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 $768.2 million in the second quarter of 2006, an increase of $26.5 million, or 4%, as compared to the second quarter of 2005. Included in revenue is a $2.5 million increase due to movements in foreign exchange.
Net income increased by $8.7 million to $9.7 million in the quarter, with operating income for the quarter decreasing by $3.6 million to $11.7 million. Diluted earnings per share for the quarter amounted to $0.15.
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 $27.0 million in the second quarter of 2006, compared to $30.6 million in the second 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.
"During the quarter we continued to make significant progress in the implementation of our strategic plan," said Michael Rapino, Live Nation’s Chief Executive Officer. "An environment of transformation has begun in 2006 as we execute against our newly defined core business. We have a clear strategic focus which has resulted in an expansion of our core live music business and the divestiture of a number of non-core businesses. We are implementing a range of programs to drive revenues and cash flows and have added strategic acquisitions that expand our fan and artist relationships. We remain driven by our focus on vertically integrating our business toward the fan by expanding and improving upon the services we provide to our customers before, during and after the events we promote or produce each year. We are pleased with the trends we are seeing in the third quarter, which is the most important season in our industry, and we are optimistic that we will gradually begin to witness the benefits of our investments as the year progresses."
The company’s reportable operating segments are 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, along with providing various services to artists. 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 segment.
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, as described above, beginning in 2006. 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)
Venues and Digital
(in thousands) Events Sponsorship Distribution Other
Three Months Ended
June 30, 2006
Revenue $594,122 $146,772 $20,567 $9,735
Direct operating
expenses 559,283 46,269 678 1,514
Selling, general
and administrative
expenses 56,587 61,516 2,584 8,501
Depreciation and
amortization 2,523 12,588 114 234
Loss (gain) on sale
of operating assets (1,780) 73 -- (36)
Corporate expenses -- -- -- --
Operating income
(loss) $(22,491) $26,326 $17,191 $(478)
Three Months Ended
June 30, 2005
Revenue $576,174 $138,733 $17,705 $11,635
Direct operating
expenses 543,237 39,897 708 2,001
Selling, general
and administrative
expenses 51,782 57,331 734 10,411
Depreciation and
amortization 2,187 11,288 87 623
Loss (gain) on sale
of operating assets (68) (174) -- 7
Corporate expenses -- -- -- --
Operating income
(loss) $(20,964) $30,391 $16,176 $(1,407)
Six Months Ended
June 30, 2006
Revenue $1,016,382 $224,331 $31,155 $18,741
Direct operating
expenses 912,366 72,945 927 2,185
Selling, general
and administrative
expenses 109,974 114,577 4,882 15,770
Depreciation and
amortization 4,519 24,800 180 469
Loss (gain) on sale
of operating assets (1,793) 77 -- (7,687)
Corporate expenses -- -- -- --
Operating income
(loss) $(8,684) $11,932 $25,166 $8,004
Six Months Ended
June 30, 2005
Revenue $920,542 $213,346 $27,567 $32,132
Direct operating
expenses 828,844 66,385 1,101 8,961
Selling, general
and administrative
expenses 118,078 102,969 1,483 20,774
Depreciation and
amortization 4,511 22,595 163 1,264
Loss (gain) on sale
of operating assets (110) (303) -- (176)
Corporate expenses -- -- -- --
Operating income
(loss) $(30,781) $21,700 $24,820 $1,309
(in thousands) Consolidated
Corporate Eliminations and Combined
Three Months Ended
June 30, 2006
Revenue $-- $(2,966) $768,230
Direct operating expenses -- (2,965) 604,779
Selling, general and
administrative expenses -- (1) 129,187
Depreciation and amortization 847 -- 16,306
Loss (gain) on sale of
operating assets 61 -- (1,682)
Corporate expenses 7,958 -- 7,958
Operating income (loss) $(8,866) $-- $11,682
Three Months Ended
June 30, 2005
Revenue $-- $(2,556) $741,691
Direct operating expenses -- (2,525) 583,318
Selling, general and
administrative expenses -- (31) 120,227
Depreciation and amortization 1,097 -- 15,282
Loss (gain) on sale of
operating assets (25) -- (260)
Corporate expenses 7,866 -- 7,866
Operating income (loss) $(8,938) $-- $15,258
Six Months Ended
June 30, 2006
Revenue $-- $(5,812) $1,284,797
Direct operating expenses -- (5,812) 982,611
Selling, general and
administrative expenses -- -- 245,203
Depreciation and amortization 1,343 -- 31,311
Loss (gain) on sale of
operating assets (7) -- (9,410)
Corporate expenses 15,337 -- 15,337
Operating income (loss) $(16,673) $-- $19,745
Six Months Ended
June 30, 2005
Revenue $-- $(7,413) $1,186,174
Direct operating expenses -- (7,339) 897,952
Selling, general and
administrative expenses -- (46) 243,258
Depreciation and amortization 2,226 -- 30,759
Loss (gain) on sale of
operating assets (28) -- (617)
Corporate expenses 27,090 -- 27,090
Operating income (loss) $(29,288) $(28) $(12,268)
Events
Events revenue increased $17.9 million, or 3%, during the three months ended June 30, 2006 as compared to the same period of the prior year primarily due to the timing of the Werchter festival in Belgium which took place earlier in 2006, an increase in the number of, and attendance at, our amphitheater events and an increase in the number of events presented by global theater in the second quarter of 2006 as compared to the second quarter of 2005. Partially offsetting this increase was a decline in the number of domestic music events held in third-party theaters and a decline in domestic festival revenues following our exit from a number of unprofitable festivals in 2005.
Events direct operating expenses increased $16.0 million, or 3%, during the three months ended June 30, 2006 as compared to the same period of the prior year primarily due to the timing of the Werchter festival and the increase in global theater events as discussed above. In addition, direct operating expenses increased due to the pre-opening costs related to our production of Phantom of the Opera in Las Vegas during the second quarter of 2006. Partially offsetting this increase was a decline in direct operating expenses due primarily to the decline in the number of domestic music theater events and our exit from a number of domestic music festivals.
Events selling, general and administrative expenses increased $4.8 million, or 9%, during the three months ended June 30, 2006 as compared to the same period of the prior year primarily due to an increase in reserves recorded against receivables due to a vendor bankruptcy, as well as increased consulting expenses related to music marketing. In addition, due to our acquisition of a 50.1% interest in Mean Fiddler during the third quarter of 2005, we are incurring selling, general and administrative expenses related to this business that we did not have in the prior year.
Events gain on sale of operating assets increased $1.7 million during the three months ended June 30, 2006 as compared to the same period of the prior year primarily due to a gain recorded related to theatrical production assets that were sold during 2006.
Overall, the $1.5 million decline in operating income for Events in the second quarter of 2006 as compared to the same period of 2005 is due primarily to the increased receivable reserve arising from a vendor bankruptcy, increased costs related to improving our marketing function and incremental selling, general and administrative expenses due to the 2005 Mean Fiddler acquisition whose principal events occur in the third quarter. These decreases were partially offset by an increase in operating income due to the timing of the Werchter festival in Belgium in 2006 and the gain on sale of operating assets.
Venues and Sponsorship
Venues and Sponsorship revenue increased $8.0 million, or 6%, during the three months ended June 30, 2006 as compared to the same period of the prior year primarily due to incremental revenue related to the Mean Fiddler venues acquired during the third quarter of 2005 and the commencement of the operating agreement for Wembley Arena in London during the second quarter of 2006. We also experienced an increase in our owned and/or operated amphitheater results and merchandise revenue resulting primarily from an increase in attendance. However, this increase was partially offset by a decline in revenues from several of our larger domestic and international theatrical venues and one of our international arenas due to a decline in activity during 2006. In addition, sponsorship revenues declined due to the
timing of completion of sponsorship sales in the second quarter of 2006, which we expect to realize in the third quarter.
Venues and Sponsorship direct operating expenses increased $6.4 million, or 16%, during the three months ended June 30, 2006 as compared to the same period of the prior year primarily due to incremental direct operating expenses related to the Mean Fiddler acquisition and Wembley Arena noted above. In addition, direct operating expenses increased related to the increase in merchandise revenues.
Venues and Sponsorship selling, general and administrative expenses increased $4.2 million, or 7%, during the three months ended June 30, 2006 as compared to the same period of the prior year primarily due to an increase in salary, rent and property tax expense related to the acquisitions of Historic Theater Group and Mean Fiddler and the commencement of the Wembley Arena operating agreement. We also incurred higher selling, general and administrative expenses related to building our venue management team in 2006.
Venues and Sponsorship depreciation and amortization expense increased $1.3 million, or 12%, during the three months ended June 30, 2006 as compared to the same period of the prior year primarily due to increased depreciation related to capital expenditures to improve the audience experience at our owned and/or operated amphitheaters.
Overall, the $4.1 million decrease in operating income for Venues and Sponsorship in the second quarter of 2006 as compared to the same period of 2005 is due primarily to reduced activity in several of our larger theatrical venues and one of our international arenas, a reduction in sponsorship sales in the quarter, increased costs related to building the venue management team and higher depreciation expense for our domestic venues. Offsetting this decline were the improved operating results from our owned and/or operated amphitheaters.
Digital Distribution
Digital Distribution revenues increased $2.9 million, or 16%, during the three months ended June 30, 2006 as compared to the same period of the prior year primarily due to additional ticket service charge rebates resulting from the increase in the number of events and attendance within our Events segment. The increase in these revenues exceeds the growth for our Events segment during the same period due to the type of events and the related service charges.
Digital Distribution direct operating expenses remained relatively flat during the three months ended June 30, 2006 as compared to the same period of the prior year due to the small amount of direct operating expenses that are required for this segment.
Digital Distribution selling, general and administrative expenses increased $1.8 million, or 252%, during the three months ended June 30, 2006 as compared to the same period of the prior year primarily due to increases in salary for new staff and consultant expenses related to the development of our website and internet strategy.
Overall, operating income for Digital Distribution increased slightly in the second quarter of 2006 as compared to the same period of 2005 primarily due to additional ticket service charge rebates, partially offset by the increased costs related to building the digital distribution management team and developing our on-line presence.
Other Operations
We sold a portion of our sports representation business assets in Los Angeles early in 2006. Primarily as a result of that sale, during the three months ended June 30, 2006 as compared to the same period of the prior year, other revenues decreased $1.9 million, or 16%; other selling, general and administrative expenses decreased $1.9 million, or 18%; and we experienced an overall $.9 million decrease in operating loss for our other operations.
Interest
Total interest expense decreased $3.4 million during the three months ended June 30, 2006 as compared to the same period of the prior year primarily due to repayment or capitalization of our debt with Clear Channel Communications in December 2005. This decrease was partially offset by an increase in interest expense related to our term loan and redeemable preferred stock, which did not exist in the second quarter of 2005.
Interest income increased $4.0 million during the three months ended June 30, 2006 as compared to the same period of the prior year primarily due to interest income earned on excess cash invested in money market funds and other short-term investments.
Free Cash Flow
Free cash flow for the three months ended June 30, 2006 totaled $152.7 million as compared to $33.1 million for the same period of the prior year. This increase was driven by the improvement in net income and timing of the receipt and the amount of advance ticket sales. Free cash flow (defined by the company as cash flow from operations less maintenance capital expenditures) 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 June 30, 2006 totaled $603.4 million, an increase of $199.7 million over the balance at December 31, 2005. This increase was largely driven by the increase in advance ticket sales for events to be held in the third and fourth quarters of 2006.
Total debt, including preferred stock, at June 30, 2006 totaled $406.9 million, which represents no change compared to the balance at December 31, 2005.
Share Repurchase
On December 22, 2005, our board of directors authorized a $150 million share repurchase program, effective through December 31, 2006. As of June 30, 2006, we have repurchased 3.4 million shares under this program for an aggregate purchase price of $42.7 million, including commissions and fees, at an average price of $12.65 per share. We did not repurchase any shares during the second quarter of 2006.
We will continue to base our 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 Second Quarter
* In April 2006, we sold our entire interest in the Planet Hollywood
venue project in Las Vegas, as well as 49.9% of our interest in the
Phantom of the Opera project in Las Vegas. We received $22.9 million
in proceeds from this sale.
* In May 2006, we acquired a controlling interest in the touring division
of a commonly owned group of companies operating under the name of
Concert Productions International, or CPI, for a total purchase price
of $47.2 million. CPI provides full service global touring, having
produced tours for top acts such as the Rolling Stones, Pink Floyd and
U2. CPI has also developed additional revenue streams around the tours
that it produces, such as VIP ticketing, fan clubs, merchandising and
DVDs. CPI's Chief Executive Officer, Michael Cohl, has joined our
board of directors.
* In June 2006, we acquired a controlling interest in Cinq Group, LLC,
which operates under the name TRUNK Ltd. TRUNK Ltd. is a specialty
merchandise company that acquires licenses, primarily from music
artists, to design, manufacture and sell merchandise through various
distribution channels.
* In June 2006, we also agreed to acquire HOB Entertainment, Inc., or
HOB, for $350 million in cash. HOB owns and/or operates 10 mid-size
venues under the House of Blues brand in cities such as Las Vegas, Los
Angeles, Chicago and Orlando, and eight amphitheaters in cities
including Atlanta, Toronto, San Diego and Dallas. We expect this
acquisition, which is subject to customary closing conditions, to close
by the end of 2006.
* In July 2006, we announced that we have agreed to acquire a majority
interest in Musictoday, a leader in connecting artists directly to
their fans through on-line fan clubs, artist e-commerce and fulfillment
and artist fan club ticketing.
* We have now completed the sale of substantially all of the assets of
the golf, football and tennis divisions of our sports representation
business to various parties.
Conference Call
The company will host a teleconference to discuss its second quarter 2006 financial results today, Friday, August 4th at 11:00 a.m. Eastern Daylight Time/8:00 a.m. Pacific Daylight Time. To access the teleconference, please dial 973-633-6740 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, August 11, 2006, which can be accessed by dialing 877-519-4471 (U.S.) or 973-341-3080 (Int’l), passcode 7600092. The webcast will also be archived on the company’s website for 30 days.
About Live Nation
Live Nation is a leading live event and venue management company focused on creating superior experiences for artists, performers, corporations and fans. Live Nation owns, operates and/or has booking rights for more than 150 venues worldwide and produced over 29,500 events in 2005. 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.
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.
CONSOLIDATED AND COMBINED STATEMENTS OF OPERATIONS (UNAUDITED)
Three months ended Six months ended
June 30, June 30,
2006 2005 2006 2005
(in thousands except share and per share data)
Revenue $768,230 $741,691 $1,284,797 $1,186,174
Operating expenses:
Direct operating
expenses 604,779 583,318 982,611 897,952
Selling, general
and administrative
expenses 129,187 120,227 245,203 243,258
Depreciation and
amortization 16,306 15,282 31,311 30,759
Gain on sale of
operating assets (1,682) (260) (9,410) (617)
Corporate expenses 7,958 7,866 15,337 27,090
Operating income (loss) 11,682 15,258 19,745 (12,268)
Interest expense 8,348 875 16,161 1,494
Interest expense with
Clear Channel
Communications -- 10,827 -- 22,015
Interest income 4,496 459 5,976 944
Equity in earnings
(loss) of
nonconsolidated
affiliates 1,478 (2,129) 3,302 (1,619)
Other income
(expense) - net 5,728 (269) 4,009 190
Income (loss) before
income taxes 15,036 1,617 16,871 (36,262)
Income tax
benefit (expense):
Current (5,884) 5,370 (6,051) 17,521
Deferred 530 (6,017) (21) (3,016)
Net income (loss) 9,682 970 10,799 (21,757)
Other comprehensive
income, net of tax:
Unrealized holding
gain on cash flow
derivatives 1,377 -- 1,869 --
Foreign currency
translation
adjustments 11,919 10,319 15,597 19,903
Comprehensive
income (loss) $22,978 $11,289 $28,265 $(1,854)
Net income (loss) per
common share:
Basic $.15 $.17
Diluted $.15 $.17
Weighted average
common shares
outstanding:
Basic 64,462,679 64,218,450
Diluted 65,329,597 64,919,415
CONSOLIDATED AND COMBINED STATEMENTS OF CASH FLOWS (UNAUDITED)
Six months ended
June 30,
2006 2005
(in thousands)
CASH FLOWS FROM OPERATING ACTIVITIES
Net income (loss) $10,799 $(21,757)
Reconciling items:
Depreciation 30,375 29,380
Amortization of intangibles 936 1,379
Deferred income tax expense 21 3,016
Amortization of debt issuance costs 292 --
Current tax benefit dividends to owner -- (27,807)
Non-cash compensation expense 1,570 703
Gain on sale of operating assets (9,410) (617)
Loss on sale of other investments 2,051 --
Loss (equity) in earnings of
nonconsolidated affiliates (3,302) 1,619
Minority interest expense (income) (684) 571
Decrease in other - net (39) (96)
Changes in operating assets and
liabilities, net of effects of acquisitions:
Increase in accounts receivable (63,170) (68,517)
Increase in prepaid expenses (199,189) (202,060)
Increase in other assets (13,828) (69,338)
Increase in accounts payable, accrued
expenses and other liabilities 56,519 96,622
Increase in deferred income 383,508 333,202
Increase (decrease) in minority
interest liability 7,690 (953)
Net cash provided by operating activities 204,139 75,347
CASH FLOWS FROM INVESTING ACTIVITIES
Decrease in notes receivable, net 938 1,119
Increase in investments in, and
advances to, nonconsolidated
affiliates - net (1,179) (173)
Contribution from minority interest partner 15,343 --
Proceeds from disposal of other investments 1,743 --
Purchases of property, plant and equipment (31,967) (49,891)
Proceeds from disposal of operating assets 36,655 337
Acquisition of operating assets (4,022) (1,226)
Decrease (increase) in other - net (621) 49
Net cash provided by (used in) investing
activities 16,890 (49,785)
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from debt with Clear Channel
Communications -- 42,719
Proceeds from long-term debt, net of debt
issuance costs 1,228 444
Payments on long-term debt (6,351) (508)
Payments for purchase of common stock (24,717) --
Net cash provided by (used in)
financing activities (29,840) 42,655
Effect of exchange rate changes on cash 8,527 4,595
Net increase in cash and cash equivalents 199,716 72,812
Cash and cash equivalents at
beginning of period 403,716 179,137
Cash and cash equivalents at
end of period $603,432 $251,949
CONSOLIDATED BALANCE SHEETS
June 30, December 31,
2006 2005
(unaudited) (audited)
(in thousands)
ASSETS
CURRENT ASSETS
Cash and cash equivalents $603,432 $403,716
Accounts receivable, less allowance
of $11,121 as of June 30, 2006 and $9,518
as of December 31, 2005 291,509 190,207
Prepaid expenses 322,889 115,055
Other current assets 49,929 46,714
Total Current Assets 1,267,759 755,692
PROPERTY, PLANT AND EQUIPMENT
Land, buildings and improvements 934,335 910,926
Furniture and other equipment 178,463 166,004
Construction in progress 40,947 39,856
1,153,745 1,116,786
Less accumulated depreciation 340,544 307,867
813,201 808,919
INTANGIBLE ASSETS
Definite-lived intangibles - net 37,536 12,351
Goodwill 157,864 137,110
OTHER ASSETS
Notes receivable, less allowance of
$745 as of June 30, 2006 and
December 31, 2005 3,195 4,720
Investments in, and advances to,
nonconsolidated affiliates 38,880 30,660
Other assets 34,691 27,132
Total Assets $2,353,126 $1,776,584
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES
Accounts payable $70,995 $37,654
Deferred income 622,200 232,754
Accrued expenses 464,672 405,507
Current portion of long-term debt 28,045 25,705
Total Current Liabilities 1,185,912 701,620
Long-term debt 338,840 341,136
Other long-term liabilities 41,436 30,766
Minority interest liability 65,932 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 767,521 748,011
Retained deficit (76,763) (87,563)
Cost of shares held in treasury (21,473) (18,003)
Accumulated other comprehensive income (loss) 11,049 (6,417)
Total Shareholders' Equity 681,006 636,700
Total Liabilities and
Shareholders' Equity $2,353,126 $1,776,584
RECONCILIATIONS OF NON-GAAP MEASURES TO THEIR MOST DIRECTLY
COMPARABLE GAAP MEASURES (UNAUDITED)
Reconciliation of OIBDAN to operating income (loss) and net income (loss) – Consolidated and Combined
Three months ended Six months ended
June 30, June 30,
2006 2005 2006 2005
(in thousands) (in thousands)
OIBDAN $27,015 $30,640 $43,216 $18,577
Depreciation and
amortization 16,306 15,282 31,311 30,759
Gain on sale of
operating assets (1,682) (260) (9,410) (617)
Non-cash compensation
expense 709 360 1,570 703
Operating income (loss) 11,682 15,258 19,745 (12,268)
Interest expense 8,348 875 16,161 1,494
Interest expense with
Clear Channel
Communications -- 10,827 -- 22,015
Interest income 4,496 459 5,976 944
Equity in earnings of
nonconsolidated
affiliates 1,478 (2,129) 3,302 (1,619)
Other income
(expense) - net 5,728 (269) 4,009 190
Income (loss) before
income taxes 15,036 1,617 16,871 (36,262)
Income tax
benefit (expense):
Current (5,884) 5,370 (6,051) 17,521
Deferred 530 (6,017) (21) (3,016)
Net income (loss) $9,682 $970 $10,799 $(21,757)
Reconciliation of free cash flow to net cash provided by operating activities – Consolidated and Combined
Three months ended Six months ended
June 30, June 30,
2006 2005 2006 2005
(in thousands) (in thousands)
Free cash flow $152,730 $33,110 $180,452 $49,034
Maintenance capital
expenditures 12,252 18,779 23,687 26,313
Net cash provided by
operating
activities $164,982 $51,889 $204,139 $75,347
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. The company 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. Free cash flow is not calculated or presented in accordance with U.S. generally accepted accounting principles. 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 it is not necessarily a measure of our ability to fund our cash needs. Accordingly, free cash flow should be considered in addition to, and not as a substitute for, net cash provided by operating activities and other measures of financial performance reported in accordance with U.S. GAAP. Furthermore, this measure may vary among other companies; thus, free cash flow as presented above may not be comparable to similarly titled measures of other companies.
SOURCE: Live Nation