01—Abstract
Summary
Summary of the 10-K filed February 25, 2010. Cited figures are marked; the original filing is the authoritative source.
Live Nation Entertainment, Inc. (filed as Live Nation, Inc.; name changed January 25, 2010 upon the Ticketmaster merger) reported 2009 revenue of $4.18 billiona, up from $4.09 billion in 2008, and an operating loss of $52.4 million compared with an operating loss of $297.3 million in 2008, which included a $269.9 million goodwill impairment.
The company recorded a net loss attributable to Live Nation of $60.2 millionb in 2009 (loss from continuing operations of $126.0 million). Results were driven by North American Music, which generated $2.57 billion of revenue but an operating loss of $18.4 million, and International Music, which generated $1.53 billion of revenue and operating income of $65.9 million. Ticketing revenue rose to $73.6 million, though the segment still posted an operating loss of $6.0 million.
Cash from operations improved to $57.3 millionc, and cash and cash equivalents were $237.0 million at year-end. The balance sheet carries substantial leverage: total debt, including redeemable preferred stock and excluding the convertible note discount, was approximately $832.9 million at December 31, 2009, with $141.4 million of available revolver capacity. The company's $220 million 2.875% convertible senior notes due 2027 and $40 million of 13% redeemable preferred stock are noted, and the company stated it was in compliance with its debt covenants at year-end.
The filing is dominated by the January 25, 2010 completion of the merger with Ticketmaster, which made Ticketmaster a wholly owned subsidiary and resulted in the issuance of approximately 84.6 million shares of common stock. The filing also discloses a proposed Final Judgment with the U.S. Department of Justice and a Canadian Consent Agreement, both imposing behavioral remedies and a divestiture of the Paciolan ticketing business. A tender offer by LMC Events, LLC, a Liberty Media subsidiary, to buy up to 34.2 million shares at $12.00d per share was also pending at the time of filing.
02—Key points
Key Highlights
- Revenue of $4.18 billion in 2009, up 2% from $4.09 billion in 2008; excluding foreign exchange effects, revenue rose $275.5 million, or 7%.
- Operating loss narrowed to $52.4 million in 2009 from $297.3 million in 2008, which included a $269.9 million goodwill impairment.
- Net loss attributable to Live Nation Entertainment of $60.2 million in 2009, compared with $239.4 million in 2008.
- International Music was the profit driver, with operating income of $65.9 million on revenue of $1.53 billion, while North American Music posted an operating loss of $18.4 million.
- Total debt of approximately $832.9 million at December 31, 2009, with $141.4 million of revolver availability and the company in compliance with its covenants.
- Merger with Ticketmaster completed January 25, 2010, with about 84.6 million shares issued; the combined company is named Live Nation Entertainment, Inc.
- Proposed DOJ Final Judgment and Canadian Consent Agreement impose ten-year behavioral remedies and require divestiture of the Paciolan ticketing business.
03—One dollar
04—Financials
Financial Highlights
Figures from 10-KFY2009filed February 25, 2010Financial Statements
| Revenue | $4.18B |
| SG&A Expenses | $617.71M |
| Operating Income | -$52.36M |
| Interest Expense | $66.36M |
| Net Income | -$60.18M |
| EPS (Basic) | $-0.73 |
| Shares Outstanding (Basic) | 82.65M |
| Shares Outstanding (Diluted) | 82.65M |
05—Questions
Frequently Asked Questions
How did Live Nation perform financially in 2009?
Revenue increased 2% to $4.18 billion from $4.09 billion in 2008. The operating loss was $52.4 million, a significant improvement from the $297.3 million operating loss in 2008, which included a $269.9 million goodwill impairment. The net loss attributable to Live Nation Entertainment was $60.2 million, or $0.73 per share, compared with $239.4 million in 2008. The filing attributes the revenue increase to International Music and Ticketing, partially offset by a decline in North American Music, and notes foreign exchange rates reduced revenue by about $179.8 million.
What is the company's debt position?
At December 31, 2009, total indebtedness for borrowed money, including redeemable preferred stock and excluding the convertible note discount, was approximately $832.9 million. The company had $141.4 million of available borrowing capacity under the revolving portion of its senior secured credit facility. Approximately $41.0 million of debt is due in 2010, and $579.9 million is due in 2013 and 2014. The 2.875% convertible senior notes ($220 million face value) mature in 2027 but have holder put dates in 2014, 2017 and 2022.
What does the Ticketmaster merger mean for investors?
The merger closed January 25, 2010, making Ticketmaster a wholly owned subsidiary, with Live Nation issuing approximately 84.6 million shares to Ticketmaster stockholders. The company stated it expects vertical integration of concert promotion, ticketing and artist management to lower costs and create new revenue streams. However, the filing notes integration risks, a proposed DOJ Final Judgment requiring behavioral remedies and divestiture of the Paciolan business, and a pending LMC Events tender offer for up to 34.2 million shares at $12.00 per share.
What are the main risks identified in the filing?
Key risks include high leverage and restrictive debt covenants, dependence on popular artists and touring, seasonality in results (with the lowest performance typically in the first and fourth quarters), cash needs for advances to artists, intense competition, unionized labor disruptions, and international operations, which accounted for approximately 35% of revenue. The filing also highlights litigation, including twenty-two putative class actions relating to concert ticket pricing, and regulatory remedies tied to the Ticketmaster merger.
06—Continue