Q213EarningsRelease

“We saw continued strong consumer demand for the live business over the past quarter, and further accelerated our top line growth by continuing to build share in our concerts and ticketing businesses. As a result, we are well on our way to achieving our 2013 goals with strong performance across our core business segments with revenue growth of 8% in the second quarter as compared to last year. The positive trend in our concert ticket sales from the beginning of the year has continued with concert attendance up 8% for the quarter,” said Michael Rapino, President and Chief Executive Officer of Live Nation Entertainment. “Sponsorship & Advertising delivered a 16% increase in revenue during the second quarter driven by new sponsors and improved online activity and Ticketmaster revenue was up 3% with 2% higher ticket volume. We strongly believe that the strategies and investments we are implementing today position the company for long-term growth and delivery of our three-year plan.”

The company will webcast a teleconference today at 5:00 p.m. Eastern Time to discuss its financial performance. Interested parties should visit the Investor Relations section of the company’s website at www.livenation.com/investors to listen to the webcast. Supplemental statistical and financial information provided on the call, if any, will be available under the same link. A replay of the webcast will also be available on the Live Nation website.



	Q2 2013			Q2 2012			Growth		6 months 2013			6 months 2012			Growth
Revenue
Concerts	$	1,193.0		$	1,076.0		10.9	%	$	1,706.5		$	1,524.7		11.9	%
Ticketing	337.8			328.9			2.7	%	663.0			655.5			1.1	%
Artist Nation	99.7			109.2			(8.7	%)	150.0			170.6			(12.1	%)
Sponsorship & Advertising	71.2			61.3			16.2	%	111.4			97.4			14.4	%
Other & Eliminations	(22.2		)	(24.7		)	10.1	%	(27.7		)	(29.5		)	6.1	%
	$	1,679.5		$	1,550.7		8.3	%	$	2,603.2		$	2,418.7		7.6	%

Adjusted Operating Income (Loss)
Concerts	$	42.6		$	36.2		17.7	%	$	29.4		$	11.3		**
Ticketing	77.6			71.4			8.7	%	137.2			143.9			(4.7	%)
Artist Nation	8.5			14.9			(43.0	%)	7.5			11.9			(37.0	%)
Sponsorship & Advertising	47.2			42.9			10.0	%	70.9			63.6			11.5	%
Other & Eliminations	1.6			0.8			100.0	%	2.4			(0.4		)	**
Corporate	(17.6		)	(20.2		)	12.9	%	(34.6		)	(36.1		)	4.2	%
	$	159.9		$	146.0		9.5	%	$	212.8		$	194.2		9.6	%

Operating Income (Loss)
Concerts	$	36.9		$	(7.0	)	**		$	(2.9	)	$	(62.0	)	95.3	%
Ticketing	39.2			31.5			24.4	%	54.5			63.8			(14.6	%)
Artist Nation	(2.9		)	2.8			**		(13.8		)	(12.2		)	(13.1	%)
Sponsorship & Advertising	46.4			42.7			8.7	%	69.8			63.3			10.3	%
Other & Eliminations	2.1			1.4			50.0	%	3.2			0.1			**
Corporate	(23.9		)	(28.4		)	15.8	%	(46.2		)	(52.8		)	12.5	%
	$	97.8		$	43.0		**		$	64.6		$	0.2		**

As of June 30, 2013, total cash and cash equivalents were $1.4 billion, which includes $479 million in ticketing client cash and $331 million in free cash. Event-related deferred revenue was $868 million as of June 30, 2013, compared to $707 million as of the same date in 2012. Free cash flow was $102 million for the second quarter of 2013 as compared to $99 million in the second quarter of last year, and $116 million for the first six months of 2013 versus $123 million for the same period in 2012.



	Three Months Ended June 30,				Six Months Ended June 30,
	2013		2012		2013		2012
Concerts ⁽¹⁾
Total estimated events:
North America	4,076		3,983		7,339		7,188
International	1,842		1,709		3,464		3,309
Total estimated events	5,918		5,692		10,803		10,497
Total estimated attendance (rounded):
North America	9,321,000		9,282,000		14,376,000		13,642,000
International	6,021,000		4,877,000		9,071,000		7,728,000
Total estimated attendance	15,342,000		14,159,000		23,447,000		21,370,000
Ancillary net revenue per attendee ⁽²⁾:
North America amphitheaters					$	18.59	$	18.87
International festivals					$	16.81	$	17.83
Ticketing ⁽³⁾
Number of tickets sold (in thousands):
Concerts	19,526		18,604		36,197		35,412
Sports	8,099		7,734		16,620		16,540
Arts and theater	3,962		4,371		8,226		9,190
Family	3,264		3,073		7,834		7,601
Other ⁽⁴⁾	1,417		1,699		3,138		3,449
	36,268		35,481		72,015		72,192

Gross value of tickets sold (in thousands)	$	2,326,378	$	2,191,152	$	4,508,229	$	4,411,351

Sponsorship & Advertising
Sponsorship revenue (in thousands)	$	54,322	$	48,223	$	82,575	$	73,940
Online advertising revenue (in thousands)	$	16,918	$	13,055	$	28,812	$	23,466



	Three Months Ended June 30,						Six Months Ended June 30,
	2013			2012			2013			2012
	(in thousands except share and per share data)
Revenue	$	1,679,513		$	1,550,677		$	2,603,211		$	2,418,674
Operating expenses:
Direct operating expenses	1,209,918			1,106,869			1,786,852			1,645,583
Selling, general and administrative expenses	295,719			280,943			575,241			549,078
Depreciation and amortization	82,688			94,259			164,853			173,972
Loss (gain) on disposal of operating assets	(30,199		)	93			(33,796		)	(195		)
Corporate expenses	21,812			27,415			42,467			50,632
Acquisition transaction expenses	1,769			(1,870		)	2,977			(561		)
Operating income	97,806			42,968			64,617			165
Interest expense	30,041			29,488			58,192			59,198
Interest income	(890		)	(931		)	(2,658		)	(1,831		)
Equity in earnings of nonconsolidated affiliates	(2,629		)	(1,801		)	(5,211		)	(5,682		)
Other expense, net	3,868			5,424			7,506			3,642
Income (loss) before income taxes	67,416			10,788			6,788			(55,162		)
Income tax expense	8,401			5,228			11,960			9,506
Net income (loss)	59,015			5,560			(5,172		)	(64,668		)
Net income (loss) attributable to noncontrolling interests	885			(2,132		)	(63		)	(3,210		)
Net income (loss) attributable to common stockholders of Live Nation Entertainment, Inc.	$	58,130		$	7,692		$	(5,109	)	$	(61,458	)

Basic and diluted net income (loss) per common share attributable to common stockholders of Live Nation Entertainment, Inc.	$	0.30		$	0.04		$	(0.03	)	$	(0.33	)

Weighted average common shares outstanding:
Basic	193,069,783			186,893,774			190,960,206			186,707,769
Diluted	196,770,405			189,325,338			190,960,206			186,707,769



	June 30, 2013			December 31, 2012
	(in thousands)
ASSETS
Current assets
Cash and cash equivalents	$	1,385,260		$	1,001,055
Accounts receivable, less allowance of $20,175 and $19,794, respectively	634,509			415,790
Prepaid expenses	607,376			359,936
Other current assets	60,212			36,031
Total current assets	2,687,357			1,812,812
Property, plant and equipment
Land, buildings and improvements	794,902			852,175
Computer equipment and capitalized software	372,704			338,919
Furniture and other equipment	199,478			200,743
Construction in progress	55,625			56,822
	1,422,709			1,448,659
Less accumulated depreciation	730,014			726,873
	692,695			721,786
Intangible assets
Definite-lived intangible assets, net	668,367			724,463
Indefinite-lived intangible assets	375,991			377,463
Goodwill	1,369,062			1,357,827
Investments in nonconsolidated affiliates	52,438			46,160
Other long-term assets	236,901			250,295
Total assets	$	6,082,811		$	5,290,806
LIABILITIES AND EQUITY
Current liabilities
Accounts payable, client accounts	$	622,448		$	557,953
Accounts payable	167,818			102,718
Accrued expenses	631,216			626,723
Deferred revenue	1,018,135			402,002
Current portion of long-term debt	61,658			62,050
Other current liabilities	15,274			16,726
Total current liabilities	2,516,549			1,768,172
Long-term debt, net	1,662,035			1,677,955
Long-term deferred income taxes	192,821			199,596
Other long-term liabilities	87,409			94,409
Commitments and contingent liabilities
Redeemable noncontrolling interests	78,759			42,100
Stockholders’ equity
Common stock	1,959			1,877
Additional paid-in capital	2,355,798			2,272,882
Accumulated deficit	(913,527		)	(908,418		)
Accumulated other comprehensive loss	(51,959		)	(10,923		)
Total Live Nation Entertainment, Inc. stockholders’ equity	1,392,271			1,355,418
Noncontrolling interests	152,967			153,156
Total equity	1,545,238			1,508,574
Total liabilities and equity	$	6,082,811		$	5,290,806



	Six Months Ended June 30,
	2013			2012
	(in thousands)
CASH FLOWS FROM OPERATING ACTIVITIES
Net loss	$	(5,172	)	$	(64,668	)
Reconciling items:
Depreciation	59,410			59,691
Amortization	105,443			114,281
Deferred income tax benefit	(6,305		)	(6,946		)
Amortization of debt issuance costs and discount/premium, net	10,421			6,881
Non-cash compensation expense	14,119			17,919
Gain on disposal of operating assets	(33,796		)	(195		)
Equity in earnings of nonconsolidated affiliates	(5,211		)	(5,682		)
Other, net	1,468			(1,773		)
Changes in operating assets and liabilities, net of effects of acquisitions and dispositions:
Increase in accounts receivable	(205,361		)	(103,344		)
Increase in prepaid expenses	(230,247		)	(305,090		)
Increase in other assets	(65,252		)	(62,284		)
Increase in accounts payable, accrued expenses and other liabilities	152,384			94,717
Increase in deferred revenue	588,446			566,621
Net cash provided by operating activities	380,347			310,128
CASH FLOWS FROM INVESTING ACTIVITIES
Distributions from nonconsolidated affiliates	2,740			703
Investments made in nonconsolidated affiliates	(3,032		)	(2,858		)
Purchases of property, plant and equipment	(76,685		)	(62,785		)
Proceeds from disposal of operating assets, net of cash divested	81,070			5,648
Cash paid for acquisitions, net of cash acquired	(23,766		)	(68,093		)
Purchases of intangible assets	(17		)	(11,469		)
(Increase) decrease other, net	(1,052		)	297
Net cash used in investing activities	(20,742		)	(138,557		)
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from long-term debt, net of debt issuance costs	89,369			58,270
Payments on long-term debt	(106,388		)	(44,222		)
Contributions from noncontrolling interests	267			130
Distributions to noncontrolling interests	(1,936		)	(8,189		)
Proceeds from exercise of stock options	73,449			859
Payments for deferred and contingent consideration	(750		)	(10,585		)
Net cash provided by (used in) financing activities	54,011			(3,737		)
Effect of exchange rate changes on cash and cash equivalents	(29,411		)	(7,048		)
Net increase in cash and cash equivalents	384,205			160,786
Cash and cash equivalents at beginning of period	1,001,055			844,253
Cash and cash equivalents at end of period	$	1,385,260		$	1,005,039

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 prospects for achieving its 2013 goals and the company’s positioning for long-term growth and delivery of its three-year plan. 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, the potential impact of any 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.

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, payments under the Azoff Trust note and acquisition-related severance), depreciation and amortization (including goodwill impairment), loss (gain) on disposal of operating assets and non-cash and certain stock-based compensation expense (including expense associated with grants of certain stock-based awards which were 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 noncontrolling 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 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 fund 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.



($ in millions)	Adjusted operating income (loss)			Non-cash and stock-based compensation expense			Loss (gain) on disposal of operating assets			Depreciation and amortization			Acquisition expenses			Operating income (loss)

	Three Months Ended June 30, 2013

Concerts	$	42.6		$	1.6		$	(31.3	)	$	35.1		$	0.3		$	36.9
Ticketing	77.6			1.7			—			36.7			—			39.2
Artist Nation	8.5			0.2			1.1			10.1			—			(2.9		)
Sponsorship & Advertising	47.2			0.2			—			0.6			—			46.4
Other and Eliminations	1.6			(0.1		)	—			(0.5		)	0.1			2.1
Corporate	(17.6		)	4.2			—			0.7			1.4			(23.9		)
Total Live Nation	$	159.9		$	7.8		$	(30.2	)	$	82.7		$	1.8		$	97.8

	Three Months Ended June 30, 2012

Concerts	$	36.2		$	1.3		$	—		$	44.1		$	(2.2	)	$	(7.0	)
Ticketing	71.4			1.5			(0.1		)	38.8			(0.3		)	31.5
Artist Nation	14.9			0.3			—			11.5			0.3			2.8
Sponsorship & Advertising	42.9			0.2			—			—			—			42.7
Other and Eliminations	0.8			—			0.2			(0.8		)	—			1.4
Corporate	(20.2		)	5.6			—			0.7			1.9			(28.4		)
Total Live Nation	$	146.0		$	8.9		$	0.1		$	94.3		$	(0.3	)	$	43.0

	Six Months Ended June 30, 2013

Concerts	$	29.4		$	2.5		$	(34.5	)	$	63.8		$	0.5		$	(2.9	)
Ticketing	137.2			3.1			—			79.5			0.1			54.5
Artist Nation	7.5			0.3			0.7			20.2			0.1			(13.8		)
Sponsorship & Advertising	70.9			0.4			—			0.7			—			69.8
Other and Eliminations	2.4			—			—			(0.8		)	—			3.2
Corporate	(34.6		)	7.8			—			1.5			2.3			(46.2		)
Total Live Nation	$	212.8		$	14.1		$	(33.8	)	$	164.9		$	3.0		$	64.6

	Six Months Ended June 30, 2012

Concerts	$	11.3		$	2.7		$	(0.5	)	$	72.5		$	(1.4	)	$	(62.0	)
Ticketing	143.9			3.0			(0.2		)	78.0			(0.7		)	63.8
Artist Nation	11.9			0.6			—			23.1			0.4			(12.2		)
Sponsorship & Advertising	63.6			0.3			—			—			—			63.3
Other and Eliminations	(0.4		)	—			0.5			(1.0		)	—			0.1
Corporate	(36.1		)	11.3			—			1.4			4.0			(52.8		)
Total Live Nation	$	194.2		$	17.9		$	(0.2	)	$	174.0		$	2.3		$	0.2



($ in millions)	Q2 2013			Q2 2012
Adjusted operating income	$	159.9		$	146.0
Less: Cash interest expense — net	(22.0		)	(20.4		)
Cash taxes	(19.5		)	(3.4		)
Maintenance capital expenditures	(15.3		)	(16.6		)
Distributions to noncontrolling interests	(0.7		)	(5.0		)
Distributions from (contributions to) investments in nonconsolidated affiliates	(0.1		)	(1.9		)
Free cash flow	$	102.3		$	98.7
Revenue generating capital expenditures	(18.5		)	(18.8		)
Net	$	83.8		$	79.9

($ in millions)	6 months 2013			6 months 2012
Adjusted operating income	$	212.8		$	194.2
Less: Cash interest expense — net	(44.5		)	(48.9		)
Cash taxes	(22.9		)	14.5
Maintenance capital expenditures	(26.8		)	(26.7		)
Distributions to noncontrolling interests	(1.9		)	(8.2		)
Distributions from (contributions to) investments in nonconsolidated affiliates	(0.3		)	(2.2		)
Free cash flow	$	116.4		$	122.7
Revenue generating capital expenditures	(28.5		)	(32.1		)
Net	$	87.9		$	90.6



($ in millions)	June 30, 2013
Cash and cash equivalents	$	1,385.3
Client cash	(479.1		)
Deferred revenue — event-related	(868.3		)
Accrued artist fees	(56.3		)
Collections on behalf of others	(38.0		)
Prepaids related to artist settlements/events	387.7
Free cash	$	331.3


(1)	Events generally represent a single performance by an artist. Attendance generally represents the number of fans who were present at an event. Festivals are counted as one event in the quarter in which the festival begins but attendance is based on the days the fan was present at the festival and thus can be reported in multiple quarters. Events and attendance metrics are estimated each quarter.


(4)	Other category includes tickets for comedy shows, facility tours, donations, lectures, seminars and cinemas.


(2)	Amounts are reported as of the latest period shown.