UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): January 26, 2006
Live Nation, Inc.
(Exact name of registrant as specified in its charter)
         
Delaware
(State or other jurisdiction
of incorporation) 		  001-32601
(Commission File Number) 		  20-3247759
(IRS Employer Identification No.)
     
9348 Civic Center Drive
Beverly Hills, CA
(Address of principal executive offices) 		  90210
(Zip Code)
Registrant’s telephone number, including area code: (310) 867-7000
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):
o Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
o Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
o Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
o Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))
 
 

 

 

Item 1.01 Entry into a Material Definitive Agreement.
     The information set forth in Item 2.01 of this Form 8-K is incorporated by reference into this Item 1.01 with respect to the terms and conditions of the Membership Interest Purchase Agreement with Arn Tellem.
Item 2.01 Completion of Acquisition or Disposition of Assets.
     On January 26, 2006, SFX Sports Group, Inc. (the “Seller”), a wholly-owned subsidiary of Live Nation, Inc. (“Live Nation”), entered into a Membership Interest Purchase Agreement (the “Purchase Agreement”) with Arn Tellem (“Tellem”). Under the Purchase Agreement, the majority of the Seller’s assets in the Los Angeles sports talent representation business held by SFX Sports Group, LLC (the “Company”), a wholly-owned subsidiary of Live Nation, were sold to Tellem for $12 million in cash. The transaction was effective as of January 1, 2006.
     Tellem was employed as an officer of the Company and beginning January 1, 2005, had a participating profit interest in the Company. His employment and other interests with the Seller were terminated upon execution of the Purchase Agreement. Live Nation and its subsidiaries will not have any significant relationships with Tellem in the future.
     As part of this transaction, many of the sports agents that currently work for the Company in the Los Angeles office will be terminating their employment with the Seller. The following assets are included in the Purchase Agreement:
  •   All of the client contracts and client relationships with clients of the Company that are principally served by any one or more of the Los Angeles sports agents leaving the Seller;
 
  •   All furniture, fixtures, equipment and other tangible assets located in the Los Angeles sports talent representation office;
 
  •   The notes and interest receivables owed by certain employees of the Company;
 
  •   The Company’s leasehold estate in the Los Angeles sports talent representation office;
 
  •   Any goodwill or other similar intangible assets to the extent relating to, or derived from, the Los Angeles sports talent representation business (but specifically excluding the Seller’s names, trade names, trademarks and the goodwill associated therewith);
 
  •   All of the Company’s rights and interests under employment agreements with any of the Los Angeles sports agents;
 
  •   Certain prepaid expenses of the Company related to the Los Angeles sports talent representation business;
 
  •   All of the Company’s accounts receivable that are owed by clients of the Company that are principally served by any one or more of the Los Angeles sports agents leaving the Seller (but specifically excluding accounts receivable originally invoiced on or before December 31, 2005).

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     The foregoing is a summary description of the terms of the Purchase Agreement and by its nature is incomplete. For further information regarding the terms and conditions of the transaction, reference is made to the Purchase Agreement, which is filed as Exhibit 10.1 and incorporated by reference herein.
Item 9.01 Financial Statements and Exhibits.
(b) Pro forma financial information.
The following Unaudited Pro Forma Consolidated Financial Statements are included with this report:
     
Unaudited Pro Forma Consolidated Balance Sheet as of September 30, 2005
  4
 
    
Unaudited Pro Forma Consolidated Statements of Operations:
    
Year ended December 31, 2004
  5
Nine months ended September 30, 2005
  6
 
    
Notes to Unaudited Pro Forma Consolidated Financial Statements
  7
     The Unaudited Pro Forma Consolidated Balance Sheet of Live Nation as of September 30, 2005, reflects the financial position of Live Nation after giving effect to the disposition of the Los Angeles sports talent representation business, as discussed in Item 2.01, as if such disposition took place on September 30, 2005. The Unaudited Pro Forma Consolidated Statements of Operations for the year ended December 31, 2004 and the nine months ended September 30, 2005 give effect to the disposition of the Los Angeles sports talent representation business as if such disposition occurred on January 1, 2004.
     The Unaudited Pro Forma Consolidated Financial Statements have been prepared by Live Nation based upon historical financial statements of Live Nation and assumptions deemed proper by management. The Unaudited Pro Forma Consolidated Financial Statements presented herein are shown for illustrative purposes only and are not necessarily indicative of the future financial position or future results of operations of Live Nation, or of the financial position or results of operations of Live Nation that would have actually occurred had the sale been consummated on the date indicated. The Unaudited Pro Forma Consolidated Financial Statements should be read in conjunction with the historical financial statements and related notes of Live Nation previously filed with the Securities and Exchange Commission.

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UNAUDITED PRO FORMA CONSOLIDATED BALANCE SHEET
SEPTEMBER 30, 2005
                         
            Pro Forma        
    Historical     Adjustments     Pro Forma  
    (unaudited)     (unaudited)     (unaudited)  
    (In thousands)  
ASSETS
                        
CURRENT ASSETS
                        
Cash and cash equivalents
   $ 273,474     $ 12,000 (d)   $ 285,474  
Accounts receivable, net
     241,936       (2,544 ) (a)     239,392  
Prepaid expenses
     218,293       (511 ) (a)     217,782  
Other current assets
     48,617       —       48,617  
 
                  
Total Current Assets
     782,320       8,945       791,265  
 
                        
PROPERTY, PLANT AND EQUIPMENT
                        
Land, buildings and improvements
     904,813       —       904,813  
Furniture and other equipment
     164,962       (26 ) (a)     164,936  
Construction in progress
     40,479       —       40,479  
 
                  
 
     1,110,254       (26 )     1,110,228  
Less accumulated depreciation
     294,984       (10 ) (a)     294,974  
 
                  
 
     815,270       (16 )     815,254  
INTANGIBLE ASSETS
                        
Definite-lived intangibles, net
     12,787       —       12,787  
Goodwill
     143,170       —       143,170  
OTHER ASSETS
                        
Notes receivable
     6,436       (863 ) (a)     5,573  
Investments in, and advances to, nonconsolidated affiliates
     25,281       —       25,281  
Deferred tax asset
     87,069       —       87,069  
Other assets
     19,900       —       19,900  
 
                  
Total Assets
   $ 1,892,233     $ 8,066     $ 1,900,299  
 
                  
 
                        
LIABILITIES AND OWNER’S EQUITY
                        
CURRENT LIABILITIES
                        
Accounts payable
   $ 67,125     $ —     $ 67,125  
Deferred income
     240,753       —       240,753  
Accrued expenses
     469,354       (25 ) (a)     469,329  
Current portion of long-term debt
     22,546       —       22,546  
 
                  
Total Current Liabilities
     799,778       (25 )     799,753  
Long-term debt
     20,038       —       20,038  
Debt with Clear Channel Communications
     725,495       —       725,495  
Other long-term liabilities
     84,399       —       84,399  
Minority interest
     28,507       —       28,507  
Commitment and contingent liabilities
                        
OWNER’S EQUITY
                        
Owner’s net investment
     4,409,303       —       4,409,303  
Retained deficit
     (4,183,529 )     8,091 (b)     (4,175,438 )
Accumulated other comprehensive income (loss)
     8,242       —       8,242  
 
                  
Total Owner’s Equity
     234,016       8,091       242,107  
 
                  
Total Liabilities and Owner’s Equity
   $ 1,892,233     $ 8,066     $ 1,900,299  
 
                  

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UNAUDITED PRO FORMA CONSOLIDATED STATEMENTS OF OPERATIONS
YEAR ENDED DECEMBER 31, 2004
                         
            Pro Forma        
    Historical     Adjustments     Pro Forma  
            (unaudited)     (unaudited)  
    (In thousands)  
Revenue
   $ 2,806,128     $ (7,542 ) (c)   $ 2,798,586  
Operating expenses:
                        
Divisional operating expenses
     2,645,293       (4,891 ) (c)     2,640,402  
Depreciation and amortization
     64,095       (17 ) (c)     64,078  
Loss (gain) on sale of operating assets
     6,371       —       6,371  
Corporate expenses
     31,386       —       31,386  
 
                  
Operating income
     58,983       (2,634 )     56,349  
Interest expense
     3,119       —       3,119  
Intercompany interest expense
     42,355       —       42,355  
Equity in earnings of nonconsolidated affiliates
     2,906       —       2,906  
Other income (expense) — net
     (1,690 )     —       (1,690 )
 
                  
Income before income taxes
     14,725       (2,634 )     12,091  
Income tax (expense) benefit:
                        
Current
     55,946       1,073 (c)     57,019  
Deferred
     (54,411 )     —       (54,411 )
 
                  
Net income
   $ 16,260     $ (1,561 )   $ 14,699  
 
                  
Basic and diluted pro forma income per common share
   $ 0.24             $ 0.22  
 
                    
Basic and diluted pro forma common shares outstanding
     67,565               67,565  
 
                    

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UNAUDITED PRO FORMA CONSOLIDATED STATEMENTS OF OPERATIONS
NINE MONTHS ENDED SEPTEMBER 30, 2005
                         
            Pro Forma        
    Historical     Adjustments     Pro Forma  
    (unaudited)     (unaudited)     (unaudited)  
    (In thousands)  
Revenue
   $ 2,184,588     $ (6,277 ) (c)   $ 2,178,311  
Operating expenses:
                        
Divisional operating expenses
     2,050,631       (5,099 ) (c)     2,045,532  
Depreciation and amortization
     46,392       (4 ) (c)     46,388  
Loss (gain) on sale of assets
     (426 )     —       (426 )
Corporate expenses
     38,391       —       38,391  
 
                  
Operating income
     49,600       (1,174 )     48,426  
Interest expense
     2,671       —       2,671  
Intercompany interest expense
     35,719       —       35,719  
Equity in earnings of nonconsolidated affiliates
     157       —       157  
Other income (expense) — net
     (4,157 )     —       (4,157 )
 
                  
Income before income taxes
     7,210       (1,174 )     6,036  
Income tax (expense) benefit:
                        
Current
     11,975       478 (c)     12,453  
Deferred
     (14,859 )     —       (14,859 )
 
                  
Net income
   $ 4,326     $ (696 )   $ 3,630  
 
                  
Basic and diluted pro forma income per common share
   $ 0.06             $ 0.05  
 
                    
Basic and diluted pro forma common shares outstanding
     67,565               67,565  
 
                    

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NOTES TO UNAUDITED PRO FORMA CONSOLIDATED FINANCIAL STATEMENTS
The Unaudited Pro Forma Consolidated Financial Statements reflect the following pro forma adjustments:
  (a)   To eliminate the assets and liabilities included in the balance sheet of the Los Angeles sports talent representation business as of September 30, 2005.
 
  (b)   Represents the estimated gain on the disposition.
 
  (c)   To eliminate the results of operations of the Los Angeles sports talent representation business for the year ended December 31, 2004 and the nine months ended September 30, 2005.
 
  (d)   Represents the proceeds from the disposition that were retained to meet operating and investing cash requirements.

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(c) Exhibits.
10.1   Membership Interest Purchase Agreement dated January 26, 2006 by and among SFX Sports Group, Inc. and Arn Tellem.

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SIGNATURES
     Pursuant to the requirements of the Securities Exchange Act of 1934, as amended, the Registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
                 
Date: February 1, 2006
                
 
                
    LIVE NATION, INC.    
 
                
 
      By:   /s/ Kathy Willard    
 
         
 
    
        Kathy Willard    
        Executive Vice President and    
        Chief Accounting Officer    

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EXHIBIT INDEX
     
EXHIBIT    
NUMBER   DESCRIPTION
10.1
  Membership Interest Purchase Agreement dated January 26, 2006 by and among SFX Sports Group, Inc. and Arn Tellem

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