Q313EarningsRelease

“We had a record summer with revenue of $2.3 billion, up 15% for the quarter, largely driven by a 27% growth in global concert attendance compared to last year. Consumer demand has come back strong for us this year, as we have had attendance growth across concerts globally, from new artists to the legends and everyone in between,” said Michael Rapino, President and Chief Executive Officer of Live Nation Entertainment. “The Sponsorship & Advertising segment also had continued strong performance with a 15% increase in revenue for the third quarter driven by higher sponsorship revenue and ongoing success in our online advertising business. And the launch of Ticketmaster resale product in our Ticketing segment delivered higher sales and gross transaction value in the secondary market. At this point we are confident in delivering solid revenue, operating income and adjusted operating income growth for the year, with a double-digit increase in concert attendance.”



	Q3 2013			Q3 2012			Growth		9 months 2013			9 months 2012			Growth
Revenue
Concerts	$	1,727.0		$	1,429.9		21	%	$	3,433.5		$	2,954.6		16	%
Ticketing	356.8			346.0			3	%	1,019.8			1,001.5			2	%
Artist Nation	111.1			127.9			(13	%)	261.1			298.6			(13	%)
Sponsorship & Advertising	110.2			95.8			15	%	221.6			193.2			15	%
Other & Eliminations	(42.9		)	(36.5		)	(18	%)	(70.6		)	(66.1		)	(7	%)
	$	2,262.2		$	1,963.1		15	%	$	4,865.4		$	4,381.8		11	%

Adjusted Operating Income (Loss)
Concerts	$	70.7		$	49.1		44	%	$	100.2		$	60.4		66	%
Ticketing	80.3			82.1			(2	%)	217.4			226.0			(4	%)
Artist Nation	12.7			21.1			(40	%)	20.1			33.0			(39	%)
Sponsorship & Advertising	83.3			74.1			12	%	154.3			137.8			12	%
Other & Eliminations	(3.5		)	(0.7		)	**		(1.2		)	(1.1		)	(9	%)
Corporate	(22.3		)	(23.3		)	4	%	(56.9		)	(59.5		)	4	%
	$	221.2		$	202.4		9	%	$	433.9		$	396.6		9	%

Operating Income (Loss)
Concerts	$	44.6		$	19.1		**		$	41.8		$	(43.0	)	**
Ticketing	28.0			36.6			(23	%)	82.5			100.4			(18	%)
Artist Nation	1.8			7.5			(76	%)	(12.0		)	(4.7		)	**
Sponsorship & Advertising	83.2			73.6			13	%	153.0			137.0			12	%
Other & Eliminations	(3.1		)	(0.2		)	**		0.1			—			**
Corporate	(28.5		)	(32.1		)	11	%	(74.7		)	(85.0		)	12	%
	$	126.0		$	104.5		21	%	$	190.7		$	104.7		82	%

As of September 30, 2013, total cash and cash equivalents were $1.3 billion, which includes $510 million in ticketing client cash and $539 million in free cash. Event-related deferred revenue was $313 million as of September 30, 2013, compared to $273 million as of the same date in 2012. Free cash flow was $167 million for the third quarter of 2013 as compared to $152 million in the third quarter of last year, and $283 million for the first nine months of 2013 versus $274 million for the same period in 2012.




	Three Months Ended September 30,				Nine Months Ended September 30,
	2013		2012		2013		2012
Concerts ⁽¹⁾
Total estimated events:
North America	3,858		3,938		11,181		11,126
International	1,210		1,227		4,674		4,536
Total estimated events	5,068		5,165		15,855		15,662
Total estimated attendance (rounded):
North America	14,826,000		11,636,000		29,292,000		25,278,000
International	6,348,000		5,080,000		15,419,000		12,808,000
Total estimated attendance	21,174,000		16,716,000		44,711,000		38,086,000
Ancillary net revenue per attendee ⁽²⁾:
North America amphitheaters					$	18.26	$	18.54
International festivals					$	17.81	$	15.71
Ticketing ⁽³⁾
Number of tickets sold (in thousands):
Concerts	20,526		19,421		56,724		54,832
Sports	7,447		6,709		24,067		23,249
Arts and theater	4,239		4,493		12,465		13,683
Family	3,803		3,676		11,637		11,277
Other ⁽⁴⁾	1,579		1,771		4,717		5,221
	37,594		36,070		109,610		108,262

Gross transaction value of tickets sold (in thousands)	$	2,231,826	$	2,092,102	$	6,740,055	$	6,503,452

Sponsorship & Advertising
Sponsorship revenue (in thousands)	$	90,081	$	81,199	$	172,656	$	155,139
Online advertising revenue (in thousands)	$	20,136	$	14,606	$	48,948	$	38,072



	Three Months Ended September 30,						Nine Months Ended September 30,
	2013			2012			2013			2012
	(in thousands except share and per share data)
Revenue	$	2,262,236		$	1,963,146		$	4,865,447		$	4,381,820
Operating expenses:
Direct operating expenses	1,698,731			1,457,423			3,485,583			3,103,006
Selling, general and administrative expenses	325,005			283,846			900,246			832,924
Depreciation and amortization	92,729			84,684			257,582			258,656
Gain on disposal of operating assets	(9,060		)	(60		)	(42,856		)	(255		)
Corporate expenses	26,442			30,842			68,909			81,474
Acquisition transaction expenses	2,352			1,896			5,329			1,335
Operating income	126,037			104,515			190,654			104,680
Interest expense	29,393			35,535			87,585			94,733
Loss (gain) on extinguishment of debt	36,269			(460		)	36,269			(460		)
Interest income	(1,547		)	(994		)	(4,205		)	(2,825		)
Equity in losses (earnings) of nonconsolidated affiliates	2,363			(3,117		)	(2,848		)	(8,799		)
Other expense (income), net	(5,269		)	(6,575		)	2,237			(2,933		)
Income before income taxes	64,828			80,126			71,616			24,964
Income tax expense	14,410			11,950			26,370			21,456
Net income	50,418			68,176			45,246			3,508
Net income attributable to noncontrolling interests	6,644			10,228			6,581			7,018
Net income (loss) attributable to common stockholders of Live Nation Entertainment, Inc.	$	43,774		$	57,948		$	38,665		$	(3,510	)

Basic and diluted net income (loss) per common share attributable to common stockholders of Live Nation Entertainment, Inc.	$	0.22		$	0.31		$	0.20		$	(0.02	)
Weighted average common shares outstanding:
Basic	196,396,704			187,153,788			192,792,286			186,857,527
Diluted	202,109,783			189,754,343			197,266,289			186,857,527



	September 30, 2013			December 31, 2012
	(in thousands)
ASSETS
Current assets
Cash and cash equivalents	$	1,302,578		$	1,001,055
Accounts receivable, less allowance of $17,240 and $19,794, respectively	578,426			415,790
Prepaid expenses	435,769			359,936
Other current assets	47,777			36,031
Total current assets	2,364,550			1,812,812
Property, plant and equipment
Land, buildings and improvements	812,685			852,175
Computer equipment and capitalized software	386,825			338,919
Furniture and other equipment	205,267			200,743
Construction in progress	59,305			56,822
	1,464,082			1,448,659
Less accumulated depreciation	767,079			726,873
	697,003			721,786
Intangible assets
Definite-lived intangible assets, net	644,410			724,463
Indefinite-lived intangible assets	376,440			377,463
Goodwill	1,397,471			1,357,827
Investments in nonconsolidated affiliates	40,128			46,160
Other long-term assets	255,558			250,295
Total assets	$	5,775,560		$	5,290,806
LIABILITIES AND EQUITY
Current liabilities
Accounts payable, client accounts	$	659,803		$	557,953
Accounts payable	113,385			102,718
Accrued expenses	784,761			626,723
Deferred revenue	395,763			402,002
Current portion of long-term debt	263,689			62,050
Other current liabilities	16,350			16,726
Total current liabilities	2,233,751			1,768,172
Long-term debt, net	1,540,763			1,677,955
Long-term deferred income taxes	189,496			199,596
Other long-term liabilities	92,288			94,409
Commitments and contingent liabilities
Redeemable noncontrolling interests	66,680			42,100
Stockholders’ equity
Common stock	1,973			1,877
Additional paid-in capital	2,375,613			2,272,882
Accumulated deficit	(869,753		)	(908,418		)
Cost of shares held in treasury	(6,865		)	—
Accumulated other comprehensive loss	(11,261		)	(10,923		)
Total Live Nation Entertainment, Inc. stockholders’ equity	1,489,707			1,355,418
Noncontrolling interests	162,875			153,156
Total equity	1,652,582			1,508,574
Total liabilities and equity	$	5,775,560		$	5,290,806



	Nine Months Ended September 30,
	2013			2012
	(in thousands)
CASH FLOWS FROM OPERATING ACTIVITIES
Net income	$	45,246		$	3,508
Reconciling items:
Depreciation	90,443			90,789
Amortization	167,139			167,867
Deferred income tax benefit	(8,230		)	(11,183		)
Amortization of debt issuance costs and discount/premium, net	15,409			11,415
Loss (gain) on extinguishment of debt	36,269			(460		)
Non-cash compensation expense	23,224			27,595
Gain on disposal of operating assets	(42,856		)	(255		)
Equity in earnings of nonconsolidated affiliates	(2,848		)	(8,799		)
Other, net	576			(364		)
Changes in operating assets and liabilities, net of effects of acquisitions and dispositions:
Increase in accounts receivable	(129,361		)	(186,313		)
Increase in prepaid expenses	(50,432		)	(159,473		)
Increase in other assets	(94,512		)	(37,712		)
Increase in accounts payable, accrued expenses and other liabilities	260,254			138,270
Increase (decrease) in deferred revenue	(45,783		)	54,154
Net cash provided by operating activities	264,538			89,039
CASH FLOWS FROM INVESTING ACTIVITIES
Distributions from nonconsolidated affiliates	13,104			6,744
Investments made in nonconsolidated affiliates	(7,505		)	(3,212		)
Purchases of property, plant and equipment	(103,577		)	(92,372		)
Proceeds from disposal of operating assets, net of cash divested	83,086			7,788
Cash paid for acquisitions, net of cash acquired	(26,418		)	(71,256		)
Purchases of intangible assets	(17		)	(14,553		)
Other, net	(1,163		)	(943		)
Net cash used in investing activities	(42,490		)	(167,804		)
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from long-term debt, net of debt issuance costs	870,324			481,286
Payments on long-term debt	(854,277		)	(457,487		)
Contributions from noncontrolling interests	267			130
Distributions to noncontrolling interests	(12,382		)	(9,202		)
Purchases and sales of noncontrolling interests, net	(75		)	(259		)
Proceeds from exercise of stock options	80,593			926
Payments for deferred and contingent consideration	(750		)	(10,585		)
Net cash provided by financing activities	83,700			4,809
Effect of exchange rate changes on cash and cash equivalents	(4,225		)	13,374
Net increase (decrease) in cash and cash equivalents	301,523			(60,582		)
Cash and cash equivalents at beginning of period	1,001,055			844,253
Cash and cash equivalents at end of period	$	1,302,578		$	783,671

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 delivering revenue, operating income and adjusted operating income growth for 2013, as well as its anticipated double-digit increase in concert attendance for the year. 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 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 September 30, 2013

Concerts	$	70.7		$	1.6	$	(9.1	)	$	32.8		$	0.8		$	44.6
Ticketing	80.3			2.9		—			49.2			0.2			28.0
Artist Nation	12.7			0.2		—			10.7			—			1.8
Sponsorship & Advertising	83.3			0.2		—			(0.1		)	—			83.2
Other and Eliminations	(3.5		)	0.1		—			(0.5		)	—			(3.1		)
Corporate	(22.3		)	4.2		—			0.6			1.4			(28.5		)
Total Live Nation	$	221.2		$	9.2	$	(9.1	)	$	92.7		$	2.4		$	126.0

	Three Months Ended September 30, 2012

Concerts	$	49.1		$	1.5	$	—		$	27.5		$	1.0		$	19.1
Ticketing	82.1			1.7		—			43.3			0.5			36.6
Artist Nation	21.1			0.4		—			13.2			—			7.5
Sponsorship & Advertising	74.1			0.2		—			0.3			—			73.6
Other and Eliminations	(0.7		)	—		(0.1		)	(0.4		)	—			(0.2		)
Corporate	(23.3		)	5.9		—			0.8			2.1			(32.1		)
Total Live Nation	$	202.4		$	9.7	$	(0.1	)	$	84.7		$	3.6		$	104.5

	Nine Months Ended September 30, 2013

Concerts	$	100.2		$	4.1	$	(43.6	)	$	96.6		$	1.3		$	41.8
Ticketing	217.4			6.1		—			128.6			0.2			82.5
Artist Nation	20.1			0.4		0.7			30.9			0.1			(12.0		)
Sponsorship & Advertising	154.3			0.6		—			0.7			—			153.0
Other and Eliminations	(1.2		)	—		—			(1.3		)	—			0.1
Corporate	(56.9		)	12.0		—			2.1			3.7			(74.7		)
Total Live Nation	$	433.9		$	23.2	$	(42.9	)	$	257.6		$	5.3		$	190.7

	Nine Months Ended September 30, 2012

Concerts	$	60.4		$	4.2	$	(0.5	)	$	100.1		$	(0.4	)	$	(43.0	)
Ticketing	226.0			4.7		(0.2		)	121.3			(0.2		)	100.4
Artist Nation	33.0			1.0		—			36.3			0.4			(4.7		)
Sponsorship & Advertising	137.8			0.5		—			0.3			—			137.0
Other and Eliminations	(1.1		)	—		0.4			(1.5		)	—			—
Corporate	(59.5		)	17.2		—			2.2			6.1			(85.0		)
Total Live Nation	$	396.6		$	27.6	$	(0.3	)	$	258.7		$	5.9		$	104.7



($ in millions)	Q3 2013			Q3 2012
Adjusted operating income	$	221.2		$	202.4
Less: Cash interest expense — net	(28.3		)	(36.1		)
Cash taxes	(9.9		)	(3.9		)
Maintenance capital expenditures	(11.7		)	(15.5		)
Distributions to noncontrolling interests	(10.4		)	(1.0		)
Distributions from (contributions to) investments in nonconsolidated affiliates	5.9			5.7
Free cash flow	$	166.8		$	151.6
Revenue generating capital expenditures	(13.1		)	(13.9		)
Net	$	153.7		$	137.7

($ in millions)	9 months 2013			9 months 2012
Adjusted operating income	$	433.9		$	396.6
Less: Cash interest expense — net	(72.8		)	(85.0		)
Cash taxes	(32.8		)	10.6
Maintenance capital expenditures	(38.5		)	(42.2		)
Distributions to noncontrolling interests	(12.3		)	(9.2		)
Distributions from (contributions to) investments in nonconsolidated affiliates	5.6			3.5
Free cash flow	$	283.1		$	274.3
Revenue generating capital expenditures	(41.6		)	(46.0		)
Net	$	241.5		$	228.3



($ in millions)	September 30, 2013
Cash and cash equivalents	$	1,302.6
Client cash	(509.5		)
Deferred revenue — event-related	(312.7		)
Accrued artist fees	(108.3		)
Collections on behalf of others	(46.4		)
Prepaids related to artist settlements/events	212.9
Free cash	$	538.6


(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.