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Live Nation Entertainment Reports First Quarter 2012 Financial Results

May 09, 2012 (04:05 PM EDT)
URL: http://www.techweb.com/show-press-release/X903112/live-nation-entertainment-reports-first-quarter-2012-financial-results.html

First Quarter Revenue and Ticket Sales Up Compared to Prior Year

LOS ANGELES, May 9, 2012 /PRNewswire-FirstCall/ -- Live Nation Entertainment (NYSE:LYV) released financial results for the three months ended March 31, 2012 today. 

"We are off to a great start for 2012 with solid first quarter performance in all our segments.  The company delivered year over year growth in revenue, profitability and free cash flow in the quarter. Importantly, we also saw a 6% increase in ticket sales this quarter as compared to last year, reflecting strong demand for our live events and giving us great confidence that we are well positioned for the summer concert season," said Michael Rapino, President and Chief Executive Officer of Live Nation Entertainment. 

The company will host a teleconference today, May 9, 2012 at 5:00 p.m. Eastern Time, which can be accessed by dialing 877-857-6177 (U.S.) or 719-325-4839 (Int'l) ten minutes prior to the start time and referencing passcode 3741112. To access the call via webcast, please visit the Investor Relations section of the company's website at www.livenation.com/investors approximately ten minutes prior to the start time to ensure a connection. Additional statistical and/or financial information to be provided on the call, if any, will be posted supplementally under that same link. For those who are not available to listen to the live broadcast, a replay will be available shortly after the call on the Live Nation website through May 16, 2012.


 

FINANCIAL HIGHLIGHTS – FIRST QUARTER

(Unaudited; $ in millions)




Q1 2012

Q1 2011

Growth


Revenue





Concerts

$     448.7

$     449.3

(0.1%)


Ticketing

326.5

317.5

2.8%


Artist Nation

61.4

54.1

13.5%


Sponsorship & Advertising

36.1

33.0

9.4%


Other & Eliminations

(4.7)

(4.5)

(4.4%)



$     868.0

$     849.4

2.2%







Adjusted Operating Income (Loss)





Concerts

$      (25.0)

$      (41.3)

39.5%


Ticketing

72.6

84.0

(13.6%)


Artist Nation

(3.0)

(0.8)

 **


Sponsorship & Advertising

20.7

18.4

12.5%


Other & Eliminations

(1.2)

-

**


Corporate

(15.9)

(15.2)

(4.6%)



$       48.2

$       45.1

6.9%







Operating Income (Loss)





Concerts

$      (55.0)

$      (64.7)

15.0%


Ticketing

32.3

45.1

(28.4%)


Artist Nation (1)

(15.0)

(43.4)

65.4%


Sponsorship & Advertising

20.6

18.1

13.8%


Other & Eliminations

(1.3)

0.2

**


Corporate

(24.4)

(27.5)

11.3%



$      (42.8)

$      (72.2)

40.7%







** percentages are not meaningful


(1) The Artist Nation segment's operating loss for the first quarter ended March 31, 2011 is driven primarily by $24.4 million of stock-based compensation expense due to the acquisition of the remaining equity of Front Line Management in February 2011.

                                                                                                   

As of March 31, 2012, total cash and cash equivalents were $1.1 billion, which includes $421.8 million in ticketing client cash and $263.9 million in free cash, compared to $189.4 million in free cash as of March 31, 2011. Event-related deferred revenue was $613.2 million in the first quarter of 2012, compared to $573.1 million for the same period in 2011. Free cash flow was $23.1 million for the first quarter of 2012 as compared to ($6.9) million in the first quarter of last year.

About Live Nation Entertainment:
Live Nation Entertainment is the world's leading live entertainment and ecommerce company, comprised of four market leaders: Ticketmaster.com, Live Nation Concerts, Front Line Management Group and Live Nation Network. Ticketmaster.com is the global event ticketing leader and one of the world's top five ecommerce sites, with almost 27 million monthly unique visitors. Live Nation Concerts produces over 22,000 shows annually for more than 2,300 artists globally. Front Line is the world's top artist management company, representing over 250 artists. These businesses power Live Nation Network, the leading provider of entertainment marketing solutions, enabling nearly 800 advertisers to tap into the 200 million consumers Live Nation delivers annually through its live event and digital platforms. For additional information, visit www.livenation.com/investors.

 

Live Nation Entertainment, Inc.

Key Operating Metrics







 3 Months Ended March 31, 






2012


2011









Concerts (1)







Estimated Events:







North America


3,267


3,079



International


1,600


1,521




     Total estimated events


4,867


4,600


Estimated Attendance (rounded):







North America


4,356,000


4,006,000



International


2,851,000


2,953,000




     Total estimated attendance


7,207,000


6,959,000









Ticketing (2)







Number of tickets sold (in thousands):







Concerts


16,729


17,004



Sports


8,697


7,489



Arts & theater


4,807


4,563



Family


4,500


4,414



Other (3)


1,977


1,175






36,710


34,645










Gross value of tickets sold (in thousands):


$2,236,206


$2,096,525









Sponsorship & Advertising






Sponsorship revenue (in thousands)


$25,625


$24,796


Online advertising revenue (in thousands)


$10,503


$8,275

 

(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 split over the days of the festival and can be split between quarters. Events and attendance metrics are estimated each quarter.

(2)     The number and gross value of tickets sold includes primary tickets only and excludes tickets sold for the 2012 London Olympics. These metrics include tickets sold during the period regardless of event timing except for our promoted concerts in our owned and/or operated venues and certain European territories where these tickets are recognized as the concerts occur.

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

 

LIVE NATION ENTERTAINMENT, INC.

CONSOLIDATED STATEMENTS OF OPERATIONS

(unaudited)





Three Months Ended

March 31 ,


2012

2011


(in thousands except share and per share data)

Revenue

$         867,997

$         849,409

Operating expenses:



Direct operating expenses

538,714

547,124

Selling, general and administrative expenses

268,135

272,969

Depreciation and amortization

79,713

77,481

Loss (gain) on sale of operating assets

(288)

1,295

Corporate expenses

23,217

21,036

Acquisition transaction expenses

1,309

1,665




                Operating loss

(42,803)

(72,161)

Interest expense

29,710

29,229

Interest income

(900)

(527)

Equity in earnings of nonconsolidated affiliates

(3,881)

(994)

Other income, net

(1,782)

(585)




Loss before income taxes

(65,950)

(99,284)

Income tax expense (benefit)

4,278

(44,942)




Net loss

(70,228)

(54,342)

Net loss attributable to noncontrolling interests

(1,078)

(5,882)




Net loss attributable to Live Nation Entertainment, Inc.

$          (69,150)

$         (48,460)







Basic and diluted net loss per common share attributable to common stockholders of Live Nation Entertainment, Inc.

$              (0.37)

$              (0.27)




Weighted average common shares outstanding:



         Basic and diluted

186,521,520

176,292,809









 

LIVE NATION ENTERTAINMENT, INC.

CONSOLIDATED BALANCE SHEETS




March 31,

December 31,


2012

2011


(unaudited)

(audited)


(in thousands)

ASSETS


Current assets



Cash and cash equivalents

$       1,071,412

$       844,253

Accounts receivable, less allowance of $15,049 as of March 31, 2012 and $16,986 as of December 31, 2011

421,919

389,346

Prepaid expenses

504,463

316,491

Other current assets

35,015

26,700

Total current assets

2,032,809

1,576,790

Property, plant and equipment



Land, buildings and improvements

853,059

851,812

Computer equipment and capitalized software

272,088

261,475

Furniture and other equipment

176,447

172,250

Construction in progress

69,013

60,652





1,370,607

1,346,189

Less accumulated depreciation

655,732

626,053





714,875

720,136

Intangible assets



Definite-lived intangible assets, net

846,147

873,712

Indefinite-lived intangible assets

377,465

377,160

Goodwill

1,277,732

1,257,644

Investments in nonconsolidated affiliates

60,118

55,796

Other long-term assets

240,593

226,533




Total assets

$      5,549,739

$       5,087,771




LIABILITIES AND STOCKHOLDERS' EQUITY



Current liabilities



Accounts payable, client accounts

$          568,419

$       473,956

Accounts payable

109,776

87,627

Accrued expenses

549,815

579,566

Deferred revenue

713,989

273,536

Current portion of long-term debt

51,218

52,632

Other current liabilities

19,536

25,236




Total current liabilities

2,012,753

1,492,553




Long-term debt, net

1,662,167

1,663,056

Long-term deferred income taxes

177,433

186,298

Other long-term liabilities

113,068

120,693

Commitments and contingent liabilities






Redeemable noncontrolling interests

8,824

8,277




Stockholders' equity 



Common stock

1,869

1,868

Additional paid-in capital

2,248,130

2,243,587

Accumulated deficit

(814,341)

(745,191)

Cost of shares held in treasury

(475)

(2,787)

Accumulated other comprehensive loss

(11,056)

(36,374)




Total Live Nation Entertainment, Inc. stockholders' equity

1,424,127

1,461,103

Noncontrolling interests

151,367

155,791

Total stockholders' equity

1,575,494

1,616,894

Total liabilities and stockholders' equity

$       5,549,739

$    5,087,771





 

LIVE NATION ENTERTAINMENT, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS

(unaudited)





Three Months Ended

 March 31,


2012

2011


(in thousands)



CASH FLOWS FROM OPERATING ACTIVITIES



Net loss

$       (70,228)

$    (54,342)

Reconciling items:



Depreciation

28,936

28,947

Amortization

50,777

48,534

Deferred income tax benefit

(3,605)

(31,341)

Amortization of debt issuance costs and discount/premium, net

3,403

3,176

Non-cash compensation expense

8,979

24,707

Unrealized changes in fair value of contingent consideration

157

(4,581)

Loss (gain) on sale of operating assets

(288)

1,295

Equity in earnings of nonconsolidated affiliates

(3,881)

(994)

Other, net

(50)

315

Changes in operating assets and liabilities, net of effects of acquisitions and dispositions:



Increase in accounts receivable

(26,374)

(48,414)

Increase in prepaid expenses

(181,927)

(78,273)

Increase in other assets

(29,215)

(36,744)

Increase (decrease) in accounts payable, accrued expenses and other liabilities

54,787

(22,074)

Increase in deferred revenue

433,301

297,557




Net cash provided by operating activities

264,772

127,768




CASH FLOWS FROM INVESTING ACTIVITIES



Collections and advances of notes receivable

544

(459)

Distributions from nonconsolidated affiliates

540

340

Investments made in nonconsolidated affiliates

(864)

(486)

Purchases of property, plant and equipment

(28,017)

(18,211)

Proceeds from disposal of operating assets, net of cash divested

5,648

2,684

Cash paid for acquisitions, net of cash acquired

-

(7,289)

Purchases of intangible assets

(10,002)

(107)

Increase in other, net

(19)

(664)




Net cash used in investing activities

(32,170)

(24,192)




CASH FLOWS FROM FINANCING ACTIVITIES



Proceeds from long-term debt, net of debt issuance costs

29,587

(756)

Payments on long-term debt

(36,844)

(5,567)

Contributions from noncontrolling interests

130

-

Distributions to and purchases/sales of noncontrolling interests

(3,226)

(48,579)

Proceeds from exercise of stock options

408

1,003

Proceeds from sale of common stock

-

18,836

Payments for deferred and contingent consideration

(10,585)

(10,307)




Net cash used in financing activities

(20,530)

(45,370)

Effect of exchange rate changes on cash and cash equivalents

15,087

36,222




Net increase in cash and cash equivalents

227,159

94,428

Cash and cash equivalents at beginning of period

844,253

892,758




Cash and cash equivalents at end of period

$    1,071,412

$    987,186




 

Forward-Looking Statements, Non-GAAP Financial Measures and Reconciliations:
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 demand for the company's live events and the company's positioning for the summer concert season. 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 or artists do not tour as currently expected, the risk that consumer demand weakens and the potential impact of the economic slowdown in general 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.

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, together with an explanation of why management believes that these non-GAAP financial measures provide useful information to investors, is provided below.

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 impairments), loss (gain) on sale of operating assets and non-cash and certain stock-based compensation expense (including expense associated with grants of certain stock-based awards which are 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 for 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 finance ticketing, venue and other 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.

 

 

Reconciliations of Non-GAAP Measures to Their Most Directly Comparable GAAP Measures (Unaudited)


Reconciliation of Adjusted Operating Income (Loss) to Operating Income (Loss)









  ($ in millions)


Adjusted operating income (loss)

Non-cash and stock-based compensation expense

Loss (gain) on sale of operating assets

 

Depreciation and

amortization

Acquisition expenses

Operating income (loss)



 

Three months ended March 31, 2012









Concerts


$        (25.0)

$               1.3

$              (0.5)

$             28.4

$               0.8

$          (55.0)

Ticketing


72.6

1.5

(0.1)

39.2

(0.3)

32.3

Artist Nation


(3.0)

0.3

11.6

0.1

(15.0)

Sponsorship & Advertising


20.7

0.1

20.6

Other & Eliminations


(1.2)

0.1

0.3

(0.2)

(0.1)

(1.3)

Corporate


(15.9)

5.7

0.7

2.1

(24.4)

Total Live Nation


$         48.2

$               9.0

$              (0.3)

$             79.7

$              2.6

$          (42.8)











    Three months ended March 31, 2011









Concerts


$         (41.3)

$               1.7

$               —

$           26.4

$             (4.7)

$          (64.7)

Ticketing


84.0

1.5

37.3

0.1

45.1

Artist Nation


(0.8)

27.2

1.2

13.5

0.7

(43.4)

Sponsorship & Advertising


18.4

0.1

0.2

18.1

Other & Eliminations


0.1

(0.3)

0.2

Corporate


(15.2)

4.8

0.4

7.1

(27.5)

Total Live Nation


$          45.1

$             35.3

$               1.3

$           77.5

$              3.2

$          (72.2)










 

Reconciliation of Adjusted Operating Income (Loss) to Free Cash Flow




($ in millions)

Q1 2012

Q1 2011

Adjusted operating income

$        48.2

$      45.1

Less:  Cash interest expense — net

(29.4)

(25.6)

           Cash taxes

17.9

(9.4)

           Maintenance capital expenditures

(10.1)

(11.0)

           Distributions to noncontrolling interests

(3.2)

(5.9)

Distributions from/contributions to investments in nonconsolidated affiliates 

(0.3)

(0.1)

           Free cash flow

$        23.1

$      (6.9)

 Revenue generating capital expenditures

(13.3)

(7.2)

 Net

$         9.8

$    (14.1)

 

Reconciliation of Cash and Cash Equivalents to Free Cash





($ in millions)


March 31,

2012

March 31, 2011

Cash and cash equivalents


$         1,071.4

$        987.2

Client cash


(421.8)

(441.1)

Deferred revenue — event related


(613.2)

(573.1)

Accrued artist fees


(10.6)

(20.4)

Collections on behalf of others


(76.9)

(51.7)

Prepaids related to artist settlements/events


315.0

288.5

   Free cash


$             263.9

$       189.4

 

SOURCE Live Nation Entertainment