the components of other comprehensive income primarily consist of foreign currency translation gains and losses, minimum pension liabilities, and deferred gains and losses on financial instruments designated as hedges under ASC 815, Derivatives and Hedging .

The following summary sets forth the changes in the components of accumulated other comprehensive loss, net of related tax benefit of less than $ 1 million:

Foreign Currency Translation Loss (a) Minimum Pension Liability Adjustment Deferred Gains (Losses) On Derivative Financial Instruments Accumulated Other Comprehensive Loss, net

The following summary sets forth the changes in the components of accumulated other comprehensive loss.

Foreign Currency Translation Loss (a) Minimum Pension Liability Adjustment Accumulated Other Comprehensive Loss, net

(in millions)

Balances at September 30, 2024 $ ( 244 ) $ ( 3 ) $ ( 247 )

Other comprehensive income (loss) 13 ( 1 ) ( 1 ) 11

Balances at June 30, 2024 $ ( 309 ) $ ( 2 ) $ — $ ( 311 )

Other comprehensive loss ( 129 ) — ( 129 )

Balances at December 31, 2024 $ ( 373 ) $ ( 3 ) $ ( 376 )

______________________________________

7 unchanged sentences

Other adjustments (a) ( 29 ) — ( 29 )

Balances at June 30, 2024 $ 1,539 $ 464 $ 2,003

Balances at December 31, 2024 $ 1,549 $ 464 $ 2,013

______________________________________

(a) Other adjustments during the nine months ended June 30, 2024 represent foreign currency movements.

(a) Other adjustments during the three months ended December 31, 2024 represent foreign currency movements.

The Company performs its annual goodwill impairment test in accordance with ASC 350, Intangibles—Goodwill and Other (“ASC 350”) during the fourth quarter of each fiscal year as of July 1.

3 unchanged sentences

Intangible assets consist of the following:

Weighted-Average Useful Life June 30,

Weighted-Average Useful Life December 31,

2024 September 30,

12 unchanged sentences

Total net intangible assets $ 2,478 $ 2,511

The decrease in net intangible assets during the nine months ended June 30, 2024 is partially related to the write off of approximately $ 35 million of unamortized intangible assets within trademarks and other intangible assets in connection with the winding down of the Company’s O&O Media Properties.

Please refer to Note 9 of our condensed consolidated financial statements for further discussion.

The decrease in net intangible assets during the three months ended December 31, 2024 is primarily related to foreign currency movements, partially offset by business combinations which resulted in the recognition of intangible assets with a preliminary estimated fair value of $ 39 million in the aggregate within recorded music catalogs, artist and songwriter contracts, trademarks, and other intangibles.

Debt Capitalization

14 unchanged sentences

______________________________________

(a) Reflects $ 350 million and $ 300 million of commitments under the Revolving Credit Facility, less letters of credit outstanding of approximately $ 2 million and $ 2 million as of June 30, 2024 and September 30, 2023, respectively.

There were no loans outstanding under the Revolving Credit Facility at June 30, 2024 or September 30, 2023.

(a) Reflects $ 350 million of commitments under the Revolving Credit Facility, less letters of credit outstanding of approximately $ 2 million as of December 31, 2024 and September 30, 2024.

There were no loans outstanding under the Revolving Credit Facility at December 31, 2024 or September 30, 2024.

The Company is the direct parent of Holdings, which is the direct parent of Acquisition Corp.

1 unchanged sentence

is party to a $ 1,295 million senior secured term loan credit facility, pursuant to a credit agreement dated November 1, 2012, as amended or supplemented (the “Senior Term Loan Credit Agreement”) with JPMorgan Chase Bank NA, as administrative agent and collateral agent, and the other financial institutions and lenders from time to time party thereto (the “Senior Term Loan Facility”).

Additionally, as of June 30, 2024 Acquisition Corp.

Additionally, as of December 31, 2024 Acquisition Corp.

had issued and outstanding the 2.750 % Senior Secured Notes due 2028, the 3.750 % Senior Secured Notes due 2029, the 3.875 % Senior Secured Notes due 2030, the 2.250 % Senior Secured Notes due 2031 and the 3.000 % Senior Secured Notes due 2031 (together, the “Acquisition Corp.

9 unchanged sentences

Senior Credit Facilities, including the Revolving Credit Facility (as defined below) and the Senior Term Loan Facility, should Acquisition Corp.’s Total Indebtedness to EBITDA Ratio increase above 3.50 :1.00 and the term loans not achieve an investment grade rating, the covenants under the Revolving Credit Facility, which are currently suspended, will be reinstated and the ability of the Company and Holdings to obtain funds from their subsidiaries will be restricted by the Revolving Credit Facility.

The Company was in compliance with its covenants under its outstanding notes, the Revolving Credit Facility and the Senior Term Loan Facility as of June 30, 2024 .

Fiscal 2024 Transactions

Revolving Credit Agreement Amendment

On November 30, 2023, Acquisition Corp.

entered into an amendment (the “Revolving Credit Agreement Amendment”) to the revolving credit agreement, dated January 31, 2018, as amended, among Acquisition Corp., the several banks and other financial institutions party thereto and Credit Suisse AG, Cayman Islands Branch, as predecessor administrative agent, governing Acquisition Corp.’s revolving credit facility (the “Revolving Credit Facility”) with JPMorgan Chase Bank, N.A., as administrative agent, and the other financial institutions and lenders from time to time party thereto.

The Revolving Credit Agreement Amendment (among other changes):

(i) increased the commitments under the Revolving Credit Facility from an aggregate principal amount of $ 300 million to an aggregate principal amount of $ 350 million, (ii) extended the final maturity date of the Revolving Credit Facility from April 3, 2025 to November 30, 2028, (iii) appointed JPMorgan Chase Bank, N.A.

as administrative agent in the place of Credit Suisse AG, Cayman Islands Branch, (iv) modified the existing springing Secured Indebtedness to EBITDA Ratio financial maintenance covenant by increasing the springing threshold from $ 105,000,000 to $ 140,000,000 , and (v) included provisions that allow Acquisition Corp.

to terminate the security interests securing the obligations under the Revolving Credit Facility upon the satisfaction of the Collateral Suspension Conditions (as defined below) and, in the event that the security interests are so terminated, the existing springing Secured Indebtedness to EBITDA Ratio financial maintenance covenant (which is calculated net of up to $ 250 million of cash and cash equivalents held by Acquisition Corp.

and its restricted subsidiaries) shall automatically be replaced with a new financial maintenance covenant prohibiting Acquisition Corp.

from permitting the Total Indebtedness to EBITDA Ratio to be greater than 3.60 :1.00 (calculated net of all cash and cash equivalents held by Acquisition Corp.

and its restricted subsidiaries) as of the end of any fiscal quarter.

In the event that the security interests securing the obligations under the Facility are reinstated as a result of the occurrence of a Collateral Suspension Reversion Date (as defined below), the Total Indebtedness to EBITDA Ratio financial maintenance covenant shall revert back to a springing Secured Indebtedness to EBITDA Ratio financial maintenance covenant set at 5.00 :1.00.

For purposes the Revolving Credit Agreement Amendment, (i) “Collateral Suspension Conditions” means conditions that are satisfied if (x) the investment grade condition has been satisfied and (y) the aggregate outstanding principal amount of senior secured indebtedness incurred by Acquisition Corp.

and its restricted subsidiaries is not in excess of $ 500,000,000 and (ii) “Collateral Suspension Reversion Date” means, the earlier of (x) the date on which the Collateral Suspension Conditions cease to be satisfied or (y) the date on which Acquisition Corp.

delivers a collateral suspension reversion notice to the Administrative Agent.

December 2023 Senior Term Loan Credit Agreement Amendment

On December 29, 2023, Acquisition Corp.

entered into an amendment (the “Thirteenth Amendment”) to the Senior Term Loan Credit Agreement among Acquisition Corp., the other loan parties, Holdings, each lender party hereto, Credit Suisse AG, Cayman Islands Branch as the resigning administrative agent, and JPMorgan Chase Bank, N.A, as the successor administrative agent.

The Thirteenth Amendment appointed JPMorgan Chase Bank, N.A.

as administrative agent in the place of Credit Suisse AG, Cayman Islands Branch.

Senior Term Loan Credit Agreement Amendment

On January 24, 2024, Acquisition Corp.”) entered into an amendment (the “Senior Term Loan Credit Agreement Amendment”) to the credit agreement, dated November 1, 2012 (as amended by the amendments dated as of May 9, 2013, July 15, 2016, November 21, 2016, May 22, 2017, December 6, 2017, March 14, 2018, June 7, 2018, January 20, 2021, March 8, 2021, November 1, 2022, May 10, 2023, June 30, 2023 and December 29, 2023), among Acquisition Corp., the guarantors party thereto, the lenders party thereto and JPMorgan Chase Bank, N.A., as administrative agent, governing Acquisition Corp.’s senior secured term loan facility with JPMorgan Chase Bank N.A., as administrative agent, and the other financial institutions and lenders from time to time party thereto.

The Senior Term Loan Credit Agreement Amendment (among other changes) extends the maturity date of its outstanding term loans from January 20, 2028 to January 24, 2031 through the issuance of tranche I term loans and refinancing of the existing tranche G term loans.

The tranche I term loans shall bear interest at a rate equal to, at Acquisition Corp.’s election (i) the forward-looking term rate based on the secured overnight financing rate as administered by the Federal Reserve Bank of New York for the applicable interest period (“Term SOFR”) subject to a zero floor, plus 2.00 % per annum or (ii) the base rate, which is the highest of (x) the corporate base rate established by the administrative agent as its prime rate in effect at its principal office in New York City from time to time, (y) 0.50 % in excess of the overnight federal funds rate and (z) one-month Term SOFR, plus 1.00 % per annum, in each case, subject to a 1.00 % floor, plus 1.00 % per annum.

In connection with the Senior Term Loan Credit Agreement Amendment, the Company recognized approximately $ 3 million of expenses associated with fees paid to third parties and capitalized approximately $ 2 million in fees paid to creditors.

Certain participating lenders were repaid and replaced by new lenders.

The proceeds and repayments of $ 42 million have been presented in the accompanying condensed consolidated statement of cash flows.

The Company was in compliance with its covenants under its outstanding notes, the Revolving Credit Facility and the Senior Term Loan Facility as of December 31, 2024 .

Interest Rates

1 unchanged sentence

provided that, in respect of 2020 Revolving Loans, the applicable margin with respect to such loans is subject to adjustment as set forth in the pricing grid in the Revolving Credit Agreement.

Based on the Senior Secured Indebtedness to EBITDA Ratio of 2.41 x at June 30, 2024, the applicable margin for SOFR loans and RFR loans would be 1.375 % instead of 1.875 % and the applicable margin for ABR loans would be 0.375 % instead of 0.875 % in the case of 2020 Revolving Loans.

Based on the Senior Secured Indebtedness to EBITDA Ratio of 2.11 x at December 31, 2024,

the applicable margin for SOFR loans and RFR loans would be 1.375 % instead of 1.875 % and the applicable margin for ABR loans would be 0.375 % instead of 0.875 % in the case of 2020 Revolving Loans.

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.

5 unchanged sentences

The Company has entered into, and in the future may enter into, interest rate swaps to manage interest rate risk.

Please refer to Note 13 of our condensed consolidated financial statements for further discussion.

As of December 31, 2024, there are no interest rate swaps outstanding.

Maturity of Senior Term Loan Facility

3 unchanged sentences

Maturities of Senior Secured Notes

As of June 30, 2024, there are no scheduled maturities of notes until 2028, when $ 348 million is scheduled to mature.

As of December 31, 2024, there are no scheduled maturities of notes until 2028, when $ 337 million is scheduled to mature.

Thereafter, $ 2.337 billion is scheduled to mature.

2 unchanged sentences

Interest Expense, net

Total interest expense, net was $ 40 million and $ 38 million for the three months ended June 30, 2024 and 2023, respectively, and $ 121 million and $ 105 million for the nine months ended June 30, 2024 and 2023, respectively.

Interest expense, net includes interest expense related to our outstanding indebtedness of $ 46 million and $ 41 million for the three months ended June 30, 2024 and 2023, respectively, and $ 137 million and $ 115 million for the nine months ended June 30, 2024 and 2023, respectively.

The weighted-average interest rate of the Company’s total debt was 4.5 % at June 30, 2024, 4.1 % at September 30, 2023, and 4.1 % at June 30, 2023.

Total interest expense, net was $ 37 million and $ 39 million for the three months ended December 31, 2024 and 2023, respectively.

Interest expense, net includes interest expense related to our outstanding indebtedness of $ 43 million and $ 45 million for the three months ended December 31, 2024 and 2023, respectively.

The weighted-average interest rate of the Company’s total debt was 4.2 % at December 31, 2024, 4.3 % at September 30, 2024, and 4.6 % at December 31, 2023.

Restructuring and Impairments

Strategic Restructuring Plan

In February 2024, the Company announced a strategic restructuring plan (the “Strategic Restructuring Plan”) designed to free up additional funds to invest in music and accelerate the Company’s growth for the next decade.

Under the Strategic Restructuring Plan, the Company expects a reduction in headcount of approximately 10 % of the Company’s overall headcount.

In 2024, the Company announced a strategic restructuring plan (the “Strategic Restructuring Plan”) designed to free up additional funds to invest in music and accelerate the Company’s growth for the next decade.

The Company expects to incur total non-recurring restructuring charges of approximately $ 230 million or approximately $ 150 million of total non-recurring after tax charges .

The expected pre-tax charges include approximately $ 85 million of severance costs and approximately $ 50 million of non-cash impairment charges primarily in connection with the disposal or winding down of the Company’s non-core owned and operated media properties including the Company’s in-house advertising sales function (the “O&O Media Properties”).

The majority of the Strategic Restructuring Plan is expected to be completed by the end of fiscal year 2025.

For the three months ended June 30, 2024, total severance costs recorded in connection with the Strategic Restructuring Plan were $ 1 million, all of which was recognized in our Recorded Music segment.

For the nine months ended June 30, 2024, total severance costs recorded in connection with the Strategic Restructuring Plan were $ 47 million, of which, $ 43 million was recognized in our Recorded Music segment and $ 4 million was recognized in Corporate.

The below table sets forth the activity for the nine months ended June 30, 2024 in the restructuring accrual associated with the Strategic Restructuring Plan included within accrued liabilities in the accompanying condensed consolidated balance sheets.

Additionally, for the nine months ended June 30, 2024, the Company recognized $ 50 million of impairment losses on unamortized intangible assets and other assets of which $ 47 million was recognized in our Recorded Music segment and $ 3 million was recognized in Corporate.

Impairment charges recognized primarily relate to the winding down of the Company’s O&O Media Properties.

Severance Costs

(in millions)

Balance at September 30, 2023 $ —

Restructuring charges 47

Cash payments ( 9 )

Balance at June 30, 2024 $ 38

2023 Restructuring Plan

In March 2023, the Company announced a restructuring plan (the “2023 Restructuring Plan”) intended to drive the evolution of the Company and position the Company for long-term growth, primarily through headcount reductions.

The 2023 Restructuring Plan is substantially complete as of June 30, 2024 and the remaining associated cash payments are expected to be made by the end of fiscal year 2024.

There was a $ 1 million benefit associated with the 2023 Restructuring Plan recorded for the nine months ended June 30, 2024 primarily associated with a change in estimate for costs previously recorded.

The following table sets forth the activity for the nine months ended June 30, 2024 in the restructuring accrual associated with the 2023 Restructuring Plan included within accrued liabilities in the accompanying condensed consolidated balance sheets:

Severance Costs

The expected pre-tax charges include approximately $ 154 million of severance and other termination costs, along with approximately $ 76 million of non-cash impairment charges.

The majority of severance payments and other termination costs are expected to be paid by the end of fiscal year 2026.

For the three months ended December 31, 2024, total severance costs recorded in connection with the Strategic Restructuring Plan were $ 1 million, of which $ 2 million of expense was recognized in our Recorded Music segment while there was a $ 1 million benefit recognized at Corporate associated with a change in estimate for costs previously recorded.

Additionally, for the three months ended December 31, 2024, the Company recognized $ 26 million of impairment losses which were recognized in our Recorded Music

Impairment charges recognized during the period primarily relate to the write-off of certain long-form audiovisual production assets and lease termination costs for office closures.

As of December 31, 2024, total cumulative restructuring and impairment charges recognized in connection with the Strategic Restructuring Plan were $ 205 million with $ 195 million of costs recognized in our Recorded Music segment and $ 10 million recognized at Corporate.

These costs are composed of $ 129 million of severance and other termination benefits, of which $ 7 million was non-cash, and $ 76 million of non-cash impairment charges.

The below table sets forth the activity for the three months ended December 31, 2024 in the restructuring accrual associated with the Strategic Restructuring Plan included within accrued liabilities in the accompanying condensed consolidated balance sheets.

Severance Costs Contract Termination Costs Total

(in millions)

2 unchanged sentences

Cash payments ( 23 ) ( 2 ) ( 25 )

Balance at June 30, 2024 $ 3

Foreign currency movements ( 1 ) — ( 1 )

Balance at December 31, 2024 $ 76 $ 3 $ 79

Commitments and Contingencies

7 unchanged sentences

Stock-based compensation consists primarily of common stock, restricted stock units and market-based performance share units granted to eligible employees and executives under the Omnibus Incentive Plan.

For the three and nine months ended June 30, 2024, the Company recognized a total of $ 10 million and $ 28 million of non-cash stock-based compensation expense, respectively, which was recorded to additional paid-in capital.

For the three months ended June 30, 2023, the Company recognized a total of $ 7 million of non-cash stock-based compensation expense, all of which was recorded to additional paid-in capital.

For the nine months ended June 30, 2023, the Company recognized a total of $ 42 million of non-cash stock-based compensation expense, of which $ 27 million was recorded to additional paid-in capital and $ 15 million was recorded as a share-based compensation liability.

During the nine months ended June 30, 2024, $ 15 million of share-based compensation liabilities were reclassified to additional paid-in capital upon a certain number of awards being determinable.

During the nine months ended June 30, 2023 , a separation agreement between the Company and our previous Chief Executive Officer was executed.

In connection with the separation agreement, the Company recognized $ 12 million of non-cash stock-based compensation expense associated with restricted stock units (“RSUs”) and common stock as there was no remaining service required for vesting.

During the nine months ended June 30, 2024 and 2023, the Company issued market-based performance share units (“PSUs”) to our Chief Executive Officer whereby the PSU award payout is determined based on the Company’s total shareholder return compared to a designated peer group.

For the three and nine months ended June 30, 2024, n on-cash stock-based compensation associated with these PSUs was approximately $ 3 million and $ 6 million , respectively.

For the three and nine months ended June 30, 2023, n on-cash stock-based compensation associated with these PSUs was approximately $ 1 million and $ 2 million , respectively.

During the nine months ended June 30, 2023 , in connection with the 2023 Restructuring Plan, the Company recognized $ 2 million of non-cash stock-based compensation related to the accelerated vesting of certain RSUs.

During the nine months ended June 30, 2024, in connection with the Senior Management Free Cash Flow Plan (the “Plan”), the Company issued a total of 1,738,016 shares of Class A Common Stock to settle a portion of participants’ deferred equity units previously issued under the Plan.

Additionally, a Plan participant redeemed a portion of their vested Class B equity units of WMG Management Holdings LLC in exchange for a total of 1,335,169 shares of Class B Common Stock which were converted to shares of Class A Common Stock upon the exchange.

During the three and nine months ended June 30, 2024, the Company issued approximately 7,428 and 185,115 shares of Class A Common Stock, respectively, under the Omnibus Incentive Plan which were net of shares used to settle employee income tax obligations of approximately $ 5 million.

For the three and nine months ended June 30, 2024, the Company recorded an income tax expense of $ 30 million and $ 120 million, respectively.

The income tax expense for the three months ended June 30, 2024 is lower than the expected tax expense at the statutory rate of 21% primarily due to benefit related to updated allowable costs for reported foreign derived intangible income (“FDII”) , non-controlling interest, and the net impact of GILTI and FDII.

These benefits were partially offset by foreign income taxed at rates higher than the United States, withholding taxes, and U.S.

state and local taxes.

The income tax expense for the nine months ended June 30, 2024 is lower than the expected tax expense at the statutory rate of 21% primarily due to the tax benefit from the winding down of the Company’s O&O Media Properties, updated allowable costs for FDII, non-controlling interest, the net impact of GILTI and FDII and tax benefits associated with Research and Development (“R&D”) credits.

These benefits were partially offset by withholding taxes, foreign income taxed at rates higher than the United States, U.S.

state and local taxes, non-deductible executive compensation under IRC Section 162(m), and unrecognized tax benefit related to uncertain tax positions.

For the three and nine months ended June 30, 2023, the Company recorded an income tax expense of $ 43 million and $ 112 million, respectively.

The income tax expense for the three and nine months ended June 30, 2023 is higher than the expected tax benefit at the statutory tax rate of 21% primarily due to foreign income taxed at rates higher than the United States, including withholding taxes, U.S.

state and local taxes, unrecognized tax benefit related to uncertain tax positions, and non-deductible executive

compensation under IRC Section 162(m).

For the three months ended December 31, 2024, the Company recognized a total of $ 13 million of non-cash stock-based compensation expense, which was recorded to additional paid-in capital.

For the three months ended December 31, 2023, the Company recognized a total of $ 9 million of non-cash stock-based compensation expense, all of which was recorded to additional paid-in capital.

During the three months ended December 31, 2024 and 2023, $ 7 million and $ 15 million of share-based compensation liabilities were reclassified to additional paid-in capital upon a certain number of awards becoming determinable, respectively.

During the three months ended December 31, 2024, in connection with the Senior Management Free Cash Flow Plan (the “Plan”), the Company issued a total of 1,738,018 shares of Class A Common Stock to settle participants’ deferred equity units previously issued under the Plan.

During the three months ended December 31, 2024, the Company satisfied the vesting of RSUs by issuing 63,886 shares of Class A Common Stock under the Omnibus Incentive Plan, which is net of shares used to settle employee income tax obligations.

Share Repurchase Program

On November 14, 2024, the Company’s board of directors authorized a new $ 100 million share repurchase program (the “Share Repurchase Program”), which is intended to offset dilution from the Omnibus Incentive Plan.

Under this authorization, the Company may, from time to time, purchase shares of its Class A Common Stock through open market transactions, privately

negotiated transactions, forward, derivative, or accelerated repurchase transactions, tender offers or otherwise, in accordance with all applicable securities laws and regulations, including Rule 10b-18 of the Exchange Act.

The $ 100 million share repurchase authorization does not obligate the Company to purchase any shares and the Share Repurchase Program does not have a fixed expiration date.

The Company may enter into a pre-arranged stock trading plan in accordance with the guidelines specified under Rule 10b5-1 to effectuate all or a portion of the Share Repurchase Program.

The Company expects to finance any repurchases from a combination of cash on hand and cash provided by operating activities.

The timing and method of any repurchases, which will depend on a variety of factors, including market conditions, are subject to our results of operations, financial condition, liquidity and other factors.

The authorization for the Share Repurchase Program may be suspended, terminated, increased or decreased by the Company’s board of directors at any time.

The following table summarizes our total share repurchases and retirement under the Share Repurchase Program during the three months ended December 31, 2024:

Share Repurchase Type

Shares Amount

(in millions)

Open Market Repurchases

For the three months ended December 31, 2024, the Company recorded an income tax expense of $ 89 million.

The income tax expense for the three months ended December 31, 2024 is higher than the expected tax expense at the statutory rate of 21% primarily due to foreign income taxed at rates higher than the United States, including withholding taxes, and U.S.

state and local taxes, unrecognized tax benefit related to uncertain tax positions, and non-deductible executive compensation under IRC Section 162(m).

These charges were partially offset by tax benefits associated with R&D credits, and the net impact of GILTI and foreign derived intangible income (“FDII”).

For the three months ended December 31, 2023, the Company recorded an income tax expense of $ 72 million.

The income tax expense for the three months ended December 31, 2023 is higher than the expected tax benefit at the statutory tax rate of 21% primarily due to foreign income taxed at rates higher than the United States, including withholding taxes, U.S.

state and local taxes, unrecognized tax benefit related to uncertain tax positions, and non-deductible executive compensation under IRC Section 162(m).

These charges were partially offset by tax benefits associated with R&D credits, release of U.S.

state valuation allowance, and the net impact of GILTI and FDII.

The Company has determined that it is reasonably possible that the gross unrecognized tax benefits as of June 30, 2024 could decrease by up to approximately $ 2 million related to various ongoing audits and settlement discussions in various jurisdictions during the next twelve months.

The Company has determined that it is reasonably possible that the gross unrecognized tax benefits as of December 31, 2024 could decrease by up to approximately $ 2 million related to various ongoing audits and settlement discussions in various jurisdictions during the next twelve months.

The Organization for Economic Co-operation and Development (“OECD”) introduced Base Erosion and Profit Shifting (“BEPS”) Pillar 2 rules that impose a global minimum tax rate of 15%.

Numerous countries, including European Union member states, have enacted or are expected to enact legislation to be effective as early as January 1, 2024, with general implementation of a global minimum tax rate by January 1, 2025.

The Company is currently evaluating the potential impact of the rules.

The Inflation Reduction Act of 2022 (H.R.

5376) includes a 15% corporate alternative minimum tax (“CAMT”) on adjusted financial statement income for corporations with average profits over $1 billion over a three-year period.

Although the U.S.

Treasury and Internal Revenue Service issued interim CAMT guidance during 2023, many details and specifics of application of the CAMT remain subject to future guidance.

The Company is not expecting to be subject to CAMT for our fiscal year 2024.

Numerous countries, including European Union member states, have enacted or are expected to enact legislation with general implementation of a global minimum tax rate by January 1, 2025.

The Company has evaluated the potential impact of the rules based on the most recently available information and estimates that the impact to the Company is immaterial.

The Company will continue to monitor legislative developments to determine if there are significant changes to Pillar 2 rules that could lead to a material impact.

Derivative Financial Instruments

The Company uses derivative financial instruments, primarily foreign currency forward exchange contracts and interest rate swaps, for the purposes of managing foreign currency exchange rate risk and interest rate risk on expected future cash flows.

The fair value of interest rate swaps is based on dealer quotes of market rates (i.e., Level 2 inputs) which is discussed further in Note 20, “Fair Value Measurements,” to the consolidated financial statements included in the Company’s Annual Report on Form 10-K for the fiscal year ended September 30, 2023.

Interest income or expense related to interest rate swaps is recognized in interest income (expense), net in the same period as the related expense is recognized.

The ineffective portions of interest rate swaps are recognized in other income (expense) in the period measured.

As of June 30, 2024, the Company had outstanding foreign currency forward exchange contracts for the sale of $ 175 million and the purchase of $ 108 million of foreign currencies at fixed rates that will be settled by September 2024.

As of June 30, 2024, the Company had no outstanding interest rate swaps and no unrealized deferred gains or losses in comprehensive income related to the interest rate swaps.

As of September 30, 2023, the Company had outstanding $ 500 million in a pay-fixed receive-variable interest rate swap with $ 1 million of unrealized deferred gains in comprehensive income related to the interest rate swaps.

The Company recorded realized pre-tax losses of $ 1 million and unrealized pre-tax gains of $ 1 million related to its foreign currency forward exchange contracts in the condensed consolidated statement of operations as other expense for the nine months ended June 30, 2024.

The Company recorded realized pre-tax losses of $ 6 million and unrealized pre-tax losses of $ 1 million related to its foreign currency forward exchange contracts in the condensed consolidated statement of operations as other expense for the nine months ended June 30, 2023.

The unrealized pre-tax losses of the Company’s derivative interest rate swaps designated as cash flow hedges recorded in other comprehensive income during the nine months ended June 30, 2024 and June 30, 2023 were $ 1 million and $ 11 million, respectively.

The following is a summary of amounts recorded in the consolidated balance sheets pertaining to the Company’s derivative instruments at June 30, 2024 and September 30, 2023:

The Company uses derivative financial instruments, primarily foreign currency forward exchange contracts, for the purposes of managing foreign currency exchange rate risk on expected future cash flows.

As of December 31, 2024, the Company had outstanding foreign currency forward exchange contracts for the sale of $ 438 million and the purchase of $ 260 million of foreign currencies at fixed rates that will be settled by September 2025.

As of September 30, 2024, the Company had no foreign currency forward exchange contracts outstanding.

The Company recorded realized pre-tax gains of $ 3 million and unrealized pre-tax gains of $ 12 million related to its foreign currency forward exchange contracts in the condensed consolidated statement of operations as other expense for the three months ended December 31, 2024.

The Company recorded no realized pre-tax gains or losses and recorded unrealized pre-tax losses of $ 6 million related to its foreign currency forward exchange contracts in the condensed consolidated statement of operations as other expense for the three months ended December 31, 2023.

The following is a summary of amounts recorded in the consolidated balance sheets pertaining to the Company’s derivative instruments at December 31, 2024 and September 30, 2024:

2024 September 30,

2 unchanged sentences

Foreign currency forward exchange contracts (a)

Interest rate swap

Other Current Liabilities:

Foreign currency forward exchange contracts (a)

______________________________________

(a) Includes $ 3 million and $ 2 million of foreign exchange derivative contracts in asset and liability positions, respectively, which net to $ 1 million of current assets.

(a) Includes $ 29 million and $ 17 million of foreign exchange derivative contracts in asset and liability positions, respectively, which net to $ 15 million of current assets and $ 3 million of current liabilities, respectively.

Segment Information

4 unchanged sentences

Items excluded are not viewed to contribute directly to management’s evaluation of operating results.

During the three months ended December 31, 2023, the Company changed the measure used to evaluate segment profitability from OIBDA to Adjusted OIBDA which is consistent with how the Company's CODM evaluates the results of operations and makes strategic decisions about the business.

For these reasons, the Company believes that Adjusted OIBDA represents the most relevant measure of segment profit and loss.

All disclosures relating to segment profitability, including those for the three and nine months ended June 30, 2023, have been revised as a result of this change.

Hereafter, the Company will revise other prior quarterly and year-to-date periods for fiscal year 2023 when they are subsequently reported in later filings for comparative purposes.

The accounting policies of the Company’s business segments are the same as those described in Note 2, “Summary of Significant Accounting Policies,” to the consolidated financial statements included in the Company’s Annual Report on Form 10-K for the fiscal year ended September 30, 2024.

4 unchanged sentences

Three Months Ended (in millions)

June 30, 2024

Revenues $ 1,251 $ 305 $ ( 2 ) $ 1,554

Adjusted OIBDA

281 79 ( 44 ) 316

June 30, 2023

Revenues $ 1,282 $ 283 $ ( 1 ) $ 1,564

Adjusted OIBDA

264 74 ( 41 ) 297

Publishing Corporate

eliminations Total

Nine Months Ended (in millions)

June 30, 2024

December 31, 2024

Revenues $ 1,345 $ 323 $ ( 2 ) $ 1,666

1 unchanged sentence

323 83 ( 43 ) 363

June 30, 2023

December 31, 2023

Revenues $ 1,445 $ 304 $ ( 1 ) $ 1,748

5 unchanged sentences

For the Three Months Ended

June 30, For the Nine Months Ended

2024 2023 2024 2023

Operating income $ 214 $ 354

2 unchanged sentences

Restructuring and impairments 27 —

Transformation initiatives and other related costs 18 13 56 39

Executive transition costs — 1 — 4

Transformation initiative costs 17 19

Net gain on divestitures — ( 17 )

3 unchanged sentences

Supplemental Cash Flow Disclosures

The Company made interest payments of approximately $ 35 million and $ 29 million during the three months ended June 30, 2024 and 2023, respectively, and approximately $ 125 million and $ 104 million during the nine months ended June 30, 2024 and 2023, respectively.

The Company paid approximately $ 33 million and $ 49 million of income and withholding taxes, net of refunds, for the three months ended June 30, 2024 and 2023, respectively, and approximately $ 105 million and $ 166 million of income and withholding taxes, net of refunds, for the nine months ended June 30, 2024 and 2023, respectively.

Non-cash investing activities was approximately $ 18 million related to the acquisition of music publishing rights and music catalogs, net during the nine months ended June 30, 2024.

The Company made interest payments of approximately $ 18 million and $ 33 million during the three months ended December 31, 2024 and 2023, respectively.

The Company paid approximately $ 43 million and $ 39 million of income and withholding taxes, net of refunds, for the three months ended December 31, 2024 and 2023, respectively.

Non-cash investing activities were approximately $ 18 million related to business combinations and the acquisition of music catalogs during the three months ended December 31, 2024, and $ 18 million related to the acquisition of music publishing rights and music catalogs during the three months ended December 31, 2023.

Net Gain on Divestitures

During the three months ended June 30, 2024 and 2023, the Company recognized a pre-tax gain of $ 1 million and no pre-tax gains or losses, respectively, in connection with the divestiture of one of its O&O Media Properties.

During the nine months ended June 30, 2024 and 2023, the Company recognized a pre-tax gain of $ 32 million and $ 41 million, respectively, in connection with the divestiture of certain sound recording and publishing rights and one of its O&O Media Properties.

For each period, the divestiture has been reflected as a net gain on divestiture in the accompanying condensed consolidated statement of operations.

The Company recognized a pre-tax gain of $ 17 million during the three months ended December 31, 2023 in connection with the divestiture of certain sound recordings rights in the period which has been reflected as a net gain on divestiture in the accompanying condensed consolidated statement of operations.

Net Gain on Sale of Investments

The Company recognized a pre-tax realized net gain of $ 29 million during the three months ended December 31, 2024 in connection with the sale of an investment which has been presented within the Other income (expense) line of the accompanying condensed consolidated statement of operations.

The Company’s ability to pay dividends may be restricted by covenants in the credit agreement for the Revolving Credit Facility which are currently suspended but which will be reinstated if Acquisition Corp.’s Total Indebtedness to EBITDA Ratio increases above 3.50 :1.00 and the term loans do not achieve an investment grade rating.

The Company intends to pay quarterly cash dividends to holders of its Class A Common Stock and Class B Common Stock.

The Company has been paying quarterly cash dividends to holders of its Class A Common Stock and Class B Common Stock.

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.

On May 13, 2024, the Company’s board of directors declared a cash dividend of $ 0.17 per share on the Company’s Class A Common Stock and Class B Common Stock, as well as related payments under certain stock-based compensation plans, which was paid to stockholders on June 3, 2024.

The Company paid an aggregate of approximately $ 89 million and $ 267 million, or $ 0.17 and $ 0.51 per share, in cash dividends to stockholders and participating security holders for the three and nine months ended June 30, 2024, respectively.

On November 8, 2024, the Company’s board of directors declared a cash dividend of $ 0.18 per share on the Company’s Class A Common Stock and Class B Common Stock, as well as related payments under certain stock-based compensation plans, which was paid to stockholders on December 3, 2024.

The Company paid an aggregate of approximately $ 94 million, or $ 0.18 per share, in cash dividends to stockholders and participating security holders for the three months ended December 31, 2024.

Fair Value Measurements

The following tables show the fair value of the Company’s financial instruments that are required to be measured at fair value as of June 30, 2024 and September 30, 2023.

Fair Value Measurements as of June 30, 2024

The following tables show the fair value of the Company’s financial instruments that are required to be measured at fair value as of December 31, 2024 and September 30, 2024.

Fair Value Measurements as of December 31, 2024

(Level 1) (Level 2) (Level 3) Total

2 unchanged sentences

Foreign Currency Forward Exchange Contracts (a) $ — $ 15 $ — $ 15

Other noncurrent assets:

Equity investments with readily determinable fair value (c)

Other noncurrent liabilities:

Contractual obligations (b)

Other current liabilities:

Foreign currency forward exchange contracts (a)

$ — $ ( 3 ) $ — $ ( 3 )

Other noncurrent assets:

Equity investments with readily determinable fair value (b)

Fair Value Measurements as of September 30, 2024

1 unchanged sentence

(in millions)

Other current assets:

Interest rate swap (d)

$ — $ 2 $ — $ 2

Other noncurrent assets:

Equity investment with readily determinable fair value (c)

Other noncurrent liabilities:

Contractual obligations (b)

— — ( 1 ) ( 1 )

Equity investment with readily determinable fair value (b)

______________________________________

(a) The fair value of 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 contingent consideration related to acquisitions.

This is based on a probability weighted performance approach and it is adjusted to fair value on a recurring basis and any adjustments are typically included as a component of operating income in the condensed consolidated statements of operations.

This amount was primarily calculated using unobservable inputs such as future earnings performance of the acquiree and the expected timing of payments.

(b) These represent equity investments with a readily determinable fair value.

The Company has measured its investments to fair value in accordance with ASC 321, Investments—Equity Securities, based on quoted prices in active markets.

(d) The fair value of the interest rate swaps is based on dealer quotes of market forward rates and reflects the amount that the Company would receive or pay as of each reporting period for contracts involving the same attributes and maturity dates.

The following table reconciles the beginning and ending balances of net liabilities classified as Level 3:

(in millions)

Balance at September 30, 2023 $ ( 1 )

Balance at June 30, 2024 $ ( 1 )

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.

5 unchanged sentences

The Company has elected to use the measurement alternative to fair value that will allow these investments to be recorded at cost, less impairment, and adjusted for subsequent observable price changes.

The Company did not

record any impairment charges on these investments during the three months ended June 30, 2024 and recorded approximately $ 1 million of impairment charges on these investments during the nine months ended June 30, 2024.

The Company did no t record any impairment charges on these investments during the three and nine months ended June 30, 2023.

In addition, there were no observable price changes events that were completed during the three and nine months ended June 30, 2024 and 2023.

In each of the three month periods ended December 31, 2024 and 2023, the Company recorded approximately $ 1 million of impairment charges on these investments.

In addition, there were no observable price changes events that were completed during the three months ended December 31, 2024 and 2023.

Fair Value of Debt

Based on the level of interest rates prevailing at June 30, 2024, the fair value of the Company’s debt was $ 3.715 billion.

Based on the level of interest rates prevailing at December 31, 2024, the fair value of the Company’s debt was $ 3.751 billion.

Based on the level of interest rates prevailing at September 30, 2024, the fair value of the Company’s debt was $ 3.836 billion.

1 unchanged sentence

both approaches are considered a Level 2 measurement.

Subsequent Events

The Company has performed a review of all subsequent events through the date the financial statements were issued on February 6, 2025.

On February 5, 2025, WMG Tempo Holdco LLC, a wholly owned subsidiary of Acquisition Corp.

and an indirect subsidiary of the Company, entered into a Share Purchase Agreement by and among WMG Tempo Holdco LLC and various affiliates of Providence Equity Partners, including Tempo Music Holdings, LLC (“Tempo”), a proprietary music rights acquisition platform, pursuant to which WMG Tempo Holdco LLC (a) acquired a 50.1 % interest in Tempo for approximately $ 76 million, subject to a post-closing working capital adjustment, and (b) received an option, exercisable on or prior to November 30, 2027, to acquire the remaining

49.9 % of Tempo for approximately $ 73 million, subject to contractual adjustments.

A subsidiary of Tempo is the issuer of approximately $ 311 million of asset-based securities due November 2050 secured by certain music rights owned by Tempo.

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-Q

Item 1. Financial Statements