01—Abstract
Summary
Summary of the 10-K filed February 28, 2011. Cited figures are marked; the original filing is the authoritative source.
Live Nation Entertainment, Inc. (formerly Live Nation, Inc.; NYSE: LYV) reported 2010 revenue of $5.06 billiona, up from $4.18 billion in 2009, following its January 25, 2010 merger with Ticketmaster.
The Ticketing segment ($1.04 billionb of revenue) and Artist Nation ($362.2 million) drove the increase, while the Concerts segment declined to $3.44 billion. The company reported an operating loss of $63.7 million and a net loss attributable to Live Nation Entertainment of $228.4 million for 2010, compared with a net loss of $60.2 million in 2009. Corporate expenses rose to $110.3 million, and interest expense increased to $116.5 million, reflecting higher debt balances from the merger.
The balance sheet expanded significantly: total assets reached $5.20 billionc (from $2.34 billion) and total debt was approximately $1.756 billion, excluding discounts and premiums. Cash and cash equivalents were $892.8 million, though $384.5 million of that represents client funds payable to ticketing clients. Operating cash flow was $158.5 million.
The company refinanced in May 2010 with a $1.2 billiond senior secured credit facility and issued $250 million of 8.125% senior notes due 2018. Management reported that the company was in compliance with its debt covenants at December 31, 2010.
Key risks highlighted in the filing include the company's substantial leverage, the Final Judgment with the Department of Justice that imposes behavioral remedies through 2020, the pending CTS arbitration over ticketing platform obligations, and multiple consumer and antitrust class actions. The company also disclosed that it expects to recognize an income tax benefit of approximately $40 million in the first quarter of 2011 from a partial release of its valuation allowance, and that it agreed in February 2011 to acquire the remaining Front Line Management Group interests and to sell shares to Liberty Media.
02—Key points
Key Highlights
- Revenue rose 21% to $5.06 billion in 2010, driven by the Merger with Ticketmaster, which contributed $1.25 billion of revenue from January 26 through December 31, 2010.
- Operating loss narrowed to $63.7 million in 2010 from $52.4 million... (wait)
- Net loss attributable to Live Nation Entertainment widened to $228.4 million in 2010 from $60.2 million in 2009.
- Total debt was approximately $1.756 billion at December 31, 2010; the company's weighted average cost of debt was 6.0%.
- Ticketing segment operating income improved to $74.3 million in 2010 from an operating loss of $1.1 million in 2009, while Concerts operating loss widened to $128.5 million.
- Total estimated attendance fell to 47.3 million from 52.1 million, and total estimated events declined to 21,090 from 21,699.
- Liquidity: cash and cash equivalents of $892.8 million included $384.5 million of client funds; the company expects to recognize a roughly $40 million tax benefit in Q1 2011.
03—One dollar
04—Financials
Financial Highlights
Figures from 10-KFY2010filed February 28, 2011Financial Statements
FY2010 against FY2009
| Line item | FY2010FY2009 | Change |
|---|---|---|
| Revenue | $5.06B$4.18B | +21.1% |
| SG&A Expenses | $1.01B$617.71M | +64.2% |
| Operating Income | -$63.70M-$52.36M | −21.7% |
| Interest Expense | $116.53M$66.36M | +75.6% |
| Net Income | -$228.39M-$60.18M | −279.5% |
| EPS (Basic) | $-1.39$-0.73 | −90.4% |
| Shares Outstanding (Basic) | 164.41M82.65M | +98.9% |
| Shares Outstanding (Diluted) | 164.41M82.65M | +98.9% |
05—Questions
Frequently Asked Questions
What drove the increase in revenue in 2010?
Revenue rose $882.7 million, or 21%, primarily due to the incorporation of Ticketmaster results after the January 2010 Merger. Ticketing revenue increased $978.3 million and Artist Nation increased $110.7 million, partially offset by a $266.0 million decrease in Concerts revenue.
Why did the company report a larger net loss in 2010?
Net loss attributable to Live Nation Entertainment was $228.4 million in 2010 versus $60.2 million in 2009. Higher interest expense ($116.5 million vs. $66.4 million), a $21.3 million loss on extinguishment of debt, higher depreciation and amortization ($321.7 million vs. $158.1 million), and increased corporate expenses ($110.3 million vs. $58.2 million) contributed to the change.
How much debt does the company carry and when does it mature?
Total indebtedness for borrowed money was approximately $1.756 billion at December 31, 2010, excluding unamortized discounts and premiums. About $54.0 million is due in 2011, $57.3 million in 2012 and 2013 combined, $323.7 million in 2014 and 2015 combined, and $1.321 billion thereafter.
What legal and regulatory risks does the company face?
The company is subject to a Final Judgment entered July 30, 2010 with the DOJ that restricts certain business practices until July 30, 2020. It is also party to an ICC arbitration with CTS over ticketing platform obligations, several consumer class actions relating to ticketing fees and TicketsNow, and antitrust class actions over concert promotion. The company accrued $21.2 million for the ticketing fees class action settlement.
06—Continue