Live Nation Entertainment Reports Second Quarter 2013 Financial Results

FINANCIAL HIGHLIGHTS – 2nd QUARTER

(unaudited; $ in millions)

Q2 2013

Q2 2012

Growth

6 months 2013

6 months 2012

Growth

Revenue

Concerts

$

1,193.0

$

1,076.0

10.9%

$

1,706.5

$

1,524.7

11.9%

Ticketing

337.8

328.9

2.7%

663.0

655.5

1.1%

Artist Nation

99.7

109.2

(8.7%)

150.0

170.6

(12.1%)

Sponsorship & Advertising

71.2

61.3

16.2%

111.4

97.4

14.4%

Other & Eliminations

(22.2)

(24.7)

10.1%

(27.7)

(29.5)

6.1%

$

1,679.5

$

1,550.7

8.3%

$

2,603.2

$

2,418.7

7.6%

Adjusted Operating Income (Loss)

Concerts

$

42.6

$

36.2

17.7%

$

29.4

$

11.3

**

Ticketing

77.6

71.4

8.7%

137.2

143.9

(4.7%)

Artist Nation

8.5

14.9

(43.0%)

7.5

11.9

(37.0%)

Sponsorship & Advertising

47.2

42.9

10.0%

70.9

63.6

11.5%

Other & Eliminations

1.6

0.8

100.0%

2.4

(0.4)

**

Corporate

(17.6)

(20.2)

12.9%

(34.6)

(36.1)

4.2%

$

159.9

$

146.0

9.5%

$

212.8

$

194.2

9.6%

Operating Income (Loss)

Concerts

$

36.9

$

(7.0)

**

$

(2.9)

$

(62.0)

95.3%

Ticketing

39.2

31.5

24.4%

54.5

63.8

(14.6%)

Artist Nation

(2.9)

2.8

**

(13.8)

(12.2)

(13.1%)

Sponsorship & Advertising

46.4

42.7

8.7%

69.8

63.3

10.3%

Other & Eliminations

2.1

1.4

50.0%

3.2

0.1

**

Corporate

(23.9)

(28.4)

15.8%

(46.2)

(52.8)

12.5%

$

97.8

$

43.0

**

$

64.6

$

0.2

**

LIVE NATION ENTERTAINMENT, INC.

KEY OPERATING METRICS

Three Months Ended

June 30,

Six Months Ended

June 30,

2013

2012

2013

2012

Total estimated events:

     North America

4,076

3,983

7,339

7,188

     International

1,842

1,709

3,464

3,309

          Total estimated events

5,918

5,692

10,803

10,497

Total estimated attendance (rounded):

     North America

9,321,000

9,282,000

14,376,000

13,642,000

     International

6,021,000

4,877,000

9,071,000

7,728,000

          Total estimated attendance

15,342,000

14,159,000

23,447,000

21,370,000

Ancillary net revenue per attendee ⁽²⁾:

     North America amphitheaters

$

18.59

$

18.87

     International festivals

$

16.81

$

17.83

Ticketing ⁽³⁾

Number of tickets sold (in thousands):

     Concerts

19,526

18,604

36,197

35,412

     Sports

8,099

7,734

16,620

16,540

     Arts and theater

3,962

4,371

8,226

9,190

     Family

3,264

3,073

7,834

7,601

     Other ⁽⁴⁾

1,417

1,699

3,138

3,449

36,268

35,481

72,015

72,192

Gross value of tickets sold (in thousands)

$

2,326,378

$

2,191,152

$

4,508,229

$

4,411,351

Sponsorship & Advertising

Sponsorship revenue (in thousands)

$

54,322

$

48,223

$

82,575

$

73,940

Online advertising revenue (in thousands)

$

16,918

$

13,055

$

28,812

$

23,466

(1)

Events generally represent a single performance by an artist.  Attendance generally represents the number of fans who were present at an event.  Festivals are counted as one event in the quarter in which the festival begins but attendance is based on the days the fan was present at the festival and thus can be reported in multiple quarters.  Events and attendance metrics are estimated each quarter.

(2)

Amounts are reported as of the latest period shown.

(3)

The number and gross value of tickets sold includes primary tickets only and excludes tickets sold for the 2012 Olympics.  These metrics include tickets sold during the period regardless of event timing except for our promoted events in our owned and/or operated venues and in certain European territories where these tickets are reported as the events occur.  The total number of tickets sold excludes approximately 25 million and 27 million tickets sold for the three months ended June 30, 2013 and 2012, respectively, and excludes approximately 53 million and 58 million tickets sold for the six months ended June 30, 2013 and 2012, respectively, through our venue clients' box offices for which we do not receive a fee.

(4)

Other category includes tickets for comedy shows, facility tours, donations, lectures, seminars and cinemas.

LIVE NATION ENTERTAINMENT, INC.

CONSOLIDATED STATEMENTS OF OPERATIONS

(unaudited)

Three Months Ended

June 30,

Six Months Ended

June 30,

2013

2012

2013

2012

(in thousands except share and per share data)

Revenue

$

1,679,513

$

1,550,677

$

2,603,211

$

2,418,674

Operating expenses:

Direct operating expenses

1,209,918

1,106,869

1,786,852

1,645,583

Selling, general and administrative expenses

295,719

280,943

575,241

549,078

Depreciation and amortization

82,688

94,259

164,853

173,972

Loss (gain) on disposal of operating assets

(30,199)

93

(33,796)

(195)

Corporate expenses

21,812

27,415

42,467

50,632

Acquisition transaction expenses

1,769

(1,870)

2,977

(561)

     Operating income

97,806

42,968

64,617

165

Interest expense

30,041

29,488

58,192

59,198

Interest income

(890)

(931)

(2,658)

(1,831)

Equity in earnings of nonconsolidated affiliates

(2,629)

(1,801)

(5,211)

(5,682)

Other expense, net

3,868

5,424

7,506

3,642

Income (loss) before income taxes

67,416

10,788

6,788

(55,162)

Income tax expense

8,401

5,228

11,960

9,506

Net income (loss)

59,015

5,560

(5,172)

(64,668)

Net income (loss) attributable to noncontrolling interests

885

(2,132)

(63)

(3,210)

Net income (loss) attributable to common stockholders of Live Nation Entertainment, Inc.

$

58,130

$

7,692

$

(5,109)

$

(61,458)

Basic and diluted net income (loss) per common share attributable to common stockholders of Live Nation Entertainment, Inc.

$

0.30

$

0.04

$

(0.03)

$

(0.33)

Weighted average common shares outstanding:

Basic

193,069,783

186,893,774

190,960,206

186,707,769

Diluted

196,770,405

189,325,338

190,960,206

186,707,769

LIVE NATION ENTERTAINMENT, INC.

CONSOLIDATED BALANCE SHEETS

(unaudited)

June 30,

2013

December 31,

2012

(in thousands)

ASSETS

Current assets

Cash and cash equivalents

$

1,385,260

$

1,001,055

Accounts receivable, less allowance of $20,175 and $19,794, respectively

634,509

415,790

Prepaid expenses

607,376

359,936

Other current assets

60,212

36,031

     Total current assets

2,687,357

1,812,812

Property, plant and equipment

Land, buildings and improvements

794,902

852,175

Computer equipment and capitalized software

372,704

338,919

Furniture and other equipment

199,478

200,743

Construction in progress

55,625

56,822

1,422,709

1,448,659

Less accumulated depreciation

730,014

726,873

692,695

721,786

Intangible assets

Definite-lived intangible assets, net

668,367

724,463

Indefinite-lived intangible assets

375,991

377,463

Goodwill

1,369,062

1,357,827

Investments in nonconsolidated affiliates

52,438

46,160

Other long-term assets

236,901

250,295

     Total assets

$

6,082,811

$

5,290,806

LIABILITIES AND EQUITY

Current liabilities

Accounts payable, client accounts

$

622,448

$

557,953

Accounts payable

167,818

102,718

Accrued expenses

631,216

626,723

Deferred revenue

1,018,135

402,002

Current portion of long-term debt

61,658

62,050

Other current liabilities

15,274

16,726

     Total current liabilities

2,516,549

1,768,172

Long-term debt, net

1,662,035

1,677,955

Long-term deferred income taxes

192,821

199,596

Other long-term liabilities

87,409

94,409

Commitments and contingent liabilities

Redeemable noncontrolling interests

78,759

42,100

Stockholders' equity

Common stock

1,959

1,877

Additional paid-in capital

2,355,798

2,272,882

Accumulated deficit

(913,527)

(908,418)

Accumulated other comprehensive loss

(51,959)

(10,923)

     Total Live Nation Entertainment, Inc. stockholders' equity

1,392,271

1,355,418

Noncontrolling interests

152,967

153,156

     Total equity

1,545,238

1,508,574

     Total liabilities and equity

$

6,082,811

$

5,290,806

LIVE NATION ENTERTAINMENT, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS

(unaudited)

Six Months Ended

June 30,

2013

2012

(in thousands)

CASH FLOWS FROM OPERATING ACTIVITIES

Net loss

$

(5,172)

$

(64,668)

Reconciling items:

Depreciation

59,410

59,691

Amortization

105,443

114,281

Deferred income tax benefit

(6,305)

(6,946)

Amortization of debt issuance costs and discount/premium, net

10,421

6,881

Non-cash compensation expense

14,119

17,919

Gain on disposal of operating assets

(33,796)

(195)

Equity in earnings of nonconsolidated affiliates

(5,211)

(5,682)

Other, net

1,468

(1,773)

Changes in operating assets and liabilities, net of effects of acquisitions and dispositions:

Increase in accounts receivable

(205,361)

(103,344)

Increase in prepaid expenses

(230,247)

(305,090)

Increase in other assets

(65,252)

(62,284)

Increase in accounts payable, accrued expenses and other liabilities

152,384

94,717

Increase in deferred revenue

588,446

566,621

     Net cash provided by operating activities

380,347

310,128

CASH FLOWS FROM INVESTING ACTIVITIES

Distributions from nonconsolidated affiliates

2,740

703

Investments made in nonconsolidated affiliates

(3,032)

(2,858)

Purchases of property, plant and equipment

(76,685)

(62,785)

Proceeds from disposal of operating assets, net of cash divested

81,070

5,648

Cash paid for acquisitions, net of cash acquired

(23,766)

(68,093)

Purchases of intangible assets

(17)

(11,469)

(Increase) decrease other, net

(1,052)

297

     Net cash used in investing activities

(20,742)

(138,557)

CASH FLOWS FROM FINANCING ACTIVITIES

Proceeds from long-term debt, net of debt issuance costs

89,369

58,270

Payments on long-term debt

(106,388)

(44,222)

Contributions from noncontrolling interests

267

130

Distributions to noncontrolling interests

(1,936)

(8,189)

Proceeds from exercise of stock options

73,449

859

Payments for deferred and contingent consideration

(750)

(10,585)

     Net cash provided by (used in) financing activities

54,011

(3,737)

Effect of exchange rate changes on cash and cash equivalents

(29,411)

(7,048)

     Net increase in cash and cash equivalents

384,205

160,786

Cash and cash equivalents at beginning of period

1,001,055

844,253

Cash and cash equivalents at end of period

$

1,385,260

$

1,005,039

Reconciliations of Non-GAAP Measures to Their Most Directly Comparable GAAP Measures (Unaudited)

Reconciliation of Adjusted Operating Income (Loss) to Operating Income (Loss)

  ($ in millions)

Adjusted
operating
income
(loss)

Non-cash and
stock-based
compensation
expense

Loss (gain) on
disposal of
operating
assets

Depreciation and

amortization

Acquisition
expenses

Operating
income (loss)

Three Months Ended June 30, 2013

Concerts

$

42.6

$

1.6

$

(31.3)

$

35.1

$

0.3

$

36.9

Ticketing

77.6

1.7

—

36.7

—

39.2

Artist Nation

8.5

0.2

1.1

10.1

—

(2.9)

Sponsorship & Advertising

47.2

0.2

—

0.6

—

46.4

Other and Eliminations

1.6

(0.1)

—

(0.5)

0.1

2.1

Corporate

(17.6)

4.2

—

0.7

1.4

(23.9)

   Total Live Nation

$

159.9

$

7.8

$

(30.2)

$

82.7

$

1.8

$

97.8

Three Months Ended June 30, 2012

Concerts

$

36.2

$

1.3

$

—

$

44.1

$

(2.2)

$

(7.0)

Ticketing

71.4

1.5

(0.1)

38.8

(0.3)

31.5

Artist Nation

14.9

0.3

—

11.5

0.3

2.8

Sponsorship & Advertising

42.9

0.2

—

—

—

42.7

Other and Eliminations

0.8

—

0.2

(0.8)

—

1.4

Corporate

(20.2)

5.6

—

0.7

1.9

(28.4)

   Total Live Nation

$

146.0

$

8.9

$

0.1

$

94.3

$

(0.3)

$

43.0

Six Months Ended June 30, 2013

Concerts

$

29.4

$

2.5

$

(34.5)

$

63.8

$

0.5

$

(2.9)

Ticketing

137.2

3.1

—

79.5

0.1

54.5

Artist Nation

7.5

0.3

0.7

20.2

0.1

(13.8)

Sponsorship & Advertising

70.9

0.4

—

0.7

—

69.8

Other and Eliminations

2.4

—

—

(0.8)

—

3.2

Corporate

(34.6)

7.8

—

1.5

2.3

(46.2)

   Total Live Nation

$

212.8

$

14.1

$

(33.8)

$

164.9

$

3.0

$

64.6

Six Months Ended June 30, 2012

Concerts

$

11.3

$

2.7

$

(0.5)

$

72.5

$

(1.4)

$

(62.0)

Ticketing

143.9

3.0

(0.2)

78.0

(0.7)

63.8

Artist Nation

11.9

0.6

—

23.1

0.4

(12.2)

Sponsorship & Advertising

63.6

0.3

—

—

—

63.3

Other and Eliminations

(0.4)

—

0.5

(1.0)

—

0.1

Corporate

(36.1)

11.3

—

1.4

4.0

(52.8)

   Total Live Nation

$

194.2

$

17.9

$

(0.2)

$

174.0

$

2.3

$

0.2

Reconciliation of Adjusted Operating Income (Loss) to Free Cash Flow

($ in millions)

Q2 2013

Q2 2012

Adjusted operating income

$

159.9

$

146.0

Less:  Cash interest expense — net

(22.0)

(20.4)

            Cash taxes

(19.5)

(3.4)

            Maintenance capital expenditures

(15.3)

(16.6)

            Distributions to noncontrolling interests

(0.7)

(5.0)

Distributions from (contributions to) investments in nonconsolidated affiliates

(0.1)

(1.9)

Free cash flow

$

102.3

$

98.7

     Revenue generating capital expenditures

(18.5)

(18.8)

     Net

$

83.8

$

79.9

($ in millions)

6 months 2013

6 months 2012

Adjusted operating income

$

212.8

$

194.2

Less:  Cash interest expense — net

(44.5)

(48.9)

            Cash taxes

(22.9)

            Maintenance capital expenditures

(26.8)

(26.7)

            Distributions to noncontrolling interests

(1.9)

(8.2)

Distributions from (contributions to) investments in nonconsolidated affiliates

(0.3)

(2.2)

Free cash flow

$

116.4

$

122.7

     Revenue generating capital expenditures

(28.5)

(32.1)

     Net

$

87.9

$

90.6

Reconciliation of Cash and Cash Equivalents to Free Cash

($ in millions)

June 30,

2013

Cash and cash equivalents

$

1,385.3

Client cash

(479.1)

Deferred revenue — event-related

(868.3)

Accrued artist fees

(56.3)

Collections on behalf of others

(38.0)

Prepaids related to artist settlements/events

      Free cash

$

331.3