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Warner Music Group Corp. Reports Results for the Fiscal Fourth Quarter and Full Year Ended September 30, 2012

NEW YORK, NY -- (Marketwire) -- 12/13/12 --


  • Both physical and digital Recorded Music revenue grew in the quarter
  • Digital Recorded Music revenue growth more than offset physical decline in the fiscal year
  • Adjusted OIBDA and Adjusted OIBDA margin expanded in the quarter and fiscal year
  • Positive Free Cash Flow of $80 million for the quarter and $151 million for the fiscal year

Warner Music Group Corp. today announced its fourth-quarter and full-year financial results for the period ended September 30, 2012.

"We had a very productive year. Warner Music Group performed well and is positioned to capitalize on the industry's more stable recent trends," said Stephen Cooper, Warner Music Group's CEO. "Among our important achievements, we grew global digital and physical Recorded Music sales on an aggregate basis, for the quarter and the fiscal year."

"We improved Free Cash Flow significantly for both the quarter and the full fiscal year, and we nearly doubled our cash balance to $302 million at September 30th -- up by $148 million for the fiscal year," added Brian Roberts, Warner Music Group's Executive Vice President and CFO.

Total WMG


Total WMG Summary Results
--------------------------------------------------------------------------
(dollars in millions)

           For the      For the              For the      For the
            Three        Three                Twelve       Twelve
            Months       Months               Months       Months
            ended        ended                ended        ended
          September    September     %      September    September     %
           30, 2012     30, 2011  Change     30, 2012     30, 2011  Change
         -----------  ----------- ------   -----------  ----------- ------
         (unaudited)  (unaudited)          (unaudited)  (unaudited)
Revenue  $       731  $       718      2%  $     2,780  $     2,867     (3%)
Digital
 Revenue         241          210     15%          925          820     13%
Operating
 income
 (loss)           41          (21)     -           109           32    241%
Adjusted
 operating
 income
 (loss)
 (1)              49           40     23%          124          100     24%
OIBDA(1)         103           41    151%          353          290     22%
Adjusted
 OIBDA(1)        111          102      9%          368          358      3%
Net loss
 attributable
 to
 Warner
 Music
 Group
 Corp.           (18)        (103)    83%         (112)        (205)    45%
Adjusted
 net
 loss
 attributable
 to
 Warner
 Music
 Group
 Corp.(1)$       (10) $       (42)    76%  $       (97) $      (137)    29%

--------------------------------------------------------------------------

(1) See "Supplemental Disclosures Regarding Non-GAAP Financial Measures"
 at the end of this release for details regarding these measures.

Fourth-Quarter Results
For the quarter, revenue grew 1.8%, and 7.3% in constant-currency, as physical Recorded Music revenue and total digital revenue both grew, helped by a more robust release schedule. Constant-currency revenue growth in Japan, Germany, Italy and the U.S. was partially offset by weakness in France related to the company's concert promotion business, and declines in Latin America, Spain and the U.K. Digital revenue grew 14.8%, or 18.1% in constant-currency, and digital revenue represented 33.0% of total revenue for the quarter, compared to 29.2% in the prior-year quarter. The growth in digital revenue reflects growth in subscription/streaming services and global downloads.

Adjusted operating margin expanded 1.1 percentage points to 6.7% from 5.6%. Adjusted OIBDA grew 8.8% and Adjusted OIBDA margin expanded 1.0 percentage point to 15.2% from 14.2%. The growth in Adjusted OIBDA margin was related to the continued shift to digital in the company's Recorded Music business as well as the decline in lower-margin European concert promotion revenue. Operating income, adjusted operating income, OIBDA and Adjusted OIBDA for the quarter included $14 million of severance charges ($11 million in Recorded Music, $2 million in Music Publishing and $1 million in Corporate) compared to $10 million of severance charges in the prior-year quarter ($7 million in Recorded Music and $3 million in Corporate) (the "Quarterly Severance Charges"). See below for calculations and reconciliations of OIBDA, Adjusted Operating Income and Adjusted OIBDA.

Adjusted net loss reflects the impact of a decline in interest expense, to $56 million from $72 million, related to the July 2011 refinancing of certain existing indebtedness in connection with the acquisition of the company by Access Industries. The refinancing in the prior-year quarter resulted in $19 million in tender/call premiums and $15 million of accrued interest paid in connection with the debt obligations repaid in full. See below for calculations and reconciliations of Adjusted Net Income (Loss).

As of September 30, 2012, the company reported a cash balance of $302 million, total long-term debt of $2.21 billion and net debt (total long-term debt minus cash) of $1.90 billion.

Cash provided by operating activities was $102 million compared to cash used in operating activities of $34 million in the prior-year quarter. Free Cash Flow, defined below, was $80 million compared to negative $52 million in the prior-year quarter. The primary factors impacting the comparison of Free Cash Flow were the prior-year quarter's $46 million in expenses related to the acquisition of the company by Access Industries in July 2011 (the vast majority of which were paid in the fourth quarter of fiscal year 2011) and the $34 million in cash paid for tender/call premiums and interest in connection with the July 2011 refinancing.

Full-Year Results
For the fiscal year, growth in digital revenue more than offset physical revenue declines in the company's Recorded Music business. However, this net growth was more than offset by declines in Artist Services and Expanded Rights revenue, Recording Music licensing revenue and Music Publishing revenue. Digital revenue grew 12.8%, or 14.1% in constant-currency, and represented 33.3% of total revenue, compared to 28.6% in the prior year.

Adjusted operating margin expanded 1.0 percentage point to 4.5% from 3.5% in the prior year. Adjusted OIBDA grew 2.8% and Adjusted OIBDA margin expanded 0.7 percentage points to 13.2% from 12.5% in the prior year. Operating income, adjusted operating income, OIBDA and Adjusted OIBDA in the fiscal year included $42 million of severance charges ($35 million in Recorded Music, $4 million in Music Publishing and $3 million in Corporate) compared to $38 million of severance charges in the prior fiscal year ($24 million in Recorded Music, $6 million in Music Publishing and $8 million in Corporate) (the "Fiscal-Year Severance Charges").

Adjusted net loss reflects an increase in interest expense, to $225 million from $213 million, as a result of the July 2011 refinancing of certain existing indebtedness in connection with the acquisition of the company by Access Industries, which resulted in new debt obligations which were issued with higher interest rates.

Cash provided by operating activities was $209 million compared to cash used in operating activities of $52 million in the prior fiscal year. Free Cash Flow was $151 million, compared to negative $221 million in fiscal year 2011. The primary factors impacting the comparison in Free Cash Flow between the fiscal years were the prior fiscal year's $53 million in expenses related to the acquisition of the company by Access Industries (the vast majority of which were paid in the fiscal year) and $41 million in cash paid for tender/call premiums and interest, largely driven by the July 2011 refinancing in connection with the acquisition of the company by Access Industries.

Recorded Music


Recorded Music Summary Results
--------------------------------------------------------------------------
(dollars in millions)

           For the      For the              For the      For the
            Three        Three                Twelve       Twelve
            Months       Months               Months       Months
            ended        ended                ended        ended
          September    September     %      September    September     %
           30, 2012     30, 2011  Change     30, 2012     30, 2011  Change
         -----------  ----------- ------   -----------  ----------- ------
         (unaudited)  (unaudited)          (unaudited)  (unaudited)
Revenue  $       605  $       582      4%  $     2,275  $     2,342     (3%)
Digital
 Revenue         222          194     14%          864          768     13%
Operating
 income
 (loss)           35           13    169%          120          110      9%
Adjusted
 operating
 income
 (loss)
 (1)              35           21     67%          120          118      2%
OIBDA(1)          77           54     43%          283          282      -
Adjusted
 OIBDA(1)$        77  $        62     24%  $       283  $       290     (2%)

--------------------------------------------------------------------------

(1) See "Supplemental Disclosures Regarding Non-GAAP Financial Measures"
 at the end of this release for details regarding these measures.

Fourth-Quarter Results
The company's Recorded Music business experienced growth in both physical and digital revenue due to a more robust release schedule. Recorded Music digital revenue grew 14.4%, or 17.5% in constant-currency, and represented 36.7% of total Recorded Music revenue, compared to 33.3% in the prior-year quarter, as subscription/streaming and download revenue were both strong. Domestic Recorded Music digital revenue was $130 million, or 57.3% of total domestic Recorded Music revenue, compared to 47.6% in the prior-year quarter. Artist Services and Expanded Rights revenue declined, driven primarily by the decline in tours in the company's European concert promotion business, particularly in France. Major sellers included Kobukuro, Tatsuro Yamashita, Green Day, Superfly and Muse.

Recorded Music adjusted operating margin expanded 2.2 percentage points to 5.8% from 3.6% in the prior-year quarter. Recorded Music Adjusted OIBDA grew 24.2% and Recorded Music Adjusted OIBDA margin expanded 2.0 percentage points to 12.7% from 10.7% in the prior-year quarter related to revenue growth in Japan, which is typically a higher-margin territory. Operating income, adjusted operating income, OIBDA and Adjusted OIBDA reflect the impact of the Quarterly Severance Charges.

Full-Year Results
Growth in digital revenue more than offset the decline in physical revenue on a global basis. This marks the first fiscal year in five years where physical and digital sales grew on a combined basis. However, this growth was more than offset by declines in Artist Services and Expanded Rights revenue and Recorded Music licensing revenue. The decline in Artist Services and Expanded Rights revenue primarily relates to a decline in tours in the company's European concert promotion business, particularly in France. Digital Recorded Music revenue grew 12.5%, or 13.7% in constant-currency, and represented 38.0% of Recorded Music revenue for the fiscal year, up from 32.8% in fiscal year 2011. Domestic Recorded Music digital revenue amounted to $489 million, or 53.8% of total domestic Recorded Music revenue, marking the first time digital revenue represented more than half of domestic Recorded Music revenue for the fiscal year. Major sellers across physical and digital formats included Michael Bublé, Kobukuro, Flo Rida, Tatsuro Yamashita and fun.

Recorded Music adjusted operating margin expanded 0.3 percentage points to 5.3% from 5.0% in the prior year. Recorded Music Adjusted OIBDA declined 2.4%, in line with the decline in revenue, while Recorded Music Adjusted OIBDA margin was flat at 12.4%. Operating income, adjusted operating income, OIBDA and Adjusted OIBDA reflect the impact of the Fiscal-Year Severance Charges.

Music Publishing


Music Publishing Summary Results
--------------------------------------------------------------------------
(dollars in millions)

           For the      For the              For the      For the
            Three        Three                Twelve       Twelve
            Months       Months               Months       Months
            ended        ended                ended        ended
          September    September     %      September    September     %
           30, 2012     30, 2011  Change     30, 2012     30, 2011  Change
         -----------  ----------- ------   -----------  ----------- ------
         (unaudited)  (unaudited)          (unaudited)  (unaudited)
Revenue  $       133  $       141     (6%) $       524  $       544     (4%)
Digital
 Revenue          22           17     29%           67           60     12%
Operating
 income
 (loss)           37           40     (8%)          85           73     16%
Adjusted
 operating
 income
 (loss)
 (1)              37           43    (14%)          85           76     12%
OIBDA(1)          54           57     (5%)         152          147      3%
Adjusted
 OIBDA(1)$        54  $        60    (10%) $       152  $       150      1%

--------------------------------------------------------------------------

(1) See "Supplemental Disclosures Regarding Non-GAAP Financial Measures"
 at the end of this release for details regarding these measures.

Fourth-Quarter Results
Music Publishing revenue declined 5.7%, but grew 0.8% in constant-currency. Digital revenue grew 29.4% while mechanical revenue declined 3.2%, but grew 7.1% in constant-currency as result of the timing of certain society collections. Synchronization revenue declined 10.7%, or 3.8% in constant-currency, reflecting lower video game revenue. Performance revenue declined 13.1%, or 7.0% on constant-currency, partially due to an industry-wide reduction in U.S. radio license fees as mentioned last quarter.

Music Publishing adjusted operating margin contracted 2.7 percentage points to 27.8% from 30.5% in the prior-year quarter. Music Publishing Adjusted OIBDA declined 10.0% and Music Publishing Adjusted OIBDA margin contracted 2.0 percentage points to 40.6% from 42.6% related to revenue mix. Operating income, adjusted operating income, OIBDA and Adjusted OIBDA reflect the impact of the Quarterly Severance Charges.

Full-Year Results
The decrease in Music Publishing revenue was driven by an expected decrease in mechanical revenue due to the ongoing digital transition in the recorded music industry as well as a decrease in performance revenue, partially due to an industry-wide reduction in U.S. radio license fees. This was partially offset by an increase in digital revenue, while synchronization revenue declined slightly, but grew in constant-currency. Digital Music Publishing revenue represented 12.8% of total Music Publishing revenue in the fiscal year, compared to 11.0% in fiscal year 2011.

Music Publishing adjusted operating margin was 16.2%, up 2.2 percentage points from 14.0% in fiscal year 2011. Music Publishing Adjusted OIBDA grew 1.3% while Music Publishing Adjusted OIBDA margin was 29.0%, up 1.4 percentage points from 27.6% in the prior year. The increase in Adjusted OIBDA margin reflects a more disciplined A&R investment and acquisition strategy focused on higher-margin assets. Operating income, adjusted operating income, OIBDA and Adjusted OIBDA reflect the impact of the Fiscal-Year Severance Charges.

Financial details for the quarter and fiscal year can be found in the company's Annual Report on Form 10-K, for the period ended September 30, 2012, filed today with the Securities and Exchange Commission.

This morning, management will be hosting a conference call to discuss the results at 8:30 A.M. EST. The call will be webcast on www.wmg.com.

About Warner Music Group
With its broad roster of new stars and legendary artists, Warner Music Group is home to a collection of the best-known record labels in the music industry including Asylum, Atlantic, East West, Elektra, Nonesuch, Reprise, Rhino, Roadrunner, Rykodisc, Sire, Warner Bros. and Word, as well as Warner/Chappell Music, one of the world's leading music publishers, with a catalog of more than one million copyrights worldwide.

"Safe Harbor" Statement under Private Securities Litigation Reform Act of 1995
This communication includes forward-looking statements that reflect the current views of Warner Music Group about future events and financial performance. Words such as "estimates," "expects," "anticipates," "projects," "plans," "intends," "believes," "forecasts" and variations of such words or similar expressions that predict or indicate future events or trends, or that do not relate to historical matters, identify forward-looking statements. All forward-looking statements are made as of today, and we disclaim any duty to update such statements. Our expectations, beliefs and projections are expressed in good faith and we believe there is a reasonable basis for them. However, we cannot assure you that management's expectations, beliefs and projections will result or be achieved. Investors should not rely on forward-looking statements because they are subject to a variety of risks, uncertainties, and other factors that could cause actual results to differ materially from our expectations. Please refer to our Form 10-K, Form 10-Qs and our other filings with the U.S. Securities and Exchange Commission concerning factors that could cause actual results to differ materially from those described in our forward-looking statements.

We maintain an Internet site at www.wmg.com. We use our website as a channel of distribution of material company information. Financial and other material information regarding Warner Music Group is routinely posted on and accessible at http://investors.wmg.com. In addition, you may automatically receive email alerts and other information about Warner Music Group by enrolling your email by visiting the "email alerts" section at http://investors.wmg.com. Our website and the information posted on it or connected to it shall not be deemed to be incorporated by reference into this communication.

Explanation of Presentation
The following tables set forth our results of operations as reported in our condensed consolidated financial statements in accordance with accounting principles generally accepted in the United States of America ("GAAP"). GAAP requires that we separately present our Predecessor and Successor periods results. Management believes reviewing our operating results for the three and twelve months ended September 30, 2011 by combining the results of the Predecessor and Successor periods is more useful in identifying any trends in, or reaching conclusions regarding, our overall operating performance. Accordingly, the tables below present the non-GAAP combined results for the three and twelve months ended September 30, 2011, which is also the period we compare when computing percentage change from prior year, as we believe this presentation provides the most meaningful basis for comparison of our results and it is how management reviews operating performance. The combined operating results may not reflect the actual results we would have achieved had the acquisition by Access Industries closed prior to July 20, 2011 and may not be predictive of future results of operations.


Figure 1. Warner Music Group Corp. - Consolidated Statements of
 Operations, Three & Twelve Months Ended 9/30/12 versus 9/30/11
(dollars in millions)



                         Successor         Predecessor
                 ------------------------  -----------
                                                          For the
                   For the                                Combined
                    Three      From July    From July      Three
                    Months      20, 2011     1, 2011       Months
                    Ended       through      through       ended
                  September    September     July 19,    September     %
                   30, 2012     30, 2011       2011       30, 2011  Change
                 -----------  -----------  -----------  ----------- ------
                 (unaudited)  (unaudited)  (unaudited)  (unaudited)
Revenues         $       731  $       556  $       162  $       718      2%
Costs and
 expenses:
Cost of revenues        (368)        (288)         (92)        (380)    (3%)
Selling, general
 and
 administrative
 expenses               (274)        (186)         (76)        (262)     5%
Merger
 transaction
 costs                     -          (10)         (36)         (46)  (100%)
Amortization of
 intangible
 assets                  (48)         (38)         (13)         (51)    (6%)
                 -----------  -----------  -----------  ----------- ------
Total costs and
 expenses        $      (690) $      (522) $      (217) $      (739)    (7%)
                 -----------  -----------  -----------  ----------- ------
Operating income
 (loss)          $        41  $        34  $       (55) $       (21)     -
Interest
 expense, net            (56)         (62)         (10)         (72)   (22%)
Other income,
 net                       2            -            -            -      -
                 -----------  -----------  -----------  ----------- ------
Loss before
 income taxes    $       (13) $       (28) $       (65) $       (93)   (86%)
Income tax
 expense                  (4)          (3)          (7)         (10)   (60%)
                 -----------  -----------  -----------  ----------- ------
Net loss         $       (17) $       (31) $       (72) $      (103)   (83%)
Less: income
 attributable to
 noncontrolling
 interest                 (1)           -            -            -      -
                 -----------  -----------  -----------  ----------- ------
Net loss
 attributable to
 Warner Music
 Group Corp.     $       (18) $       (31) $       (72) $      (103)   (83%)
                 ===========  ===========  ===========  =========== ======


                         Successor         Predecessor
                 ------------------------  -----------
                                                          For the
                   For the                     From       Combined
                    Twelve     From July    October 1,     Twelve
                    Months      20, 2011       2010        Months
                    Ended       through      through       ended
                  September    September     July 19,    September     %
                   30, 2012     30, 2011       2011       30, 2011  Change
                 -----------  -----------  -----------  ----------- ------
                 (unaudited)  (unaudited)  (unaudited)  (unaudited)
Revenues         $     2,780  $       556  $     2,311  $     2,867     (3%)
Costs and
 expenses:
Cost of revenues      (1,459)        (288)      (1,261)      (1,549)    (6%)
Selling, general
 and
 administrative
 expenses             (1,019)        (186)        (831)      (1,017)     -
Merger
 transaction
 costs                     -          (10)         (43)         (53)  (100%)
Amortization of
 intangible
 assets                 (193)         (38)        (178)        (216)   (11%)
                 -----------  -----------  -----------  ----------- ------
Total costs and
 expenses        $    (2,671) $      (522) $    (2,313) $    (2,835)    (6%)
                 -----------  -----------  -----------  ----------- ------
Operating income
 (loss)          $       109  $        34  $        (2) $        32      -
Interest
 expense, net           (225)         (62)        (151)        (213)     6%
Other income,
 net                       8            -            5            5     60%
                 -----------  -----------  -----------  ----------- ------
Loss before
 income taxes    $      (108) $       (28) $      (148) $      (176)   (39%)
Income tax
 expense                  (1)          (3)         (27)         (30)   (97%)
                 -----------  -----------  -----------  ----------- ------
Net loss         $      (109) $       (31) $      (175) $      (206)   (47%)
Less: (income)
 loss
 attributable to
 noncontrolling
 interest                 (3)           -            1            1      -
                 -----------  -----------  -----------  ----------- ------
Net loss
 attributable to
 Warner Music
 Group Corp.     $      (112) $       (31) $      (174) $      (205)   (45%)
                 ===========  ===========  ===========  =========== ======



Figure 2. Warner Music Group Corp. - Consolidated Balance Sheets as of
 9/30/12 and 09/30/11
(dollars in millions)
                                       Succesor       Succesor
                                    -------------  -------------
                                    September 30,  September 30,
                                         2012           2011      % Change
                                    -------------  -------------  --------
                                     (unaudited)    (unaudited)
Assets
Current assets
  Cash and equivalents              $         302  $         154        96%
  Accounts receivable, less
   allowance of $63 and $40 million           398            385         3%
  Inventories                                  28             29        (3%)
  Royalty advances expected to be
   recouped within one year                   116            135       (14%)
  Deferred tax assets                          51             54        (6%)
  Other current assets                         44             45        (2%)
                                    -------------  -------------  --------
Total current assets                $         939  $         802        17%
Royalty advances expected to be
 recouped after one year                      142            173       (18%)
Property, plant & equipment, net              152            182       (16%)
Goodwill                                    1,380          1,372         1%
Intangible assets subject to
 amortization, net                          2,499          2,678        (7%)
Intangible assets not subject to
 amortization                                 102            102         -
Other assets                                   64             71       (10%)
                                    -------------  -------------  --------
Total assets                        $       5,278  $       5,380        (2%)
                                    =============  =============  ========

Liabilities and Equity
Current liabilities
  Accounts payable                  $         156  $         165        (5%)
  Accrued royalties                           997            974         2%
  Accrued liabilities                         258            217        19%
  Accrued interest                             89             55        62%
  Deferred revenue                            101            101         -
  Other current liabilities                     5             10       (50%)
                                    -------------  -------------  --------
Total current liabilities           $       1,606  $       1,522         6%

Long-term debt                              2,206          2,217         -
Deferred tax liabilities                      375            411        (9%)
Other noncurrent liabilities                  147            148        (1%)
                                    -------------  -------------  --------
Total liabilities                   $       4,334  $       4,298         1%
                                    =============  =============  ========

Equity:
Common stock ($0.001 par value;
 10,000 shares authorized; 1,000
 shares issued and outstanding                  -              -         -
Additional paid-in capital                  1,129          1,129         -
Accumulated deficit                          (143)           (31)        -
Accumulated other comprehensive
 loss, net                                    (59)           (33)       79%
                                    -------------  -------------  --------
Total Warner Music Group Corp.
 equity                             $         927  $       1,065       (13%)

Noncontrolling interest                        17             17         -
                                    -------------  -------------  --------
Total equity                                  944          1,082       (13%)

                                    -------------  -------------  --------
Total liabilities and equity        $       5,278  $       5,380        (2%)
                                    =============  =============  ========



Figure 3. Warner Music Group Corp. - Summarized Statements of Cash Flows,
 Three & Twelve Months Ended 9/30/12 versus 9/30/11
(dollars in millions)


                                 Successor         Predecessor
                         ------------------------  -----------
                                                                  For the
                           For the                                Combined
                            Three      From July    From July      Three
                            Months      20, 2011     1, 2011       Months
                            Ended       through      through       ended
                          September    September     July 19,    September
                           30, 2012     30, 2011       2011       30, 2011
                         -----------  -----------  -----------  -----------
                         (unaudited)  (unaudited)  (unaudited)  (unaudited)
Net cash provided by
 (used in) operating
 activities              $       102  $       (64) $        30  $       (34)
Net cash used in
 investing activities            (22)      (1,292)          (4)      (1,296)
Net cash (used in)
 provided by financing
 activities                       (1)       1,199            -        1,199
Effect of foreign
 currency exchange rates
 on cash                           4           (8)           3           (5)
                         -----------  -----------  -----------  -----------
Net increase (decrease)
 in cash and equivalents $        83  $      (165) $        29  $      (136)
                         ===========  ===========  ===========  ===========


                                 Successor         Predecessor
                         ------------------------  -----------
                                                                  For the
                           For the                     From       Combined
                            Twelve     From July    October 1,     Twelve
                            Months      20, 2011       2010        Months
                            Ended       through      through       ended
                          September    September     July 19,    September
                           30, 2012     30, 2011       2011       30, 2011
                         -----------  -----------  -----------  -----------
                         (unaudited)  (unaudited)  (unaudited)  (unaudited)
Net cash provided by
 (used in) operating
 activities              $       209  $       (64) $        12  $       (52)
Net cash used in
 investing activities            (58)      (1,292)        (155)      (1,447)
Net cash (used in)
 provided by financing
 activities                       (3)       1,199            5        1,204
Effect of foreign
 currency exchange rates
 on cash                           -           (8)          18           10
                         -----------  -----------  -----------  -----------
Net increase (decrease)
 in cash and equivalents $       148  $      (165) $      (120) $      (285)
                         ===========  ===========  ===========  ===========



Supplemental Disclosures Regarding Non-GAAP Financial Measures

We evaluate our operating performance based on several factors, including the following non-GAAP financial measures:

OIBDA
OIBDA reflects our operating income before non-cash depreciation of tangible assets, non-cash amortization of intangible assets and non-cash impairment charges to reduce the carrying value of goodwill and intangible assets. We consider OIBDA to be an important indicator of the operational strengths and performance of our businesses, and believe the presentation of OIBDA helps improve the ability to understand our operating performance and evaluate our performance in comparison to comparable periods. However, a limitation of the use of OIBDA as a performance measure is that it does not reflect the periodic costs of certain capitalized tangible and intangible assets used in generating revenue in our businesses. Accordingly, OIBDA should be considered in addition to, not as a substitute for, operating income, net (loss) income and other measures of financial performance reported in accordance with GAAP. In addition, OIBDA, as we calculate it, may not be comparable to similarly titled measures employed by other companies.


Figure 4. Warner Music Group Corp. - Reconciliation of OIBDA to Net Loss,
 Three & Twelve Months Ended 9/30/12 versus 9/30/11
(dollars in millions)



                         Successor         Predecessor
                 ------------------------  -----------
                                                          For the
                   For the                                Combined
                    Three      From July    From July      Three
                    Months      20, 2011     1, 2011       Months
                    Ended       through      through       ended
                  September    September     July 19,    September     %
                   30, 2012     30, 2011       2011       30, 2011  Change
                 -----------  -----------  -----------  ----------- ------
                 (unaudited)  (unaudited)  (unaudited)  (unaudited)
OIBDA            $       103  $        81  $       (40) $        41      -
Depreciation
 expense                 (14)          (9)          (2)         (11)    27%
Amortization
 expense                 (48)         (38)         (13)         (51)    (6%)
                 -----------  -----------  -----------  ----------- ------
Operating income
 (loss)          $        41  $        34  $       (55) $       (21)     -
Interest
 expense, net            (56)         (62)         (10)         (72)   (22%)
Other income,
 net                       2            -            -            -      -
                 -----------  -----------  -----------  ----------- ------
Loss before
 income taxes    $       (13) $       (28) $       (65) $       (93)   (86%)
Income tax
 expense                  (4)          (3)          (7)         (10)   (60%)
                 -----------  -----------  -----------  ----------- ------
Net loss         $       (17) $       (31) $       (72) $      (103)   (83%)
Less: loss
 attributable to
 noncontrolling
 interest                 (1)           -            -            -      -
                 -----------  -----------  -----------  ----------- ------
Net loss
 attributable to
 Warner Music
 Group Corp.     $       (18) $       (31) $       (72) $      (103)   (83%)
                 ===========  ===========  ===========  =========== ======


                         Successor         Predecessor
                 ------------------------  -----------
                                                          For the
                   For the                     From       Combined
                    Twelve     From July    October 1,     Twelve
                    Months      20, 2011       2010        Months
                    Ended       through      through       ended
                  September    September     July 19,    September     %
                   30, 2012     30, 2011       2011       30, 2011  Change
                 -----------  -----------  -----------  ----------- ------
                 (unaudited)  (unaudited)  (unaudited)  (unaudited)
OIBDA            $       353  $        81  $       209  $       290     22%
Depreciation
 expense                 (51)          (9)         (33)         (42)    21%
Amortization
 expense                (193)         (38)        (178)        (216)   (11%)
                 -----------  -----------  -----------  ----------- ------
Operating income
 (loss)          $       109  $        34  $        (2) $        32      -
Interest
 expense, net           (225)         (62)        (151)        (213)     6%
Other income,
 net                       8            -            5            5     60%
                 -----------  -----------  -----------  ----------- ------
Loss before
 income taxes    $      (108) $       (28) $      (148) $      (176)   (39%)
Income tax
 expense                  (1)          (3)         (27)         (30)   (97%)
                 -----------  -----------  -----------  ----------- ------
Net loss         $      (109) $       (31) $      (175) $      (206)   (47%)
Less: (income)
 loss
 attributable to
 noncontrolling
 interest                 (3)           -            1            1      -
                 -----------  -----------  -----------  ----------- ------
Net loss
 attributable to
 Warner Music
 Group Corp.     $      (112) $       (31) $      (174) $      (205)   (45%)
                 ===========  ===========  ===========  =========== ======



Figure 5. Warner Music Group Corp. - Reconciliation of Segment Operating
 Income to OIBDA, Three & Twelve Months Ended 9/30/12 versus 9/30/11
(dollars in millions)



                         Successor         Predecessor
                  -----------------------  -----------
                                                          For the
                    For the                               Combined
                     Three     From July    From July      Three
                     Months     20, 2011     1, 2011       Months
                     Ended      through      through       ended
                   September   September     July 19,    September     %
                    30, 2012    30, 2011       2011       30, 2011  Change
                  ----------- -----------  -----------  ----------- ------
                  (unaudited) (unaudited)  (unaudited)  (unaudited)
Total WMG
 operating income
 - GAAP           $        41 $        34  $       (55) $       (21)     -
Depreciation and
 amortization
 expense                   62          47           15           62      -
                  ----------- -----------  -----------  ----------- ------
Total WMG OIBDA   $       103 $        81  $       (40) $        41      -
                  =========== ===========  ===========  =========== ======

Recorded Music
 operating income
 - GAAP           $        35 $        17  $        (4) $        13      -
Depreciation and
 amortization
 expense                   42          31           10           41      2%
                  ----------- -----------  -----------  ----------- ------
Recorded Music
 OIBDA            $        77 $        48  $         6  $        54     43%
                  =========== ===========  ===========  =========== ======

Music Publishing
 operating income
 - GAAP           $        37 $        39  $         1  $        40     (8%)
Depreciation and
 amortization
 expense                   17          12            5           17      -
                  ----------- -----------  -----------  ----------- ------
Music Publishing
 OIBDA            $        54 $        51  $         6  $        57     (5%)
                  =========== ===========  ===========  =========== ======


                         Successor         Predecessor
                  -----------------------  -----------
                                                          For the
                    For the                    From       Combined
                     Twelve    From July    October 1,     Twelve
                     Months     20, 2011       2010        Months
                     Ended      through      through       ended
                   September   September     July 19,    September     %
                    30, 2012    30, 2011       2011       30, 2011  Change
                  ----------- -----------  -----------  ----------- ------
                  (unaudited) (unaudited)  (unaudited)  (unaudited)
Total WMG
 operating income
 - GAAP           $       109 $        34  $        (2) $        32      -
Depreciation and
 amortization
 expense                  244          47          211          258     (5%)
                  ----------- -----------  -----------  ----------- ------
Total WMG OIBDA   $       353 $        81  $       209  $       290     22%
                  =========== ===========  ===========  =========== ======

Recorded Music
 operating income
 - GAAP           $       120 $        17  $        93  $       110      9%
Depreciation and
 amortization
 expense                  163          31          141          172     (5%)
                  ----------- -----------  -----------  ----------- ------
Recorded Music
 OIBDA            $       283 $        48  $       234  $       282      -
                  =========== ===========  ===========  =========== ======

Music Publishing
 operating income
 - GAAP           $        85 $        39  $        34  $        73     16%
Depreciation and
 amortization
 expense                   67          12           62           74     (9%)
                  ----------- -----------  -----------  ----------- ------
Music Publishing
 OIBDA            $       152 $        51  $        96  $       147      3%
                  =========== ===========  ===========  =========== ======



Adjusted Operating Income, Adjusted OIBDA and Adjusted Net Income (Loss)
Adjusted operating income, adjusted OIBDA and adjusted net (loss) income is operating income, OIBDA and net (loss) income, respectively, adjusted to exclude the impact of certain items that affect comparability ("Factors Affecting Comparability"). Factors affecting period-to-period comparability of the unadjusted measures in fiscal year 2012 included expenses related to our acquisition by Access Industries, share-based compensation expense, which existed in fiscal year 2011 but not 2012, as well as expenses incurred in relation to the sale of EMI. We use adjusted operating income, adjusted OIBDA and adjusted net loss to evaluate our actual operating performance. We believe that the adjusted results provide relevant and useful information for investors because they clarify our actual operating performance, make it easier to compare our results with those of other companies in our industry and allow investors to review performance in the same way as our management. Since these are not measures of performance calculated in accordance with GAAP, they should not be considered in isolation of, or as a substitute for, operating income, OIBDA and net loss attributable to WMG as indicators of operating performance, and they may not be comparable to similarly titled measures employed by other companies.


Figure 6. Warner Music Group Corp. - Reconciliation of Reported Results to
 Adjusted Results, Three and Twelve Months 9/30/12 and 9/30/11
(dollars in millions)

                For the Three Months ended September 30, 2012
----------------------------------------------------------------------------

                                           Recorded     Music
                             Total WMG      Music     Publishing
                             Operating    Operating   Operating   Total WMG
                               Income       Income      Income      OIBDA
                            -----------  ----------- ----------- -----------
                            (unaudited)  (unaudited) (unaudited) (unaudited)
Reported Results            $        41  $        35 $        37 $       103
Factors Affecting
 Comparability:
 EMI Sale-Related
  Expenses(1)                         8            -           -           8
                            -----------  ----------- ----------- -----------
Adjusted Results            $        49  $        35 $        37 $       111

----------------------------------------------------------------------------

For the Three Months ended September 30, 2011
----------------------------------------------------------------------------

                                           Recorded     Music
                             Total WMG      Music     Publishing
                             Operating    Operating   Operating   Total WMG
                               Income       Income      Income      OIBDA
                            -----------  ----------- ----------- -----------
                            (unaudited)  (unaudited) (unaudited) (unaudited)
Reported Results            $       (21) $        13 $        40 $        41
Factors Affecting
 Comparability:
 Acquisition Expenses(2)             46            -           2          46
 Share-Based Compensation
  Expense(3)                         14            8           1          14
 EMI Sale-Related
  Expenses(1)                         1            -           -           1
                            -----------  ----------- ----------- -----------
Adjusted Results            $        40  $        21 $        43 $       102

----------------------------------------------------------------------------

For the Twelve Months ended September 30, 2012
----------------------------------------------------------------------------

                                           Recorded     Music
                             Total WMG      Music     Publishing
                             Operating    Operating   Operating   Total WMG
                               Income       Income      Income      OIBDA
                            -----------  ----------- ----------- -----------
                            (unaudited)  (unaudited) (unaudited) (unaudited)
Reported Results            $       109  $       120 $        85 $       353
Factors Affecting
 Comparability:
 Acquisition Expenses(2)              1            -           -           1
 EMI Sale-Related
  Expenses(1)                        14            -           -          14
                            -----------  ----------- ----------- -----------
Adjusted Results            $       124  $       120 $        85 $       368

----------------------------------------------------------------------------

For the Twelve Months ended September 30, 2011
----------------------------------------------------------------------------

                                           Recorded     Music
                             Total WMG      Music     Publishing
                             Operating    Operating   Operating   Total WMG
                               Income       Income      Income      OIBDA
                            -----------  ----------- ----------- -----------
                            (unaudited)  (unaudited) (unaudited) (unaudited)
Reported Results            $        32  $       110 $        73 $       290
Factors Affecting
 Comparability:
 Acquisition Expenses(2)             53            -           2          53
 Share-Based Compensation
  Expense(3)                         14            8           1          14
 EMI Sale-Related
  Expenses(1)                         1            -           -           1
                            -----------  ----------- ----------- -----------
Adjusted Results            $       100  $       118 $        76 $       358

----------------------------------------------------------------------------


          For the Three Months ended September 30, 2012
----------------------------------------------------------------

                                                      Net loss
                                                    attributable
                                           Music      to Warner
                              Recorded   Publishing  Music Group
                            Music OIBDA    OIBDA        Corp.
                            ----------- ----------- ------------
                            (unaudited) (unaudited)  (unaudited)
Reported Results            $        77 $        54 $        (18)
Factors Affecting
 Comparability:
 EMI Sale-Related
  Expenses(1)                         -           -            8
                            ----------- ----------- ------------
Adjusted Results            $        77 $        54 $        (10)

----------------------------------------------------------------

For the Three Months ended September 30, 2011
----------------------------------------------------------------

                                                      Net loss
                                                    attributable
                                           Music      to Warner
                              Recorded   Publishing  Music Group
                            Music OIBDA    OIBDA        Corp.
                            ----------- ----------- ------------
                            (unaudited) (unaudited)  (unaudited)
Reported Results            $        54 $        57 $       (103)
Factors Affecting
 Comparability:
 Acquisition Expenses(2)              -           2           46
 Share-Based Compensation
  Expense(3)                          8           1           14
 EMI Sale-Related
  Expenses(1)                         -           -            1
                            ----------- ----------- ------------
Adjusted Results            $        62 $        60 $        (42)

----------------------------------------------------------------

For the Twelve Months ended September 30, 2012
----------------------------------------------------------------

                                                      Net loss
                                                    attributable
                                           Music      to Warner
                              Recorded   Publishing  Music Group
                            Music OIBDA    OIBDA        Corp.
                            ----------- ----------- ------------
                            (unaudited) (unaudited)  (unaudited)
Reported Results            $       283 $       152 $       (112)
Factors Affecting
 Comparability:
 Acquisition Expenses(2)              -           -            1
 EMI Sale-Related
  Expenses(1)                         -           -           14
                            ----------- ----------- ------------
Adjusted Results            $       283 $       152 $        (97)

----------------------------------------------------------------

For the Twelve Months ended September 30, 2011
----------------------------------------------------------------

                                                      Net loss
                                                    attributable
                                           Music      to Warner
                              Recorded   Publishing  Music Group
                            Music OIBDA    OIBDA        Corp.
                            ----------- ----------- ------------
                            (unaudited) (unaudited)  (unaudited)
Reported Results            $       282 $       147 $       (205)
Factors Affecting
 Comparability:
 Acquisition Expenses(2)              -           2           53
 Share-Based Compensation
  Expense(3)                          8           1           14
 EMI Sale-Related
  Expenses(1)                         -           -            1
                            ----------- ----------- ------------
Adjusted Results            $       290 $       150 $       (137)

----------------------------------------------------------------

(1) Adjusted Results for the three months and twelve months
 ended September 30, 2012 exclude $8 million (all corporate) and
 $14 million (all corporate), respectively, and for the three
 months and twelve months ended September 30, 2011 exclude $1
 million (all corporate) in professional and other fees incurred
 in connection with the sale of EMI and subsequent regulatory
 review. These costs primarily included advisory, legal and
 other professional fees.
(2) Adjusted Results for the twelve months ended September 30,
 2012 exclude $1 million (all corporate) and for the three
 months and twelve months ended September 30, 2011 exclude $46
 million ($44 million corporate and $2 million Music Publishing)
 and $53 million ($51 million corporate and $2 million Music
 Publishing), respectively, in fees incurred in connection with
 the acquisition of the Company by Access Industries. These
 costs primarily included advisory, accounting, legal and other
 professional fees.
(3) Adjusted Results for the three months and twelve months
 ended September 30, 2011 exclude $14 million ($5 million
 corporate, $8 million Recorded Music and $1 million Music
 Publishing) in share-based compensation expense incurred in
 connection with the acquisition of the Company by Access
 Industries.



Constant Currency
Because exchange rates are an important factor in understanding period-to-period comparisons, we believe the presentation of revenue on a constant-currency basis in addition to reported revenue helps improve the ability to understand our operating results and evaluate our performance in comparison to prior periods. Constant-currency information compares results between periods as if exchange rates had remained constant period over period. We use results on a constant-currency basis as one measure to evaluate our performance. We calculate constant-currency results by applying current-year foreign currency exchange rates to prior-year results. However, a limitation of the use of the constant-currency results as a performance measure is that it does not reflect the impact of exchange rates on our revenue, including, for example, the $37 million, $28 million and $9 million unfavorable impact of exchange rates on our Total, Recorded Music and Music Publishing revenue, in the three months ended September 30, 2012 compared to the prior-year quarter. These results should be considered in addition to, not as a substitute for, results reported in accordance with GAAP. Results on a constant-currency basis, as we present them, may not be comparable to similarly titled measures used by other companies and are not a measure of performance presented in accordance with GAAP.


Figure 7. Warner Music Group Corp. - Revenue by Geography and Segment,
 Three & Twelve Months Ended 9/30/12 versus 9/30/11 as Reported and
 Constant Currency
(dollars in millions)

                      Successor         Predecessor             Predecessor
               -----------------------  -----------             -----------
                                                      For the     For the
                 For the                              Combined    Combined
                  Three     From July    From July     Three       Three
                  Months     20, 2011     1, 2011      Months      Months
                  Ended      through      through      ended       ended
                September   September     July 19,   September   September
                 30, 2012    30, 2011       2011      30, 2011    30, 2011
               ----------- -----------  ----------- ----------- -----------
               As reported As reported  As reported As reported  Constant $
               (unaudited) (unaudited)  (unaudited) (unaudited) (unaudited)

US revenue
  Recorded
   Music       $       227 $       175  $        52 $       227 $       227
  Music
   Publishing           51          41            6          47          47

International
 revenue
  Recorded
   Music               378         281           74         355         327
  Music
   Publishing           82          63           31          94          85

Intersegment
 eliminations           (7)         (4)          (1)         (5)         (5)
               ----------- -----------  ----------- ----------- -----------
Total Revenue  $       731 $       556  $       162 $       718 $       681
               =========== ===========  =========== =========== ===========

Revenue by
 Segment:
Recorded Music
    Physical   $       270 $       193  $        46 $       239 $       228
    Digital            222         147           47         194         189
               ----------- -----------  ----------- ----------- -----------
    Total
     Physical
     and
     Digital           492         340           93         433         417
    Artist
     Services
     and
     Expanded
     Rights             66          75           22          97          89
    Licensing           47          41           11          52          48
               ----------- -----------  ----------- ----------- -----------
Total Recorded
 Music                 605         456          126         582         554
Music
 Publishing
    Performance         53          41           20          61          57
    Mechanical          30          24            7          31          28
    Synchroni-
     zation             25          21            7          28          26
    Digital             22          15            2          17          17
    Other                3           3            1           4           4
               ----------- -----------  ----------- ----------- -----------
Total Music
 Publishing            133         104           37         141         132
Intersegment
 eliminations           (7)         (4)          (1)         (5)         (5)
               ----------- -----------  ----------- ----------- -----------
Total Revenue  $       731 $       556  $       162 $       718 $       681
               =========== ===========  =========== =========== ===========

               ----------- -----------  ----------- ----------- -----------
Total Digital
 Revenue       $       241 $       161  $        49 $       210 $       204
               =========== ===========  =========== =========== ===========


                      Successor         Predecessor             Predecessor
               -----------------------  -----------             -----------
                                                      For the     For the
                 For the                    From      Combined    Combined
                  Twelve    From July    October 1,    Twelve      Twelve
                  Months     20, 2011       2010       Months      Months
                  Ended      through      through      ended       ended
                September   September     July 19,   September   September
                 30, 2012    30, 2011       2011      30, 2011    30, 2011
               ----------- -----------  ----------- ----------- -----------
               As reported As reported  As reported As reported  Constant $
               (unaudited) (unaudited)  (unaudited) (unaudited) (unaudited)

US revenue
  Recorded
   Music       $       909 $       175  $       781 $       956 $       956
  Music
   Publishing          204          41          155         196         196

International
 revenue
  Recorded
   Music             1,366         281        1,105       1,386       1,339
  Music
   Publishing          320          63          285         348         331

Intersegment
 eliminations          (19)         (4)         (15)        (19)        (19)

               ----------- -----------  ----------- ----------- -----------
Total Revenue  $     2,780 $       556  $     2,311 $     2,867 $     2,803
               =========== ===========  =========== =========== ===========

Revenue by
 Segment:
Recorded Music
    Physical   $       966 $       193  $       839 $     1,032 $     1,015
    Digital            864         147          621         768         760
               ----------- -----------  ----------- ----------- -----------
    Total
     Physical
     and
     Digital         1,830         340        1,460       1,800       1,775
    Artist
     Services
     and
     Expanded
     Rights            244          75          235         310         295
    Licensing          201          41          191         232         225
               ----------- -----------  ----------- ----------- -----------
Total Recorded
 Music               2,275         456        1,886       2,342       2,295
Music
 Publishing
    Performance        202          41          173         214         205
    Mechanical         129          24          118         142         137
    Synchroni-
     zation            112          21           92         113         111
    Digital             67          15           45          60          60
    Other               14           3           12          15          14
               ----------- -----------  ----------- ----------- -----------
Total Music
 Publishing            524         104          440         544         527
Intersegment
 eliminations          (19)         (4)         (15)        (19)        (19)
               ----------- -----------  ----------- ----------- -----------
Total Revenue  $     2,780 $       556  $     2,311 $     2,867 $     2,803
               =========== ===========  =========== =========== ===========

               ----------- -----------  ----------- ----------- -----------
Total Digital
 Revenue       $       925 $       161  $       659 $       820 $       811
               =========== ===========  =========== =========== ===========



Free Cash Flow
Free Cash Flow reflects our cash flow provided by operating activities less capital expenditures and cash paid or received for investments. We use Free Cash Flow, among other measures, to evaluate our operating performance. Management believes Free Cash Flow provides investors with an important perspective on the cash available to service debt, fund ongoing operations and working capital needs, make strategic acquisitions and investments and pay any dividends or fund any repurchases of our outstanding notes or common stock in open market purchases, privately negotiated purchases or otherwise. As a result, Free Cash Flow is a significant measure of our ability to generate long-term value. It is useful for investors to know whether this ability is being enhanced or degraded as a result of our operating performance. We believe the presentation of Free Cash Flow is relevant and useful for investors because it allows investors to view performance in a manner similar to the method used by management. In addition, Free Cash Flow is also a primary measure used externally by our investors and analysts for purposes of valuation and comparing our operating performance to other companies in our industry.

Because Free Cash Flow is not a measure of performance calculated in accordance with GAAP, Free Cash Flow should not be considered in isolation of, or as a substitute for, net (loss) income as an indicator of operating performance or cash flow provided by operating activities as a measure of liquidity. Free Cash Flow, as we calculate it, may not be comparable to similarly titled measures employed by other companies. In addition, Free Cash Flow does not necessarily represent funds available for discretionary use and is not necessarily a measure of our ability to fund our cash needs. Because Free Cash Flow deducts capital expenditures and cash paid or received for investments from "cash flow provided by operating activities" (the most directly comparable GAAP financial measure), users of this information should consider the types of events and transactions that are not reflected. We provide below a reconciliation of Free Cash Flow to the most directly comparable amount reported under GAAP, which is "net cash flow (used in) provided by operating activities."

Unlevered After-Tax Cash Flow
Free Cash Flow includes cash paid for interest. We also review our cash flow adjusted for cash paid for interest, a measure we call Unlevered After-Tax Cash Flow. Management believes this measure provides investors with an additional important perspective on our cash generation ability. We consider Unlevered After-Tax Cash Flow to be an important indicator of the performance of our businesses and believe the presentation is relevant and useful for investors because it allows investors to view performance in a manner similar to the method used by management. A limitation of the use of this measure is that it does not reflect the charges for cash interest and, therefore, does not necessarily represent funds available for discretionary use, and is not necessarily a measure of our ability to fund our cash needs. Accordingly, this measure should be considered in addition to, not as a substitute for, net cash flow provided by operating activities and other measures of liquidity reported in accordance with GAAP.


Figure 8. Warner Music Group Corp. - Calculation of Free Cash Flow and
 Unlevered After-Tax Cash Flow, Three & Twelve Months Ended 9/30/12 versus
 9/30/11
(dollars in millions)


                                 Successor         Predecessor
                          -----------------------  -----------
                                                                  For the
                            For the                               Combined
                             Three     From July    From July      Three
                             Months     20, 2011     1, 2011       Months
                             Ended      through      through       ended
                           September   September     July 19,    September
                            30, 2012    30, 2011       2011       30, 2011
                          ----------- -----------  -----------  -----------
                          (unaudited) (unaudited)  (unaudited)  (unaudited)
Net cash flow provided by
 (used in) operating
 activities               $       102 $       (64) $        30  $       (34)
Less: Capital
 expenditures                       8          11            3           14
Less: Net cash paid for
 investments                       14           3            1            4

                          ----------- -----------  -----------  -----------
Free Cash Flow            $        80 $       (78) $        26  $       (52)
                          =========== ===========  ===========  ===========

  Plus: Cash paid for
   interest                         -          34            -           34
                          ----------- -----------  -----------  -----------
  Unlevered After-Tax
   Cash Flow              $        80 $       (44) $        26  $       (18)
                          =========== ===========  ===========  ===========


                                 Successor         Predecessor
                          -----------------------  -----------
                                                                  For the
                            For the                    From       Combined
                             Twelve    From July    October 1,     Twelve
                             Months     20, 2011       2010        Months
                             Ended      through      through       ended
                           September   September     July 19,    September
                            30, 2012    30, 2011       2011       30, 2011
                          ----------- -----------  -----------  -----------
                          (unaudited) (unaudited)  (unaudited)  (unaudited)
Net cash flow provided by
 (used in) operating
 activities               $       209 $       (64) $        12  $       (52)
Less: Capital
 expenditures                      32          11           37           48
Less: Net cash paid for
 investments                       26           3          118          121

                          ----------- -----------  -----------  -----------
Free Cash Flow            $       151 $       (78) $      (143) $      (221)
                          =========== ===========  ===========  ===========

  Plus: Cash paid for
   interest                       193          34          176          210
                          ----------- -----------  -----------  -----------
  Unlevered After-Tax
   Cash Flow              $       344 $       (44) $        33  $       (11)
                          =========== ===========  ===========  ===========



Media Contact:
Will Tanous
(212) 275-2244
Email Contact

Investor Contact:
Erika Begun
(212) 275-4850
Email Contact

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Connected devices and the Internet of Things are getting significant momentum in 2014. In his session at Internet of @ThingsExpo, Jim Hunter, Chief Scientist & Technology Evangelist at Greenwave Systems, examined three key elements that together will drive mass adoption of the IoT before the end of 2015. The first element is the recent advent of robust open source protocols (like AllJoyn and WebRTC) that facilitate M2M communication. The second is broad availability of flexible, cost-effective storage designed to handle the massive surge in back-end data in a world where timely analytics is e...
DevOps Summit 2015 New York, co-located with the 16th International Cloud Expo - to be held June 9-11, 2015, at the Javits Center in New York City, NY - announces that it is now accepting Keynote Proposals. The widespread success of cloud computing is driving the DevOps revolution in enterprise IT. Now as never before, development teams must communicate and collaborate in a dynamic, 24/7/365 environment. There is no time to wait for long development cycles that produce software that is obsolete at launch. DevOps may be disruptive, but it is essential.
Explosive growth in connected devices. Enormous amounts of data for collection and analysis. Critical use of data for split-second decision making and actionable information. All three are factors in making the Internet of Things a reality. Yet, any one factor would have an IT organization pondering its infrastructure strategy. How should your organization enhance its IT framework to enable an Internet of Things implementation? In his session at Internet of @ThingsExpo, James Kirkland, Chief Architect for the Internet of Things and Intelligent Systems at Red Hat, described how to revolutioniz...
The 3rd International Internet of @ThingsExpo, co-located with the 16th International Cloud Expo - to be held June 9-11, 2015, at the Javits Center in New York City, NY - announces that its Call for Papers is now open. The Internet of Things (IoT) is the biggest idea since the creation of the Worldwide Web more than 20 years ago.
The security devil is always in the details of the attack: the ones you've endured, the ones you prepare yourself to fend off, and the ones that, you fear, will catch you completely unaware and defenseless. The Internet of Things (IoT) is nothing if not an endless proliferation of details. It's the vision of a world in which continuous Internet connectivity and addressability is embedded into a growing range of human artifacts, into the natural world, and even into our smartphones, appliances, and physical persons. In the IoT vision, every new "thing" - sensor, actuator, data source, data con...
"Matrix is an ambitious open standard and implementation that's set up to break down the fragmentation problems that exist in IP messaging and VoIP communication," explained John Woolf, Technical Evangelist at Matrix, in this SYS-CON.tv interview at @ThingsExpo, held Nov 4–6, 2014, at the Santa Clara Convention Center in Santa Clara, CA.
The Internet of Things will put IT to its ultimate test by creating infinite new opportunities to digitize products and services, generate and analyze new data to improve customer satisfaction, and discover new ways to gain a competitive advantage across nearly every industry. In order to help corporate business units to capitalize on the rapidly evolving IoT opportunities, IT must stand up to a new set of challenges. In his session at @ThingsExpo, Jeff Kaplan, Managing Director of THINKstrategies, will examine why IT must finally fulfill its role in support of its SBUs or face a new round of...
The Internet of Things promises to transform businesses (and lives), but navigating the business and technical path to success can be difficult to understand. In his session at @ThingsExpo, Sean Lorenz, Technical Product Manager for Xively at LogMeIn, demonstrated how to approach creating broadly successful connected customer solutions using real world business transformation studies including New England BioLabs and more.
How do APIs and IoT relate? The answer is not as simple as merely adding an API on top of a dumb device, but rather about understanding the architectural patterns for implementing an IoT fabric. There are typically two or three trends: Exposing the device to a management framework Exposing that management framework to a business centric logic Exposing that business layer and data to end users. This last trend is the IoT stack, which involves a new shift in the separation of what stuff happens, where data lives and where the interface lies. For instance, it's a mix of architectural styles ...
An entirely new security model is needed for the Internet of Things, or is it? Can we save some old and tested controls for this new and different environment? In his session at @ThingsExpo, New York's at the Javits Center, Davi Ottenheimer, EMC Senior Director of Trust, reviewed hands-on lessons with IoT devices and reveal a new risk balance you might not expect. Davi Ottenheimer, EMC Senior Director of Trust, has more than nineteen years' experience managing global security operations and assessments, including a decade of leading incident response and digital forensics. He is co-author of t...
P2P RTC will impact the landscape of communications, shifting from traditional telephony style communications models to OTT (Over-The-Top) cloud assisted & PaaS (Platform as a Service) communication services. The P2P shift will impact many areas of our lives, from mobile communication, human interactive web services, RTC and telephony infrastructure, user federation, security and privacy implications, business costs, and scalability. In his session at @ThingsExpo, Robin Raymond, Chief Architect at Hookflash, will walk through the shifting landscape of traditional telephone and voice services ...
The definition of IoT is not new, in fact it’s been around for over a decade. What has changed is the public's awareness that the technology we use on a daily basis has caught up on the vision of an always on, always connected world. If you look into the details of what comprises the IoT, you’ll see that it includes everything from cloud computing, Big Data analytics, “Things,” Web communication, applications, network, storage, etc. It is essentially including everything connected online from hardware to software, or as we like to say, it’s an Internet of many different things. The difference ...