(Logo: http://www.newscom.com/cgi-bin/prnh/20081203/LAW048LOGO-b)
“During the first six months of 2009, we sold 16.3 million tickets which exceeded our plan by more than one million tickets,” said Michael Rapino, President and Chief Executive Officer of Live Nation. “Highlighting the underlying strength of our business, our ticket sales going into the peak summer concert season surged, as reflected in our record level of deferred revenue. We are putting fans in seats as a result of our strong concert line-up and our value priced promotions. Our ‘No Service Fee’ promotions have been a huge success, generating nearly 500,000 ticket sales in the second quarter, with most of the benefits expected to play out in the third quarter. These promotions are highly effective for Live Nation as they are increasing awareness around our concert season. We believe that any reduction in margin that we sacrifice on the ticket purchase will be more than made up for in incremental ticket sales and additional on-site spending. We have now proven that we can motivate the casual fan to come to concerts, thereby growing our core business and reducing our historic 40% unsold inventory levels.”
“The year-over-year variation in our North American Music financial results during the quarter was in line with our internal expectations as we move toward what we expect will be a strong third quarter concert season,” Rapino continued. “We had never planned on exceeding our record results from 2008 in North American Music, but instead planned to grow our overall adjusted operating income through robust International growth. Our North American strategy was centered on increasing profits per show through cost management and incremental ticket sales on reduced show counts in 2009 in an effort to reduce our capital risk profile. We believe that the combination of these trends point to a robust third quarter and support our positive outlook for 2009, continuing our trend of annual adjusted operating income growth in order to increase free cash and reduce long-term debt.”
Highlights:
-- Reported revenue of $1.1 billion reflects a decline of $86.3 million
due to foreign currency exchange movements. Revenue on a constant
currency basis was up 2% over the prior year.
-- International Music continued to show strength with increased margins
in the second quarter driven by higher promotion activity and improved
festival results.
-- Deferred revenue as of June 30, 2009 was $894.1 million as compared to
a balance of $782.3 million as of June 30, 2008.
-- Through our Ticketing segment, we have sold 7.6 million tickets
globally since the beginning of 2009, including 4.3 million tickets
sold in the second quarter of 2009.
-- Successfully launched our "No Service Fee Wednesday" promotion,
selling nearly 500,000 tickets to our shows in North America in the
second quarter.
-- Our LiveNation.com network was ranked 7th by Nielsen NetView among the
most-visited domestic music websites, with 4.3 million unique visitors
in June 2009.
-- We continue the process of seeking regulatory approval for our pending
merger with Ticketmaster Entertainment, Inc. and we currently expect
that this transaction will be completed in the fourth quarter of 2009.
For the second quarter of 2009, we incurred $14.9 million of
acquisition expenses for this transaction. These costs are now
required to be expensed under new accounting rules in 2009 and
therefore reduced our operating income for the period.
Key operating metrics related to our business for the second quarter and six months ended June 30 are outlined below:
METRICS
-------
(Unaudited; $in
millions except
as noted)
----------------
Q2 Q2 6 months 6 months
Key Drivers 2009 2008 Variance 2009 2008 Variance
----------- ---- ---- -------- ---- ---- --------
Global Music
------------
Talent Costs and
Other Event
Direct Operating
Expenses $831.5 $881.7 (5.7%) $1,200.0 $1,270.7 (5.6%)
Talent and Other
Event Expenses
as % of Total
Revenue 81.1% 80.0% 80.0% 79.5%
Number of Live
Rights
(Concerts)
(est.) 5,713 5,832 (2.0%) 10,153 10,313 (1.6%)
Total
Attendance
(est.) 13,124,000 13,462,000 (2.5%) 20,175,000 21,365,000 (5.6%)
Ancillary
Revenue per
Attendee - NA
Music Amps
only* $18.28 $17.67 3.5% $18.17 $17.77 2.2%
Total Revenue
per Attendee $78.16 $81.82 (4.5%) $74.31 $74.83 (0.7%)
------------- ------ ------ ----- ------ ------ -----
Sponsorship
-----------
Number of
Sponsors - as
of date (est.) 576 623 (7.5%) 576 623 (7.5%)
Sponsorship
Revenue
Recognized $45.1 $45.1 0.1% $66.1 $63.0 4.9%
Average Revenue
per Sponsor
(rounded, whole
$) $78,000 $72,000 8.3% $115,000 $101,000 13.9%
---------------- ------- ------- --- -------- -------- ----
* Excludes rentals
FINANCIAL HIGHLIGHTS - 2nd QUARTER
----------------------------------
(Unaudited)
-----------
Q2 2009 Q2 2008 Growth
------- ------- ------
$in millions
Revenue
North American
Music $693.4 $691.8 0.2%
International Music 332.3 409.7 (18.9%)
Ticketing 20.2 7.3 **
Other 17.1 20.9 (18.2%)
---- ---- ------
$1,063.0 $1,129.7 (5.9%)
======== ======== =====
Margins
-------
Adjusted Operating Q2 2009 Q2 2008
Income (Loss)
------- -------
North American
Music $29.1 $48.9 (40.5%) 4.2% 7.1%
International Music 24.6 23.7 3.9% 7.4% 5.8%
Ticketing 1.8 (2.7) ** 8.9% (37.0%)
Other 5.9 3.8 55.3% ** **
Corporate (10.2) (10.5) 2.5%
----- ----- --- --- ---
$51.2 $63.2 (19.0%) 4.8% 5.6%
===== ===== ====== === ===
Operating Income (Loss)
North American
Music $6.7 $25.7 (73.9%) 1.0% 3.7%
International Music 14.5 15.9 (8.8%) 4.4% 3.9%
Ticketing (1.4) (4.3) 67.4% (6.9%) (58.8%)
Other 4.5 1.8 ** ** **
Corporate (12.8) (11.3) (13.3%)
----- ----- ------ --- ---
11.5 27.8 (58.6%) 1.1% 2.5%
---- ---- ------ --- ---
Acquisition Transaction
Expenses:
Corporate (14.9) - **
----- --- --- --- ---
$(3.4) $27.8 ** (0.3%) 2.5%
===== ===== === ===== ===
The highlights of our financial information for the second quarter of 2009, as compared to the second quarter of 2008, are as follows:
Revenue change - Total decrease of $66.7 million, primarily driven by:
-- ($86.3) million - Foreign exchange movements, primarily in
International Music.
-- ($14.6) million - Decrease in International Music related to the
divestiture of F&P Italia.
-- $26.8 million - Acquisitions of De-Lux and Fantasma in North American
Music and small acquisitions in International Music.
-- $12.9 million - Increase in Ticketing due to higher revenue from the
launch of our new ticketing platform and related sponsorship revenue.
Adjusted Operating Income (Loss) change – Total decrease of $12.0 million, primarily driven by:
-- ($7.6) million - Foreign exchange movements, primarily in
International Music.
-- ($19.8) million - Decline in North American Music primarily due to an
overall decrease in events, primarily in clubs and theaters, partially
offset by more arena shows which tend to have higher costs.
-- $6.3 million - Increase in International Music primarily due to strong
stadium, arena and theater events, growth in festival results and the
reopening of the O2 Dublin.
-- $4.5 million - Increase in Ticketing due to higher net revenue from
ticket service charges related to events that occurred during the
second quarter of 2009, along with ticketing-related sponsorships.
Operating Income (Loss) change – Total decrease of $31.2 million, primarily driven by:
-- ($12.0) million - Overall decrease in adjusted operating income (loss)
noted above.
-- ($3.9) million - Higher depreciation and amortization expense
primarily due to increases in our International Music and Ticketing
segments driven by the reopening of the O2 Dublin and the launch of
our ticketing platform.
-- ($14.9) million - Acquisition transaction expenses in Corporate which
are now required to be expensed under new accounting rules in 2009.
These costs are related to our planned merger with Ticketmaster.
FINANCIAL HIGHLIGHTS - SIX MONTHS ENDED JUNE 30
-----------------------------------------------
(Unaudited)
-----------
6 months 6 months
2009 2008 Growth
---- ---- ------
$in millions
Revenue
North American Music $1,015.6 $1,026.8 (1.1%)
International Music 483.7 571.9 (15.4%)
Ticketing 30.3 13.0 **
Other 32.7 50.7 (35.5%)
---- ---- ------
$1,562.3 $1,662.4 (6.0%)
======== ======== =====
Margins
-------
Adjusted Operating 6 months 6 months
Income (Loss) 2009 2008
---- ----
North American Music $2.6 $25.0 (89.6%) 0.3% 2.4%
International Music 28.3 22.6 25.2% 5.8% 4.0%
Ticketing (3.9) (6.0) 35.0% (12.9%) (46.1%)
Other 10.9 10.1 7.7% ** **
Corporate (21.3) (19.7) (8.2%)
----- ----- ----- --- ---
$16.6 $32.0 (48.0%) 1.1% 1.9%
===== ===== ====== === ===
Operating Income (Loss)
North American Music $(51.4) $(19.8) ** (5.1%) (1.9%)
International Music 10.7 4.1 ** 2.2% 0.7%
Ticketing (10.6) (8.2) (29.3%) (35.0%) (63.0%)
Other 8.1 5.9 37.3% ** **
Corporate (26.0) (24.5) (6.1%)
----- ----- ----- ---- ----
(69.2) (42.5) (62.8%) (4.4%) (2.6%)
----- ----- ------ ----- -----
Acquisition Transaction
Expenses:
International Music (0.1) - **
Corporate (18.6) - **
----- --- --- ---- ----
$(87.9) $(42.5) ** (5.6%) (2.6%)
====== ====== === ===== =====
The highlights of our financial information for the six-month period ended June 30, 2009, as compared to the same period in 2008, are as follows:
Revenue change - Total decrease of $100.1 million, primarily driven by:
-- ($134.9) million - Foreign exchange movements, primarily in
International Music.
-- ($38.3) million - Decline in North American Music primarily due to an
overall decrease in events and attendance at theaters, clubs and other
third-party venues, in addition to a decline in House of Blues special
events.
-- ($16.9) million - Decrease in International Music related to the
divestiture of F&P Italia.
-- $38.0 million - Acquisitions of De-Lux and Fantasma in North American
Music and DF Concerts and other small acquisitions in International
Music.
-- $22.2 million - Increase in International Music driven by stronger
promotion revenue, primarily in stadium, arena and theater events,
improved festival performance and the reopening of the O2 Dublin.
-- $17.3 million - Increase in Ticketing due to the launch of our new
ticketing platform, incremental sales from a new third-party venue and
ticketing-related sponsorship revenue.
Adjusted Operating Income (Loss) change – Total decrease of $15.4 million, primarily driven by:
-- ($8.9) million - Foreign exchange movements, primarily in
International Music.
-- ($22.4) million - Decline in North American Music primarily due to an
overall decrease in events and attendance.
-- $9.9 million - Increase in International Music due to the reopening of
the O2 Dublin, stronger promotion activity and improved festival
performance in the United Kingdom.
-- $2.1 million - Improvement in Ticketing due to higher revenue from
ticket service charges related to events that occurred during the
first half of 2009, along with ticketing-related sponsorships.
Operating Income (Loss) change – Total decrease of $45.4 million, primarily driven by:
-- ($15.4) million - Overall decrease in Adjusted Operating Income (Loss)
noted above.
-- ($18.7) million - Acquisition transaction expenses in Corporate and
International Music which are now required to be expensed under new
accounting rules in 2009. These costs are primarily related to our
planned merger with Ticketmaster.
-- ($13.0) million - Increase in depreciation and amortization expense
primarily due to an impairment of $8.2 million recorded during the
first quarter of 2009 related to an agreement to sell two theaters and
a club in Boston, along with increased depreciation related to our
ticketing and website platforms.
Other Information -
-- As of June 30, 2009, our cash and cash equivalents were $469.8 million
and our total long-term debt was $791.5 million, including $77.0
million outstanding on our revolving credit facility. Free cash as of
June 30, 2009 was ($91.7) million and free cash flow was $23.0 million
for the second quarter of 2009 as compared to $31.2 million for the
same period in 2008.
-- We have 576 local, national and international corporate sponsors as of
June 30, 2009. We continue to expand our sponsorship relationships
with key companies across the world such as Barclaycard, Microsoft IE8
and Comcast. By expanding into more strategic partnerships, we have
reduced our overall number of sponsors but increased our average
revenue per sponsor. For the first six months of 2009, our average
revenue per sponsor increased by 14% as compared to the same period of
the prior year.
-- For the six months ended June 30, 2009, maintenance capital
expenditures were $8.7 million and capital expenditures for revenue
generating projects were $16.0 million, a total decline of $51.4
million compared to last year due to the 2008 development and
renovation of various venues, including the O2 Dublin, House of Blues
clubs in Houston and Boston and the Academy Music Group venue
expansion in Sheffield, along with the ticketing roll-out.
-- For the six months ended June 30, 2009, our net cash provided by
operating activities was $322.9 million, an increase of $70.5 million
over the same period in 2008.
About Live Nation:
Live Nation’s mission is to maximize the live concert experience. Our core business is producing, marketing and selling live concerts for artists via our global concert pipe. Live Nation is the largest producer of live concerts in the world, annually producing over 22,000 concerts for 1,600 artists in 33 countries. During 2008, the company sold over 50 million concert tickets and drove over 70 million unique visitors to LiveNation.com. Live Nation is transforming the concert business by expanding its concert platform into ticketing and building the industry’s first artist-to-fan vertically integrated concert platform. The company is headquartered in Los Angeles, California and is listed on the New York Stock Exchange, trading under the symbol LYV. For additional information about the company, please visit www.livenation.com/investors.
Conference Call:
The company will host a teleconference today, August 6th, 2009 at 5:00 p.m. Eastern Time, which can be accessed by dialing 888-603-6873 (U.S.) or 973-321-1019 (Int’l) and referencing passcode 20824615. To access the call via webcast, please visit the Investor Relations section of the company’s website at www.livenation.com/investors. Please visit the website approximately ten minutes prior to start time to ensure a connection. Additional statistical and 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 August 13, 2009.
CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)
Three Months Ended Six Months Ended
June 30, June 30,
-------- --------
2009 2008 2009 2008
---- ---- ---- ----
(in thousands except share and per share data)
Revenue $1,063,015 $1,129,735 $1,562,273 $1,662,424
Operating expenses:
Direct operating
expenses 842,558 891,716 1,218,723 1,294,027
Selling, general and
administrative
expenses 161,070 166,669 308,275 321,066
Depreciation and
amortization 36,885 33,042 80,298 67,271
Loss (gain) on sale of
operating assets (718) - (986) 449
Corporate expenses 11,778 10,474 25,094 22,115
Acquisition
transaction
expenses 14,877 - 18,735 -
------ --- ------ ---
Operating income
(loss) (3,435) 27,834 (87,866) (42,504)
Interest expense 15,951 16,321 33,264 34,087
Interest income (589) (3,266) (1,671) (5,428)
Equity in (earnings)
losses of
nonconsolidated
affiliates (908) 1,396 (1,483) 1,108
Other expense (income)
- net (1,086) (252) 609 (1,115)
------ ---- --- ------
Income (loss) from
continuing operations
before income taxes (16,803) 13,635 (118,585) (71,156)
Income tax expense
(benefit):
Current 10,151 11,431 12,672 (5,552)
Deferred (146) 2,641 (1,292) 5,662
---- ----- ------ -----
Loss from continuing
operations (26,808) (437) (129,965) (71,266)
Income (loss) from
discontinued
operations, net of
tax - (2,456) - 28,906
--- ------ --- ------
Net loss (26,808) (2,893) (129,965) (42,360)
Net income (loss)
attributable to
noncontrolling
interests 390 (2,241) (60) (4,467)
--- ------ --- ------
Net loss attributable
to Live Nation, Inc.) $(27,198) $(652) $(129,905) $(37,893)
======== ===== ========= ========
Basic net income
(loss) per common
share attributable to
common stockholders:
Income (loss) from
continuing operations
attributable to Live
Nation, Inc. $(0.33) $0.02 $(1.59) $(0.89)
Income (loss) from
discontinued
operations
attributable to Live
Nation, Inc. - (0.03) - 0.39
--- ----- --- ----
Net loss attributable
to Live Nation, Inc. $(0.33) $(0.01) $(1.59) $(0.50)
====== ====== ====== ======
Diluted net income
(loss) per common
share attributable to
common stockholders:
Income (loss) from
continuing operations
attributable to Live
Nation, Inc. $(0.33) $0.02 $(1.59) $(0.89)
Income (loss) from
discontinued
operations
attributable to Live
Nation Inc - (0.03) - 0.39
--- ----- --- ----
Net loss attributable
to Live Nation, Inc. $(0.33) $(0.01) $(1.59) $(0.50)
====== ====== ====== ======
Weighted average
common shares
outstanding:
Basic 83,612,409 75,720,739 81,618,066 75,352,837
========== ========== ========== ==========
Diluted 83,612,409 76,791,658 81,618,066 75,352,837
========== ========== ========== ==========
CONSOLIDATED BALANCE SHEETS
June 30, December 31,
2009 2008
---- ----
(unaudited) (audited)
ASSETS (in thousands)
CURRENT ASSETS
Cash and cash equivalents $469,830 $199,660
Accounts receivable, less allowance of
$6,104 as of June 30, 2009 and $10,376 as
of December 31, 2008 250,545 217,286
Prepaid expenses 524,526 194,355
Other current assets 53,942 28,517
------ ------
Total Current Assets 1,298,843 639,818
PROPERTY, PLANT AND EQUIPMENT
Land, buildings and improvements 1,015,719 990,433
Furniture and other equipment 282,315 260,524
Construction in progress 34,435 41,282
------ ------
1,332,469 1,292,239
Less accumulated depreciation 449,355 404,504
------- -------
883,114 887,735
INTANGIBLE ASSETS
Intangible assets - net 503,502 514,469
Goodwill 202,302 205,296
OTHER LONG-TERM ASSETS
Notes receivable, less allowance of $558 as
of June 30, 2009 and $562 as of December
31, 2008 427 672
Investments in nonconsolidated affiliates 17,287 18,519
Other long-term assets 231,109 210,214
------- -------
Total Assets $3,136,584 $2,476,723
========== ==========
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
Accounts payable $100,824 $53,563
Accrued expenses 472,785 378,992
Deferred revenue 894,089 225,664
Current portion of long-term debt 52,467 48,637
Other current liabilities 54,405 64,381
------ ------
Total Current Liabilities 1,574,570 771,237
Long-term debt, net of discount 738,996 775,483
Other long-term liabilities 141,027 146,360
Series A and Series B redeemable preferred
stock 40,000 40,000
Commitments and contingent liabilities
STOCKHOLDERS' EQUITY
Common stock 859 785
Additional paid-in capital 1,088,112 1,063,564
Retained deficit (503,511) (373,606)
Cost of shares held in treasury (9,514) (7,861)
Accumulated other comprehensive loss (1,245) (961)
------ ----
Total Live Nation, Inc. stockholders' equity 574,701 681,921
Noncontrolling Interests 67,290 61,722
------ ------
Total Stockholders' Equity 641,991 743,643
------- -------
Total Liabilities and Stockholders' Equity $3,136,584 $2,476,723
========== ==========
CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
Six Months Ended
June 30,
--------
2009 2008
---- ----
(in thousands)
CASH FLOWS FROM OPERATING ACTIVITIES
Net loss $(129,965) $(42,360)
Reconciling items:
Depreciation 54,539 37,914
Amortization of intangibles 25,759 29,853
Deferred income tax expense (benefit) (1,292) 5,662
Amortization of debt issuance costs 1,712 1,456
Amortization of debt discount 4,298 3,900
Non-cash compensation expense 6,525 5,864
Gain on sale of operating assets (986) (21,117)
Equity in losses (earnings) of
nonconsolidated affiliates (1,483) 1,425
Changes in operating assets and
liabilities, net of effects of
acquisitions and dispositions:
Increase in accounts receivable (41,119) (100,290)
Increase in prepaid expenses (315,819) (177,960)
Increase in other assets (45,023) (55,857)
Increase (decrease) in accounts payable,
accrued expenses and other liabilities 138,211 33,261
Increase in deferred revenue 627,574 530,607
Increase (decrease) in other - net - 43
--- ---
Net cash provided by operating activities 322,931 252,401
CASH FLOWS FROM INVESTING ACTIVITIES
Collection of notes receivable 316 88
Advances to notes receivable (132) -
Distributions from nonconsolidated
affiliates 2,119 3,799
Investments made in nonconsolidated
affiliates (654) (250)
Purchases of property, plant and equipment (24,637) (76,082)
Proceeds from disposal of operating
assets, net of cash divested 16,478 23,127
Cash paid for acquisitions, net of cash
acquired (13,030) (31,315)
Purchases of intangible assets (7,763) (5,981)
Decrease (increase) in other - net 165 (4)
--- ---
Net cash used in investing activities (27,138) (86,618)
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from long-term debt, net of debt
issuance costs 235,200 18,748
Payments on long-term debt (283,808) (81,945)
Contributions from noncontrolling interest
partners - 8,847
Distributions to noncontrolling interest
partners (301) (402)
Issuance of treasury stock 1,553 -
Payments for purchases of common stock (5,803) (3,628)
------ ------
Net cash used in financing activities (53,159) (58,380)
Effect of exchange rate changes on cash
and cash equivalents 27,536 6,974
------ -----
Net increase (decrease) in cash and cash
equivalents 270,170 114,377
Cash and cash equivalents at beginning of
period 199,660 338,991
------- -------
Cash and cash equivalents at end of period $469,830 $453,368
======== ========
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 potential health and growth of Live Nation’s business, including its prospects for the third quarter and full year 2009 and the anticipated benefits of its “No Service Fee” promotions; the company’s anticipated achievement of its strategic objectives; the company’s anticipated earnings growth during 2009; the company’s planned capital expenditures and potential sales of select non-strategic assets; the company’s anticipated debt reduction and improved operating leverage; and the anticipated timing of the closing of the company’s pending merger with Ticketmaster Entertainment, Inc. 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 the 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.
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) is a non-GAAP financial measure that the company defines as operating income (loss) before acquisition transaction expenses, depreciation and amortization, loss (gain) on sale of operating assets and non-cash compensation expense. The company uses Adjusted Operating Income (Loss) to evaluate the performance of its operating segments. The company believes that information about Adjusted Operating Income (Loss) 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. Adjusted Operating Income (Loss) is not calculated or presented in accordance with U.S. generally accepted accounting principles. A limitation of the use of Adjusted Operating Income (Loss) as a performance measure is that it does not reflect the periodic costs of certain capitalized tangible and intangible assets used in generating revenue in the company’s business. Accordingly, Adjusted Operating Income (Loss) 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, Adjusted Operating Income (Loss) 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 net cash interest expense, less cash taxes, less maintenance capital expenditures, less 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 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, operating income (loss) 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.
Free Cash is a non-GAAP financial measure that the company defines as cash and cash equivalents less event-related deferred revenue, less accrued artist fees, less collections on behalf of others plus prepaids related to artist settlements and events. 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 venue and other revenue generating expenditures. Free cash is not calculated or presented in accordance with U.S. generally accepted accounting principles. A limitation of the use of free cash 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 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 U.S. 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)
---------------------------------------------------------------
Loss
(gain) Deprecia-
Adjusted Non-cash on tion Acquisi-
operating compensa- sale of and tion Operating
income tion operating amortiza- transaction income
($in millions) (loss) expense assets tion expenses (loss)
Three months ended June 30, 2009
--------------------------------
North American
Music $29.1 $0.7 $(0.8) $22.5 $- $6.7
International
Music 24.6 0.7 0.1 9.3 - 14.5
Ticketing 1.8 0.1 - 3.1 - (1.4)
Other 5.9 - - 1.4 - 4.5
Corporate (10.2) 2.0 - 0.6 14.9 (27.7)
----- --- --- --- ---- -----
Total Live
Nation $51.2 $3.5 $(0.7) $36.9 $14.9 $(3.4)
===== ==== ===== ===== ===== =====
Three months ended June 30, 2008
--------------------------------
North American
Music $48.9 $2.3 $(0.1) $21.0 $- $25.7
International
Music 23.7 0.1 - 7.7 - 15.9
Ticketing (2.7) - - 1.6 - (4.3)
Other 3.8 - - 2.0 - 1.8
Corporate (10.5) - 0.1 0.7 - (11.3)
----- --- --- --- --- -----
Total Live
Nation $63.2 $2.4 $- $33.0 $- $27.8
===== ==== === ===== === =====
Six months ended June 30, 2009
------------------------------
North American
Music $2.6 $1.8 $(0.9) $53.1 $- $(51.4)
International
Music 28.3 0.8 (0.1) 16.9 0.1 10.6
Ticketing (3.9) 0.1 - 6.6 - (10.6)
Other 10.9 - - 2.8 - 8.1
Corporate (21.3) 3.8 - 0.9 18.6 (44.6)
----- --- --- --- ---- -----
Total Live
Nation $16.6 $6.5 $(1.0) $80.3 $18.7 $(87.9)
===== ==== ===== ===== ===== ======
Six months ended June 30, 2008
------------------------------
North American
Music $25.0 $3.9 $(0.1) $41.0 $- $(19.8)
International
Music 22.6 0.3 - 18.2 - 4.1
Ticketing (6.0) 0.2 - 2.0 - (8.2)
Other 10.1 - (0.1) 4.3 - 5.9
Corporate (19.7) 2.4 0.6 1.8 - (24.5)
----- --- --- --- --- -----
Total Live
Nation $32.0 $6.8 $0.4 $67.3 $- $(42.5)
===== ==== ==== ===== === ======
Reconciliation of Adjusted Operating Income (Loss) to Free Cash Flow
--------------------------------------------------------------------
($in millions) Q2 2009 Q2 2008
------------- ------- -------
Adjusted operating income $51.2 $63.2
Less: Cash interest expense - net (12.3) (10.4)
Cash taxes (10.2) (9.9)
Maintenance capital expenditures (5.7) (12.8)
Distributions to noncontrolling
interest partners (0.3) (0.2)
Distributions from (contributions to) investments in
nonconsolidated affiliates 0.3 1.3
--- ---
Free cash flow $23.0 $31.2
-------------- ----- -----
6 months 6 months
($in millions) 2009 2008
------------- ---- ----
Adjusted operating income $16.6 $32.0
Less: Cash interest expense - net (25.6) (23.3)
Cash taxes (12.7) (13.5)
Maintenance capital expenditures (8.7) (19.0)
Distributions to noncontrolling
interest partners (0.3) (0.4)
Distributions from (contributions to) investments
in nonconsolidated affiliates 1.5 3.5
--- ---
Free cash flow $(29.2) $(20.7)
-------------- ------ ------
Reconciliation of Cash and Cash Equivalents to Free Cash
--------------------------------------------------------
June 30,
($in millions) 2009
-------------- ----
Cash and cash equivalents $469.8
Deferred revenue - event related $(838.8)
Accrued artist fees $(20.7)
Collections on behalf of others $(82.8)
Prepaids related to artist settlements/events $380.8
------
Free cash $(91.7)
--------- ------
First Call Analyst:
FCMN Contact:
Photo: http://www.newscom.com/cgi-bin/prnh/20081203/LAW048LOGO-b
http://photoarchive.ap.org/
[email protected]
SOURCE: Live Nation
CONTACT: Media, John Vlautin, +1-310-867-7000,
[email protected], or Investors, Linda Bandov, +1-310-867-7000,
[email protected], both of Live Nation, Inc.; or Brad Edwards of
Brainerd Communicators, Inc., +1-212-986-6667, [email protected], for Live
Nation, Inc.
Web Site: http://www.livenation.com/