Live Nation Entertainment Reports First Quarter 2011 Financial Results

LOS ANGELES, May 5, 2011 /PRNewswire/ -- Live Nation Entertainment (NYSE: LYV) released financial results for the three months ended March 31, 2011 today.  

"We believe that our business environment is starting to improve over last year and we're encouraged with overall trends to date," said Michael Rapino, President and Chief Executive Officer of Live Nation Entertainment.  "Our healthy first quarter performance reflects improvement in ticket sales, solid growth in our Sponsorship and eCommerce segments and our focus on carefully managing our costs.  It's still early in the year, but fans are responding well to our ticket pricing initiatives.  In the year ahead, we remain focused on driving the two key parts of our business which are adding content and monetizing the event in order to grow our higher margin businesses.  We're continuing to invest in upgrading our digital infrastructure to improve functionality and adding enhancements to our eCommerce platform to improve our core services for fans, artists, sports teams and venues."

The company will host a teleconference today, May 5, 2011 at 5:00 p.m. Eastern Daylight Time, which can be accessed by dialing 888-603-6873 (U.S.) or 973-321-1019 (Int'l) and referencing passcode 61022703.  To access the call via webcast, please visit the Investor Relations section of the company's website at www.livenation.com/investors.  Please visit the website approximately ten minutes prior to the start time to ensure a connection.  Additional statistical and financial information to be provided on the call, if any, will be posted supplementally under that same link.  For those who are not available to listen to the live broadcast, a replay will be available shortly after the call on the Live Nation website through May 12, 2011.


METRICS

(Unaudited)

Key Drivers           Q1 2011              Q1 2010              Variance (Qtr.)

CONCERTS(1)

Total Attendance
(estimated)           6,962,000            6,975,000            (0.0%)

SPONSORSHIP/ONLINE

Online Advertising
Revenue (in millions) $ 8.3                $ 7.5                10.7%

Average Revenue per
Sponsor (rounded,
whole $)              $ 81,000             $ 64,000             26.6%

TICKETING

(in thousands)

                      Q1 2011              Q1 2010
Primary Ticketing
Volume by Category    Ticket Volume Totals Ticket Volume Totals Variance (Qtr.)

Concerts              17,033               15,100               12.8%

Sports                7,491                6,403                17.0%

Arts & Theater        4,746                4,809                (1.3%)

Family                4,315                3,762                14.7%

Other (2)             1,060                1,127                (5.9%)

Total (3)             34,645               31,201               11.0%








(1) Other Concerts metrics have been omitted this period due to the lack of
    meaningful information in the first quarter.

(2) Other category includes tickets for comedy shows, parking, audio and
    facility tours, donations, lectures and seminars.

(3) The Q1 2010 figures include ticket sales for the pre-merger period of
    January 1-25th in order to give comparable information.





The financial results of operations below only include Ticketmaster results following the date of the merger (January 25) through March 31 for 2010. (1)


FINANCIAL HIGHLIGHTS – 1st QUARTER

(Unaudited; $ in millions)

                                 Q1 2011  Q1 2010   Growth



Revenue

Concerts                         $ 449.3  $ 408.1   10.1%

Ticketing                        296.3    209.1     41.7%

Artist Nation                    54.1     69.6      (22.3%)

eCommerce                        29.4     18.1      62.4%

Sponsorship                      24.8     21.2      17.0%

Other & Eliminations             (4.5)    (2.7)     (66.7%)

                                 $ 849.4  $ 723.4   17.4%



Adjusted Operating Income (Loss)

Concerts                         $ (41.3) $ (42.5)  2.8%

Ticketing                        80.6     46.4      73.7%

Artist Nation                    (0.8)    0.9       **

eCommerce                        10.7     7.7       39.0%

Sponsorship                      11.1     8.6       29.1%

Other & Eliminations             -        0.2       **

Corporate                        (15.2)   (19.1)    20.4%

                                 $ 45.1   $ 2.2     **



Operating Income (Loss)

Concerts                         $ (69.4) $ (72.9)  4.8%

Ticketing                        44.2     12.4      **

Artist Nation (2)                (42.7)   (7.9)     **

eCommerce                        8.3      5.0       66.0%

Sponsorship                      10.8     8.4       28.6%

Other & Eliminations             0.2      0.2       -

Corporate                        (20.4)   (32.9)    38.0%

                                 $ (69.0) $ (87.7)  21.3%



Acquisition Expenses             $ 3.2    $ 18.6

                                 $ (72.2) $ (106.3)

** percentages are not meaningful






(1) Reported results for the period ended March 31, 2010 include the results of
    the legacy Ticketmaster operations following the date of the merger through
    March 31. Results for the legacy Ticketmaster operations for the period
    January 1, 2010 through January 25, 2010, or the stub period (which are not
    included in the reported results above), include $76.1 million in revenue,
    primarily in the Ticketing segment, and $5 million in adjusted operating
    income driven by income in Ticketing partially offset by a loss in the
    Artist Nation segment. Ticketmaster's operating income for the stub period
    was $14.8 million, including a $30.1 million gain on sale of IATS.

(2) Artist Nation's operating loss during the first quarter of 2011 was driven
    by $24.4 million of stock-related compensation expense due to the
    acquisition of the remaining equity of Front Line Management in 2011.
    Results were also impacted by increased depreciation/amortization of $6.3
    million primarily related to intangibles recorded in the merger with
    Ticketmaster in 2010 and the impact of recent Artist Nation acquisitions.





Free cash as of March 31, 2011 was $189.4 million.  Free cash flow was ($6.9) million for the first quarter of 2011 as compared to ($32.3) million for the same period in 2010.

About Live Nation Entertainment:

Live Nation Entertainment is the world's leading live entertainment and eCommerce company, comprised of four market leaders: Ticketmaster.com, Live Nation Concerts, Front Line Management Group and Live Nation Network. Ticketmaster.com is the global event ticketing leader and one of the world's top five eCommerce sites, with over 26 million monthly unique visitors.  Live Nation Concerts produces over 20,000 shows annually for more than 2,000 artists globally.  Front Line is the world's top artist management company, representing over 250 artists.  These businesses power Live Nation Network, the leading provider of entertainment marketing solutions, enabling nearly 800 advertisers to tap into the 200 million consumers Live Nation delivers annually through its live event and digital platforms. For additional information, visit www.livenation.com/investors.


LIVE NATION ENTERTAINMENT, INC.

CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)





                                  Three Months Ended

                                  March 31 ,

                                  2011        2010

                                  (in thousands except share and per share
                                  data)

Revenue                           $ 849,409   $ 723,361

Operating expenses:

Direct operating expenses         547,124     484,756

Selling, general and
administrative expenses           272,969     231,596

Depreciation and amortization     77,481      62,633

Loss on sale of operating assets  1,295       4,571

Corporate expenses                21,036      37,124

Acquisition transaction expenses  1,665       9,017

Operating loss                    (72,161)    (106,336)

Interest expense                  29,317      26,561

Interest income                   (527)       (643)

Equity in earnings of
nonconsolidated affiliates        (994)       (547)

Other income, net                 (673)       (1,068)

Loss from continuing operations
before income taxes               (99,284)    (130,639)

Income tax benefit                (44,942)    (7,991)

Loss from continuing operations   (54,342)    (122,648)

Loss from discontinued
operations, net of tax            -           (303)

Net loss                          (54,342)    (122,951)

Net loss attributable to
noncontrolling interests          (5,882)     (738)

Net loss attributable to Live
Nation Entertainment, Inc.        $ (48,460)  $ (122,213)

Basic and diluted net loss per
common share attributable to
common stockholders:

Loss from continuing operations
attributable to Live Nation
Entertainment, Inc.               $ (0.27)    $ (0.83)

Loss from discontinued operations
attributable to Live Nation
Entertainment, Inc.               -           -

Net loss attributable to Live
Nation Entertainment, Inc.        $ (0.27)    $ (0.83)

Weighted average common shares
outstanding:

Basic and diluted                 176,292,809 146,300,907








LIVE NATION ENTERTAINMENT, INC.

CONSOLIDATED BALANCE SHEETS



                                                     March 31,   December 31

                                                     2011        2010

                                                     (unaudited) (audited)

                                                     (in thousands)

ASSETS

Current assets

Cash and cash equivalents                            $ 987,186   $ 892,758

Accounts receivable, less allowance of $11,773 as of
March 31, 2011 and $10,898 as of December 31, 2010   385,988     329,947

Prepaid expenses                                     432,645     348,309

Other current assets                                 41,775      32,483

Total current assets                                 1,847,594   1,603,497

Property, plant and equipment

Land, buildings and improvements                     859,089     850,124

Computer equipment and capitalized software          228,465     218,294

Furniture and other equipment                        169,155     168,508

Construction in progress                             35,338      24,528

                                                     1,292,047   1,261,454

Less accumulated depreciation                        556,866     524,390

                                                     735,181     737,064

Intangible assets

Definite-lived intangible assets, net                986,874     997,268

Indefinite-lived intangible assets                   377,978     375,214

Goodwill                                             1,244,912   1,226,416

Investments in nonconsolidated affiliates            36,097      30,077

Other long-term assets                               246,616     226,024

Total assets                                         $ 5,475,252 $ 5,195,560



LIABILITIES AND STOCKHOLDERS' EQUITY

Current liabilities

Accounts payable, client accounts                    $ 532,621   $ 462,301

Accounts payable                                     96,566      76,876

Accrued expenses                                     458,234     498,864

Deferred revenue                                     646,110     335,539

Current portion of long-term debt                    56,007      54,150

Other current liabilities                            36,339      46,491

Total current liabilities                            1,825,877   1,474,221



Long-term debt, net                                  1,676,215   1,677,714

Long-term deferred income taxes                      187,193     219,143

Other long-term liabilities                          162,668     215,273

Commitments and contingent liabilities

Redeemable noncontrolling interests                  23,306      107,541



Stockholders' equity

Common stock                                         1,801       1,724

Additional paid-in capital                           2,144,029   2,053,233

Accumulated deficit                                  (710,635)   (662,175)

Cost of shares held in treasury                      (3,626)     (6,122)

Accumulated other comprehensive income (loss)        23,203      (22,244)

Total Live Nation Entertainment, Inc. stockholders'
equity                                               1,454,772   1,364,416

Noncontrolling interests                             145,221     137,252

Total stockholders' equity                           1,599,993   1,501,668

Total liabilities and stockholders' equity           $ 5,475,252 $ 5,195,560








LIVE NATION ENTERTAINMENT, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)

                                                         Three Months Ended

                                                         March 31,

                                                         2011       2010

                                                         (in thousands)



CASH FLOWS FROM OPERATING ACTIVITIES

Net loss                                                 $ (54,342) $ (122,951)

Reconciling items:

Depreciation                                             28,947     30,971

Amortization                                             48,534     31,662

Impairment of operational assets                         -          13,373

Deferred income tax benefit                              (31,341)   (6,149)

Amortization of debt issuance costs                      1,449      783

Amortization of debt discount/premium, net               1,727      2,037

Provision for uncollectible accounts receivables and
advances                                                 315        244

Non-cash compensation expense                            24,707     22,422

Unrealized changes in fair value of contingent
consideration                                            (4,581)    19

Loss on sale of operating assets                         1,295      4,874

Equity in earnings of nonconsolidated affiliates         (994)      (547)

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

Decrease (increase) in accounts receivable               (48,414)   45,274

Increase in prepaid expenses                             (78,273)   (150,772)

Increase in other assets                                 (36,744)   (13,625)

Decrease in accounts payable, accrued expenses and other
liabilities                                              (22,074)   (61,306)

Increase in deferred revenue                             297,557    293,192

Net cash provided by operating activities                127,768    89,501



CASH FLOWS FROM INVESTING ACTIVITIES

Collections and advances of notes receivable             (459)      19

Distributions from nonconsolidated affiliates            340        836

Investments made in nonconsolidated affiliates           (486)      -

Purchases of property, plant and equipment               (18,211)   (13,083)

Proceeds from disposal of operating assets, net of cash
divested                                                 2,684      20,643

Cash paid for acquisitions, net of cash acquired         (7,289)    576,144

Purchases of intangible assets                           (107)      (7,201)

Decrease (increase) in other, net                        (664)      412

Net cash provided by (used in) investing activities      (24,192)   577,770



CASH FLOWS FROM FINANCING ACTIVITIES

Proceeds from long-term debt, net of debt issuance costs (756)      147,303

Payments on long-term debt                               (5,567)    (193,321)

Contributions from noncontrolling interests              -          8

Distributions to and purchases/sales of noncontrolling
interests                                                (48,579)   (6,687)

Proceeds from exercise of stock options                  1,003      2,163

Proceeds from sale of common stock                       18,836     -

Equity issuance costs                                    -          (40)

Payments for purchases of common stock                   -          (1,567)

Payments for deferred and contingent consideration       (10,307)   (6,934)

Net cash used in financing activities                    (45,370)   (59,075)

Effect of exchange rate changes on cash and cash
equivalents                                              36,222     (19,954)

Net increase in cash and cash equivalents                94,428     588,242

Cash and cash equivalents at beginning of period         892,758    236,955

Cash and cash equivalents at end of period               $ 987,186  $ 825,197







Forward-Looking Statements, Non-GAAP Financial Measures and Reconciliations:

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 include, but are not limited to, statements regarding the company's improving business environment, ticket sales and overall trends; the anticipated success of the company's ticket pricing initiatives; the company's anticipated infrastructure upgrades and eCommerce enhancements and the benefits expected to be derived from such initiatives; and the company's anticipated growth of its higher margin businesses.  Live Nation wishes to caution you that there are some known and unknown factors that could cause actual results to differ materially from any future results, performance or achievements expressed or implied by such forward-looking statements, including but not limited to operational challenges in achieving strategic objectives and executing on the company's plans, the risk that the company's markets do not evolve as anticipated, challenges related to the post-merger integration of Live Nation and Ticketmaster, the potential impact of the economic slowdown and operational challenges associated with selling tickets and staging events.

Live Nation refers you to the documents it files from time to time with the U.S. Securities and Exchange Commission, or SEC, specifically the section titled "Item 1A. Risk Factors" of the company's most recent Annual Report filed on Form 10-K and Quarterly Reports on Form 10-Q and its Current Reports on Form 8-K, which contain and identify other important factors that could cause actual results to differ materially from those contained in the company's projections or forward-looking statements.  You are cautioned not to place undue reliance on these forward-looking statements which speak only as of the date on which they are made.  All subsequent written and oral forward-looking statements by or concerning Live Nation 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.

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 provided below.

Adjusted Operating Income (Loss), or AOI, is a non-GAAP financial measure that the company defines as operating income (loss) before acquisition expenses (including transaction costs, changes in the fair value of accrued acquisition-related contingent consideration arrangements, merger bonuses, payments under the Azoff Trust note and merger-related severance), depreciation and amortization (including goodwill impairments), loss (gain) on sale of operating assets and non-cash and certain stock-based compensation expense (including expense associated with grants of certain stock-based awards which are classified as liabilities). The company uses AOI to evaluate the performance of its operating segments. The company believes that information about AOI assists investors by allowing them to evaluate changes in the operating results of the portfolio of the businesses separate from non-operational factors that affect net income, thus providing insights into both operations and the other factors that affect reported results. AOI is not calculated or presented in accordance with GAAP. A limitation of the use of AOI as a performance measure is that it does not reflect the periodic costs of certain amortizing assets used in generating revenue in the company's business. Accordingly, AOI 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 GAAP. Furthermore, this measure may vary among other companies; thus, AOI as presented herein may not be comparable to similarly titled measures of other companies.

Free Cash Flow is a non-GAAP financial measure that the company defines as Adjusted Operating Income (Loss) less maintenance capital expenditures, less net cash interest expense, less cash taxes, less net 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 GAAP.  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 is not necessarily a measure of the company's ability to fund its 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 GAAP.  Furthermore, this measure may vary among other companies; thus, free cash flow as presented herein 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 ticketing-related client funds, less event-related deferred revenue, less accrued expenses due to artists and for cash collected on behalf of others for ticket sales, plus event-related prepaids.  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 venue and other revenue generating capital expenditures. Free cash is not calculated or presented in accordance with GAAP.  A limitation of the use of free cash as a performance measure is that it does not necessarily represent funds available from 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 GAAP.  Furthermore, this measure may vary among other companies; thus, free cash as presented herein may not be comparable to similarly titled measures of other companies.



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



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



                                     Loss
              Adjusted  Non-cash and (gain) on

              operating stock-based  sale of   Depreciation
                                                                        Operating
              income    compensation operating and          Acquisition
($ in                                                                   income
millions)     (loss)    expense      assets    amortization expenses    (loss)

              Three months ended March 31, 2011



Concerts      $ (41.3)  $ 1.7        $ -       $ 26.4       $ (4.7)     $ (64.7)

Ticketing     80.6      1.4          -         35.0         0.1         44.1

Artist
Nation        (0.8)     27.2         1.2       13.5         0.7         (43.4)

eCommerce     10.7      0.1          -         2.3          -           8.3

Sponsorship   11.1      0.1          -         0.2          -           10.8

Other &
Eliminations  -         -            0.1       (0.3)        -           0.2

Corporate     (15.2)    4.8          -         0.4          7.1         (27.5)

Total Live
Nation        $ 45.1    $ 35.3       $ 1.3     $ 77.5       $ 3.2       $ (72.2)



              Three months ended March 31, 2010



Concerts      $ (42.5)  $ 2.0        $ -       $ 28.4       $ -         $ (72.9)

Ticketing     46.4      5.8          4.6       23.6         3.6         8.8

Artist
Nation        0.9       1.6          -         7.2          0.2         (8.1)

eCommerce     7.7       -            -         2.7          0.2         4.8

Sponsorship   8.6       0.2          -         -            0.3         8.1

Other &
Eliminations  0.2       -            -         -            -           0.2

Corporate     (19.1)    13.1         -         0.7          14.3        (47.2)

Total Live
Nation        $ 2.2     $ 22.7       $ 4.6     $ 62.6       $ 18.6      $ (106.3)








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

($ in millions)                                      Q1 2011  Q1 2010

Adjusted operating income                            $ 45.1   $ 2.2

Less: Cash interest expense — net                  (25.6)   (23.1)

Cash taxes                                           (9.4)    1.8

Maintenance capital expenditures                     (11.0)   (7.3)

Distributions to noncontrolling interests            (5.9)    (6.7)

Distributions from (contributions to) investments in
nonconsolidated affiliates                           (0.1)    0.8

Free cash flow                                       $ (6.9)  $ (32.3)

Revenue generating capital expenditures              (7.2)    (4.7)

Net                                                  $ (14.1) $ (37.0)








Reconciliation of Cash and Cash Equivalents to Free Cash

                                               March 31,

($ in millions)                                2011

Cash and cash equivalents                      $ 987.2

Client cash                                    (441.1)

Deferred revenue—event related               (573.1)

Accrued artist fees                            (20.4)

Collections on behalf of others                (51.7)

Prepaids related to artist settlements/events  288.5

Free cash                                      $ 189.4







SOURCE Live Nation Entertainment