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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
____________________________________
Form 10-Q
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☒ | QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the quarterly period ended September 30, 2019
or
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☐ | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the transition period from to
Commission File Number 001-32601
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LIVE NATION ENTERTAINMENT, INC.
(Exact name of registrant as specified in its charter)
____________________________________
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Delaware | | 20-3247759 |
(State of Incorporation) | | (I.R.S. Employer Identification No.) |
9348 Civic Center Drive
Beverly Hills, CA 90210
(Address of principal executive offices, including zip code)
(310) 867-7000
(Registrant’s telephone number, including area code)
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Securities registered pursuant to Section 12(b) of the Act: | | | | |
Title of each class | | Trading Symbol(s) | | Name of each exchange on which registered |
Common stock, $.01 Par Value Per Share | | LYV | | New York Stock Exchange |
(Includes Preferred Stock Purchase Rights) | | | | |
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. x Yes ¨ No
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes x No ¨
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
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Large Accelerated Filer | x | | Accelerated Filer | | ¨ |
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Non-accelerated Filer | ¨ | | Smaller Reporting Company | | ☐ |
| | | Emerging Growth Company | | ☐ |
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. | | | | | ¨ |
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). ☐ Yes x No
On October 24, 2019, there were 213,715,534 outstanding shares of the registrant’s common stock, $0.01 par value per share, including 2,988,582 shares of unvested restricted stock awards and excluding 408,024 shares held in treasury.
LIVE NATION ENTERTAINMENT, INC.
INDEX TO FORM 10-Q
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PART I—FINANCIAL INFORMATION | | |
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PART II—OTHER INFORMATION | | |
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GLOSSARY OF KEY TERMS | |
AOCI | Accumulated other comprehensive income (loss) |
AOI | Adjusted operating income (loss) |
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FASB | Financial Accounting Standards Board |
GAAP | United States Generally Accepted Accounting Principles |
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Live Nation | Live Nation Entertainment, Inc. and subsidiaries |
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SEC | United States Securities and Exchange Commission |
Ticketmaster | Our ticketing business |
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PART I—FINANCIAL INFORMATION
Item 1. Financial Statements
LIVE NATION ENTERTAINMENT, INC.
CONSOLIDATED BALANCE SHEETS (UNAUDITED)
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| September 30, 2019 | | December 31, 2018 |
| (in thousands) | | |
ASSETS | | | |
Current assets | | | |
Cash and cash equivalents | $ | 1,795,166 | | | $ | 2,371,540 | |
Accounts receivable, less allowance of $41,932 and $34,225, respectively | 1,215,465 | | | 829,320 | |
Prepaid expenses | 772,196 | | | 597,866 | |
Restricted cash | 13,628 | | | 6,663 | |
Other current assets | 53,268 | | | 42,685 | |
Total current assets | 3,849,723 | | | 3,848,074 | |
Property, plant and equipment | | | |
Land, buildings and improvements | 1,116,305 | | | 984,558 | |
Computer equipment and capitalized software | 787,966 | | | 742,737 | |
Furniture and other equipment | 362,978 | | | 329,607 | |
Construction in progress | 163,470 | | | 160,028 | |
| 2,430,719 | | | 2,216,930 | |
Less accumulated depreciation | 1,382,580 | | | 1,270,337 | |
| 1,048,139 | | | 946,593 | |
Operating lease assets | 1,145,487 | | | — | |
Intangible assets | | | |
Definite-lived intangible assets, net | 678,790 | | | 661,451 | |
Indefinite-lived intangible assets | 368,756 | | | 368,854 | |
Goodwill | 1,915,215 | | | 1,822,943 | |
Long-term advances | 563,815 | | | 420,891 | |
Other long-term assets | 397,208 | | | 428,080 | |
Total assets | $ | 9,967,133 | | | $ | 8,496,886 | |
LIABILITIES AND EQUITY | | | |
Current liabilities | | | |
Accounts payable, client accounts | $ | 985,214 | | | $ | 1,037,162 | |
Accounts payable | 119,910 | | | 90,253 | |
Accrued expenses | 1,511,883 | | | 1,245,465 | |
Deferred revenue | 1,115,874 | | | 1,227,797 | |
Current portion of long-term debt, net | 64,274 | | | 82,142 | |
Current portion of operating lease liabilities | 122,299 | | | — | |
Other current liabilities | 39,918 | | | 67,047 | |
Total current liabilities | 3,959,372 | | | 3,749,866 | |
Long-term debt, net | 2,694,934 | | | 2,732,878 | |
Long-term operating lease liabilities | 1,092,538 | | | — | |
Deferred income taxes | 166,305 | | | 137,067 | |
Other long-term liabilities | 112,336 | | | 204,977 | |
Commitments and contingent liabilities | | | | | |
Redeemable non-controlling interests | 418,816 | | | 329,355 | |
Stockholders' equity | | | |
Common stock | 2,111 | | | 2,091 | |
Additional paid-in capital | 2,262,461 | | | 2,268,209 | |
Accumulated deficit | (789,387) | | | (1,019,223) | |
Cost of shares held in treasury | (6,865) | | | (6,865) | |
Accumulated other comprehensive loss | (181,047) | | | (145,231) | |
Total Live Nation stockholders' equity | 1,287,273 | | | 1,098,981 | |
Non-controlling interests | 235,559 | | | 243,762 | |
Total stockholders' equity | 1,522,832 | | | 1,342,743 | |
Total liabilities and stockholders' equity | $ | 9,967,133 | | | $ | 8,496,886 | |
See Notes to Consolidated Financial Statements
2
LIVE NATION ENTERTAINMENT, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED)
| | | | | | | | | | | | | | | | | | | | | | | | | | |
| Three Months Ended September 30, | | | | Nine Months Ended September 30, | | | |
| 2019 | | 2018 | | 2019 | | 2018 | |
| | | | | | | | |
| (in thousands except share and per share data) | | | | | | | |
Revenue | $ | 3,773,684 | | | $ | 3,835,246 | | | $ | 8,658,521 | | | $ | 8,185,945 | | |
Operating expenses: | | | | | | | | |
Direct operating expenses | 2,800,429 | | | 2,924,356 | | | 6,279,447 | | | 5,991,547 | | |
Selling, general and administrative expenses | 542,547 | | | 524,654 | | | 1,520,910 | | | 1,435,703 | | |
Depreciation and amortization | 126,306 | | | 99,606 | | | 329,044 | | | 277,262 | | |
Loss (gain) on disposal of operating assets | (305) | | | 10,318 | | | (553) | | | 10,464 | | |
Corporate expenses | 44,666 | | | 42,093 | | | 121,909 | | | 108,055 | | |
Operating income | 260,041 | | | 234,219 | | | 407,764 | | | 362,914 | | |
Interest expense | 36,587 | | | 35,993 | | | 109,894 | | | 104,196 | | |
| | | | | | | | |
Interest income | (5,863) | | | (2,260) | | | (12,229) | | | (6,148) | | |
Equity in loss (earnings) of nonconsolidated affiliates | 2,681 | | | (4) | | | (6,291) | | | (3,406) | | |
Other expense, net | 5,384 | | | 262 | | | 1,551 | | | 7,033 | | |
Income before income taxes | 221,252 | | | 200,228 | | | 314,839 | | | 261,239 | | |
Income tax expense | 27,280 | | | 17,031 | | | 59,988 | | | 35,714 | | |
Net income | 193,972 | | | 183,197 | | | 254,851 | | | 225,525 | | |
Net income attributable to noncontrolling interests | 15,047 | | | 10,514 | | | 25,015 | | | 17,389 | | |
Net income attributable to common stockholders of Live Nation | $ | 178,925 | | | $ | 172,683 | | | $ | 229,836 | | | $ | 208,136 | | |
| | | | | | | | |
Basic net income per common share available to common stockholders of Live Nation | $ | 0.74 | | | $ | 0.73 | | | $ | 0.86 | | | $ | 0.74 | | |
Diluted net income per common share available to common stockholders of Live Nation | $ | 0.71 | | | $ | 0.70 | | | $ | 0.83 | | | $ | 0.71 | | |
| | | | | | | | |
Weighted average common shares outstanding: | | | | | | | | |
Basic | 210,621,971 | | | 207,614,413 | | | 209,849,058 | | | 207,228,034 | | |
Diluted | 218,957,376 | | | 216,788,983 | | | 218,485,494 | | | 215,406,201 | | |
| | | | | | | | |
| | | | | | | | |
Reconciliation to net income available to common stockholders of Live Nation: | | | | | | | | |
Net income attributable to common stockholders of Live Nation | $ | 178,925 | | | $ | 172,683 | | | $ | 229,836 | | | $ | 208,136 | | |
Accretion of redeemable noncontrolling interests | (23,580) | | | (20,789) | | | (49,407) | | | (54,347) | | |
Net income available to common stockholders of Live Nation—basic | 155,345 | | | 151,894 | | | 180,429 | | | 153,789 | | |
Convertible debt interest, net of tax | — | | | 319 | | | 265 | | | — | | |
Net income available to common stockholders of Live Nation—diluted | $ | 155,345 | | | $ | 152,213 | | | $ | 180,694 | | | $ | 153,789 | | |
| | | | | | | | |
See Notes to Consolidated Financial Statements
3
LIVE NATION ENTERTAINMENT, INC.
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
(UNAUDITED)
| | | | | | | | | | | | | | | | | | | | | | | |
| Three Months Ended September 30, | | | | Nine Months Ended September 30, | | |
| 2019 | | 2018 | | 2019 | | 2018 |
| (in thousands) | | | | | | |
Net income | $ | 193,972 | | | $ | 183,197 | | | $ | 254,851 | | | $ | 225,525 | |
Other comprehensive loss, net of tax: | | | | | | | |
Foreign currency translation adjustments | (32,256) | | | (9,081) | | | (35,816) | | | (26,376) | |
Comprehensive income | 161,716 | | | 174,116 | | | 219,035 | | | 199,149 | |
Comprehensive income attributable to noncontrolling interests | 15,047 | | | 10,514 | | | 25,015 | | | 17,389 | |
Comprehensive income attributable to common stockholders of Live Nation | $ | 146,669 | | | $ | 163,602 | | | $ | 194,020 | | | $ | 181,760 | |
See Notes to Consolidated Financial Statements
4
LIVE NATION ENTERTAINMENT, INC.
CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY
(UNAUDITED)
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | Live Nation Stockholders’ Equity | | | | | | | | | | | | | | | | |
| | Common Shares Issued | | Common Stock | | Additional Paid-In Capital | | Accumulated Deficit | | Cost of Shares Held in Treasury | | Accumulated Other Comprehensive Income (Loss) | | Noncontrolling Interests | | Total Equity | | Redeemable Noncontrolling Interests |
| | (in thousands, except share data) | | | | | | | | | | | | | | | | (in thousands) |
Balances at June 30, 2019 | | 210,910,143 | | | $ | 2,101 | | | $ | 2,296,010 | | | $ | (968,312) | | | $ | (6,865) | | | $ | (148,791) | | | $ | 233,613 | | | $ | 1,407,756 | | | $ | 385,328 | |
Non-cash and stock-based compensation | | — | | | — | | | 12,030 | | | — | | | — | | | — | | | — | | | 12,030 | | | — | |
Common stock issued under stock plans, net of shares withheld for employee taxes | | 9,457 | | | — | | | (319) | | | — | | | — | | | — | | | — | | | (319) | | | — | |
Exercise of stock options, net of shares withheld for option cost and employee taxes | | 206,456 | | | 2 | | | 3,039 | | | — | | | — | | | — | | | — | | | 3,041 | | | — | |
Conversion of convertible debt | | — | | | 8 | | | (8) | | | — | | | — | | | — | | | — | | | — | | | — | |
Acquisitions | | — | | | — | | | — | | | — | | | — | | | — | | | 4,790 | | | 4,790 | | | — | |
| | | | | | | | | | | | | | | | | | |
Purchases of noncontrolling interests | | — | | | — | | | (24,846) | | | — | | | — | | | — | | | (2,695) | | | (27,541) | | | — | |
| | | | | | | | | | | | | | | | | | |
Redeemable noncontrolling interests fair value adjustments | | — | | | — | | | (23,580) | | | — | | | — | | | — | | | — | | | (23,580) | | | 23,580 | |
Contributions received | | — | | | — | | | — | | | — | | | — | | | — | | | 4,800 | | | 4,800 | | | — | |
Cash distributions | | — | | | — | | | — | | | — | | | — | | | — | | | (8,185) | | | (8,185) | | | (1,624) | |
Other | | — | | | — | | | 135 | | | — | | | — | | | — | | | (279) | | | (144) | | | — | |
Comprehensive income (loss): | | | | | | | | | | | | | | | | | | |
Net income | | — | | | — | | | — | | | 178,925 | | | — | | | — | | | 3,515 | | | 182,440 | | | 11,532 | |
Foreign currency translation adjustments | | — | | | — | | | — | | | — | | | — | | | (32,256) | | | — | | | (32,256) | | | — | |
Balances at September 30, 2019 | | 211,126,056 | | | $ | 2,111 | | | $ | 2,262,461 | | | $ | (789,387) | | | $ | (6,865) | | | $ | (181,047) | | | $ | 235,559 | | | $ | 1,522,832 | | | $ | 418,816 | |
See Notes to Consolidated Financial Statements
5
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | Live Nation Stockholders’ Equity | | | | | | | | | | | | | | | | |
| | Common Shares Issued | | Common Stock | | Additional Paid-In Capital | | Accumulated Deficit | | Cost of Shares Held in Treasury | | Accumulated Other Comprehensive Income (Loss) | | Noncontrolling Interests | | Total Equity | | Redeemable Noncontrolling Interests |
| | (in thousands, except share data) | | | | | | | | | | | | | | | | (in thousands) |
Balances at December 31, 2018 | | 209,135,581 | | | $ | 2,091 | | | $ | 2,268,209 | | | $ | (1,019,223) | | | $ | (6,865) | | | $ | (145,231) | | | $ | 243,762 | | | $ | 1,342,743 | | | $ | 329,355 | |
Non-cash and stock-based compensation | | — | | | — | | | 37,022 | | | — | | | — | | | — | | | — | | | 37,022 | | | — | |
Common stock issued under stock plans, net of shares withheld for employee taxes | | 322,314 | | | 3 | | | (10,581) | | | — | | | — | | | — | | | — | | | (10,578) | | | — | |
Exercise of stock options, net of shares withheld for option cost and employee taxes | | 843,833 | | | 9 | | | 13,231 | | | — | | | — | | | — | | | — | | | 13,240 | | | — | |
Conversion of convertible debt | | 824,328 | | | 8 | | | 28,578 | | | — | | | — | | | — | | | — | | | 28,586 | | | — | |
Acquisitions | | — | | | — | | | — | | | — | | | — | | | — | | | 30,958 | | | 30,958 | | | 39,303 | |
| | | | | | | | | | | | | | | | | | |
Purchases of noncontrolling interests | | — | | | — | | | (24,576) | | | — | | | — | | | — | | | (2,965) | | | (27,541) | | | (1,459) | |
| | | | | | | | | | | | | | | | | | |
Redeemable noncontrolling interests fair value adjustments | | — | | | — | | | (49,407) | | | — | | | — | | | — | | | — | | | (49,407) | | | 49,407 | |
Contributions received | | — | | | — | | | — | | | — | | | — | | | — | | | 13,124 | | | 13,124 | | | — | |
Cash distributions | | — | | | — | | | — | | | — | | | — | | | — | | | (60,300) | | | (60,300) | | | (12,882) | |
Other | | — | | | — | | | (15) | | | — | | | — | | | — | | | (1,540) | | | (1,555) | | | 2,597 | |
Comprehensive income (loss): | | | | | | | | | | | | | | | | | | |
Net income | | — | | | — | | | — | | | 229,836 | | | — | | | — | | | 12,520 | | | 242,356 | | | 12,495 | |
Foreign currency translation adjustments | | — | | | — | | | — | | | — | | | — | | | (35,816) | | | — | | | (35,816) | | | — | |
Balances at September 30, 2019 | | 211,126,056 | | | $ | 2,111 | | | $ | 2,262,461 | | | $ | (789,387) | | | $ | (6,865) | | | $ | (181,047) | | | $ | 235,559 | | | $ | 1,522,832 | | | $ | 418,816 | |
See Notes to Consolidated Financial Statements
6
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | Live Nation Stockholders’ Equity | | | | | | | | | | | | | | | | |
| | Common Shares Issued | | Common Stock | | Additional Paid-In Capital | | Accumulated Deficit | | Cost of Shares Held in Treasury | | Accumulated Other Comprehensive Income (Loss) | | Noncontrolling Interests | | Total Equity | | Redeemable Noncontrolling Interests |
| | (in thousands, except share data) | | | | | | | | | | | | | | | | (in thousands) |
Balances at June 30, 2018 | | 207,869,835 | | | $ | 2,079 | | | $ | 2,337,691 | | | $ | (1,044,019) | | | $ | (6,865) | | | $ | (125,837) | | | $ | 242,471 | | | $ | 1,405,520 | | | $ | 293,194 | |
Non-cash and stock-based compensation | | — | | | — | | | 11,095 | | | — | | | — | | | — | | | — | | | 11,095 | | | — | |
Common stock issued under stock plans, net of shares withheld for employee taxes | | 5,685 | | | — | | | (83) | | | — | | | — | | | — | | | — | | | (83) | | | — | |
Exercise of stock options, net of shares withheld for option cost and employee taxes | | 383,982 | | | 4 | | | 5,589 | | | — | | | — | | | — | | | — | | | 5,593 | | | — | |
| | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | |
Acquisitions | | — | | | — | | | — | | | — | | | — | | | — | | | (634) | | | (634) | | | (959) | |
Divestitures | | — | | | — | | | — | | | — | | | — | | | — | | | (6,684) | | | (6,684) | | | — | |
Purchases of noncontrolling interests | | — | | | — | | | (6,493) | | | — | | | — | | | — | | | 110 | | | (6,383) | | | (10,000) | |
Sales of noncontrolling interests | | — | | | — | | | 1,410 | | | — | | | — | | | — | | | (980) | | | 430 | | | — | |
Redeemable noncontrolling interests fair value adjustments | | — | | | — | | | (20,790) | | | — | | | — | | | — | | | — | | | (20,790) | | | 20,790 | |
Contributions received | | — | | | — | | | — | | | — | | | — | | | — | | | 2,601 | | | 2,601 | | | 1,806 | |
Cash distributions | | — | | | — | | | — | | | — | | | — | | | — | | | (10,212) | | | (10,212) | | | 4 | |
Other | | — | | | — | | | 6 | | | — | | | — | | | — | | | 19 | | | 25 | | | (50) | |
Comprehensive income (loss): | | | | | | | | | | | | | | | | | | |
Net income | | — | | | — | | | — | | | 172,683 | | | — | | | — | | | 6,849 | | | 179,532 | | | 3,665 | |
Foreign currency translation adjustments | | — | | | — | | | — | | | — | | | — | | | (9,081) | | | — | | | (9,081) | | | — | |
Balances at September 30, 2018 | | 208,259,502 | | | $ | 2,083 | | | $ | 2,328,425 | | | $ | (871,336) | | | $ | (6,865) | | | $ | (134,918) | | | $ | 233,540 | | | $ | 1,550,929 | | | $ | 308,450 | |
See Notes to Consolidated Financial Statements
7
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | Live Nation Stockholders’ Equity | | | | | | | | | | | | | | | | |
| | Common Shares Issued | | Common Stock | | Additional Paid-In Capital | | Accumulated Deficit | | Cost of Shares Held in Treasury | | Accumulated Other Comprehensive Income (Loss) | | Noncontrolling Interests | | Total Equity | | Redeemable Noncontrolling Interests |
| | (in thousands, except share data) | | | | | | | | | | | | | | | | (in thousands) |
Balances at December 31, 2017 | | 206,877,037 | | | $ | 2,069 | | | $ | 2,374,006 | | | $ | (1,079,472) | | | $ | (6,865) | | | $ | (108,542) | | | $ | 236,948 | | | $ | 1,418,144 | | | $ | 244,727 | |
Non-cash and stock-based compensation | | — | | | — | | | 34,415 | | | — | | | — | | | — | | | — | | | 34,415 | | | — | |
Common stock issued under stock plans, net of shares withheld for employee taxes | | 365,502 | | | 4 | | | (8,689) | | | — | | | — | | | — | | | — | | | (8,685) | | | — | |
Exercise of stock options, net of shares withheld for option cost and employee taxes | | 1,016,963 | | | 10 | | | 16,437 | | | — | | | — | | | — | | | — | | | 16,447 | | | — | |
Fair value of convertible debt conversion feature, net of issuance costs | | — | | | — | | | 62,624 | | | — | | | — | | | — | | | — | | | 62,624 | |