WMG Announces Q4 And 2006 Revenue Results

Digital Revenue Led The Way

WARNER MUSIC GROUP reported its full-year and fourth-quarter results for the period ended SEPTEMBER 30, 2006. Total revenue of $854 million for the fourth quarter of 2006 decreased 5.6% from the prior-year quarter, or 7.1% on a constant-currency basis. Full-year 2006 revenue increased 0.4% to $3.5 million, or 1.8% on a constant-currency basis.

Digital revenue was $104 million or 12.2% of total revenue in the quarter, up 13.0% sequentially from $92 million in the third quarter of fiscal 2006 and up 96.2% from $53 million in the prior-year quarter. Operating income rose to $66 million in the quarter compared to $19 million in the prior-year quarter, adjusted to exclude non-recurring items, including the KAZAA copyright infringement settlement in 2006 and other previously announced 2005 items.

The increase in our digital recorded music revenue for the fiscal year more than offset declines in our physical recorded music revenue.

"These year-end results highlight the continued transformation of WARNER MUSIC GROUP in 2006," said WMG Chairman/CEO EDGAR BRONFMAN JR. "Continued focus on the digital music business yielded dramatic growth in digital revenue. The increase in our digital recorded music revenue for the fiscal year more than offset declines in our physical recorded music revenue. For the first time our quarterly digital revenue broke the $100 million barrier. Our quarterly digital revenue represented 12.2% of our total revenue -- about double last year's quarter in dollar terms. Obviously, this quarter we faced the expected tough comparisons against last year's significant carryover sales and revitalized release schedule at ATLANTIC. Based on the company's performance this year, we're confident that WARNER MUSIC is on the right path."

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