EXHIBIT 99.1
LIVE NATION REPORTS
FIRST QUARTER 2006 FINANCIAL RESULTS
- Consolidated Revenue Increases 16% -
- - Positive Net Income Achieved -
LOS ANGELES, CALIFORNIA — May 5, 2006 — Live Nation (NYSE: LYV), a leading live event, venue
management and digital distribution company, announced today first quarter financial results for
the period ended March 31, 2006. Live Nation will discuss these results on a conference call today
at 11:00 a.m. Eastern Daylight Time. A live broadcast of the conference call will be available on
the company’s website, located at www.livenation.com.
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(s),
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.
The company reported revenues of $516.6 million in the first quarter of 2006, an increase of $72.1
million, or 16%, as compared to the first quarter of 2005. Included in revenue is a $9.1 million
decline due to movements in foreign exchange.
Operating income for the quarter increased by $35.6 million to $8.1 million, including a $7.7
million gain from the sale of operating assets. Net income increased by $23.8 million to $1.1
million. Diluted earnings per share for the quarter amounted to $0.02.
OIBDAN (defined by the company as operating income (loss) before depreciation, amortization, loss
(gain) on sale of operating assets and non-cash compensation expense) was $16.2 million in the
first quarter of 2006, compared to a loss of $12.1 million in the first quarter of 2005. OIBDAN is
a non-GAAP financial measure. A reconciliation of OIBDAN to operating income (loss) and net income
(loss), its most directly comparable GAAP financial measures, is included at the end of this press
release.
“We delivered strong revenue growth in the quarter led by healthy gains across the majority of our
businesses,” said Michael Rapino, Live Nation’s Chief Executive Officer. “With the reorganization
of our company complete and a more efficient cost structure in place we are now focused on
aggressively executing our multi-pronged growth strategy. Our position as a global leader in live
entertainment, our streamlined management team and our strong balance sheet provide us with a solid
foundation from which to build our business. We believe we have an extraordinary opportunity to
maximize the value of our assets, including our artist relationships, our network of venues and the
millions of fans who attend our events annually. At the core of our business plan is our focus on
increasing the value we provide to our customers before, during and after our events. We are
vertically integrating toward the fan with the ultimate goal of positioning Live Nation as the
place to go for live entertainment, products and services.”
Mr. Rapino continued, “While it remains early in the implementation of our business plan, we are
making progress across a wide spectrum of initiatives. A culture of accountability is taking hold
across our operations and we are actively pursuing higher margin and more profitable opportunities.
As we enter the busiest season of the year, we are pleased with the overall trends we are seeing
across our businesses. We are confident that we will demonstrate tangible progress in implementing
our strategy as the year unfolds.”
1
Following Live Nation’s spin-off from Clear Channel Communications, Inc. in December 2005, the
company reorganized its business units and the way in which these businesses are assessed.
Accordingly, beginning in 2006, the company changed its reportable operating segments to Events, Venues and
Sponsorship, and Digital Distribution. The Events segment principally involves the promotion or
production of live music shows, theatrical performances and specialized motor sports events. The
Venues and Sponsorship segment principally involves the operation of venues and the sale of premium
seats, national and local sponsorships and placement of advertising, including signage, promotional
programs and naming of subscription series and venues. The Digital Distribution segment
principally involves the management of the company’s on-line and wireless distribution activities,
including the development of the company’s website and managing the company’s in-house ticketing
operations and third-party ticketing relationships. Included in the Digital Distribution revenue
are ticket rebates earned on tickets sold by phone, outlet and over the internet, for events
promoted by the Events division.
The company has reclassified all periods presented to conform to the current year presentation.
Revenue and expenses earned and charged between segments are eliminated in consolidation.
Segment Financial Information (unaudited)
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
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|
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|
|
Venues and |
|
|
Digital |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Consolidated |
|
| (in thousands) |
|
Events |
|
|
Sponsorship |
|
|
Distribution |
|
|
Other |
|
|
Corporate |
|
|
Eliminations |
|
|
and Combined |
|
Three months
ended March 31, 2006 |
|
|
|
|
|
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|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenue |
|
$ |
422,260 |
|
|
$ |
77,559 |
|
|
$ |
10,588 |
|
|
$ |
9,006 |
|
|
$ |
— |
|
|
$ |
(2,846 |
) |
|
$ |
516,567 |
|
Direct operating
expenses |
|
|
353,083 |
|
|
|
26,676 |
|
|
|
249 |
|
|
|
671 |
|
|
|
— |
|
|
|
(2,847 |
) |
|
|
377,832 |
|
Selling, general and
administrative
expenses |
|
|
53,387 |
|
|
|
53,061 |
|
|
|
2,298 |
|
|
|
7,269 |
|
|
|
— |
|
|
|
1 |
|
|
|
116,016 |
|
Depreciation and
amortization |
|
|
1,996 |
|
|
|
12,212 |
|
|
|
66 |
|
|
|
235 |
|
|
|
496 |
|
|
|
— |
|
|
|
15,005 |
|
Loss (gain) on sale of
operating assets |
|
|
(13 |
) |
|
|
4 |
|
|
|
— |
|
|
|
(7,651 |
) |
|
|
(68 |
) |
|
|
— |
|
|
|
(7,728 |
) |
Corporate expenses |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
7,379 |
|
|
|
— |
|
|
|
7,379 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating income (loss) |
|
$ |
13,807 |
|
|
$ |
(14,394 |
) |
|
$ |
7,975 |
|
|
$ |
8,482 |
|
|
$ |
(7,807 |
) |
|
$ |
— |
|
|
$ |
8,063 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three months ended
March 31, 2005 |
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|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenue |
|
$ |
344,368 |
|
|
$ |
74,613 |
|
|
$ |
9,862 |
|
|
$ |
20,497 |
|
|
$ |
— |
|
|
$ |
(4,857 |
) |
|
$ |
444,483 |
|
Direct operating
expenses |
|
|
285,607 |
|
|
|
26,488 |
|
|
|
393 |
|
|
|
6,960 |
|
|
|
— |
|
|
|
(4,814 |
) |
|
|
314,634 |
|
Selling, general and
administrative
expenses |
|
|
66,296 |
|
|
|
45,638 |
|
|
|
749 |
|
|
|
10,363 |
|
|
|
— |
|
|
|
(15 |
) |
|
|
123,031 |
|
Depreciation and
amortization |
|
|
2,324 |
|
|
|
11,307 |
|
|
|
76 |
|
|
|
641 |
|
|
|
1,129 |
|
|
|
— |
|
|
|
15,477 |
|
Loss (gain) on sale of
operating assets |
|
|
(42 |
) |
|
|
(129 |
) |
|
|
— |
|
|
|
(183 |
) |
|
|
(3 |
) |
|
|
— |
|
|
|
(357 |
) |
Corporate expenses |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
19,224 |
|
|
|
— |
|
|
|
19,224 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating income (loss) |
|
$ |
(9,817 |
) |
|
$ |
(8,691 |
) |
|
$ |
8,644 |
|
|
$ |
2,716 |
|
|
$ |
(20,350 |
) |
|
$ |
(28 |
) |
|
$ |
(27,526 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2
Events
Events reported revenue of $422.3 million, an increase of $77.9 million, or 23%, as compared to the
first quarter of 2005. This was attributable primarily to increased events, attendance and ticket
prices for domestic music and motor sports events, offset by declines in our international music and global
theater revenues.
The increase in our domestic music revenue is primarily due to an increase in the number of events
by artists such as Billy Joel, Coldplay, Aerosmith, Toby Keith and Rascal Flatts, principally in
third-party arenas. The decline in our international music revenue is due primarily to a decline in
the number of high profile tours in the United Kingdom during the first quarter of 2006. The
decrease in our global theater revenue is due to a decline in the number of events in 2006 as
compared to 2005.
Events direct operating expenses increased $67.5 million, or 24%, during the three months ended
March 31, 2006, as compared to the three months ended March 31, 2005, mainly due to an increase in
our domestic direct operating expenses related to the increased revenues, partially offset by
decreases in our international music and global theater direct operating expenses.
Selling, general and administrative expenses for the segment declined by $12.9 million, or 19%, in
the first quarter of 2006, principally due to an $11.9 million reduction in legal contingencies and
expenses as compared to the first quarter of 2005.
Operating income for the Events segment for the first quarter of 2006 was $13.8 million compared to
a loss of $9.8 million for the prior year period. The improvement in operating income was primarily
driven by improved results from domestic music and motor sports events and the above-mentioned
decrease in legal contingencies and expenses.
Venues and Sponsorship
Venues and Sponsorship reported revenue of $77.6 million for the first quarter of 2006, an increase
of $2.9 million, or 3.9%, as compared to the first quarter of 2005, reflecting a year-over-year
increase in sponsorship revenues and the impact of the Mean Fiddler venues acquired in the third
quarter of 2005. These increases were partly offset by lower revenues at some theatrical venues
due to weaker content compared to the first quarter of 2005.
Although direct operating expenses remained flat compared to 2005, selling, general and
administrative expenses for the segment increased by $7.4 million, or 16%, in the first quarter of
2006 primarily as a result of the acquisitions of a 50.1% interest in Mean Fiddler in the third
quarter of 2005 and 51.0% interest in the Historic Theater Group in 2006, as well as costs
associated with building a new global venue management team.
Venues and Sponsorship operating results for the first quarter of 2006 decreased to a loss of $14.4
million from a loss of $8.7 million for the prior year period. The decrease was attributable to
the results for a few of our larger theatrical venues being down compared to 2005 based on
available content in the first quarter of 2006 and due to additional costs incurred related to
building the venue management team in 2006.
Digital Distribution
Digital Distribution reported revenue of $10.6 million for the first quarter of 2006, an increase
of $0.7 million, or 7.4%, as compared to the first quarter of 2005, primarily due to additional
ticket service charge rebates arising from the increase in the number of events and attendance
within our Events division.
Digital Distribution’s selling, general and administrative expenses increased $1.5 million during
the three months ended March 31, 2006, as compared to the three months ended March 31, 2005, due
primarily to the hiring of management and staff to run this division and build our on-line
presence.
Operating income for the first quarter of 2006 for Digital Distribution was $8.0 million, a
decrease of $0.7 million, or 7.7%, from the prior year period. This decrease is attributable to
the increased costs related to building the management team and developing our on-line presence.
3
Other Operations
Our other operations, which includes our sports representation business and a number of other
businesses that were sold or terminated in 2005, reported revenue of $9.0 million for the first
quarter of 2006, a decrease of $11.5 million, or 56%, as compared to the first quarter of 2005.
This was primarily due to a decrease in our sports business resulting from an Australian golf event
managed in 2005 that we are no longer managing due to its relocation to another country, as well as
the sale of a portion of our sports representation assets in Los Angeles.
Other direct operating expenses decreased $6.3 million, or 90%, during the three months ended March
31, 2006, as compared to the three months ended March 31, 2005, due primarily to the loss of the
Australian golf event referred to above.
Operating income for the first quarter of 2006 for other operations increased to $8.5 million, an
increase of $5.8 million from the prior year period. This increase is primarily due to the gain on
the sale of a portion of the sports representation assets in Los Angeles, partially offset by the
loss of income related to the Australian golf event.
Corporate Expenses
Corporate expenses decreased $11.8 million, or 62%, during the three months ended March 31, 2006,
as compared to the three months ended March 31, 2005, primarily as a result of a reduction of $12.3
million in litigation contingencies and expenses compared to 2005.
Interest
Interest expense increased $7.2 million during the three months ended March 31, 2006 as compared to
the same period of 2005, primarily due to interest expense related to our term loan and redeemable
preferred stock issued at the time of the spin-off in December 2005. Our interest expense with
Clear Channel Communications decreased $11.2 million during the three months ended March 31, 2006
as compared to the three months ended March 31, 2005 as this debt was repaid to, or contributed to
our capital by, Clear Channel as of December 21, 2005.
Free Cash Flow
Free cash flow for the quarter amounted to $27.7 million, an increase of $11.8 million, or 74%,
over the same period in 2005. This increase was driven by an increase in cash provided by
operating activities of $15.7 million offset by an increase in maintenance capital expenditures of
$4.0 million. Free cash flow is a non-GAAP financial measure. A reconciliation of free cash flow
to net cash provided by operating activities, its most directly comparable GAAP financial measure,
is included at the end of this press release.
Cash and Debt
Cash and cash equivalents at March 31, 2006, totaled $408.8 million, an increase of $5.1 million
over the balance at December 31, 2005.
Total debt, including preferred stock, at March 31, 2006 totaled $406.3 million, a reduction of
$0.5 million compared to the balance at December 31, 2005.
Stock Option Accounting
We adopted Financial Accounting Standards Board Standard No. 123 (revised 2004), Share-Based
Payment, Statement 123(R), effective January 1, 2006. Statement 123(R) requires all share-based
payments to employees, including grants of employee stock options, to be recognized in the income
statement based on their fair values. We estimate fair value of our stock options at the date of
grant using the
4
Black-Scholes
option pricing model. We chose the modified-prospective application of Statement 123(R) and
recorded $0.5 million as part of non-cash compensation expense
during the three months ended March 31, 2006. This expense was recorded to selling, general and administrative expenses in Events and
Venues and Sponsorship for $0.3 million and $0.1 million, respectively, and in corporate expenses
for $0.1 million.
Share Repurchase
On December 22, 2005, Live Nation’s board of directors authorized a $150 million share repurchase
program, effective through December 31, 2006. As of March 31, 2006, Live Nation had purchased 3.4
million shares for an aggregate purchase price of $42.7 million, including commissions and fees, at
an average price of $12.65 per share. Subsequent to the first quarter of 2006, the company has not
purchased any additional shares.
Live Nation will continue to base its decisions on amounts of repurchases and their timing on such
factors as the stock price, general economic and market conditions and the company’s debt levels.
The repurchase program may be suspended or discontinued at any time. Shares of stock repurchased
under the plan will be held as treasury shares.
Other Significant Events During and Subsequent to the First Quarter
| |
• |
|
On January 11, 2006, the company signed an exclusive deal to join a partnership
between Korn and EMI. |
| |
| |
• |
|
On January 25, 2006, the company announced a 15-year agreement to manage and promote
the world famous Wembley Arena in London. |
| |
| |
• |
|
On February 6, 2006, the company announced a partnership with Nokia to launch new
live music service ticketrush.co.uk. |
| |
| |
• |
|
On April 28, 2006, the company divested its interest in Planet Hollywood, Las Vegas,
a venue project, to BASE Entertainment. BASE Entertainment also purchased a minority
interest in Andrew Lloyd Weber’s Phantom at the Venetian and the touring property Cirque
du Soleil/Delirium, which is itself a partnership with Cirque du Soleil American . |
Conference Call
The company will host a teleconference to discuss its first quarter 2006 financial results today
Friday, May 5th at 11:00 a.m. Eastern Daylight Time/8:00 a.m. Pacific Daylight Time. To
access the teleconference, please dial 973-582-2785 ten minutes prior to the start time. The
teleconference will also be available via live webcast under the “About Us” portion of the
company’s website located at www.livenation.com.
If you cannot listen to the teleconference at its scheduled time, there will be a replay available
through Friday, May 12, 2006, which can be accessed by dialing 877-519-4471 (U.S.) or 973-341-3080
(Int’l), passcode 7304589. The webcast will also be archived on the company’s website for 30 days.
About Live Nation
Live Nation is a leading live event, venue and digital distribution company focused on
creating superior experiences for artists, performers, corporations and fans. Live Nation owns,
operates or has booking rights for 153 venues worldwide and produced over 29,500 events in 2005.
Live Nation operates more than 60 websites globally. 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.
# # #
5
Contacts:
| |
|
|
Investors:
|
|
Press: |
Mike Smargiassi/Jonathan Lesko
|
|
John Vlautin |
Brainerd Communicators
|
|
Live Nation |
212-986-6667
|
|
310-867-7127 |
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
words or phrases “believe”, “expect”, “anticipate”, “plans”, and “estimates”, and similar words or
expressions are intended to identify such forward-looking statements. 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, those described in Live
Nation’s Form 10-K for the year ended December 31,2005 and in the company’s other filings with the
SEC. 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. 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)
6
CONSOLIDATED AND COMBINED STATEMENTS OF OPERATIONS (UNAUDITED)
| |
|
|
|
|
|
|
|
|
| |
|
Three months ended March 31, |
|
| |
|
2006 |
|
|
2005 |
|
| |
|
(in thousands except share and per |
|
| |
|
share data) |
|
Revenue |
|
$ |
516,567 |
|
|
$ |
444,483 |
|
Operating expenses: |
|
|
|
|
|
|
|
|
Direct operating expenses |
|
|
377,832 |
|
|
|
314,634 |
|
Selling, general and administrative expenses |
|
|
116,016 |
|
|
|
123,031 |
|
Depreciation and amortization |
|
|
15,005 |
|
|
|
15,477 |
|
Gain on sale of operating assets |
|
|
(7,728 |
) |
|
|
(357 |
) |
Corporate expenses |
|
|
7,379 |
|
|
|
19,224 |
|
|
|
|
|
|
|
|
Operating income (loss) |
|
|
8,063 |
|
|
|
(27,526 |
) |
Interest expense |
|
|
7,813 |
|
|
|
619 |
|
Interest expense with Clear Channel Communications |
|
|
— |
|
|
|
11,188 |
|
Equity in earnings of nonconsolidated affiliates |
|
|
1,824 |
|
|
|
510 |
|
Other income (expense) — net |
|
|
(239 |
) |
|
|
944 |
|
|
|
|
|
|
|
|
Income (loss) before income taxes |
|
|
1,835 |
|
|
|
(37,879 |
) |
Income tax benefit (expense): |
|
|
|
|
|
|
|
|
Current |
|
|
(167 |
) |
|
|
12,151 |
|
Deferred |
|
|
(551 |
) |
|
|
3,001 |
|
|
|
|
|
|
|
|
Net income (loss) |
|
|
1,117 |
|
|
|
(22,727 |
) |
Other comprehensive income, net of tax: |
|
|
|
|
|
|
|
|
Unrealized holding gain on cash flow derivatives |
|
|
492 |
|
|
|
— |
|
Foreign currency translation adjustments |
|
|
3,678 |
|
|
|
9,583 |
|
|
|
|
|
|
|
|
Comprehensive income (loss) |
|
$ |
5,287 |
|
|
$ |
(13,144 |
) |
|
|
|
|
|
|
|
Net income per common share: |
|
|
|
|
|
|
|
|
Basic |
|
$ |
.02 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Diluted |
|
$ |
.02 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average common shares outstanding: |
|
|
|
|
|
|
|
|
Basic |
|
|
63,971,508 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Diluted |
|
|
64,480,376 |
|
|
|
|
|
|
|
|
|
|
|
|
|
7
CONSOLIDATED AND COMBINED STATEMENTS OF CASH FLOWS (UNAUDITED)
| |
|
|
|
|
|
|
|
|
| |
|
Three months ended |
|
| |
|
March 31, |
|
| |
|
2006 |
|
|
2005 |
|
| |
|
(in thousands) |
|
CASH FLOWS FROM OPERATING ACTIVITIES |
|
|
|
|
|
|
|
|
Net income (loss) |
|
$ |
1,117 |
|
|
$ |
(22,727 |
) |
Reconciling items: |
|
|
|
|
|
|
|
|
Depreciation |
|
|
14,748 |
|
|
|
14,780 |
|
Amortization of intangibles |
|
|
257 |
|
|
|
697 |
|
Deferred income tax expense (benefit) |
|
|
551 |
|
|
|
(3,001 |
) |
Amortization of debt issuance costs |
|
|
105 |
|
|
|
— |
|
Current tax benefit dividends to owner |
|
|
— |
|
|
|
(14,182 |
) |
Non-cash compensation expense |
|
|
861 |
|
|
|
343 |
|
Gain on sale of operating assets |
|
|
(7,728 |
) |
|
|
(357 |
) |
Loss on sale of other investments |
|
|
2,257 |
|
|
|
— |
|
Equity in earnings of nonconsolidated affiliates |
|
|
(1,824 |
) |
|
|
(510 |
) |
Minority interest expense (income) |
|
|
(835 |
) |
|
|
173 |
|
Decrease in other — net |
|
|
— |
|
|
|
(17 |
) |
Changes in operating assets and liabilities, net of
effects of acquisitions: |
|
|
|
|
|
|
|
|
Increase in accounts receivable |
|
|
(13,067 |
) |
|
|
(10,777 |
) |
Increase in prepaid expenses |
|
|
(96,978 |
) |
|
|
(141,555 |
) |
Decrease (increase) in other assets |
|
|
7,204 |
|
|
|
(14,758 |
) |
Increase (decrease) in accounts payable, accrued
expenses and other liabilities |
|
|
(20,061 |
) |
|
|
7,436 |
|
Increase in deferred income |
|
|
152,744 |
|
|
|
209,003 |
|
Decrease in minority interest liability |
|
|
(194 |
) |
|
|
(1,090 |
) |
|
|
|
|
|
|
|
Net cash provided by operating activities |
|
|
39,157 |
|
|
|
23,458 |
|
CASH FLOWS FROM INVESTING ACTIVITIES |
|
|
|
|
|
|
|
|
Decrease (increase) in notes receivable, net |
|
|
(4,719 |
) |
|
|
865 |
|
Decrease (increase) in investments in, and advances
to, nonconsolidated affiliates — net |
|
|
(4,248 |
) |
|
|
346 |
|
Proceeds from disposal of other investments |
|
|
1,743 |
|
|
|
— |
|
Purchases of property, plant and equipment |
|
|
(17,158 |
) |
|
|
(22,607 |
) |
Proceeds from disposal of operating assets |
|
|
12,136 |
|
|
|
133 |
|
Acquisition of operating assets |
|
|
(2,177 |
) |
|
|
656 |
|
Decrease in other — net |
|
|
98 |
|
|
|
12 |
|
|
|
|
|
|
|
|
Net cash used in investing activities |
|
|
(14,325 |
) |
|
|
(20,595 |
) |
CASH FLOWS FROM FINANCING ACTIVITIES |
|
|
|
|
|
|
|
|
Proceeds from debt with Clear Channel Communications |
|
|
— |
|
|
|
37,337 |
|
Payments on long-term debt |
|
|
(779 |
) |
|
|
(287 |
) |
Payments for purchase of common stock |
|
|
(24,717 |
) |
|
|
— |
|
|
|
|
|
|
|
|
Net cash provided by (used in) financing activities |
|
|
(25,496 |
) |
|
|
37,050 |
|
Effect of exchange rate changes on cash |
|
|
5,777 |
|
|
|
2,675 |
|
Net increase in cash and cash equivalents |
|
|
5,113 |
|
|
|
42,588 |
|
Cash and cash equivalents at beginning of period |
|
|
403,716 |
|
|
|
179,137 |
|
|
|
|
|
|
|
|
Cash and cash equivalents at end of period |
|
$ |
408,829 |
|
|
$ |
221,725 |
|
|
|
|
|
|
|
|
8
CONSOLIDATED BALANCE SHEETS
| |
|
|
|
|
|
|
|
|
| |
|
March 31, |
|
|
December 31, |
|
| |
|
2006 |
|
|
2005 |
|
| |
|
(unaudited) |
|
|
(audited) |
|
| |
|
(in thousands) |
|
| ASSETS |
CURRENT ASSETS |
|
|
|
|
|
|
|
|
Cash and cash equivalents |
|
$ |
408,829 |
|
|
$ |
403,716 |
|
Accounts receivable, less allowance of $9,184 as of March
31, 2006 and $9,518 as of December 31, 2005 |
|
|
196,229 |
|
|
|
190,207 |
|
Prepaid expenses |
|
|
212,369 |
|
|
|
115,055 |
|
Other current assets |
|
|
37,345 |
|
|
|
46,714 |
|
|
|
|
|
|
|
|
Total Current Assets |
|
|
854,772 |
|
|
|
755,692 |
|
PROPERTY, PLANT AND EQUIPMENT |
|
|
|
|
|
|
|
|
Land, buildings and improvements |
|
|
919,220 |
|
|
|
910,926 |
|
Furniture and other equipment |
|
|
169,534 |
|
|
|
166,004 |
|
Construction in progress |
|
|
46,939 |
|
|
|
39,856 |
|
|
|
|
|
|
|
|
|
|
|
1,135,693 |
|
|
|
1,116,786 |
|
Less accumulated depreciation |
|
|
322,231 |
|
|
|
307,867 |
|
|
|
|
|
|
|
|
|
|
|
813,462 |
|
|
|
808,919 |
|
INTANGIBLE ASSETS |
|
|
|
|
|
|
|
|
Definite-lived intangibles — net |
|
|
12,172 |
|
|
|
12,351 |
|
Goodwill |
|
|
140,655 |
|
|
|
137,110 |
|
OTHER ASSETS |
|
|
|
|
|
|
|
|
Notes receivable, less allowance of $745 as of March 31,
2006 and December 31, 2005 |
|
|
4,028 |
|
|
|
4,720 |
|
Investments
in, and advances to, nonconsolidated affiliates |
|
|
36,903 |
|
|
|
30,660 |
|
Other assets |
|
|
30,310 |
|
|
|
27,132 |
|
|
|
|
|
|
|
|
Total Assets |
|
$ |
1,892,302 |
|
|
$ |
1,776,584 |
|
|
|
|
|
|
|
|
| LIABILITIES AND SHAREHOLDERS’ EQUITY |
CURRENT LIABILITIES |
|
|
|
|
|
|
|
|
Accounts payable |
|
$ |
40,563 |
|
|
$ |
37,654 |
|
Deferred income |
|
|
386,150 |
|
|
|
232,754 |
|
Accrued expenses |
|
|
375,071 |
|
|
|
405,507 |
|
Current portion of long-term debt |
|
|
25,939 |
|
|
|
25,705 |
|
|
|
|
|
|
|
|
Total Current Liabilities |
|
|
827,723 |
|
|
|
701,620 |
|
Long-term debt |
|
|
340,363 |
|
|
|
341,136 |
|
Other long-term liabilities |
|
|
40,540 |
|
|
|
30,766 |
|
Minority interest liability |
|
|
25,618 |
|
|
|
26,362 |
|
Series A and Series B redeemable preferred stock |
|
|
40,000 |
|
|
|
40,000 |
|
Commitments and contingent liabilities |
|
|
|
|
|
|
|
|
SHAREHOLDERS’ EQUITY |
|
|
|
|
|
|
|
|
Common stock |
|
|
672 |
|
|
|
672 |
|
Additional paid-in capital |
|
|
748,798 |
|
|
|
748,011 |
|
Retained deficit |
|
|
(86,446 |
) |
|
|
(87,563 |
) |
Cost of shares held in treasury |
|
|
(42,719 |
) |
|
|
(18,003 |
) |
Accumulated other comprehensive loss |
|
|
(2,247 |
) |
|
|
(6,417 |
) |
|
|
|
|
|
|
|
Total Shareholders’ Equity |
|
|
618,058 |
|
|
|
636,700 |
|
|
|
|
|
|
|
|
Total Liabilities and Shareholders’ Equity |
|
$ |
1,892,302 |
|
|
$ |
1,776,584 |
|
|
|
|
|
|
|
|
9
RECONCILIATIONS OF NON-GAAP MEASURES TO THEIR MOST DIRECTLY COMPARABLE GAAP MEASURES
(UNAUDITED)
| |
|
|
|
|
|
|
|
|
| Reconciliation of OIBDAN to operating income (loss) and |
|
Three months ended |
|
| net
income (loss)—Consolidated and Combined |
|
March 31, |
|
| |
|
2006 |
|
|
2005 |
|
| |
|
(in thousands) |
|
OIBDAN |
|
$ |
16,201 |
|
|
$ |
(12,063 |
) |
Depreciation and amortization |
|
|
15,005 |
|
|
|
15,477 |
|
Loss (gain) on sale of operating assets |
|
|
(7,728 |
) |
|
|
(357 |
) |
Non-cash compensation expense |
|
|
861 |
|
|
|
343 |
|
|
|
|
|
|
|
|
Operating income (loss) |
|
|
8,063 |
|
|
|
(27,526 |
) |
Interest expense |
|
|
7,813 |
|
|
|
619 |
|
Interest expense with Clear Channel Communications |
|
|
— |
|
|
|
11,188 |
|
Equity in earnings of nonconsolidated affiliates |
|
|
1,824 |
|
|
|
510 |
|
Other income (expense) — net |
|
|
(239 |
) |
|
|
944 |
|
|
|
|
|
|
|
|
Income (loss) before income taxes |
|
|
1,835 |
|
|
|
(37,879 |
) |
Income tax benefit (expense): |
|
|
|
|
|
|
|
|
Current |
|
|
(167 |
) |
|
|
12,151 |
|
Deferred |
|
|
(551 |
) |
|
|
3,001 |
|
|
|
|
|
|
|
|
Net income (loss) |
|
$ |
1,117 |
|
|
$ |
(22,727 |
) |
|
|
|
|
|
|
|
| |
|
|
|
|
|
|
|
|
| Reconciliation of free cash flow to net cash provided by |
|
Three months ended |
|
| operating activities |
|
March 31, |
|
| |
|
2006 |
|
|
2005 |
|
| |
|
(in thousands) |
|
Free cash flow |
|
$ |
27,722 |
|
|
$ |
15,924 |
|
Maintenance capital expenditures |
|
|
11,435 |
|
|
|
7,534 |
|
|
|
|
|
|
|
|
Net cash provided by operating activities |
|
$ |
39,157 |
|
|
$ |
23,458 |
|
|
|
|
|
|
|
|
Definitions and Use of Non-GAAP Measures
OIBDAN is a non-GAAP financial measure that the company defines as operating income (loss)
before depreciation, amortization, loss (gain) on sale of operating assets and non-cash
compensation expense. The company uses OIBDAN to evaluate the performance of its operating
segments. The company believes that information about OIBDAN 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. OIBDAN is not calculated or presented in
accordance with U.S. generally accepted accounting principles. A limitation of the use of OIBDAN
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,
OIBDAN 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, OIBDAN as presented above
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 cash flow from
operations less maintenance capital expenditures. 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. Management believes that information about free cash
flow provides investors with an important perspective on the cash available to service debt, make
acquisitions and repurchase shares.
10
