What changed in this filing

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Item 8. Financial Statements and Supplementary Data

2025-11-20 compared with 2024-11-21 · 311 added, 229 removed, 1125 unchanged (32% of the section changed)

90 unchanged sentences

Royalty advances expected to be recouped within one year 581 470

Assets held for sale

Prepaid and other current assets 166 125

17 unchanged sentences

Deferred revenue 286 246

Liabilities held for sale

Other current liabilities 129 110

Total current liabilities 4,201 3,897

Acquisition corp.

long-term debt

Asset-based long-term debt

Operating lease liabilities, noncurrent 200 228

32 unchanged sentences

Interest expense, net ( 162 ) ( 161 ) ( 141 )

Other (expense) income, net ( 61 ) ( 36 ) 151

Other expense, net ( 42 ) ( 61 ) ( 36 )

Income before income taxes 490 601 609

19 unchanged sentences

Net income $ 370 $ 478 $ 439

Other comprehensive income (loss), net of tax:

Other comprehensive income, net of tax:

Foreign currency adjustment, net 56 78 36

1 unchanged sentence

Minimum pension liability 2 ( 2 ) 1

Other comprehensive income (loss), net of tax 75 25 ( 145 )

Other comprehensive income, net of tax 58 75 25

Total comprehensive income 428 553 464

47 unchanged sentences

Repayment of Term Loan Mortgage ( 1 ) — ( 1 )

Proceeds from issuance of 3.750 % Senior Secured Notes due 2029

Deferred financing costs paid ( 2 ) ( 2 ) ( 3 )

4 unchanged sentences

( 20 ) ( 5 ) —

Other — ( 1 ) ( 5 )

Net cash (used in) provided by financing activities ( 396 ) ( 325 ) 188

Common stock repurchased and retired

Redemption of noncontrolling interests

( 37 ) — ( 1 )

Net cash used in financing activities ( 497 ) ( 396 ) ( 325 )

Effect of exchange rate changes on cash and equivalents — 6 ( 5 )

Net increase in cash and equivalents 53 57 85

Cash balances classified as assets held for sale

Net (decrease) increase in cash and equivalents ( 162 ) 53 57

Cash and equivalents at beginning of period 694 641 584

12 unchanged sentences

Balances at September 30, 2022 137,199 $ — 377,650 $ 1 $ 1,975 $ ( 1,477 ) $ ( 347 ) $ 152 $ 16 $ 168

Cumulative effect of ASC 842 adoption — — — — — — — — — —

— — — — — 430 — 430 9 439

5 unchanged sentences

Distribution to noncontrolling interest holders — — — — — — — — ( 12 ) ( 12 )

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

Acquisition of noncontrolling interests

— — — — — — — 112 112

Shares issued under the Plan

869 — — — — — — — — —

Conversion of Class B shares to Class A shares

14 unchanged sentences

1,738 — — — — — — — — —

Exchange of Class B shares for Class A shares

2,270 — ( 2,270 ) — — — — — — —

Shares issued under Omnibus Incentive Plan 206 — — — ( 5 ) — — ( 5 ) — ( 5 )

7 unchanged sentences

Distribution to noncontrolling interest holders — — — — — — — — ( 15 ) ( 15 )

Vesting of restricted stock units, net of shares withheld for employee taxes 800 — — — ( 20 ) — — ( 20 ) — ( 20 )

Acquisition of noncontrolling interests

2 unchanged sentences

2,607 — — — — — — — — —

Exchange of Class B shares for Class A shares

2,270 — ( 2,270 ) — — — — — — —

Shares issued under Omnibus Incentive Plan 206 — — — ( 5 ) — — ( 5 ) — ( 5 )

Common shares repurchased and retired ( 477 ) — — — ( 16 ) — — ( 16 ) — ( 16 )

Redemption of noncontrolling interests 1,417 — — — 64 — — 64 ( 111 ) ( 47 )

Balances at September 30, 2025 146,906 $ — 375,380 $ 1 $ 2,166 $ ( 1,331 ) $ ( 189 ) $ 647 $ 110 $ 757

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is one of the world’s major music entertainment companies.

We classify our business interests into two fundamental operations:

Recorded Music and Music Publishing.

Initial Public Offering

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In the opinion of management, all adjustments (consisting of normal recurring accruals) considered necessary for a fair presentation have been included.

Prior to the start of the 2023 fiscal year, the Company maintained a 52-53 week fiscal year ending on the last Friday in each reporting period.

The 2022 fiscal year ended on September 30, 2022 and included 53 weeks.

Accordingly, the results of operations for the 2022 fiscal year reflect 53 weeks compared to 52 weeks for the 2023 and 2024 fiscal years.

Starting with the 2023 fiscal year, the Company transitioned to a reporting calendar in which the reporting periods end on the last day of the calendar quarter.

The Company’s fiscal year begins on October 1 and ends on September 30 of each year.

Basis of Consolidation

36 unchanged sentences

On an ongoing basis, the Company tracks customer exposure based on news reports, ratings agency information, reviews of customer financial data and direct dialogue with customers.

Counterparties that are determined to be of a higher risk are evaluated to assess whether the payment terms previously granted to them

should be modified.

Counterparties that are determined to be of a higher risk are evaluated to assess whether the payment terms previously granted to them should be modified.

The Company also monitors payment levels from customers, and an allowance for estimated credit losses is maintained based on such payment levels, historical experience, management’s views on trends in the overall receivable aging, for larger accounts, analyses of specific risks per customer, and reasonable and supportable forecasts of the economic and geopolitical conditions that may exist through the contractual life of the receivable.

2 unchanged sentences

Customer credit risk represents the potential for financial loss if a customer is unwilling or unable to meet its agreed upon contractual payment obligations.

As of both September 30, 2024 and September 30, 2023, Spotify AB represented 18 % of the Company’s accounts receivable balance.

As of September 30, 2025 and September 30, 2024, Spotify AB represented 20 % and 18 %, respectively, of the Company’s accounts receivable balance.

No other single customer accounted for more than 10% of accounts receivable in either period.

50 unchanged sentences

Foreign currency transaction gains and losses arise from exchange rate fluctuations on transactions denominated in a foreign currency other than the functional currency.

The Company recorded foreign currency transaction gains of $ 2 million, gains of $ 4 million and losses of $ 11 million within operating income on the consolidated statement of operations during the years ended September 30, 2024, 2023 and 2022, respectively.

Furthermore, the Company recorded foreign currency transaction losses of $ 72 million, losses of $ 37 million and gains of $ 185 million within other (expense) income, net on the consolidated statement of operations during the years ended September 30, 2024, 2023 and 2022, respectively.

The Company recorded foreign currency transaction losses of $ 5 million, gains of $ 2 million and gains of $ 4 million within operating income on the consolidated statement of operations during the years ended September 30, 2025, 2024 and 2023, respectively.

Furthermore, the Company recorded foreign currency transaction losses of $ 75 million, losses of $ 72 million and losses of $ 37 million within other (expense) income, net on the consolidated statement of operations during the years ended September 30, 2025, 2024 and 2023, respectively.

Recorded Music

35 unchanged sentences

The Company accounts for stock-based payments in accordance with ASC 718, Compensation—Stock Compensation (“ASC 718”).

Stock-based compensation consists primarily of restricted stock units (“RSUs”) granted to eligible employees and executives under the Omnibus Incentive Plan.

Stock-based compensation consists primarily of restricted stock units (“RSUs”) granted to the Company’s board of directors and eligible employees and executives under the Omnibus Incentive Plan.

The Company measures compensation expense for RSUs based on the fair value of the award on the date of grant.

2 unchanged sentences

Stock-based compensation is recognized on a straight-line basis over the requisite service period, which is generally four years .

The Company also grants restricted stock to the Company’s directors.

The Company recognizes stock-based compensation expense equal to the grant date fair value of the restricted stock, based on the closing stock price on grant date, on a straight-line basis over the requisite service period of the awards, which is generally one year.

The Company also grants 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.

The Company recognizes stock-based compensation expense based on the grant date fair value of the PSUs using a Monte Carlo simulation model analysis, on a straight-line basis over the requisite service period of the awards, which is approximately three years .

The Company has also granted market-based performance share units (“PSUs”) to our Chief Executive Officer, with the PSU award payout determined based on the Company’s total shareholder return compared to a designated peer group, and stock options to our Chief Financial Officer.

The Company recognizes stock-based compensation expense based on the grant date fair value of the PSUs and stock options using a Monte Carlo simulation model analysis and Black-Scholes-Merton option-pricing-model, respectively, on a straight-line basis over the requisite service period of the awards, which is approximately three years for PSUs and four years for stock options.

Income taxes are provided using the asset and liability method presented by FASB ASC Topic 740, Income Taxes (“ASC 740”).

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New Accounting Pronouncements

Accounting Pronouncements Not Yet Adopted

In March 2023, the FASB issued ASU 2023-01, Leases (Topic 842):

Common Control Arrangements (“ASU 2023-01”).

The amendment clarifies the accounting for leasehold improvements for leases between entities under common control.

Specifically, the ASU 2023-01 requires that leasehold improvements associated with common control leases be both:

(1) amortized by the lessee over the useful life of the leasehold improvement to the common control group, regardless of the lease term, and (2) accounted for as an adjustment to equity when leasehold improvements are transferred between entities under common control when the lessee no longer controls the leasehold improvements.

The amendments in this ASU are effective for fiscal years beginning after December 15, 2023.

The Company will adopt this guidance for the fiscal year beginning October 1, 2024 on a prospective basis for all new leasehold

improvements recognized on or after that date.

The adoption will not have a material impact on the Company’s consolidated financial statements.

Accounting Pronouncements Adopted as of September 30, 2025

In November 2023, the FASB issued ASU 2023-07, Segment Reporting (Topic 280):

2 unchanged sentences

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.

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

The Company has adopted these standards as of fiscal year ended September 30, 2025.

See Note 17 for further information.

Accounting Pronouncements Not Yet Adopted

In December 2023, the FASB issued ASU 2023-09, Income Taxes (Topic 740):

Improvements to Income Tax Disclosures .

The amendment enhances income tax disclosure requirements, by requiring enhanced disclosures on the income tax rate reconciliation and income taxes paid.

The amendment enhances income tax disclosure requirements, by requiring enhanced disclosures on the income tax rate reconciliation

and income taxes paid.

The amendments in this ASU are effective for fiscal years beginning after December 15, 2024.

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

In September 2025, the FASB issued ASU 2025-06, Internal-Use Software (Subtopic 350-40):

Targeted Improvements to the Accounting for Internal-Use Software .

The amendment aligns internal use software capitalization practices with agile development methodologies and external use software model by introducing updated capitalization criteria and removing existing project staging guidance.

The amendments in this ASU are effective for 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

The Company utilizes the two-class method to report earnings per share.

Basic earnings per share is computed by dividing net income available to each class of stock, less earnings available to participating securities, by the weighted average number of outstanding common shares for each class of stock.

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

Basic 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 for each class of stock.

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.

Under the treasury-stock method, potential common shares are excluded from the computation of EPS in periods in which they have an anti-dilutive effect.

9 unchanged sentences

Net income attributable to participating securities (a) ( 4 ) — ( 6 ) — ( 6 ) —

( 6 ) — ( 6 ) — ( 7 ) —

Net income attributable to common stockholders $ 101 $ 260 $ 116 $ 313 $ 113 $ 311

$ 116 $ 313 $ 113 $ 311 $ 142 $ 402

Weighted average shares outstanding 145,128 375,380 140,882 376,641 138,070 377,650

Basic and Diluted EPS $ 0.83 $ 0.83 $ 0.82 $ 0.82 $ 1.06 $ 1.06

Basic and Diluted EPS (b)

$ 0.69 $ 0.69 $ 0.83 $ 0.83 $ 0.82 $ 0.82

______________________________________

(a) Participating securities include unvested restricted stock units, which include the right to receive non-forfeitable dividend equivalents.

Participating securities are not contractually obligated to share in losses.

(b) For the fiscal year ended September 30, 2025, the weighted average shares outstanding for Diluted EPS includes the dilutive effect of approximately 397 shares.

As the resulting Diluted EPS rounds to the same reported amount as Basic EPS, both Basic and Diluted EPS for the fiscal year ended September 30, 2025 are presented as $ 0.69 per share.

There were no dilutive potentially issuable shares in the fiscal years ended September 30, 2024 and September 30, 2023.

Revenue Recognition

15 unchanged sentences

Total digital and physical

4,121 4,038 3,829

Artist services and expanded-rights 835 684 744

9 unchanged sentences

Total revenues

$ 6,707 $ 6,426 $ 6,037

Revenue by geographical location

5 unchanged sentences

Total international

3,840 3,563 3,277

Intersegment eliminations ( 7 ) ( 7 ) ( 6 )

Total revenues

$ 6,707 $ 6,426 $ 6,037

Recorded Music

68 unchanged sentences

Reductions in deferred revenue are a result of the Company’s performance under the contract or usage by the licensee.

Deferred revenue increased by $ 645 million during the fiscal year ended September 30, 2024 and $ 724 million during the fiscal year ended September 30, 2023 related to cash received from customers for fixed fees and minimum guarantees in advance of performance, including amounts recognized in the period.

Deferred revenue increased by $ 1.1 billion during the fiscal year ended September 30, 2025 and $ 645 million during the fiscal year ended September 30, 2024 related to cash received from customers for fixed fees and minimum guarantees in advance of performance, offset by amounts recognized in the period.

Revenue recognized during the fiscal years ended September 30, 2025 and 2024 which was included in the deferred revenue balance at the beginning of each respective period was $ 207 million and $ 330 million.

8 unchanged sentences

Total $ 681 $ 173 $ 129 $ 43 $ 1,026

TenThousand Projects

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 “Unit Purchase Agreement”).

Cash consideration paid was $ 110 million which was comprised of the base purchase price of $ 102 million, as adjusted for final working capital, and cash acquired.

The base purchase price included $ 11 million, which was deferred at the time of acquisition and paid during the fiscal year ended September 30, 2024

The acquisition of TenThousand Projects was accounted for as a business combination in accordance with ASC 805, Business Combinations, using the acquisition method of accounting, as the Company had acquired a controlling financial interest in TenThousand Projects.

The results of operations of TenThousand Projects have been included in the Company’s results of operations from the date of the acquisition.

The fair value of the net assets acquired was approximately $ 19 million and primarily consisted of royalty advances.

The fair value of identifiable intangible assets subject to amortization was approximately $ 152 million and consists of a recorded music catalog, artist and songwriting contracts, and trademarks which have a fair value of $ 99 million, $ 48 million, and $ 5 million, respectively.

The weighted-average useful lives of these intangible assets identified are consistent with the average remaining useful lives of such intangible assets previously acquired by the Company as disclosed in Note 9.

The fair value of the noncontrolling interest in the acquiree was approximately $ 105 million and was determined using the implied enterprise value of the business based on the purchase price.

The excess of the purchase price over the fair value of net assets acquired, including the amount assigned to identifiable intangibles assets, was approximately $ 44 million and has been recorded as goodwill.

The resulting goodwill has been included in our Recorded Music reportable segment and the Company’s 51 % share will be deductible for income tax purposes.

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

For the fiscal year ended September 30, 2023, the Company incurred costs related to this acquisition of approximately $ 3 million, which were expensed as incurred and recorded in selling, general and administrative expenses in the accompanying consolidated statement of operations.

The unaudited pro forma revenue and operating income as if the acquisition occurred on October 1, 2021 was not material to the Company’s reported results for the fiscal years ended September 30, 2023 and September 30, 2022.

Comprehensive Income (Loss)

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 a related tax benefit of $ 2 million:

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

Foreign Currency Translation Gains (Losses) (a)

3 unchanged sentences

Balances at September 30, 2022 $ ( 358 ) $ ( 2 ) $ 13 $ ( 347 )

Other comprehensive loss ( 184 ) 9 30 ( 145 )

Other comprehensive income 36 1 ( 12 ) 25

Balances at September 30, 2023 $ ( 322 ) $ ( 1 ) $ 1 $ ( 322 )

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Net Property, Plant and Equipment $ 441 $ 481

The Company recognized $ 5 million of impairment expense associated with leasehold improvements in connection with our restructuring plans which are presented within Restructuring and Impairments in our consolidated statement of operations.

Refer to Note 12 for additional information.

The Company’s classification of its EMP business as held for sale resulted in $ 49 million of impairment expense associated with buildings and improvements within the Recorded Music segment, with the remaining $ 20 million of property, plant and equipment reclassified as held for sale within our consolidated balance sheet as of September 30, 2025.

Please refer to Note 18 for further discussion.

The Company’s lease portfolio consists of operating real estate leases for its corporate offices and, to a lesser extent, storage and other equipment.

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The subsequent measurement of the ROU asset is linked to the amount recognized as the lease liability.

Accordingly, the ROU asset is measured as the lease liability adjusted by (1) accrued or prepaid rents (i.e., the aggregate difference between the cash payment and straight-line lease cost), (2) remaining unamortized initial direct costs and lease incentives, and (3) impairments of the ROU asset.

Accordingly, the ROU asset is measured as the lease liability adjusted by (1) accrued or prepaid rents (i.e., the aggregate

difference between the cash payment and straight-line lease cost), (2) remaining unamortized initial direct costs and lease incentives, and (3) impairments of the ROU asset.

Operating lease costs are included in Selling, general and administrative expenses.

12 unchanged sentences

Operating lease cost $ 55 $ 53

Short-term lease cost — —

Variable lease cost 14 12

1 unchanged sentence

The Company incurred and recorded other occupancy expenses of $ 21 million and $ 26 million for the fiscal years ended September 30, 2025 and 2024, respectively.

The Company additionally recognized approximately $ 20 million of impairment expense associated with right of use assets that are no longer in use during the fiscal year ended September 30, 2025 in connection with our restructuring plans which are presented within Restructuring and Impairments in our consolidated statement of operations.

Refer to Note 12 for additional information.

Supplemental cash flow information related to leases was as follows:

22 unchanged sentences

Imputed interest ( 40 )

As of September 30, 2024, we have additional operating leases for facilities that have not yet commenced with total lease obligations of $ 7 million and a weighted average lease term of 5 years.

Goodwill and Intangible Assets

7 unchanged sentences

Acquisitions 24 — 24

( 4 ) — ( 4 )

Other adjustments 20 — 20

Balances at September 30, 2025 $ 1,597 $ 464 $ 2,061

The increase in goodwill during the fiscal year ended September 30, 2024 primarily relates to an acquisition entered into during the fiscal year.

The increase in goodwill during the fiscal year ended September 30, 2023 primarily relates to the acquisition of TenThousand Projects as described in Note 5.

______________________________________

The increase in goodwill during the fiscal years ended September 30, 2025 and September 30, 2024 primarily relate to acquisitions entered into during each fiscal year.

The other adjustments during both the fiscal years ended September 30, 2025 and September 30, 2024 primarily represent foreign currency movements.

The Company performs its annual goodwill impairment test in accordance with ASC 350 during the fourth quarter of each fiscal year as of July 1.

The impairment for the fiscal year ended September 30, 2025 is associated with the Company’s classification of its EMP Merchandising (“EMP”) business as held for sale (Please refer to Note 18 for further discussion).

The classification of EMP as held for sale required the disposal group to be measured at the lower of its carrying amount or its estimated fair value less costs to sell and resulted in an impairment loss of $ 4 million.

Please refer to Note 18 for further discussion.

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.

The Company may conduct an earlier review if events or circumstances occur that would suggest the carrying value of the Company’s goodwill may not be recoverable.

17 unchanged sentences

Total net intangible assets $ 2,879 $ 2,511

The increase in intangible assets during the fiscal year ended September 30, 2024 primarily relates to various music publishing copyright acquisitions, as well as foreign currency movements.

The increase in net intangible assets during the fiscal year ended September 30, 2025 primarily related to the acquisition of Tempo Music Holdings, LLC (“Tempo Music”) which is further described below.

Additionally, the Company completed various business combinations during the fiscal year ended September 30, 2025 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 intangi bles.

The increase in net intangible assets was partially offset by the Company’s classification of its EMP business as held for sale which resulted in the impairment of EMP trademarks and other intangible assets of $ 31 million, in the aggregate, within the Recorded Music segment, with the remaining $ 10 million intangible assets subject to amortization reclassified as held for sale within our consolidated balance sheet as of September 30, 2025.

Please refer to Note 18 for further discussion.

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

and an indirect subsidiary of the Company, which has majority representation on the board of WMG Tempo Holdco LLC, acquired a 50.1 % interest in Tempo Music, a proprietary music rights acquisition platform, for consideration of $ 77 million, including transaction costs, with an option, exercisable on or prior to November 30, 2027, to acquire the remaining 49.9 % of Tempo Music for approximately $ 73 million, subject to contractual adjustments.

The transaction was accounted for as an asset acquisition in accordance with ASC 805, Business Combinations , and the Company recognized $ 351 million of music publishing copyrights and $ 88 million of recorded music catalogs which will each be amortized over an estimated useful life of 15 years.

Additionally, the Company recognized approximately $ 13 million of net assets, which consists primarily of cash and accounts receivables.

In connection with the transaction, the Company assumed long-term debt held by one of Tempo Music’s subsidiaries, which was recognized on the acquisition date at its estimated fair value of approximately $ 302 million.

The assumed long-term debt is secured only by certain music rights owned by Tempo Music and is nonrecourse to the Company and its subsidiaries, other than Tempo Music (refer to Note 9 for more information on the acquired long-term debt).

Finally, the Company recognized a corresponding noncontrolling interest of $ 73 million based on the fair value of the acquired assets.

The Company performs its annual indefinite-lived intangible assets impairment test in accordance with ASC 350 during the fourth quarter of each fiscal year as of July 1.

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Debt Capitalization

Long-term debt, all of which was issued by Acquisition Corp., consists of the following:

As of September 30, 2025, our long-term debt consists of the following:

September 30,

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3.000 % Senior Secured Notes due 2031

Term Loan Mortgage

Total long-term debt, including the current portion $ 4,048 $ 4,002

Issuance premium less unamortized discount and unamortized deferred financing costs $ ( 34 ) $ ( 38 )

Mortgage Term Loan due 2033

Total debt, including the current portion

$ 4,090 $ 4,048

Premium less unamortized discount and unamortized DFCs

$ ( 27 ) $ ( 34 )

Total Acquisition Corp.

long-term debt, including the current portion, net

Beethoven JV Credit Agreement (b)

Tempo Asset-Based Notes due 2050

Unamortized discount

Total asset-based long-term debt, including the current portion, net (c)

Total long-term debt, including the current portion, net $ 4,365 $ 4,014

______________________________________

(a) Reflects $ 350 million of commitments under the Revolving Credit Facility with no letters of credit outstanding at September 30, 2024 and less letters of credit outstanding of approximately $ 2 million at September 30, 2023, respectively.

(a) Reflects $ 350 million of commitments under the Revolving Credit Facility with no letters of credit outstanding at September 30, 2025 and September 30, 2024.

There were no loans outstanding under the Revolving Credit Facility at September 30, 2025 or September 30, 2024.

(b) Reflects $ 500 million of commitments under the Beethoven JV Credit Agreement.

There were no loans outstanding under the Beethoven JV Credit Agreement at September 30, 2025.

(c) The Tempo Asset-Based Notes due 2050 are secured only by certain music rights owned by Tempo Music and are nonrecourse to the Company and its subsidiaries, other than Tempo Music.

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

As of September 30, 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.

Acquisition Corp.

is party to and the borrower under 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 September 30, 2025 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.

All of the Acquisition Corp.

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Notes or the credit agreements for the Acquisition Corp.

Senior Credit Facilities, including the Revolving Credit Facility 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, certain 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 all of its covenants that are not currently suspended under its outstanding notes, the Revolving Credit Facility and the Senior Term Loan Facility as of September 30, 2024.

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 September 30, 2025.

Fiscal 2025 Transactions

Acquisition of Tempo Music

Following its acquisition of Tempo Music on February 5, 2025, the Company holds approximately $ 311 million of asset-based securities due November 2050 (“Asset-Based Notes”) issued by a subsidiary of Tempo Music and secured only by certain music rights owned by Tempo Music and is nonrecourse to the Company and its subsidiaries, other than Tempo Music.

These notes, which consist of multiple fixed rate tranches, will accrue at a fixed weighted average rate of 4.62 % until the estimated term of November 30, 2027, with higher interest rates thereafter if the notes are not refinanced by then.

Pursuant to the indenture governing the Asset-Based Notes, the outstanding Asset-Based Notes may be redeemed in whole or in part at any time upon providing notice to the trustee and paying agent.

Principal and interest are payable in equal semi-annual installments.

The Company was in compliance with its covenants under its Asset-Based Notes as of September 30, 2025.

Beethoven Credit Agreement

On June 29, 2025, the Company, through its wholly owned indirect subsidiary, WMG BC Holdco LLC, entered into a joint venture agreement (the “JV Agreement”) with BCSS W JV Investments (B), L.P.

(“BainCo”), a Delaware limited partnership and wholly owned indirect subsidiary of Bain Capital Special Situations, LP, pursuant to which the Company and BainCo will operate Beethoven JV 1, LLC, a Delaware limited liability company.

In connection with the JV Agreement, on the same date, Beethoven Financing 1, LLC, a Delaware limited liability company and an indirect subsidiary of the Company, as borrower (the “Initial Borrower”), the additional borrowers that may from time to time become party thereto (together with the Initial Borrower, the “Borrowers”), Beethoven Holdings 1, LLC, a Delaware limited liability company, as guarantor (the “Initial Guarantor”), the additional guarantors from time to time party thereto (together with the Initial Guarantor, the “Guarantors”), each of the commercial paper conduits from time to time party thereto (the “Conduit Lenders”), each of the financial institutions from time to time party thereto as committed lenders (the “Committed Lenders” and, together with the Conduit Lenders, the “Lenders”), the conduit managing agents from time to time party thereto, The Bank of New York Mellon, as administrative agent for the Lenders and as collateral agent for the Secured Parties (in each case, as defined in the Beethoven Credit Agreement), entered into a Credit and Security Agreement (the “Beethoven Credit Agreement”) pursuant to which the Lenders have agreed to extend up to $ 500 million in commitment amounts to the Borrowers (the “Beethoven Credit Facility”).

The obligations of the Borrowers under the Beethoven Credit Agreement will be (a) secured by the Borrowers with a first priority security interest in all of their respective assets and (b) guaranteed by the Guarantors with a first priority security interest in all of their respective assets.

The advances under the Beethoven Credit Agreement shall bear interest at the rates described below under “—Interest Rates.”

The Beethoven Credit Agreement contains affirmative and negative covenants for this type of facility, and the ability, subject to the consent of the Lenders, to increase the size of the facility to $ 700 million.

There were no drawdowns on the Beethoven Credit Agreement during the fiscal year ended September 30, 2025.

The Company is also in compliance with all covenants and there are no amounts outstanding for the fiscal year ended September 30, 2025.

Historical Transactions

November 2023 Revolving Credit Agreement Amendment

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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 certain conditions 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.

to terminate the security interests securing the obligations under the Revolving Credit Facility upon the satisfaction of certain conditions 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.

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On September 17, 2024, Acquisition Corp.

entered into an amendment (the “Fifteenth 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, December 29, 2023 and January 24, 2024), 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.

Chase Bank N.A., as administrative agent, and the other financial institutions and lenders from time to time party thereto.

The Fifteenth Amendment (among other changes) reprices the term loans through the issuance of tranche J term loans and the refinancing of the existing tranche I term loans.

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entered into an amendment (the “Sixth 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 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 Sixth Revolving Credit Agreement Amendment amended the leverage ratios so that

the leverage ratios are calculated net of up to $ 750 million of cash and cash equivalents held by Acquisition Corp.

The Sixth Revolving Credit Agreement Amendment amended the leverage ratios so that the leverage ratios are calculated net of up to $ 750 million of cash and cash equivalents held by Acquisition Corp.

and its restricted subsidiaries as of the date of determination.

Historical Transactions

Senior Term Loan Facility Amendment

On November 1, 2022, Acquisition Corp.

entered into a Seventh Incremental Commitment Amendment (the “Seventh Incremental Commitment Amendment”), with Credit Suisse AG, New York Branch, as Tranche H term lender, and Credit Suisse AG, as administrative agent, and acknowledged by the guarantors party thereto and WMG Holdings Corp., to the Senior Term Loan Credit Agreement, pursuant to which Acquisition Corp.

borrowed additional term loans in the amount of $ 150 million for an aggregate principal amount outstanding under the Senior Term Loan Credit Agreement of $ 1,295 million.

The Seventh Incremental Commitment Amendment was entered into to fund certain deferred payment obligations owing in respect of certain prior acquisitions, to pay fees and expenses relating thereto and for general corporate purposes.

Term Loan Mortgage Agreement

On January 27, 2023, Acquisition Corp., along with Warner Records Inc.

and Warner Music Inc., entered into an agreement with Truist Bank, which provides for a term loan of $ 19 million (“Term Loan Mortgage”) secured by the Company’s real estate properties in Nashville, Tennessee.

Interest on the Term Loan Mortgage will accrue at a rate of 30-day SOFR plus the applicable margin of 1.40 % subject to a zero floor.

Equal principal installments and interest are due monthly.

Revolving Credit Agreement Amendment

On March 23, 2023, Acquisition Corp.

entered into an amendment (the “Fourth Revolving Credit Agreement Amendment”) to the Revolving Credit Agreement among Acquisition Corp.

and Credit Suisse AG, as administrative agent, governing Acquisition Corp.’s revolving credit facility with Credit Suisse AG, as administrative agent, and the other financial institutions and lenders from time to time party thereto.

The Fourth Revolving Credit Agreement Amendment provides for the replacement of LIBOR-based rates with a SOFR-based rate and other rates for alternate currencies, such as EURIBOR and SONIA.

We utilized the expedients set forth in ASC Topic 848, including those relating to derivative instruments used in hedging relationships.

This transition does not result in a financial impact to our consolidated financial statements.

May 2023 Senior Term Loan Credit Agreement Amendment

On May 10, 2023, Acquisition Corp.

entered into an amendment (the “Senior Term Loan Credit Agreement Amendment”) to the Senior Term Loan Credit Agreement among Acquisition Corp., the guarantors party thereto and Credit Suisse AG, as administrative agent.

The Senior Term Loan Credit Agreement Amendment provides for the replacement of LIBOR-based rates with a SOFR-based rate.

We utilized the expedients set forth in ASC 848, including those relating to derivative instruments used in hedging relationships.

This transition does not result in a financial impact to our consolidated financial statements.

June 2023 Senior Term Loan Credit Agreement Amendment

On June 30, 2023, Acquisition Corp.

entered into an increase supplement (the “Third Increase Supplement”) to the Senior Term Loan Credit Agreement among Acquisition Corp., the guarantors party thereto, the lender party thereto and Credit Suisse AG, as administrative agent, pursuant to which Acquisition Corp.

has borrowed additional Tranche G term loans in an amount equal to $ 150 million, the proceeds of which have been used to prepay the Tranche H term loans in full (see “Senior Term Loan Facility Amendment”), for an aggregate principal amount outstanding under the Senior Term Loan Credit Agreement of $ 1,295 million.

The Company recorded a loss on extinguishment of debt of approximately $ 4 million for the fiscal year ended September 30, 2023, which represents the remaining unamortized discount and deferred financing costs of the Tranche H term loan.

Interest Rates

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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 2.05 x at September 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 2.02 x at September 30, 2025, the applicable margin for SOFR loans and risk-free rate 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.

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The term loan entered into on January 27, 2023 (the “Term Loan Mortgage”) bears interest at a rate of 30-day SOFR plus the applicable margin of 1.40 %, subject to a zero floor.

Interest on the Asset-Based Notes, which consist of multiple fixed rate tranches, will accrue at a fixed weighted average rate of 4.62 % until November 30, 2027.

Following November 30, 2027, if the Asset-Based Notes remain outstanding, the interest rate on the outstanding Asset-Based Notes will increase by a per annum rate equal to the greater of:

(i) 5.0 % and (ii) the amount, if any, by which the sum of the following exceeds the interest rate otherwise payable with respect to such Asset-Based Notes:

(A) the yield to maturity (adjusted to a quarterly bond-equivalent basis) on November 30, 2027 of the U.S.

treasury security having a term closest to seven years plus (B) 5.0 %, plus (C) with respect to class A notes, 3.53 % and, with respect to class B notes, 4.28 %.

The advances under the Beethoven Credit Agreement shall bear interest (a) in the case of a base rate advance, at a rate equal to the base rate, which means, for any day, the highest of (i) the prime rate in effect on such day;

(ii) the federal funds rate in effect on such day plus 0.50 %;

and (iii) Term SOFR for a one-month tenor in effect on such day plus 1.00 % per annum, plus the applicable margin of 1.00 % and (b) in the case of a Term SOFR advance, the Term SOFR for the interest accrual period plus the applicable margin of 2.00 %.

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

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The maturity date of the Term Loan Mortgage is January 27, 2033, subject to a call option exercisable by Truist Bank at any time after January 27, 2028 if certain criteria relating to the Company’s creditworthiness are met.

Maturity of Tempo Asset-Based Notes

The maturity date of the Asset-Based Notes is November 20, 2050.

Maturity of Beethoven Credit Agreement

The maturity date of the Beethoven Credit Facility is June 29, 2030.

Interest Expense, net

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Valuation allowance

— ( 5 ) ( 6 )

Change in tax rates — 3 —

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( 1 ) ( 9 ) ( 1 )

Change in indefinite reinvestment assertion

Other — — ( 4 )

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$ 120 $ 123 $ 170

During the fiscal year ended September 30, 2024, the Company recognized a tax benefit of $ 15 million primarily related to change in prior year estimate for allowable costs for reported foreign derived intangible income.

During the fiscal year ended September 30, 2025, the Company recognized a tax benefit of $ 37 million due to impairment and held for sale designation of its EMP business.

$ 14 million of this benefit was recognized as a result of change in indefinite reinvestment assertion, for which the Company established a deferred tax asset of $ 38 million with a valuation allowance of $ 24 million.

During the fiscal year ended September 30, 2024, the Company recognized a tax benefit of $ 15 million primarily related

to change in prior year estimate for allowable costs for reported foreign derived intangible income.

During the fiscal year ended September 30, 2023, the Company recognized a tax benefit of $ 8 million related to Federal research and development credits, which was partially offset by $ 7 million of income tax expense arising from an increase in uncertain tax positions in various jurisdictions.

During the fiscal year ended September 30, 2022, the Company recognized a tax benefit of $ 8 million for the release of valuation allowances in various foreign jurisdictions.

For the fiscal years ended September 30, 2025 and September 30, 2024, the Company incurred losses in certain foreign territories and has offset the tax benefit associated with these losses with a valuation allowance as the Company has determined that it is more likely than not that these losses will not be utilized.

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Deferred revenue and debt 9 14

Investment in subsidiaries

Total deferred tax assets 407 358

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state and local jurisdictions that expire in various periods.

The Company also has tax net operating loss carryforwards, with no expiration date, in France, Spain, and the United Kingdom of $ 11 million, $ 5 million, and $ 5 million, respectively, and other tax net operating loss carryforwards in foreign jurisdictions that expire in various periods.

Deferred income taxes have not been recorded on indefinitely reinvested earnings of certain foreign subsidiaries of approximately $ 456 million at September 30, 2024.

The Company also has tax net operating loss carryforwards, with no expiration date, in France and the United Kingdom of $ 1 million and $ 4 million, respectively, and other tax net operating loss carryforwards in foreign jurisdictions that expire in various periods.

Deferred income taxes have not been recorded on indefinitely reinvested earnings of certain foreign subsidiaries of approximately $ 1 billion at September 30, 2025.

Distribution of these earnings may result in foreign withholding taxes and U.S.

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The Organization 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 by January 1, 2025.

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

Numerous countries, including European Union member states, have enacted legislation as of January 1, 2025 and others are expected to enact legislation in the next few years.

The Company has evaluated the potential impact of the rules based on the most recently available information.

For the fiscal year ended September 30, 2025, the impact on the Company was 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.

On July 4, 2025, President Trump signed into law the One Big Beautiful Bill Act, which introduces a wide-ranging set of tax reform provisions.

These provisions are scheduled to take affect beginning in our fiscal year 2026.

The Company is currently evaluating the potential impact of this law.

The most significant and beneficial provisions to the Company include changes to the business interest expense deduction limitation, restored expensing for domestic research and development costs, and changes to GILTI.

Employee Benefit Plans

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Restructuring and Impairments

Strategic Restructuring Plan

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.

Under the Strategic Restructuring Plan, the Company expects a reduction in headcount of approximately 13 % of the Company’s overall headcount.

The Company expects to incur total non-recurring restructuring charges of approximately $ 210 million or approximately $ 135 million of total non-recurring after tax charges .

The expected pre-tax charges include approximately $ 148 million of severance and other termination costs and $ 7 million of other non-cash charges, along with approximately $ 55 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 O&O Media Properties.

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

For the fiscal year ended September 30, 2024, the Company recognized a total of $ 178 million of restructuring and impairments in connection with the Strategic Restructuring Plan.

Total severance and other termination costs were $ 121 million, of which, $ 113 million was recognized in our Recorded Music segment and $ 8 million was recognized in Corporate.

The below table sets

forth the activity for the fiscal year ended September 30, 2024 for restructuring liabilities associated with the Strategic Restructuring Plan which are expected to be paid in cash and are included within accrued liabilities in the accompanying consolidated balance sheets.

Severance Costs Contract Termination Costs Total

2025 Restructuring Plan

On July 1, 2025, the Company announced a strategic restructuring plan (the “2025 Restructuring Plan”) designed to free up funds to invest in music and to accelerate the Company’s long-term growth.

The Plan is expected to be fully implemented by the end of calendar year 2026.

The Company expects to incur total charges of approximately $ 200 million on a pre-tax basis or approximately $ 150 million on an after-tax basis.

Approximately $ 170 million of the charges will be for severance payments and other related termination costs and approximately $ 30 million of certain other charges.

The Company anticipates that the Plan will result in cash expenditures of approximately $ 200 million of which $ 170 million is expected to be paid by the end of fiscal year 2026.

For the fiscal year ended September 30, 2025, total severance and other termination costs recorded in connection with the 2025 Strategic Restructuring Plan were $ 90 million, of which $ 74 million of expense was recognized in our Recorded Music segment, $ 5 million was recorded in our Music Publishing segment, and $ 11 million was recognized in Corporate.

Additionally, for the fiscal year ended September 30, 2025, the Company recognized $ 28 million of impairment losses, of which $ 6 million of expense was recognized in our Recorded Music segment and $ 22 million was recognized in Corporate.

Impairment charges recognized primarily relate to impairments of operating lease right-of-use assets that are no longer in use and royalty advances based on operational changes in the intended use of these assets.

The following table sets forth the activity for the fiscal year ended September 30, 2025 in the restructuring accrual associated with the 2025 Restructuring Plan included within accrued liabilities in the accompanying consolidated balance sheets:

Severance Costs

(in millions)

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Balance at September 30, 2025

Additionally, for the fiscal year ended September 30, 2024, the Company recognized $ 57 million of non-cash restructuring and impairments which was comprised of $ 50 million of impairment losses on unamortized intangible assets and $ 7 million of non-cash restructuring related to equity awards approved but not yet granted, of which, $ 54 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.

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 September 30, 2024.

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

During the fiscal year ended September 30, 2023, the Company recognized restructuring charges of approximately $ 40 million for severance costs.

Amounts for both periods were recorded in the Recorded Music segment.

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

Severance Costs

2024 Strategic Restructuring Plan

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

The 2024 Strategic Restructuring Plan is substantially complete and the remaining associated cash payments are expected to be made by the end of fiscal year 2026.

For the fiscal year ended September 30, 2025, total severance and other termination costs recorded in connection with the 2024 Strategic Restructuring Plan were $ 6 million, of which $ 8 million of expense was recognized in our Recorded Music segment while there was an $ 2 million benefit recognized in Corporate due to a change in estimate.

Additionally, for the fiscal year ended September 30, 2025, the Company recognized $ 32 million of impairment losses, all of which were recognized in our Recorded Music segment.

Impairment charges recognized primarily relate to the write-off of certain long-form audiovisual production assets and impairments of operating lease right-of-use assets that are no longer in use.

As of September 30, 2025, total cumulative restructuring and impairment charges recognized in connection with the 2024 Strategic Restructuring Plan were $ 216 million with $ 206 million of costs recognized in our Recorded Music segment and $ 10 million recognized at Corporate.

These costs are composed of $ 134 million of severance and other contract termination costs, of which $ 7 million was non-cash, and $ 82 million of non-cash impairment charges.

The below table sets forth the activity for the fiscal year ended September 30, 2025 in the restructuring accruals associated with the 2024 Strategic Restructuring Plan included within accrued liabilities in the accompanying consolidated balance sheets.

Severance Costs Contract Termination Costs Total

(in millions)

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Balance at September 30, 2025 $ 23 $ 7 $ 30

Other Impairments

For the fiscal year ended September 30, 2025, the Company recognized an impairment of $ 79 million within the Recorded Music segment for long-lived assets associated with EMP, which is now classified as held for sale as of September 30, 2025.

Please refer to Note 18 for further discussion.

Warner Music Group Corp.

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In connection with the IPO, the Company’s board of directors and stockholders approved the Warner Music Group Corp.

2020 Omnibus Incentive Plan, or the “Omnibus Incentive Plan.” The Omnibus Incentive Plan provides for the grant of incentive common stock, stock options, restricted stock, RSUs, performance awards and stock appreciation rights to employees, consultants and directors.

2020 Omnibus Incentive Plan, or the “Omnibus Incentive Plan.” The Omnibus Incentive Plan provides for the grant of incentive common stock, stock options, restricted stock, RSUs, PSUs and stock appreciation rights to employees, consultants and directors.

The aggregate number of shares of common stock available for issuance under the Omnibus Incentive Plan is 31,169,099 shares of Class A Common Stock over the 10-year period from the date of adoption.

To date, the Company has issued common stock, RSUs restricted stock, and PSUs under the Omnibus Incentive Plan.

The RSUs were granted to eligible employees and executives, common stock and restricted stock was granted to members of the Company’s Board of Directors, and PSUs were granted to our CEO.

Except in the case of certain awards issued in connection with the IPO, holders of RSUs and restricted stock are entitled to dividends during the vesting period.

To date, the Company has issued common stock, RSUs, restricted stock, PSUs, Deferred Share Units (“DSUs”), and stock options under the Omnibus Incentive Plan.

RSUs have been granted to eligible employees, executives, and the Company’s board of directors while common stock, restricted stock, and DSUs have been granted to members of the Company’s board of directors.

Additionally, PSUs have been granted to our CEO while stock options have been granted to our CFO.

Except in the case of stock options and certain awards issued in connection with the IPO, which became fully vested during the fiscal year ended September 30, 2025, holders of RSUs and restricted stock are entitled to cash dividends during the vesting period.

For PSUs, DSUs, and RSUs issued to the Company’s board of directors, the awards accumulate dividends granted throughout the vesting period, which are payable in additional shares upon vesting.

During the fiscal years ended September 30, 2025, 2024 and 2023, shares of Class A Common Stock issued under the Omnibus Incentive Plan were 799,748 , 206,298 , and 276,516 , respectively.

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As of September 30, 2025, there were 29,357,018 shares of Class A Common Stock available to be issued.

Restricted Stock Units and Performance Share Units

The following table summarizes the activity for the Company’s unvested RSUs and PSUs:

Restricted Stock Units, Performance Share Units, and Stock Options

The following table summarizes the activity for the Company’s unvested RSUs (inclusive of DSUs), PSUs, and stock options:

Restricted Stock Units

Performance Share Units

Stock Options

Share Units Weighted-Average Grant

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Share Units Weighted-Average Grant

Date Fair Value

Date Fair Value Number of

Share Units Weighted-Average Exercise Price

Unvested and outstanding balance as of September 30, 2024 4,126,605 $ 36.84 565,579 $ 51.04 — —

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The total intrinsic value of RSUs vested during the fiscal years ended September 30, 2025, 2024 and 2023 was $ 45 million, $ 4 million and $ 1 million, respectively, computed as of the date of vesting.

The weighted-average grant date fair value of PSUs granted during the fiscal years ended September 30, 2024 and 2023 was $ 43.49 and $ 60.25 , respectively.

As of September 30, 2025, total unrecognized compensation cost related to RSUs was approximately $ 56 million, which is expected to be recognized over a weighted-average period of approximately 2.9 years.

The Company satisfies the vesting of RSUs by issuing new shares of its Class A Common Stock.

As of September 30, 2024, total unrecognized compensation cost related to PSUs was approximately $ 16 million, which is expected to be recognized over a weighted-average period of approximately 1.6 years.

While RSUs will be settled through the issuance of Class A Common Stock at the time of vesting, the settlement of DSUs will be deferred until 30 days following the director’s departure from the board.

The weighted-average grant date fair value of PSUs granted during the fiscal years ended September 30, 2024 and 2023 was $ 43.49 and $ 60.25 respectively.

There were no PSUs granted during the fiscal year ended September 30, 2025.

As of September 30, 2025, total unrecognized compensation cost related to PSUs was approximately $ 5 million, which is expected to be recognized over a weighted-average period of approximately 1 year.

The Company satisfies the vesting of PSUs by issuing new shares of its Class A Common Stock.

In October 2025, the Company satisfied the vesting of 254,731 PSUs by issuing 90,588 shares of Class A Common Stock, which were net of shares used to settle employee income tax obligations.

The weighted-average exercise price of stock options granted during the fiscal year ended September 30, 2025 was $ 27.48 .

The fair value of stock options granted during the fiscal year ended September 30, 2025 was $ 8.48 and was determined on the grant date using the Black-Scholes valuation model.

There were no stock options granted during the fiscal years ended September 30, 2024 and 2023.

As of September 30, 2025, total unrecognized compensation cost related to stock options was approximately $ 4 million, which is expected to be recognized over a weighted-average period of approximately 3.7 years.

Prior to the IPO, certain eligible employees elected to participate in our Senior Management Free Cash Flow Plan (the “Plan”) which offered them the opportunity to share in the appreciation of the value of our common stock.

During the fiscal year ended September 30, 2024, in connection with 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, remaining Plan participants redeemed the remaining portions of their vested Class B equity units of WMG Management Holdings LLC in exchange for a total of 2,270,136 shares of Class B Common Stock which were converted to shares of Class A Common Stock upon the exchange.

During the fiscal year ended September 30, 2023, in connection with the Plan, the Company issued a total of 869,008 shares of Class A Common Stock to settle a portion of a participant’s deferred equity units previously issued under the Plan.

During the fiscal years ended September 30, 2025 and 2024, in connection with the Plan, the Company issued a total of 2,607,027 and 1,738,016 shares, respectively, of Class A Common Stock to settle all remaining participants’ deferred equity units previously issued under the Plan.

Additionally, during the fiscal year ended September 30, 2024 remaining Plan participants redeemed the remaining portions of their vested Class B equity units of WMG Management Holdings LLC in exchange for a total of 2,270,136 shares of Class B Common Stock which were converted to shares of Class A Common Stock upon the exchange.

Stock-Based Compensation Expense

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During the fiscal years ended September 30, 2024 and 2023, the Company issued 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 fiscal years ended September 30, 2024, and September 30, 2023, n on-cash stock-based compensation associated with these PSUs was approximately $ 8 million and $ 4 million, respectively which is a component of total non-cash stock-based compensation recognized for each respective period.

In connection with the departure of our Chief Executive Officer and Chief Financial Officer, the Company recognized approximately $ 13 million of non-cash stock-based compensation expense associated with RSUs and common stock as there is no remaining service required for vesting which is a component of total non-cash stock-based compensation recorded for the period.

This amount is reflected as a share-based compensation liability as of September 30, 2023.

During the fiscal year ended September 30, 2024, the Company recognized $ 14 million of non-cash stock-based compensation related to the accelerated vesting of certain RSUs in connection with the Strategic Restructuring Plan.

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

Both amounts are a component of total non-cash stock-based compensation recognized for each respective period.

Repurchase Program

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

During the fiscal years ended September 30, 2025, 2024 and 2023, the Company recognized non-cash stock-based compensation expense of approximately $ 11 million, $ 8 million, and $ 4 million, respectively, associated with these PSUs.

These amounts are a component of total non-cash stock-based compensation recognized for each respective period.

In connection with executive transition, the Company recognized non-cash stock-based compensation expense of approximately $ 5 million, $ 0 million, and $ 13 million for the fiscal years ended September 30, 2025, 2024 and 2023, respectively, related to the accelerated vesting of certain RSUs as there is no remaining service required for vesting.

Amounts are a component of total non-cash stock-based compensation recognized for each respective period.

During the fiscal years ended September 30, 2025, 2024 and 2023, the Company recognized $ 4 million, $ 14 million, and $ 2 million of non-cash stock-based compensation, respectively, related to the accelerated vesting of certain RSUs in connection with the Company’s restructuring plans.

Amounts are a component of total non-cash stock-based compensation recognized for each respective period.

Redemption of Noncontrolling Interests

August 5, 2025 (the “Closing Date”), the Company, entered into a Unit Purchase Agreement (the “Agreement”) by and among WMG, TenThousand Projects Holdings LLC (“10K Projects”), TenThousand Projects, LLC (“Seller”) and certain other parties thereto, pursuant to which WMG acquired from Seller, all of the common units of 10K Projects not already directly or indirectly owned by WMG (the “10K Units”), representing 49 % of the issued and outstanding equity interests of 10K Projects.

Seller is controlled by an employee of the Company who is involved in management of one of the Company’s affiliates.

The aggregate contractually agreed consideration for the 10K Units is $ 165 million, subject to contractual adjustments, payable by WMG in two installments.

The first installment was satisfied by a cash payment of $ 40 million (of which $ 30 million was paid on the Closing Date and $ 10 million will be paid on or about December 1, 2025) and issuance on the Closing Date of 1,416,666 shares of Class A Common Stock, the number of which was determined by dividing approximately $ 43 million by $ 30 per share at the Closing Date.

The second installment is payable on the first anniversary of the Closing Date and includes two components.

There is a fixed component, that represents an amount of $ 70 million due that will be satisfied either by the issuance of 2,333,333 shares of Class A Common Stock, the number of which was determined by dividing $ 70 million by $ 30 per share, or in cash for an amount determined by multiplying 2,333,333 shares by the share price on the trading day immediately preceding issuance at the sole discretion of WMG, and a contingent component that represents an amount of approximately $ 13 million that is contingent upon certain purchase price adjustments as specified in the Agreement, and will be satisfied at the sole discretion of WMG either by the issuance of up to 416,667 shares of Class A Common Stock or in cash for an amount determined by multiplying 416,667 shares by the share price on the trading day immediately preceding issuance.

The final number of shares to be delivered under the contingent portion of the second installment will be determined based on the approximately $ 13 million due less any adjustments, divided by the fixed share value of $ 30 per share.

The fixed component has been accounted for as an increase to additional paid in capital within the

consolidated statements of equity at closing, while the contingent component has been recognized within accrued liabilities and is remeasured each reporting period.

The Class A Common Stock issued pursuant to the Agreement will be governed by lock-up periods, subject to certain exceptions, which will begin on the date of issuance and end (i) in respect of 1,416,666 shares of the Class A Common Stock issued on the Closing Date, on March 1, 2026 and (ii) in respect to the shares of Class A Common Stock, as further described above, issued at the first anniversary of the Closing Date on the date that is the second anniversary of the Closing Date.

The Class A Common Stock issued pursuant to the Agreement was and will be sold in reliance on the exemption from registration provided in Section 4(a)(2) of the Securities Act, in a transaction not involving a public offering.

The redemption of the noncontrolling interest was accounted for as an equity transaction, consistent with transactions with owners acting in their capacity as owners.

The difference between the aggregate contractually agreed consideration and the carrying amount of the noncontrolling interest of $ 106 million was recognized as reduction to additional paid in capital of $ 46 million, which was net of the recognition of a $ 13 million deferred tax asset.

The reduction in additional paid in capital was offset by an increase of $ 112 million representing the fair value of the fixed number of Class A Common shares to be transferred as part of the transaction.

This activity is reflected within “Redemption of Noncontrolling Interest” within the Consolidated Statements of Equity.

In connection with the transaction, the Company had noncash financing activities of $ 134 million consisting of $ 43 million of equity transferred at closing, $ 81 million of equity expected to be transferred at a later date, of which, $ 12 million was recognized as a share-based liability, and $ 10 million in cash to be paid in FY 2026.

Share Repurchase Program

On November 14, 2024, the Company’s board of directors author ized 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.

We may commence such repurchases immediately, subject to compliance with applicable securities laws.

We 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.

We expect 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 board of directors at any time.

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, whi ch 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 fiscal year ended September 30, 2025.

September 30,

Share Repurchase Type

Shares Amount

(in millions)

Open Market Repurchases

Related Party Transactions

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The Company had been the tenant of the building which Access acquired.

Subsequent to the change in ownership, the parties entered into the lease and related agreements pursuant to which, on January 1, 2015, the rent was increased to £ 3,460,250 per year and the term was extended for an additional five years from December 24, 2020 to December 24, 2025, with a market rate rent review which began on December 25, 2020.

Subsequent to the change in ownership, the parties entered into the lease and related agreements pursuant to which, on January 1, 2015, the rent was increased to approximately £ 3 million per year and the term was extended for an additional five years from December 24, 2020 to December 24, 2025, with a market rate rent review which began on December 25, 2020.

On June 26, 2023, the parties entered into an extension on substantially the same terms as the current lease for an additional five years with the lease now expiring on December 24, 2030.

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companies for the sale or licensing of U.S.-based music and merchandise abroad may be adversely affected by changes in foreign currency exchange rates.

The Company focuses on managing the level of exposure to the risk of foreign currency exchange rate fluctuations on its major currencies, which include the Euro, British pound sterling, Japanese yen, Canadian dollar, Swedish krona, Australian dollar, Brazilian real, Korean won and Norwegian krone.

The Company also may at times choose to hedge foreign currency risk associated with financing transactions such as third-party debt and other balance sheet items.

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Additionally, netting provisions are provided for in existing International Swap and Derivative Association Inc.

agreements in situations where the Company executes multiple contracts

with the same counterparty.

agreements in situations where the Company executes multiple contracts with the same counterparty.

As a result, net assets or liabilities resulting from foreign exchange derivatives subject to these netting agreements are classified within other current assets or other current liabilities in the Company’s consolidated balance sheets.

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

As of September 30, 2024 and September 30, 2023, the Company had no outstanding hedge contracts and no deferred gains or losses in comprehensive income related to foreign exchange hedging.

As of September 30, 2024, the Company had no outstanding pay-fixed receive-variable interest rate swaps and no unrealized deferred gains in comprehensive income related to the interest rate swaps.

As of September 30, 2023, the Company had outstanding $ 500 million in pay-fixed receive-variable interest rate swaps 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 related to its foreign currency forward exchange contracts in the consolidated statement of operations as other expense for the fiscal year ended September 30, 2024.

As of September 30, 2025, the Company had outstanding foreign currency forward exchange contracts for the sale of $ 460 million and the purchase of $ 170 million of foreign currencies at fixed rates.

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

As of September 30, 2025 and 2024, the Company had no outstanding pay-fixed receive-variable interest rate swaps and no unrealized deferred gains in comprehensive income related to the interest rate swaps.

The Company recorded realized pre-tax gains of $ 1 million and unrealized pre-tax losses of $ 3 million related to its foreign currency forward exchange contracts in the consolidated statement of operations as other expense for the fiscal year ended September 30, 2025.

The Company recorded realized pre-tax losses of $ 1 million related to its foreign currency forward exchange contracts in the consolidated statement of operations as other income for the fiscal year ended September 30, 2024.

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Other Current Assets:

Interest Rate Swap $ — $ 2

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

Other Current Liabilities:

Foreign Currency Forward Exchange Contracts (a) ( 3 ) —

______________________________________

(a) Includes $ 3 million and $ 6 million of foreign exchange derivative contracts in asset and liability positions, respectively, which net to $ 0 million of current assets and $ 3 million of current liabilities, respectively.

Segment Information

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Recorded Music and Music Publishing, which also represent the reportable segments of the Company.

Information as to each of these operations is set forth below.

The Company evaluates performance based on several factors, of which the primary financial measure is operating income (loss) before non-cash depreciation of tangible assets and non-cash amortization of intangible assets adjusted to exclude the impact of non-cash stock-based compensation and other related expenses and certain items that affect comparability including but not limited to gains or losses on divestitures and expenses related to restructuring and transformation initiatives, which includes costs associated with the Company’s financial transformation initiative to design and implement new information technology and upgrade our finance infrastructure (“Adjusted OIBDA”).

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 fiscal years ended September 30, 2023 and 2022, have been revised as a result of this change.

Information as to each of these operations and further description of these segments is set forth below and can be found in Note 1.

The Company’s CODM, which is our Chief Executive Officer, allocates resources and evaluates performance based on several factors, including operating income (loss) and other financial measures.

The accounting policies of the Company’s business segments are the same as those described in the summary of significant accounting policies included elsewhere herein.

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Revenues $ 5,408 $ 1,306 $ ( 7 ) $ 6,707

Adjusted OIBDA

Cost of revenue

2,818 821 ( 7 ) 3,632

Selling and marketing expense

Distribution expense

General and administrative expense 679 131 325 1,135

Restructuring & Impairment 198 5 31 234

Amortization expense 136 122 — 258

Operating income (loss)

850 224 ( 380 ) 694

Total assets 5,328 3,463 1,038 9,829

Capital expenditures 22 3 114 139

Depreciation expense (a)

Revenues $ 5,223 $ 1,210 $ ( 7 ) $ 6,426

Adjusted OIBDA

Cost of revenue

2,599 763 ( 7 ) 3,355

Selling and marketing expense

Distribution expense

General and administrative expense 664 123 302 1,089

Restructuring & Impairment 166 — 11 177

Amortization expense 127 98 ( 1 ) 224

Net gain on divestitures ( 17 ) ( 14 ) ( 1 ) ( 32 )

Operating income (loss)

916 238 ( 331 ) 823

Total assets 4,945 3,017 1,193 9,155

Capital expenditures 28 1 87 116

Depreciation expense (a)

Revenues $ 4,955 $ 1,088 $ ( 6 ) $ 6,037

Adjusted OIBDA

1,046 233 ( 130 ) 1,149

Capital expenditures 52 1 82 135

Adjusted OIBDA is not a measure defined by U.S.

GAAP but is computed using amounts that are determined in accordance with U.S.

A reconciliation of the Company’s Adjusted OIBDA to operating income is presented below.

For the year ended September 30,

Cost of revenue

2,502 681 ( 6 ) 3,177

Operating income $ 823 $ 790 $ 714

Selling and marketing expense

Distribution expense

General and administrative expense 604 114 273 991

Restructuring & Impairment 40 — — 40

Amortization expense 155 90 — 245

Depreciation expense 103 87 76

Restructuring and impairments 177 42 8

Transformation initiative costs 76 53 46

Executive transition costs — 7 —

Net gain on divestitures ( 41 ) — — ( 41 )

Non-cash stock-based compensation and other related costs 61 52 42

Adjusted OIBDA $ 1,432 $ 1,235 $ 1,149

Operating income (loss)

875 200 ( 285 ) 790

Capital expenditures 39 1 87 127

Depreciation expense (a)

(a) Depreciation expense is a component of general and administrative expense

Revenues relating to operations in different geographical areas are set forth below for the fiscal years ended September 30, 2025, September 30, 2024 and September 30, 2023.

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In the fiscal year ended September 30, 2025, the Company had three customers, Spotify, YouTube and Apple, that individually represented 10% or more of total revenues, whereby Spotify AB represented 20 %, YouTube represented 12 % and Apple represented 11 % of total revenues.

In the fiscal year ended September 30, 2023, the Company had three customers, Spotify, YouTube, and Apple, that individually represented 10% or more of total revenues, whereby Spotify represented 18 %, YouTube represented 12 %

and Apple represented 11 % of total revenues.

In the fiscal year ended September 30, 2024, the Company had three customers, Spotify, YouTube, and Apple, that individually represented 10% or more of total revenues, whereby Spotify represented 18 %, YouTube represented 12 % and Apple represented 11 % of total revenues.

In the fiscal year ended September 30, 2023, the Company had three customers, Spotify, YouTube and Apple that individually represented 10% or more of total revenues, whereby Spotify represented 18 %, YouTube represented 12 % and Apple represented 11 % of total revenues.

These customers’ revenues are included in both the Company’s Recorded Music and Music Publishing segments and the Company expects that the Company’s license agreements with these customers will be renewed in the normal course of business.

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The Company paid approximately $ 181 million, $ 135 million and $ 219 million of income and withholding taxes, net of refunds, for the fiscal years ended September 30, 2025, September 30, 2024 and September 30, 2023, respectively.

Noncash investing activities were approximately $ 30 million related to the acquisition of music publishing rights and music catalogs, net during the fiscal year ended September 30, 2024.

Besides the effect from the redemption of the noncontrolling interest from 10K Projects as discussed in Note 13, non-cash investing activities were approximately $ 40 million and $ 30 million related to business combinations and the acquisition of music publishing rights and music catalogs, net during the fiscal years ended September 30, 2025 and September 30, 2024, respectively.

Assets and Liabilities Held for Sale

In the fourth quarter of 2025, the Company signed a non-binding letter of intent to sell its EMP business within our Recorded Music segment and was classified as held for sale.

The sale is expected to be completed in the first quarter of fiscal year 2026.

Upon classification as held for sale, the business was measured at the lower of its carrying amount or its estimated fair value less costs to sell.

For the fiscal year ended September 30, 2025, the Company recognized an impairment charge of $ 79 million on the long-lived assets associated with EMP upon classification of the assets as held for sale.

The major classes of assets and liabilities of the business held for sale as of September 30, 2025 are as follows:

September 30, 2025

(in millions)

Inventories 50

Property, plant and equipment, net 20

Intangible assets subject to amortization, net 10

Other assets 6

Assets of business held for sale $ 89

Accounts payable and accrued liabilities $ 34

Other liabilities 15

Liabilities of business held for sale $ 49

Net Gain on Divestiture

During the fiscal year ended September 30, 2024, the Company recognized a pre-tax gain of $ 32 million in connection with the divestiture of certain sound recording and publishing rights and one of its O&O Media Properties.

During the fiscal year ended September 30, 2023, the Company recognized a pre-tax gain of $ 41 million in connection with the divestiture of certain sound recording rights.

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

Net Gain on Sale of Investments

During the fiscal year ended September 30, 2025, the Company recognized a pre-tax realized net gain of $ 29 million in connection the sale of an investment, which has been presented within the Other income (expense) line of the accompanying 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.

4 unchanged sentences

The Company paid cash dividends to stockholders and participating security holders of $ 383 million, $ 361 million and $ 340 million for the fiscal years ended September 30, 2025, 2024 and 2023, 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, payable on December 3, 2024 to stockholders of record as of the close of business on November 19, 2024.

On November 7, 2025, the Company’s board of directors declared a cash dividend of $ 0.19 per share on the Company’s Class A Common Stock and Class B, as well as related payments under certain stock-based compensation plans, payable on December 2, 2025 to stockholders of record as of the close of business on November 19, 2025.

Fair Value Measurements

6 unchanged sentences

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

assumptions are observable in the market or can be corroborated by observable market data for substantially the full term of the assets or liabilities.

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

• Level 3—inputs are generally unobservable and typically reflect management’s estimates of assumptions that market participants would use in pricing the asset or liability.

4 unchanged sentences

(in millions)

Other current liabilities:

Foreign currency forward exchange contracts (a)

$ — $ ( 3 ) $ — $ ( 3 )

Other noncurrent assets:

Equity investment with readily determinable fair value (b)

Other Noncurrent Liabilities:

Contractual Obligations (a) — — ( 1 ) ( 1 )

$ 8 $ — $ — $ 8

Fair Value Measurements as of September 30, 2024

1 unchanged sentence

(in millions)

Other Current Assets:

Interest Rate Swap (c)

$ — $ 2 $ — $ 2

Other noncurrent assets:

Equity investment with readily determinable fair value (b)

Other Noncurrent Liabilities:

Contractual Obligations (a) — — ( 1 ) ( 1 )

______________________________________

(a) 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 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.

(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) 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.

(c) 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 September 30, 2024 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 September 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.

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The Company evaluates its equity investments without readily determinable fair values for impairment if factors indicate that a significant decrease in value has occurred.

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 recorded no impairment charges and $ 1 million of impairment charges on these investments during the fiscal years ended September 30, 2024 and September 30, 2023, respectively.

In addition, observable price changes events that were completed during the fiscal years ended September 30, 2024 and September 30, 2023 resulted in an unrealized gain of $ 4 million and $ 2 million, respectively.

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 recorded $ 1 million and no impairment charges on these investments during the fiscal years ended September 30, 2025 and September 30, 2024, respectively.

In addition, observable price changes events that were completed during the fiscal year ended September 30, 2024 resulted in an unrealized gain of $ 4 million.

There were no observable price changes for the fiscal year ended September 30, 2025

Fair Value of Debt

9 unchanged sentences

Allowance for credit losses $ 26 $ 8 $ ( 7 ) $ 27

$ 19 $ 10 $ ( 3 ) $ 26

Reserves for sales returns 20 34 ( 37 ) 17

2 unchanged sentences

Allowance for credit losses $ 19 $ 10 $ ( 3 ) $ 26

$ 19 $ 5 $ ( 5 ) $ 19

Reserves for sales returns 19 37 ( 36 ) 20

2 unchanged sentences

Allowance for credit losses $ 19 $ 5 $ ( 5 ) $ 19

$ 20 $ 5 $ ( 6 ) $ 19

Reserves for sales returns 19 39 ( 39 ) 19

2 unchanged sentences

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 8. Financial Statements and Supplementary Data