Live Nation Entertainment Reports Third Quarter 2012 Financial Results

FINANCIAL HIGHLIGHTS  – 3rd QUARTER and NINE MONTHS

(Unaudited; $ in millions)

Q3 2012

Q3 2011

Growth

9 months

2012

9 months

2011

Growth

Revenue

Concerts

$ 1,429.9

$ 1,280.3

11.7%

$ 2,954.6

$ 2,811.8

5.1%

Ticketing

346.0

333.5

3.7%

1001.5

966.7

3.6%

Artist Nation

127.9

121.4

5.4%

298.6

293.9

1.6%

Sponsorship & Advertising

95.8

86.4

10.9%

193.2

182.5

5.9%

Other & Eliminations

(36.5)

(31.6)

(15.5%)

(66.1)

(56.6)

(16.8%)

$ 1,963.1

$ 1,790.0

9.7%

$ 4,381.8

$ 4,198.3

4.4%

Adjusted Operating Income (Loss)

Concerts

$ 49.1

$ 83.7

(41.3%)

$ 60.4

$ 62.2

(2.9%)

Ticketing

82.1

54.3

51.2%

226.0

213.6

5.8%

Artist Nation

21.1

20.0

5.5%

33.0

35.0

(5.7%)

Sponsorship & Advertising

74.1

66.0

12.3%

137.8

128.6

7.2%

Other & Eliminations

(0.7)

(0.6)

(16.7%)

(1.1)

(0.4)

**

Corporate

(23.3)

(19.8)

(17.7%)

(59.5)

(51.8)

(14.9%)

$ 202.4

$ 203.6

(0.6%)

$ 396.6

$ 387.2

2.4%

Operating Income (Loss)

Concerts

$ 19.1

$ 48.4

(60.5%)

$ (43.0)

$ (24.3)

(77.0%)

Ticketing

36.6

13.7

**

100.4

97.3

3.2%

Artist Nation ⁽¹⁾

7.5

8.8

(14.8%)

(4.7)

(29.4)

84.0%

Sponsorship & Advertising

73.6

65.8

11.9%

137.0

127.9

7.1%

Other & Eliminations

(0.2)

(0.6)

66.7%

-

(0.3)

**

Corporate

(32.1)

(31.3)

(2.6%)

(85.0)

$ (86.2)

1.4%

$ 104.5

$ 104.8

(0.3%)

$ 104.7

$ 85.0

23.2%

** percentages are not meaningful

(1)

Artist Nation's operating loss for the nine months ended September 30, 2011 was driven by $24.4 million of stock-based compensation expense due to the acquisition of the remaining equity of Front Line Management Group, Inc. in February 2011.

LIVE NATION ENTERTAINMENT, INC.

KEY OPERATING METRICS

3 Months Ended Sept 30

9 Months Ended Sept 30

2012

2011

2012

2011

Concerts ⁽¹⁾

Estimated Events:

North America

3,955

4,105

11,152

11,332

International

1,227

1,136

4,536

4,248

Total estimated events

5,182

5,241

15,688

15,580

Estimated Attendance (rounded):

North America

11,542,000

12,253,000

25,150,000

25,097,000

International

4,271,000

3,304,000

11,677,000

10,449,000

Total estimated attendance

15,813,000

15,557,000

36,827,000

35,546,000

Ancillary net revenue per attendee ⁽²⁾:

North America amphitheaters

$18.55

$18.03

International festivals ⁽⁵⁾

$15.71

$16.80

Ticketing ⁽³⁾

Number of tickets sold (in thousands):

Concerts

19,421

18,302

54,832

53,090

Sports

6,709

6,427

23,249

20,765

Arts and theater

4,493

5,374

13,683

14,938

Family

3,676

3,008

11,277

9,771

Other ⁽⁴⁾

1,771

1,784

5,221

4,388

36,070

34,895

108,262

102,952

Gross value of tickets sold (in thousands)

$2,092,102

$2,004,099

$6,503,452

$6,154,589

Sponsorship & Advertising

Sponsorship revenue (in thousands)

$81,511

$72,679

$155,479

$147,102

Online advertising revenue (in thousands)

$14,294

$13,709

$37,732

$35,351

(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 split over the days of the festival and can be split between 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 concerts in our owned and/or operated buildings and in certain European territories where these tickets are recognized as the concerts occur.

(4)

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

(5)

On a constant currency basis, international festivals ancillary net revenue per attendee is $17.26 for the 9 months ended September 30, 2012, an increase of 3% over the same period in 2011.

LIVE NATION ENTERTAINMENT, INC.

CONSOLIDATED STATEMENTS OF OPERATIONS

(UNAUDITED)

Three Months Ended

Nine Months Ended

September 30,

September 30,

2012

2011

2012

2011

(in thousands except share and per share data)

Revenue

$ 1,963,146

$ 1,790,025

$ 4,381,820

$ 4,198,316

Operating expenses:

Direct operating expenses

1,457,423

1,286,304

3,103,006

2,971,579

Selling, general and administrative expenses

283,846

282,462

832,924

822,226

Depreciation and amortization

84,684

83,341

258,656

237,749

Loss (gain) on sale of operating assets

(60)

231

(255)

866

Corporate expenses

30,842

27,385

81,474

73,011

Acquisition transaction expenses

1,896

5,493

1,335

7,864

Operating income

104,515

104,809

104,680

85,021

Interest expense

35,535

30,388

94,733

90,462

Interest income

(994)

(1,023)

(2,825)

(2,848)

Equity in earnings of nonconsolidated affiliates

(3,117)

(2,777)

(8,799)

(5,549)

Other (income) expense, net

(7,035)

6,461

(3,393)

7,207

Income (loss) before income taxes

80,126

71,760

24,964

(4,251)

Income tax expense (benefit)

11,950

8,739

21,456

(29,544)

Net income

68,176

63,021

3,508

25,293

Net income attributable to noncontrolling interests

10,228

11,309

7,018

8,784

Net income (loss) attributable to common stockholders of Live

Nation Entertainment, Inc.

$ 57,948

$ 51,712

$ (3,510)

$ 16,509

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

$ 0.31

$ 0.28

$ (0.02)

$ 0.09

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

$ 0.31

$ 0.27

$ (0.02)

$ 0.09

Weighted average common shares outstanding:

Basic

187,153,788

186,127,846

186,857,527

181,115,853

Diluted

189,754,343

188,531,130

186,857,527

183,306,799

LIVE NATION ENTERTAINMENT, INC.

CONSOLIDATED BALANCE SHEETS

(UNAUDITED)

September 30,

December 31,

2012

2011

(in thousands)

ASSETS

Current assets

Cash and cash equivalents

$ 783,671

$ 844,253

Accounts receivable, less allowance of $13,947 and $16,986, respectively

583,322

389,346

Prepaid expenses

444,451

316,491

Other current assets

30,924

26,700

Total current assets

1,842,368

1,576,790

Property, plant and equipment

Land, buildings and improvements

848,340

851,812

Computer equipment and capitalized software

319,497

261,475

Furniture and other equipment

194,544

172,250

Construction in progress

52,244

60,652

1,414,625

1,346,189

Less accumulated depreciation

696,720

626,053

717,905

720,136

Intangible assets

Definite-lived intangible assets, net

834,690

873,712

Indefinite-lived intangible assets

377,286

377,160

Goodwill

1,338,599

1,257,644

Investments in nonconsolidated affiliates

57,725

55,796

Other long-term assets

263,675

216,106

Total assets

$ 5,432,248

$ 5,077,344

LIABILITIES AND STOCKHOLDERS' EQUITY

Current liabilities

Accounts payable, client accounts

$ 549,301

$ 473,956

Accounts payable

127,356

87,627

Accrued expenses

658,061

579,566

Deferred revenue

326,730

273,536

Current portion of long-term debt

60,070

52,632

Other current liabilities

16,462

25,236

Total current liabilities

1,737,980

1,492,553

Long-term debt, net

1,685,968

1,652,629

Long-term deferred income taxes

190,681

186,298

Other long-term liabilities

106,262

120,693

Commitments and contingent liabilities

Redeemable noncontrolling interests

48,136

8,277

Stockholders' equity

Common stock

1,873

1,868

Additional paid-in capital

2,265,020

2,243,587

Accumulated deficit

(748,701)

(745,191)

Cost of shares held in treasury

(214)

(2,787)

Accumulated other comprehensive loss

(16,436)

(36,374)

Total Live Nation Entertainment, Inc. stockholders' equity

1,501,542

1,461,103

Noncontrolling interests

161,679

155,791

Total stockholders' equity

1,663,221

1,616,894

Total liabilities and stockholders' equity

$ 5,432,248

$ 5,077,344

LIVE NATION ENTERTAINMENT, INC

CONSOLIDATED STATEMENTS OF CASH FLOWS

(UNAUDITED)

Nine Months Ended
September 30,

2012

2011

(in thousands)

CASH FLOWS FROM OPERATING ACTIVITIES

Net income

$ 3,508

$ 25,293

Adjustments to reconcile net income to net cash provided by (used in) operating activities:

Depreciation

90,789

94,184

Amortization

167,867

143,565

Deferred income tax benefit

(11,183)

(40,679)

Amortization of debt issuance costs and discount/premium, net

11,415

9,707

Non-cash gain on extinguishment of debt

(460)

-

Non-cash compensation expense

27,595

40,556

Changes in fair value of contingent consideration

(2,449)

(8,828)

Loss (gain) on sale of operating assets

(255)

866

Equity in earnings of nonconsolidated affiliates

(8,799)

(5,549)

Other, net

2,085

4,091

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

Increase in accounts receivable

(186,313)

(164,392)

Decrease (increase) in prepaid expenses

(159,473)

25,704

Increase in other assets

(37,712)

(56,645)

Increase (decrease) in accounts payable, accrued expenses and other liabilities

138,270

(27,682)

Increase (decrease) in deferred revenue

54,154

(67,732)

Net cash provided by (used in) operating activities

89,039

(27,541)

CASH FLOWS FROM INVESTING ACTIVITIES

Distributions from nonconsolidated affiliates

6,744

8,804

Investments made in nonconsolidated affiliates

(3,212)

(6,437)

Purchases of property, plant and equipment

(92,372)

(69,573)

Proceeds from disposal of operating assets, net of cash divested

7,788

7,361

Cash paid for acquisitions, net of cash acquired

(71,256)

(25,499)

Purchases of intangible assets

(14,553)

(118)

Other, net

(943)

(1,933)

Net cash used in investing activities

(167,804)

(87,395)

CASH FLOWS FROM FINANCING ACTIVITIES

Proceeds from long-term debt, net of issuance costs

481,286

(596)

Payments on long-term debt

(457,487)

(22,699)

Contributions from noncontrolling interests

130

-

Distributions to noncontrolling interests, net

(9,202)

(14,249)

Purchases and sales of noncontrolling interests, net

(259)

(47, 559)

Proceeds from exercise of stock options

926

3,210

Proceeds from sale of common stock

-

76,492

Payments for deferred and contingent consideration

(10,585)

(13,807)

Net cash provided by (used in) financing activities

4,809

(19,208)

Effect of exchange rate changes on cash and cash equivalents

13,374

23,959

Net decrease in cash and cash equivalents

(60,582)

(110,185)

Cash and cash equivalents at beginning of period

844,253

892,758

Cash and cash equivalents at end of period

$ 783,671

$ 782,573

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 sale of operating assets

Depreciation and

amortization

Acquisition expenses

Operating income (loss)

Three months ended September 30, 2012

Concerts

$ 49.1

$ 1.5

$ -

$ 27.5

$ 1.0

$ 19.1

Ticketing

82.1

1.7

-

43.3

0.5

36.6

Artist Nation

21.1

0.4

-

13.2

-

7.5

Sponsorship & Advertising

74.1

0.2

-

0.3

-

73.6

Other & Eliminations

(0.7)

-

(0.1)

(0.4)

-

(0.2)

     Corporate

(23.3)

5.9

-

0.8

2.1

(32.1)

Total Live Nation

$ 202.4

$ 9.7

$ (0.1)

$ 84.7

$ 3.6

$ 104.5

Three months ended September 30, 2011

Concerts

$ 83.7

$ 1.4

$ -

$ 33.1

$ 0.8

$ 48.4

Ticketing

54.3

1.4

-

39.0

0.2

13.7

Artist Nation

20.0

0.2

-

10.7

0.3

8.8

Sponsorship & Advertising

66.0

0.2

-

-

-

65.8

Other & Eliminations

(0.6)

-

0.2

(0.2)

-

(0.6)

     Corporate

(19.8)

5.1

-

0.7

5.7

(31.3)

Total Live Nation

$ 203.6

$ 8.3

$ 0.2

$ 83.3

$ 7.0

$ 104.8

Nine months ended September 30, 2012

Concerts

$ 60.4

$ 4.2

$ (0.5)

$ 100.1

$ (0.4)

$ (43.0)

Ticketing

226.0

4.7

(0.2)

121.3

(0.2)

100.4

Artist Nation

33.0

1.0

-

36.3

0.4

(4.7)

Sponsorship & Advertising

137.8

0.5

-

0.3

-

137.0

Other & Eliminations

(1.1)

-

0.4

(1.5)

-

-

     Corporate

(59.5)

17.2

-

2.2

6.1

(85.0)

Total Live Nation

$ 396.6

$ 27.6

$ (0.3)

$ 258.7

$ 5.9

$ 104.7

Nine months ended September 30, 2011

Concerts

$ 62.2

$ 4.3

$ (0.7)

$ 87.9

$ (5.0)

$ (24.3)

Ticketing

213.6

4.0

(0.1)

111.4

1.0

97.3

Artist Nation

35.0

27.8

1.3

37.2

(1.9)

(29.4)

Sponsorship & Advertising

128.6

0.5

-

0.2

-

127.9

Other & Eliminations

(0.4)

-

0.4

(0.5)

-

(0.3)

     Corporate

(51.8)

14.6

-

1.5

18.3

(86.2)

Total Live Nation

$ 387.2

$ 51.2

$ 0.9

$ 237.7

$ 12.4

$ 85.0

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

($ in millions)

Q3 2012

Q3 2011

Adjusted operating income

$ 202.4

$ 203.6

Less: Cash interest expense  — net

(36.1)

(26.1)

Cash taxes

(3.9)

(11.1)

Maintenance capital expenditures

(15.5)

(12.7)

Distributions to noncontrolling interests

(1.0)

(2.3)

Distributions from (contributions to) investments in nonconsolidated affiliates

5.7

0.8

Free cash flow

$ 151.6

$ 152.2

Revenue generating capital expenditures

(13.9)

(11.8)

Net

$ 137.7

$ 140.4

($ in millions)

9 months

2012

9 months

2011

Adjusted operating income

$ 396.6

$ 387.2

Less: Cash interest expense — net

(85.0)

(77.9)

Cash taxes

10.6

(34.3)

Maintenance capital expenditures

(42.2)

(41.6)

Distributions to noncontrolling interests

(9.2)

(12.3)

Distributions from (contributions to) investments in nonconsolidated affiliates

3.5

2.4

Free cash flow

$ 274.3

$ 223.5

Revenue generating capital expenditures

(46.0)

(27.6)

Net

$ 228.3

$ 195.9

Reconciliation of Cash and Cash Equivalents to Free Cash

($ in millions)

September 30,

2012

Cash and cash equivalents

$ 783.7

Client cash

(394.3)

Deferred revenue â€" event related

(272.8)

Accrued artist fees

(23.9)

Collections on behalf of others

(52.6)

Prepaids related to artist settlements/events

259.9

    Free cash

$ 300.0

Detail of Revenue as Reported and at Constant Currency

Reported

Constant
Currency

Reported

Reported

Constant
Currency

Q3 2012

Q3 2012

Q3 2011

Growth

Growth

($ in millions)

Revenue

Concerts

$ 1,429.9

$ 1,471.7

$ 1,280.3

11.7%

14.9%

Ticketing

346.0

351.6

333.5

3.7%

5.4%

Artist Nation

127.9

128.2

121.4

5.4%

5.6%

Sponsorship & Advertising

95.8

98.6

86.4

10.9%

14.1%

Other & Eliminations

(36.5)

(36.5)

(31.6)

(15.5%)

(15.5%)

$ 1,963.1

$ 2,013.6

$ 1,790.0

9.7%

12.5%

Reported

Constant
Currency

Reported

Reported

Constant
Currency

9 Months

9 Months

9 Months

Growth

Growth

2012

2012

2011

($ in millions)

Revenue

Concerts

$ 2,954.6

$ 3,035.5

$ 2,811.8

5.1%

8.0%

Ticketing

1,001.5

1,016.7

966.7

3.6%

5.2%

Artist Nation

298.6

299.2

293.9

1.6%

1.8%

Sponsorship & Advertising

193.2

198.1

182.5

5.9%

8.5%

Other & Eliminations

(66.1)

(66.1)

(56.6)

(16.8%)

(16.8%)

$ 4,381.8

$ 4,483.4

$ 4,198.3

4.4%

6.8%