Live Nation Reports Fourth Quarter and Full Year 2006 Financial Results

03/01/2007

- Consolidating Global Live Music Platform -
Entered or Expanded Presence in Top Global Music Markets of Spain, France and Canada
Extended Venue Portfolio Through the Acquisition of House of Blues
Solidified Global Touring Platform Through Majority Acquisition of CPI

- Expanding Offerings to Artists and Fans to Capture Additional Live Music Revenue Streams -
Added Artist Merchandise, Fan Club and Website Services to Our Offerings
Through Majority Acquisitions of Musictoday and TRUNK

- Launched Online Live Music E-Commerce Platform -
Established www.livenation.com and created 20+ million fan database

- Continued Asset Realignment -
Commenced Process to Sell the Substantial Majority of North American Theatrical Assets

LOS ANGELES, March 1 /PRNewswire-FirstCall/ -- Live Nation (NYSE: LYV), the world's largest live music company, announced today financial results for the three months and full year ended December 31, 2006.

(Logo: http://www.newscom.com/cgi-bin/prnh/20070220/LATU096LOGO)

This press release contains certain non-GAAP financial measures as defined by SEC Regulation G. A reconciliation of each such measure to its most directly comparable GAAP financial measure, together with an explanation of why management believes that these non-GAAP financial measures provide useful information to investors, is included at the end of this press release.

Throughout the text of this release, we will refer to Adjusted EBITDA. Adjusted EBITDA is a non-GAAP financial measure that the company defines as operating income (loss) before certain unusual and/or non-cash charges, depreciation and amortization, loss (gain) on sale of operating assets and non-cash compensation expense.

For the full year 2006, the company reported revenues of $3,691.6 million, an increase of $754.7 million, or 25.7%, as compared to 2005. Adjusted EBITDA increased by $15.6 million, or 11.3%, to $153.1 million, operating income increased by $43.4 million to $30.3 million, net income increased by $99.2 million to a reduced loss of ($31.4) million, and earnings per share increased by $1.48 to a reduced loss per share of ($0.48).

Excluding the impact of our 2006 acquisitions of Concert Productions International, Inc. and certain of its affiliates ("CPI"), TRUNK Ltd., Musictoday and House of Blues, including the full year impact of our acquisition of Mean Fiddler in 2005 and assuming the impact of our entire exhibition and sports representation businesses of which we sold the substantial majority of in 2005 and 2006 was completely eliminated for both 2005 and 2006 (the "Acquisition and Divestiture Adjustments"), we estimate revenue for the full year 2006 would have been $3,373.8 million, an increase of $493.3 million or 17.1% over estimated revenue for the full year 2005 of $2,880.5 million. The increase in revenue was primarily due to the increase in the number of events and attendance in our global music business. We estimate that Adjusted EBITDA for full year 2006 would have been $126.1 million, a decrease of $4.2 million, or (3.2%) from estimated Adjusted EBITDA for full year 2005 of $130.3 million. The decline in estimated Adjusted EBITDA was primarily due to increased corporate costs associated with being a public company and investment in our venue management group and online business.

For the fourth quarter of 2006, the company reported revenues of $1,052.0 million, an increase of $299.7 million, or 39.8%, as compared to the fourth quarter of 2005. Adjusted EBITDA increased by $14.8 million to $18.0 million, operating income increased by $45.7 million to a reduced loss of ($17.0) million, and net income increased by $101.8 million to a reduced loss of ($33.1) million.

Assuming the same Acquisition and Divestiture Adjustments described above, we estimate that revenue for the fourth quarter of 2006 would have been $816.7 million, an increase of $84.2 million, or 11.5%, from estimated revenue for the fourth quarter of 2005 of $732.5 million. We estimate that Adjusted EBITDA for the fourth quarter of 2006 would have been nominal, essentially flat with estimated Adjusted EBITDA for the fourth quarter of 2005 of $0.8 million.

Michael Rapino, President and Chief Executive Officer of Live Nation commented, "We began 2006 as a broad-based live entertainment company with a vision to transform ourselves into a global vertically integrated live music company. Since then, we successfully moved Live Nation closer to our goal by (i) beginning to shed non-core businesses such as our sports representation business and Las Vegas productions and announcing the plan to divest selected non-core venues and our North American theatrical business, (ii) aggressively expanding our live music platform by acquiring House of Blues, CPI and entering new top tier global music markets and (iii) extending our capabilities to provide additional goods and services surrounding live music events by establishing livenation.com and acquiring majority stakes in companies such as Musictoday and TRUNK. Now, at the beginning of 2007, I can say we are focused on live music with the tools to execute on our strategy to become a global vertically integrated music company, connecting artists and fans through the live concert experience.

In 2006, we faced, and will continue to face in 2007, a number of industry-related and company-specific challenges including:

  • Competitive challenges to our North American amphitheaters due to a declining supply of artists that can fill these venues and increasing competition from indoor arenas and casinos
  • General underexposure to small and mid-sized music venues with up to 5,000 capacity
  • High and increasing artist talent costs
  • Underexposure to top population centers / concert markets worldwide
  • De-centralized management
  • Lack of ancillary services to offer to artists and fans
  • Limited brand recognition and web presence

As a result, throughout 2006 we undertook a three-pronged strategy (fix / build / expand) to address the issues we saw in our business and the concert industry in general. Highlights of our 2006 accomplishments include:

  • Established a vision focused on the music business
  • Created a brand: Live Nation
  • Drove increased show count and attendance at our events with involvement in 9 of the top ten tours of 2006, a record year for the North American concert industry
  • Implemented a centralized venue management department which increased food and beverage revenue per fan by 10% in 2006
  • Began to divest of non-core business assets such as our sports representation business and interests in certain Las Vegas-based productions and announced the plan to sell selected non-core venues
  • Acquired House of Blues which increased our small-sized music venue, West coast amphitheater and Canadian presence
  • Acquired Concert Productions International ("CPI") which solidified our global touring business
  • Acquired Gamerco, the largest promoter in Spain (late 2006), a majority interest in Jackie Lombard Productions, one of the largest promoters in France (early 2007), and, in connection with the House of Blues acquisition, a 50% interest in House of Blues Concerts Canada, the largest promoter in Canada which extended our reach to eight of the top 10 worldwide recorded music markets
  • Added important venues to our portfolio including Wembley Arena, Gramercy Theater (both in 2006) and Dodge Theater (early 2007)
  • Launched our online presence; with our websites collectively now ranked as the second most popular entertainment/event site according to Nielsen//Net Ratings
  • Acquired Musictoday, TRUNK Ltd and, through the acquisition of CPI, a controlling interest in Ultrastar, which bring vertically integrated artist fan clubs and merchandise into our artist service portfolio

Our 2007 objectives will continue on the fix, build and expand theme and include the following strategies:

  • To drive profitability in our North American business by improving booking margins, increasing venue ancillary revenue per fan (e.g., food and beverage) and growing local and national sponsorships and alliances
  • To continue to sell non-core assets
  • To augment our international promoter network in major music markets around the world
  • To expand our festival, House of Blues and mid-sized music venue platform in North America
  • To extend our relationship with artists and maximize live event revenue streams
  • To accelerate www.livenation.com online business through expanded offers online and expansion into international markets."

    Acquisition / New Venue Development Update

    We continue to move forward on our acquisition and new venue development strategy.

    • North America Platform Expansion. During 2006, we significantly expanded our North American venue footprint by acquiring House of Blues. We continue to expand our North America venue network focusing on House of Blues and small- and mid-sized music venues in major markets.
      • House of Blues Integration Update. We closed our acquisition of House of Blues on November 3, 2006. By early December, we had completed the reorganization of House of Blues, merging its corporate operations into our existing structure. This reorganization resulted in the elimination of approximately 80 positions. The management of seven of the House of Blues amphitheaters and six exclusive booking or management contracts has been folded into our existing regional management structure in the United States and the management of the ten House of Blues(R)- branded clubs remains separate as it had been under House of Blues. As a result, we reaffirm our current expectation of achieving approximately $15 million of cost savings in connection with this acquisition (exclusive of approximately $5-$6 million of related one-time costs). In addition, as described in part below, we plan to expand the House of Blues(R) brand through the addition of new venues.
      • Canada. In connection with the acquisition of House of Blues in November 2006, we acquired a 50% interest in House of Blues Concerts Canada ("HOBCC"). HOBCC is the largest promoter in Canada and operates two venues through long-term lease agreements, the Molson Amphitheatre in Toronto and Commodore Ballroom in Vancouver and has exclusive booking arrangements with another two small-sized music venues in Toronto.
      • New House of Blues Venues. We expect to complete construction of our House of Blues venue in Dallas, Texas, the #6 Designated Market Area, or DMA(R), as defined by Nielsen Media Research, with opening targeted for May 2007. We have also broken ground on the construction of a new House of Blues venue in Houston, Texas, the #10 DMA(R) with opening targeted for 2009.
      • New Small and Mid-Sized Music Venues. In December 2006, we entered into a long-term lease to operate the Gramercy Theater, a 599- capacity small-sized music venue located in New York, New York, the #1 DMA(R). In January 2007, we entered into a long-term lease to operate the Dodge Theater, a 5,500-capacity mid-sized music venue located in Phoenix, Arizona, the #13 DMA(R). We also have won the right to negotiate a long-term lease to operate the Jackie Gleason Theater, a 2,750-capacity mid-sized music venue located in Miami, Florida, the #16 DMA(R).
    • International Platform Expansion. The acquisitions we made in 2006 and early 2007 expand and enhance Live Nation's global presence to eight of the top ten recorded music markets worldwide.
      • Spain and France. In December 2006, we acquired 100% of Gamerco, the largest promoter in Spain and in January 2007, we acquired a 51% interest in Jackie Lombard Productions, a leading promoter in France. These acquisitions provide Live Nation with a pan-European reach which we believe will facilitate tour booking and multi- country marketing partnerships and sponsorships.
      • UK Venues. In 2006 we expanded and plan to continue to selectively expand our UK and international venue platform. In April 2006, we entered into a 15-year management agreement to operate London's prestigious Wembley Arena. In addition, our planned acquisition of a controlling interest in Academy Music Group, a leading music venue operator in the UK with twelve small and mid-sized music venues, remains pending subject to satisfaction of certain conditions set forth by the Competition Commission.

    Divestiture Update North America Theatrical

    As part of our strategy to focus on our core global music business, we have launched a process to divest the majority of our North American theatrical business assets. The assets we anticipate including in this divestiture include (i) our Broadway Across America business - the largest subscription series in the United States for touring theatrical performances, (ii) thirteen theatrical venues which we own, operate or have an equity interest in located in the seven major North American markets of Chicago, Boston, Baltimore, Minneapolis, Toronto, Washington D.C. and Philadelphia and (iii) our remaining 50.1% interest in a production of the Phantom of the Opera at The Venetian Resort Hotel & Casino in Las Vegas. Our United Kingdom theatrical assets as well as the New York Hilton and the Boston Opera House will not be included in the divestiture process due to certain tax restrictions associated with our spin-off from Clear Channel Communications. We cannot predict when, or if, any transaction will occur with respect to these properties.

    Other

    During 2006 we divested certain non-core assets, including, some sports representation businesses, certain Las Vegas-based productions, and, in January 2007, Donington Park, a racetrack in the United Kingdom. Together the sale of these non-core businesses and certain other investments generated $58.5 million of cash for debt repayment and/or reinvestment. We anticipate that further sales of non-core assets, including the venue sales previously announced in connection with our third quarter earnings release, will be executed during 2007 and 2008.

        Segment and Other Financial and Operational Information
    
         ($ and attendance in thousands, actual events)
    
        Note: Totals and margins may not reconcile due to rounding; Any
    differences are immaterial
    
                                            Year Ended                      %
                                       12/31/06   12/31/05   Variance   Variance
        NUMBER OF EVENTS
        North America Music               7,857      6,850     1,007     14.7%
        International Music               2,465      1,475       990     67.1%
        Global Touring                      153         94        59     62.8%
           Subtotal Music                10,475      8,419     2,056     24.4%
        Theatrical                        5,264      5,478      (214)    (3.9%)
        Motorsports                         560        551         9      1.6%
        Third Party Rentals (a)           9,286      8,783       503      5.7%
           Subtotal                      25,585     23,231     2,354     10.1%
        Exhibitions and Sports              358      3,544    (3,186)   (89.6%)
           Total                         25,943     26,775      (832)    (3.1%)
    
        North America Music:
        O&O Amphitheaters (b)               923        768       155     20.2%
        Other                             6,943      6,082       861     14.2%
           Total                          7,857      6,850     1,007     14.7%
    
        ATTENDANCE
        North America Music              24,730     22,405     2,325     10.4%
        International Music               8,921      7,757     1,163     15.0%
        Global Touring                    2,914      2,428       486     20.0%
           Subtotal Music                36,565     32,590     3,975     12.2%
        Theatrical                        7,747      9,074    (1,327)   (14.6%)
        Motorsports                       4,641      4,643        (2)    (0.0%)
        Third Party Rentals (a)          10,791      9,484     1,307     13.8%
           Subtotal                      59,744     55,791     3,952      7.1%
        Exhibitions and Sports              203      2,903    (2,700)   (93.0%)
           Total                         59,947     58,694     1,253      2.1%
    
        North America Music:
        O&O Amphitheaters (b)             8,329      7,124     1,205     16.9%
        Other                            16,401     15,281     1,120      7.3%
           Total                         24,730     22,405     2,325     10.4%
    
        EVENTS
        Revenue                      $2,932,720 $2,266,176  $666,544     29.4%
        Adjusted EBITDA                 (57,674)   (56,551)   (1,123)     2.0%
        % Margin                          (2.0%)     (2.5%)     0.5%
        Operating (Loss)                (77,355)  (114,954)   37,599    (32.7%)
        % Margin                          (2.6%)     (5.1%)     2.4%
    
        VENUES AND SPONSORSHIP
        Revenue                        $635,753   $535,870   $99,883     18.6%
        Adjusted EBITDA                 155,091    140,788    14,303     10.2%
        % Margin                          24.4%      26.3%     (1.9%)
        Operating Income (Loss)          47,310     84,498   (37,188)   (44.0%)
        % Margin                           7.4%      15.8%     (8.3%)
    
        DIGITAL DISTRIBUTION
        Revenue                         $99,000    $72,576   $26,424     36.4%
        Adjusted EBITDA                  75,483     66,364     9,119     13.7%
        % Margin                          76.2%      91.4%    (15.2%)
        Operating Income                 74,586     66,086     8,500     12.9%
        % Margin                          75.3%      91.1%    (15.7%)
    
    
                                         Quarter Ended                      %
                                      12/31/06   12/31/05    Variance   Variance
    
        NUMBER OF EVENTS
        North America Music              2,997      2,016        981      48.7%
        International Music                623        534         89      16.7%
        Global Touring                      69         43         26      60.5%
           Subtotal Music                3,689      2.593      1,096      42.3%
        Theatrical                       1,604      1,274        330      25.9%
        Motorsports                         44         38          6      15.8%
        Third Party Rentals (a)          3,148      3,618       (470)    (13.0%)
           Subtotal                      8,485      7,523        962      12.8%
        Exhibitions and Sports               0      1,438     (1,438)   (100.0%)
           Total                         8,485      8,961       (476)     (5.3%)
    
        North America Music:
        O&O Amphitheaters (b)               67         49         18      36.7%
        Other                            2,930      1,967        963      49.0%
           Total                         2,997      2,016        981      48.7%
    
        ATTENDANCE
        North America Music              6,391      5,511        880      16.0%
        International Music              1,656      1,910       (253)    (13.3%)
        Global Touring                   1,662        773        889     114.9%
           Subtotal Music                9,710      8,194      1,515      18.5%
        Theatrical                       2,075      2,126        (51)     (2.4%)
        Motorsports                        220        233        (13)     (5.5%)
        Third Party Rentals (a)          4,902      4,259        643      15.1%
           Subtotal                     16,906     14,812      2,095      14.1%
        Exhibitions and Sports               0        617       (617)   (100.0%)
           Total                        16,906     15,429      1,478       9.6%
    
        North America Music:
        O&O Amphitheaters (b)              227        150         77      51.3%
        Other                            6,164      5,361        803      15.0%
           Total                         6,391      5,511        880      16.0%
    
        EVENTS
        Revenue                       $856,521   $613,415   $243,106      39.6%
        Adjusted EBITDA                (13,551)   (21,573)     8,022     (37.2%)
        % Margin                         (1.6%)     (3.5%)      1.9%
        Operating (Loss)               (21,158)   (60,099)    38,941     (64.8%)
        % Margin                         (2.5%)     (9.8%)      7.3%
    
        VENUES AND SPONSORSHIP
        Revenue                       $167,139   $107,029    $60,110      56.2%
        Adjusted EBITDA                 19,854     11,225      8,629      76.9%
        % Margin                         11.9%      10.5%       1.4%
        Operating Income (Loss)         (5,643)   (10,809)     5,166     (47.8%)
        % Margin                         (3.4%)    (10.1%)      6.7%
    
        DIGITAL DISTRIBUTION
        Revenue                        $27,938    $15,793    $12,145      76.9%
        Adjusted EBITDA                 16,675     14,098      2,577      18.3%
        % Margin                         59.7%      89.3%     (29.6%)
        Operating Income                16,189     14,046      2,143      15.3%
        % Margin                         57.9%      88.9%      31.0%
    
    
    
        Segment and Other Financial and Operational Information (continued)
    
        ($ and attendance in thousands, actual events)
    
        Note: Totals and margins may not reconcile due to rounding; Any
    differences are immaterial
    
    
                                            Year Ended                      %
                                       12/31/06    12/31/05   Variance  Variance
        OTHER
        Revenue                         $33,398     $73,422   ($40,024)  (54.5%)
        Adjusted EBITDA                  12,452      14,730     (2,278)  (15.5%)
        % Margin                          37.3%       20.1%      17.2%
        Operating Income                 22,482       7,935     14,547   183.3%
        % Margin                          67.3%       10.8%      56.5%
    
        CORPORATE AND ELIMINATIONS
        Revenue                         ($9,312)   ($11,199)    $1,887   (16.8%)
        Corporate Expenses               33,863      50,715    (16,852)  (33.2%)
        Adjusted EBITDA                 (32,238)    (27,777)    (4,461)   16.1%
        Operating (Loss)                (36,759)    (56,748)    19,989   (35.2%)
    
        TOTAL
        Revenue                      $3,691,559  $2,936,845   $754,714    25.7%
        Adjusted EBITDA                 153,114     137,554     15,560    11.3%
        % Margin                           4.1%        4.7%      (0.5%)
        Operating Income (Loss)          30,264     (13,183)    43,447  (329.6%)
        % Margin                           0.8%       (0.4%)      1.3%
    
        CAPITAL EXPENDITURES
        Maintenance                     $48,120     $56,325    ($8,205)  (14.6%)
        Revenue generating               17,585      36,195    (18,610)  (51.4%)
           Total                         65,705      92,520    (26,815)  (29.0%)
    
    
    
                                            Quarter Ended                   %
                                         12/31/06  12/31/05   Variance  Variance
    
        OTHER
        Revenue                            $3,385   $17,800   ($14,415)  (81.0%)
        Adjusted EBITDA                     5,487     6,739     (1,252)  (18.6%)
        % Margin                           162.1%     37.9%     124.3%
        Operating Income                    5,123     9,352     (4,229)  (45.2%)
        % Margin                           151.3%     52.5%      98.8%
    
        CORPORATE AND ELIMINATIONS
        Revenue                           ($3,010)  ($1,780)   ($1,230)   69.1%
        Corporate Expenses                 10,921    12,324     (1,403)  (11.4%)
        Adjusted EBITDA                   (10,503)   (7,336)    (3,167)   43.2%
        Operating (Loss)                  (11,559)  (15,273)     3,714   (24.3%)
    
        TOTAL
        Revenue                        $1,051,973  $752,257   $299,716    39.8%
        Adjusted EBITDA                    17,961     3,153     14,808   469.7%
        % Margin                             1.7%      0.4%       1.3%
        Operating Income (Loss)           (17,048)  (62,783)    45,735   (72.8%)
        % Margin                            (1.6%)    (8.3%)      6.7%
    
        CAPITAL EXPENDITURES
        Maintenance                        $7,334   $12,275    ($4,941)  (40.3%)
        Revenue generating                  7,341     8,248       (907)  (11.0%)
           Total                           14,675    20,523     (5,848)  (28.5%)
    
    
        * % Variance not meaningful.
    
        (a)  Reflects third party rentals of all Live Nation venues
        (b)  O&O Amphitheaters means owned and operated amphitheaters
    

    Note: The 2006 International Music data includes 710 events and 221,000 attendees for the full year, and 154 events and 59,000 attendees for the fourth quarter for Mean Fiddler venues in the United Kingdom. The 2006 Third Party Rentals data includes 526 events and 349,000 attendees for the full year, 105 events and 130,000 attendees for the fourth quarter for Mean Fiddler venues in the United Kingdom. The data for Mean Fiddler for 2005 is not available.

    Fourth Quarter 2006 Segment Highlights

    Events

    Our Events segment includes the promotion and/or production of live music shows, theatrical performances and specialized motor sports events in our owned and/or operated venues and in rented third-party venues. The promotion and/or production of these events enables us to generate revenue, operating income and Adjusted EBITDA in our Venues and Sponsorship and Digital Distribution segments as described below. Our global touring, U.S. outdoor amphitheaters and European festivals are significant drivers of this segment's results.

    For the quarter ended December 31, 2006, our number of events, excluding our exhibition and sports businesses which we exited in the case of exhibitions or are exiting in the case of sports and excluding third-party rentals, increased by 1,432 to 5,337, or a 36.7% increase over the same period for the prior year. Attendance, excluding our exhibition and sports businesses and excluding third-party rentals, increased by 1.5 million to 12.0 million, or 13.8%. Revenue increased by $243.1 million to $856.5 million or a 39.6% increase over the same period for the prior year. This growth was due primarily to the acquisition of CPI and House of Blues which were not included in our results during 2005 and which generated a total of $190.0 million of Events revenue during the quarter. In addition, revenue growth was the result of our production of Phantom - The Las Vegas Spectacular which opened in June 2006, improved revenues from our existing global touring business, mainly attributed to U2, and stronger promotion activity internationally (outside of the UK) arising from tours such as George Michael, Iron Maiden, Bruce Springsteen and Red Hot Chili Peppers. These improvements in revenue were offset by a decline in our North American and UK music business due to lower average ticket prices for arena shows in North America and reduced touring product in the UK. Our segment Adjusted EBITDA also improved by $8.0 million to a total loss of $13.6 million primarily due to the acquisition of CPI and House of Blues which generated a total of $15.3 million segment Adjusted EBITDA, offset by a decline in Adjusted EBITDA from weaker results for our global touring business outside of CPI and for our UK music business. Our segment operating income improved by $38.9 million to a total operating loss of $21.2 million. The increase in segment operating income was primarily due to the elimination of $33.7 million of certain litigation and reorganization costs incurred during 2005.

    Venues and Sponsorship

    Our Venues and Sponsorship segment primarily involves the management and operation of our owned and/or operated venues and the sale of various types of sponsorships and advertising. The revenues in our Venues and Sponsorship segment are generated primarily from per fan food and beverage sales, facility management and box office fees, parking fees, premium and box seating and venue sponsorships.

    For the quarter ended December 31, 2006, revenue increased by $60.1 million to $167.1 million or a 56.2% increase over the same period for the prior year. This growth was primarily due to the acquisition of House of Blues which generated $29.2 million of Venues and Sponsorship revenue during the quarter and was not included in our results during 2005. In addition, revenue growth was the result of increased attendance generated by the activities in our Events segment, improved food and beverage revenue per fan in our North American venues of 16.7%, primarily due to higher food and beverage revenue per fan associated with the mix of shows which played our amphitheaters during the fourth quarter of 2006, improvement in our UK theatrical venues due to long running productions of Wicked and the Lion King and the inclusion of Wembley Arena under a management contract that became effective in April 2006. Segment Adjusted EBITDA increased by $8.6 million to $19.9 million, a 76.9% increase over the same period for the prior year primarily due to the improvements in revenue described above. House of Blues generated $0.3 million of segment Adjusted EBITDA during the quarter. Segment operating income increased by $5.2 million to a reduced loss of $5.6 million, a smaller increase than for segment Adjusted EBITDA due to an $11.2 million increase in depreciation and amortization associated with the acquisition of House of Blues and additional venue impairments, offset by the elimination of $7.7 million of certain litigation and reorganization costs incurred during 2005.

    Digital Distribution

    Our Digital Distribution segment manages our ticketing operations/relationships as well as our online and wireless distribution activities.

    For the quarter ended December 31, 2006, revenues increased by $12.1 million to $27.9 million, a 76.9% increase over the same period of the prior year. This increase was primarily due to the acquisitions of Musictoday, the operations of which are included in this segment since the acquisition closed on September 1, 2006, and the acquisition of House of Blues which, together, generated $9.7 million of digital distribution revenue in the quarter. In addition, the increase in revenue was attributable to the increased attendance generated by the activities in our Events segment as the additional ticket sales resulted in additional service charge rebates. Segment Adjusted EBITDA increased by $2.6 million to $16.7 million, an 18.3% increase over the same period for the prior year. The increase in Adjusted EBITDA was lower than the increase in revenues due to a $9.6 million increase in direct operating expenses and selling, general and administrative expenses which reflects the full quarter impact of our website and internet management group which did not exist in the fourth quarter of 2005 as well as a full quarter's direct operating expenses and selling, general and administrative expenses associated with the acquisition of Musictoday. During the quarter ended December 31, 2006, Musictoday and House of Blues, together, generated $3.0 million of segment Adjusted EBITDA. Segment operating income increased by $2.1 million to $16.2 million, a 15.3% increase over the same period of the prior year, a smaller increase than for segment Adjusted EBITDA due to a $0.4 million increase in depreciation and amortization.

    Other Operations

    Our other operations primarily consist of our sports representation business assets which are not core to our business. For the quarter ended December 31, 2006 revenue decreased by $14.4 million, segment Adjusted EBITDA decreased by $1.3 million and segment operating income decreased by $4.2 million versus the same period of the prior year. These decreases are all primarily due to the sale of substantially all of our sports representation business assets related to basketball, golf, football, tennis, media, baseball, soccer and rugby. The decrease in segment Adjusted EBITDA and segment operating income from the sale of the assets described above is offset by the release of a larger legal accrual in 2006 than occurred in 2005. Segment Adjusted EBITDA decreased less than segment operating income due primarily to a $3.9 million benefit from the reversal of certain litigation accruals in 2005.

    Corporate Expenses

    Corporate expenses decreased $1.4 million, or 11.4%, for the quarter ended December 31, 2006 as compared to the same period of the prior year primarily due the elimination of $5.5 million of certain litigation and reorganization costs incurred in 2005 offset by an increase in corporate expenses associated with the annualization of new public company headcount and other costs associated with being public.

    Depreciation and Amortization

    Depreciation and amortization increased $16.1 million for the quarter ended December 31, 2006 as compared to the same period of the prior year primarily due to the acquisition of House of Blues and $9.5 million of additional venue impairments, arising from revised valuations on some of the venues we announced our intent to sell in the third quarter.

    Capital Expenditures

    Capital expenditures were $14.7 million for the quarter ended December 31, 2006, a decrease of $5.8 million from the same period for the prior year. Maintenance capital expenditures, which represented $7.3 million of the total capital expenditures for the quarter ended December 31, 2006, are primarily associated with the renewal and improvement of existing venues. Revenue generating expenditures, which represented the remaining $7.3 million of the total capital expenditures for the quarter ended December 31, 2006, related primarily to $4.3 million of new House of Blues venue development, renovations to existing buildings, costs associated with the livenation.com website, and improvements at a festival site in the UK.

    Minority Interest Expense and Equity in Earnings of Nonconsolidated Affiliates

    Minority interest expense was $4.6 million for the quarter ended December 31, 2006, an increase of $4.9 million from the same period of the prior year. This increase was primarily due to the impact of our acquisition of CPI and partially offset by a decrease in minority interest expense associated with Mean Fiddler. Net cash distributions to minority interest partners decreased by $0.7 million to ($1.0) million for the quarter ended December 31, 2006 as compared to the same period of the prior year.

    Equity in earnings of nonconsolidated affiliates was $5.5 million, an increase of $5.9 million from the same period of the prior year. This increase was primarily due to the acquisition of CPI which included an investment in the successful BODIES ... The Exhibition, an improvement in our Broadway in Chicago joint venture, partially offset by a reduction in losses associated with several other ventures. Net cash distributions from investments in nonconsolidated affiliates increased to $4.6 million for the quarter ended December 31, 2006 from a net cash distribution to nonconsolidated affiliates of ($6.2) million for the same period of the prior year. This increase was due primarily to distributions from CPI investments and our House of Blues Canada joint venture, both of which were not part of our business in the fourth quarter of 2005, along with increased distributions from our Broadway in Chicago joint venture.

    Free Cash Flow

    Free cash flow is a non-GAAP financial measure that we define as Adjusted EBITDA less maintenance capital expenditures less net interest expense, less cash taxes, less distributions to minority interest partners, plus distributions from investments in nonconsolidated affiliates net of contributions to investments in nonconsolidated affiliates. For the year ended December 31, 2006 free cash flow was $54.1 million as compared to ($0.9) million for the same period of the prior year. This increase was primarily due to improved Adjusted EBITDA, reduced interest expense as a result of our new debt capitalization associated with our spin-off from Clear Channel Communications, an increase in net distributions from nonconsolidated affiliates and reduced maintenance capital expenditures. For the three months ended December 31, 2006, free cash flow was $8.0 million as compared to ($34.3) million for the same period of the prior year. This increase was primarily due to improved Adjusted EBITDA, reduced interest expense as a result of our new debt capitalization associated with our spin-off from Clear Channel Communications, reduced cash taxes, an increase in net distributions from nonconsolidated affiliates and reduced maintenance capital expenditures.

    Cash and Debt

    As of December 31, 2006, our cash and cash equivalents balance was $313.9 million. Adjusting for cash collected related to shows that have not yet played, net of related prepaid show expenses, accrued fees due to artists and cash collected on behalf of others, we estimate that our "free cash" balance was $36.1 million as of December 31, 2006 and $190.6 million as of December 31, 2005. Our total debt and preferred stock totaled $679.1 million as of December 31, 2006 and $406.8 million as of December 31, 2005. The reduction in our free cash balance is primarily due to the share repurchases and acquisitions we made during 2006, including House of Blues, and free cash we used to fund working capital fluctuations related to our concert promotions business. The increase in our total debt and preferred stock balance is primarily due to the incurrence of additional debt to finance the acquisition of House of Blues in November 2006.

    Conference Call

    The company will also host a teleconference to discuss its fourth quarter and full year 2006 financial results on Thursday, March 1st at 5:00 p.m. Eastern Standard Time. To access the teleconference, please dial 888-802-8579 (U.S.) or 973-633-6740 (Int'l) ten minutes prior to the start time and reference passcode 8448512. The teleconference will also be available via live webcast at the Investor Relations section of the company's website located at www.livenation.com under "About Us."

    If you cannot listen to the teleconference at its scheduled time, there will be a replay available through Thursday, March 8, 2007, which can be accessed by dialing 877-519-4471 (U.S.) or 973-341-3080 (Int'l), passcode 8448512. The webcast will also be archived on the company's website for 30 days.

    About Live Nation

    Live Nation is the world's largest live music company. Our mission is to inspire passion for live music around the world. We are the largest promoter of live concerts in the world, the second-largest entertainment venue management company and have a rapidly growing online presence. We strive to create superior experiences for artists and fans, regularly producing tours for the biggest superstars in the business, including The Rolling Stones, Barbra Streisand, Madonna, U2 and Coldplay. Globally, we own, operate, have booking rights for and/or have an equity interest in more than 160 venues, including House of Blues(R) music venues and prestigious locations such as The Fillmore in San Francisco, Nikon at Jones Beach in New York and London's Wembley Arena. Our websites collectively are the second most popular entertainment/event websites in the United States, according to Nielsen//NetRatings. In addition, we also produce, promote or host theatrical, specialized motor sports and other live entertainment events. In 2006, we connected nearly 60 million fans with their favorite performers at approximately 26,000 events in 18 countries around the world. Headquartered in Los Angeles, California, Live Nation is listed on the New York Stock Exchange, trading under the symbol "LYV." For more information regarding Live Nation and its businesses, please visit the company's website at www.livenation.com.

    Certain statements in this press release constitute "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995. Such forward-looking statements involve known and unknown risks, uncertainties and other factors which may cause the actual results, performance or achievements of Live Nation to be materially different from any future results, performance or achievements expressed or implied by such forward-looking statements. The following are intended to identify such forward-looking statements: (i) statements regarding certain of Live Nation's goals and expectations with respect to revenue and expenses and the growth rate in such items, as well as other measures of economic performance, (ii) statements relating to the benefits of the merger with HOB Entertainment, Inc. or HOB, including future financial and operating results, costs and cost savings, enhanced revenues and the accretion or dilution to reported earnings that may be realized from the merger, and (iii) statements preceded by, followed by or that include the words "may," "could," "should," "would," "believe," "anticipate," "estimate," "expect," "intend," "plan," "project," "outlook" and similar words or expressions. In addition, any statements that refer to expectations or other characterizations of future events or circumstances are forward-looking statements.

    Various risks that could cause future results to differ from those expressed by forward-looking statements include, but are not limited to, (1) the risk that the businesses of Live Nation and/or HOB in connection with the HOB merger will not be integrated successfully or such integration may be more difficult, time-consuming or costly than expected; (2) expected revenue synergies and cost savings from the HOB merger may not be fully realized or realized within the expected time frame; (3) revenues following the HOB merger may be lower than expected; (4) operating costs and business disruption following the HOB merger, including, without limitation, difficulties in maintaining relationships with employees, may be greater than expected; (5) the amount of restructuring and other costs associated with the acquisition may be greater than expected; and (6) other factors discussed in Live Nation's filings with the Securities and Exchange Commission.

    Other unknown or unpredictable factors could have material adverse effects on Live Nation's future results, performance or achievements. In light of these risks, uncertainties, assumptions and factors, the forward-looking events discussed herein may not occur. You are cautioned not to place undue reliance on these forward-looking statements. All subsequent written and oral forward-looking statements concerning Live Nation, the HOB merger, or other matters and attributable to Live Nation or any person acting on its behalf are expressly qualified in their entirety by the cautionary statements above. Live Nation does not undertake any obligation to publicly update or revise any forward-looking statements because of new information, future events or otherwise.

                              (See attached financial statements)
    
    
                                  CONSOLIDATED BALANCE SHEETS
    
                                                          December 31,
                                                      2006           2005
                                                (in thousands except share data)
                                 ASSETS
        CURRENT ASSETS
        Cash and cash equivalents                   $313,880       $403,716
        Accounts receivable, less allowance
         of $13,465 in 2006 and $9,518 in 2005       248,772        190,207
        Prepaid expenses                             136,938        115,055
        Other current assets                          38,519         46,295
          Total Current Assets                       738,109        755,273
        PROPERTY, PLANT AND EQUIPMENT
        Land, buildings and improvements             999,561        910,926
        Furniture and other equipment                193,290        166,004
        Construction in progress                      43,370         39,856
                                                   1,236,221      1,116,786
        Less accumulated depreciation                360,049        307,867
                                                     876,172        808,919
        INTANGIBLE ASSETS
        Intangible assets - net                       73,398         12,351
        Goodwill                                     423,169        137,110
        OTHER ASSETS
        Notes receivable, less allowance of
         $545 in 2006 and $745 in 2005                 2,613          4,720
        Investments in nonconsolidated affiliates     61,342         30,660
        Other assets                                  50,199         27,551
          Total Assets                            $2,225,002     $1,776,584
              LIABILITIES AND SHAREHOLDERS' EQUITY
        CURRENT LIABILITIES
        Accounts payable                             $40,646        $37,654
        Accrued expenses                             471,414        382,606
        Deferred revenue                             230,179        232,754
        Current portion of long-term debt             31,721         25,705
          Total Current Liabilities                  773,960        678,719
    
        Long-term debt                               607,425        341,136
        Other long-term liabilities                   88,790         53,667
        Minority interest liability                   76,165         26,362
        Series A and Series B redeemable
         preferred stock                              40,000         40,000
        Commitments and contingent liabilities
        SHAREHOLDERS' EQUITY
        Preferred stock - Series A Junior
         Participating, $.01 par value;
         20,000,000 shares authorized;
         no shares issued and outstanding                 --             --
        Preferred stock, $.01 par value;
         30,000,000 shares authorized;
         no shares issued and outstanding                 --             --
        Common stock, $.01 par value;
         450,000,000 shares authorized;
         67,174,912 shares issued in
         2006 and 2005                                   672            672
        Additional paid-in capital                   757,748        748,011
        Retained deficit                            (119,005)       (87,563)
        Cost of shares held in treasury
         (1,697,227 shares in 2006 and
          1,506,900 shares in 2005)                  (21,472)       (18,003)
        Accumulated other comprehensive
         income (loss)                                20,719         (6,417)
          Total Shareholders' Equity                 638,662        636,700
          Total Liabilities and Shareholders'
           Equity                                 $2,225,002     $1,776,584
    
    
    
    
                    CONSOLIDATED AND COMBINED STATEMENTS OF OPERATIONS
    
                                              Year Ended December 31,
                                         2006           2005           2004
                                   (in thousands except share and per share data)
    
        Revenue                       $3,691,559     $2,936,845    $2,806,128
        Operating expenses:
         Direct operating expenses     2,981,801      2,310,926     2,185,127
         Selling, general and
          administrative expenses        529,104        518,906       460,166
         Depreciation and amortization   128,167         64,622        64,095
         Loss (gain) on sale of
          operating assets               (11,640)         4,859         6,371
         Corporate expenses               33,863         50,715        31,386
         Operating income (loss)          30,264        (13,183)       58,983
        Interest expense                  37,218          6,059         3,119
        Interest expense with
         Clear Channel Communications         --         46,437        42,355
        Interest income                  (12,446)        (2,506)       (3,221)
        Equity in losses (earnings)
         of nonconsolidated affiliates   (11,265)           276        (2,906)
        Minority interest expense         12,209          5,236         3,300
        Other expense (income) - net      (1,220)           446         1,611
        Income (loss) before income
         taxes                             5,768        (69,131)       14,725
        Income tax expense (benefit):
         Current                          26,876        (53,025)      (55,946)
         Deferred                         10,334        114,513        54,411
        Net income (loss)                (31,442)      (130,619)       16,260
        Other comprehensive income
         (loss), net of tax:
         Unrealized holding gain on
          cash flow derivatives             (104)            --            --
         Foreign currency translation
          adjustments                    (27,032)         4,398        18,472
        Comprehensive loss               $(4,306)     $(135,017)      $(2,212)
    
        Basic and diluted net loss
         per common share                $(0.48)        $(1.96)
    
        Basic and diluted weighted
         average common shares
         outstanding                  64,853,243     66,809,394
    
    
    
                  CONSOLIDATED AND COMBINED STATEMENTS OF CASH FLOWS
    
                                                  Year Ended December 31,
                                                2006        2005      2004
                                                       (In thousands)
        CASH FLOWS FROM OPERATING ACTIVITIES
        Net income (loss)                     $(31,442)  $(130,619)   $16,260
        Reconciling items:
         Depreciation                          118,343      62,279     60,918
         Amortization of intangibles             9,824       2,343      3,177
         Deferred income tax expense            10,334     114,513     54,411
         Amortization of debt issuance costs       736           9         --
         Current tax benefit dividends to
          Clear Channel Communications              --     (76,705)   (64,063)
         Non-cash compensation expense           3,432       1,256      1,084
         Loss (gain) on sale of operating
          assets                               (11,640)      4,859      6,371
         Loss on sale of other investments       1,659          --         --
         Equity in losses (earnings)
          of nonconsolidated affiliates        (11,265)        276     (2,906)
         Minority interest expense              12,209       5,236      3,300
         Decrease in other - net                    --        (119)      (462)
         Changes in operating assets and
          liabilities, net of effects of
          acquisitions and dispositions:
         Decrease (increase) in accounts
          receivable                           (53,554)    (15,911)    11,100
         Decrease (increase) in prepaid
          expenses                             (11,837)    (41,759)     5,527
         Decrease (increase) in other assets    (1,762)      4,592      1,178
         Increase in accounts payable,
          accrued expenses and other
          liabilities                            3,902      41,946     10,511
         Increase (decrease) in deferred
          revenue                              (22,219)     24,132     16,047
         Decrease in other - net                    --        (245)        --
          Net cash provided by (used in)
           operating activities                 16,720      (3,917)   122,453
    
        CASH FLOWS FROM INVESTING ACTIVITIES
        Collection of notes receivable           4,427       2,517      2,076
        Advances to notes receivable            (2,420)     (2,341)      (133)
        Distributions from nonconsolidated
         affiliates                             18,148       5,456      5,060
        Investments made to nonconsolidated
         affiliates                            (15,975)    (11,203)    (6,473)
        Proceeds from disposal of other
         investments                             1,743          --         --
        Purchases of property, plant and
         equipment                             (65,705)    (92,520)   (73,435)
        Proceeds from disposal of operating
         assets                                 36,292         580      3,581
        Acquisition of operating assets,
         net of cash acquired                 (351,858)     (8,467)   (13,727)
        Decrease (increase) in other - net         185         (71)    (1,025)
          Net cash used in investing
           activities                         (375,163)   (106,049)   (84,076)
    
        CASH FLOWS FROM FINANCING ACTIVITIES
        Proceeds from debt with
         Clear Channel Communications               --     220,981     24,079
        Payment on debt with Clear Channel
         Communications at spin-off                 --    (220,000)        --
        Proceeds from long-term debt,
         net of debt issuance costs            339,491     344,129      6,725
        Payments on long-term debt             (78,253)     (1,169)    (7,550)
        Contributions from minority
         interest partners                      33,188      20,543         --
        Distributions to minority interest
         partners                               (1,415)     (2,713)    (2,555)
        Proceeds from issuance of redeemable
         preferred stock, net of debt
         issuance costs                             --      19,500         --
        Payments for purchases of common
         stock                                 (24,717)    (18,003)        --
          Net cash provided by financing
           activities                          268,294     363,268     20,699
        Effect of exchange rate changes
         on cash                                   313     (28,723)     3,701
          Net increase in cash and cash
           equivalents                         (89,836)    224,579     62,777
        Cash and cash equivalents at
         beginning of period                   403,716     179,137    116,360
        Cash and cash equivalents at
         end of period                        $313,880    $403,716   $179,137
    
        SUPPLEMENTAL DISCLOSURE
        Cash paid during the year for:
          Interest                             $35,406      $4,549     $3,048
          Income taxes                         $20,508     $17,253     $9,685
    
    
    
          RECONCILIATIONS OF NON-GAAP MEASURES TO THEIR MOST DIRECTLY COMPARABLE
                                GAAP MEASURES (UNAUDITED)
        (all $ in thousands)
    
        Reconciliation of Adjusted EBITDA to Operating Income
    
                                       Year Ended              Quarter Ended
                                 12/31/2006  12/31/2005  12/31/2006  12/31/2005
        EVENTS
        Adjusted EBITDA          ($57,674)    ($56,551)   ($13,551)   ($21,573)
        Certain litigation and
         reorganization costs           0       46,611           0      33,689
        Depreciation and
         amortization              17,010        9,631       7,238       2,554
        Loss (gain) on sale of
         operating assets          (1,733)       2,161           0       2,283
        Non-cash compensation
         expense                    1,387            0         369           0
        Non-cash impairment
         charge                     3,017            0           0           0
          Operating (Loss)        (77,355)    (114,954)    (21,158)    (60,099)
    
        VENUES AND SPONSORSHIP
        Adjusted EBITDA          $155,091     $140,788     $19,854     $11,225
        Certain litigation and
         reorganization costs           0        7,793           0       7,680
        Depreciation and
         amortization             106,320       48,602      25,596      14,360
        Loss (gain) on sale
         of operating assets        1,195         (105)       (174)         (6)
        Non-cash compensation
         expense                      266            0          75           0
        Non-cash impairment
         charge                         0            0           0           0
          Operating Income (Loss)  47,310       84,498      (5,643)    (10,809)
    
        DIGITAL DISTRIBUTION
        Adjusted EBITDA           $75,483      $66,364     $16,675     $14,098
        Certain litigation and
         reorganization costs           0            0           0           0
        Depreciation and
         amortization                 875          278         480          52
        Loss (gain) on sale
         of operating assets            0            0           0           0
        Non-cash compensation
         expense                       22            0           6           0
        Non-cash impairment
         charge                         0            0           0           0
          Operating Income         74,586       66,086      16,189      14,046
    
        OTHER
        Adjusted EBITDA           $12,452      $14,730      $5,487      $6,739
        Certain litigation and
         reorganization costs           0        3,942           0      (3,923)
        Depreciation and
         amortization                 945        2,115         236         395
        Loss (gain) on sale of
         operating assets         (10,981)         738         127         915
        Non-cash compensation
         expense                        6            0           1           0
        Non-cash impairment
         charge                         0            0           0           0
          Operating Income         22,482        7,935       5,123       9,352
    
        CORPORATE AND ELIMINATIONS
        Adjusted EBITDA          ($32,238)    ($27,777)   ($10,503)    ($7,336)
        Certain litigation and
         reorganization costs           0       21,654           0       5,454
        Depreciation and
         amortization               3,017        3,996         730         869
        Loss (gain) on sale
         of operating assets         (121)       2,065         (92)      2,093
        Non-cash compensation
         expense                    1,625        1,256         418        (479)
        Non-cash impairment
         charge                         0            0           0           0
          Operating (Loss)        (36,759)     (56,748)    (11,559)    (15,273)
    
        TOTAL
        Adjusted EBITDA          $153,114     $137,554     $17,961      $3,153
        Certain litigation and
         reorganization costs           0       80,000           0      42,900
        Depreciation and
         amortization             128,167       64,622      34,280      18,230
        Loss (gain) on sale
         of operating assets      (11,640)       4,859        (139)      5,285
        Non-cash compensation
         expense                    3,306        1,256         868        (479)
        Non-cash impairment
         charge                     3,017            0           0           0
        Operating Income (Loss)    30,264      (13,183)    (17,048)    (62,783)
    
    
    
          RECONCILIATIONS OF NON-GAAP MEASURES TO THEIR MOST DIRECTLY COMPARABLE
                          GAAP MEASURES (UNAUDITED) - CONTINUED
    
        (all $ in thousands)
    
        Reconciliation of Adjusted EBITDA to Free Cash Flow
    
                                      Year Ended              Quarter Ended
                                12/31/2006   12/31/2005   12/31/2006  12/31/2005
    
        Adjusted EBITDA          $153,114     $137,554     $17,961      $3,153
        Less: Interest
         expense, net             (24,772)     (49,990)     (8,943)    (13,128)
        Less: Cash taxes          (26,876)     (23,680)      2,326      (4,721)
        Less: Distributions
         to minority interest
         partners                  (1,415)      (2,713)       (583)     (1,046)
        Plus: Distributions
         from investments
         in nonconsolidated
         affiliates                18,148        5,456       9,693         952
        Less: Contributions
         to investments in
         nonconsolidated
         affiliates               (15,975)     (11,203)     (5,126)     (7,188)
        Less: Maintenance
         capital expenditures     (48,120)     (56,325)     (7,334)    (12,275)
          Free Cash Flow          $54,104        ($901)     $7,994    ($34,253)
    
    
        Reconciliation of Adjusted EBITDA to Operating Income (Loss)
    
                                        Year Ended           Quarter Ended
                                 12/31/2006   12/31/2005  12/31/2006  12/31/2005
    
        Free Cash Flow            $54,104        ($901)     $7,994    ($34,253)
        Maintenance capital
         expenditures              48,120       56,325       7,334      12,275
        Distributions to
         minority interest
         partners                   1,415        2,713         583       1,046
        Distributions from
         investments in
         nonconsolidated
         affiliates               (18,148)      (5,456)     (9,693)       (952)
        Contributions to
         investments in
         nonconsolidated
         affiliates                15,975       11,203       5,126       7,188
        Cash taxes                 26,876       23,680      (2,326)      4,721
        Interest expense, net      24,772       49,990       8,943      13,128
          Adjusted EBITDA         153,114      137,554      17,961       3,153
    
        Adjustments for certain
         litigations and
         reorganization costs           0       80,000           0      42,900
        Depreciation and
         amortization             128,167       64,622      34,280      18,230
        Loss (gain) on sale of
         operating assets         (11,640)       4,859        (139)      5,285
        Non-cash compensation
         expense                    3,306        1,256         868        (479)
        Non-cash impairment
         charge                     3,017            0           0           0
          Operating income        $30,264     ($13,183)   ($17,048)   ($62,783)
    
    
        Reconciliation of Revenue and Adjusted EBITDA to Revenue and Adjusted
        EBITDA including the Acquisition and Divestiture Adjustments
    
                                       Year Ended             Quarter Ended
                               12/31/2006   12/31/2005  12/31/2006  12/31/2005
    
        Revenue                $3,691,559   $2,936,845  $1,051,973    $752,257
        Less: 2006
         Acquisitions (a)        (280,572)           0    (231,681)          0
        Plus: 2005
         Acquisition (b)                0       21,504           0           0
        Less: 2005 and 2006
         Divestitures (c)         (37,172)     (77,823)     (3,635)    (19,749)
          Revenue including
           Acquisition and
           Divestiture
           Adjustments          3,373,815    2,880,526     816,657     732,508
    
        Adjusted EBITDA          $153,114     $137,554     $17,961      $3,153
        Less: 2006
         Acquisitions (a)         (21,426)           0     (17,952)          0
        Plus: 2005
         Acquisition (b)                0       (1,057)          0           0
        Less: 2005 and 2006
         Divestitures (c)          (5,553)      (6,197)         38      (2,365)
          Adjusted EBITDA
           including Acquisition
           and Divestiture
           Adjustments            126,135      130,300          47         788
    
        (a)  2006 Acquisitions includes our acquisitions of CPI, TRUNK, Musictoday
             and House of Blues
        (b)  2005 Acquisition is the acquisition of Mean Fiddler
        (c)  2005 and 2006 Divestitures assumes the impact of our entire
             exhibition and sports representation businesses, of which we sold the
             substantial majority of in 2005 and 2006, was completely eliminated
             for both 2005 and 2006
    
    
    
           RECONCILIATIONS OF NON-GAAP MEASURES TO THEIR MOST DIRECTLY COMPARABLE
                                GAAP MEASURES (UNAUDITED) - CONTINUED
    
        (all $ in thousands)
    
        Reconciliation of Free Cash to Cash and Cash Equivalents
    
                                                       12/31/2006     12/31/2005
    
        Cash and cash equivalents                       $313,880       $403,716
        Deferred income (a)                             (183,471)      (203,557)
        Accrued artist fees (b)                          (19,108)       (20,081)
        Collections on behalf of others                 (136,643)       (71,823)
        Prepaids related to artist
         settlements / events (c)                         61,429         82,334
          Free cash balance                              $36,087       $190,589
    
        (a)  Excludes deferred income related to sponsorship, rebates and box and
             season ticket sales.
        (b)  Reflects cash held against accrued artist fees for a show that has
             already played (i.e. ticket revenue collected) but the artist has not
             been paid.
        (c)  Reflects only prepaid expenses for shows against which ticket revenue
             has already been collected or a show is pending; excludes ordinary
             course prepaids.
    
        Definitions and Use of Non-GAAP Measures

    Adjusted EBITDA is a non-GAAP financial measure that the company defines as operating income (loss) before certain unusual and/or non-cash charges, depreciation and amortization, loss (gain) on sale of operating assets and non-cash compensation expense. The company uses Adjusted EBITDA to evaluate the performance of its operating segments. The company believes that information about Adjusted EBITDA assists investors by allowing them to evaluate changes in the operating results of the company's portfolio of businesses separate from non-operational factors that affect net income, thus providing insights into both operations and the other factors that affect reported results. Adjusted EBITDA is not calculated or presented in accordance with U.S. generally accepted accounting principles. A limitation of the use of Adjusted EBITDA as a performance measure is that it does not reflect the periodic costs of certain capitalized tangible and intangible assets used in generating revenues in the company's business. Accordingly, Adjusted EBITDA should be considered in addition to, and not as a substitute for, operating income (loss), net income (loss), and other measures of financial performance reported in accordance with U.S. GAAP. Furthermore, this measure may vary among other companies; thus, Adjusted EBITDA as presented above may not be comparable to similarly titled measures of other companies.

    Adjustments related to certain litigation and reorganization costs represent actual adjustments made or management's approximation of adjustments made during the period stated that were related to costs associated with the reorganization and spin-off for the period. This does not necessarily represent the variance of such expense items between the period noted herein and the comparable period before or after the period noted.

    Free cash flow is a non-GAAP financial measure that the company defines as Adjusted EBITDA less maintenance capital expenditures, less net interest expense, less cash taxes, less distributions to minority interest partners plus distributions from investments in nonconsolidated affiliates net of contributions to investments in nonconsolidated affiliates. The company uses free cash flow, among other measures, to evaluate the ability of its operations to generate cash that is available for purposes other than maintenance capital expenditures. The company believes that information about free cash flow provides investors with an important perspective on the cash available to service debt and make acquisitions. Free cash flow is not calculated or presented in accordance with U.S. generally accepted accounting principles. A limitation of the use of free cash flow as a performance measure is that it does not necessarily represent funds available for operations and it is not necessarily a measure of our ability to fund our cash needs. Accordingly, free cash flow should be considered in addition to, and not as a substitute for, operating income (loss) and other measures of financial performance reported in accordance with U.S. GAAP. Furthermore, this measure may vary among other companies; thus, free cash flow as presented above may not be comparable to similarly titled measures of other companies.

    Free cash is a non-GAAP financial measure that the company defines as cash and cash equivalents less event-related deferred income, less accrued artist fees, less collections on behalf of others plus prepaids related to artist settlements/events. The company uses free cash as a proxy for how much cash it has available to, among other things, optionally repay debt balances make acquisitions and finance new venue expenditures. Free cash is not calculated or presented in accordance with U.S. GAAP. A limitation of the use of free cash as a performance measure is that it does not necessarily represent funds available for operations and it is not necessarily a measure of our ability to fund our cash needs. Accordingly, free cash should be considered in addition to, and not as a substitute for, cash and cash equivalents and other measures of financial performance reported in accordance with U.S. GAAP. Furthermore, this measure may vary among other companies; thus, free cash as presented above may not be comparable to similarly titled measures of other companies.

    SOURCE Live Nation
    03/01/2007

    CONTACT: Investors, Lee Ann Gliha, +1-310-867-7000, or Media, John
    Vlautin, +1-310-867-7127, both of Live Natio
    /Photo: NewsCom: http://www.newscom.com/cgi-bin/prnh/20070220/LATU096LOGO
    AP Archive: http://photoarchive.ap.org
    PRN Photo Desk, photodesk@prnewswire.com 
    Web site: http://www.livenation.com 
    (LYV)

logo