01—Abstract
Summary
Summary of the 10-K filed February 24, 2012. Cited figures are marked; the original filing is the authoritative source.
Live Nation Entertainment, Inc. reported 2011 revenue of $5.38 billiona, up 6% from $5.06 billion in 2010, with operating income of $18.3 million compared with an operating loss of $63.7 million in 2010.
The company remained loss-making at the net level: net loss attributable to Live Nation Entertainment, Inc. was $83.0 millionb in 2011, versus $228.4 million in 2010. The filing states that the revenue increase included $132.9 million from foreign exchange and $77.3 million of incremental revenue from the timing of the Merger with Ticketmaster, and that excluding the FX effect revenue rose $187.4 million, or 4%. Segment results show Concerts ($3.51 billion revenue) still posted an operating loss of $105.0 million, while Ticketing ($1.19 billion revenue) generated operating income of $117.2 million and Sponsorship produced $119.7 million of operating income.
Management attributed the Concerts improvement to stronger arena and stadium results and cost reductions, partly offset by a planned reduction in amphitheater events. Total debt was approximately $1.732 billionc at December 31, 2011, with $241.2 million available under the revolving credit facility, and cash and cash equivalents were $844.3 million, of which $373.9 million represented client funds. The filing also highlights material contingencies, including a pending CTS arbitration over ticketing platform obligations (decision expected in the first half of 2012, with no loss estimate given), the Live Concert Antitrust Litigation, and several consumer class actions.
The company has accrued $44.0 milliond for specific cases, including $35.8 million for the Ticketing Fees Consumer Class Action settlement. Investors should weigh the return to positive operating income against continued net losses, high leverage and these unresolved legal matters.
02—Key points
Key Highlights
- Revenue rose to $5.38 billion in 2011 from $5.06 billion in 2010, an increase of 6%, or 4% excluding $132.9 million of favorable foreign exchange effects.
- Operating income was $18.3 million in 2011, a turnaround from an operating loss of $63.7 million in 2010.
- Net loss attributable to Live Nation Entertainment, Inc. narrowed to $83.0 million in 2011 from $228.4 million in 2010.
- Ticketing segment revenue increased to $1.19 billion with operating income of $117.2 million, and Sponsorship operating income reached $119.7 million.
- Concerts segment revenue was $3.51 billion but the segment still recorded an operating loss of $105.0 million, though improved from $128.5 million in 2010.
- Total indebtedness was approximately $1.732 billion at December 31, 2011, with a weighted average cost of debt of 6.0%.
- Pending CTS arbitration and multiple consumer and antitrust class actions remain unresolved, and the company has accrued $44.0 million for specific legal cases.
03—One dollar
04—Financials
Financial Highlights
Figures from 10-KFY2011filed February 24, 2012Financial Statements
FY2011 against FY2010
| Line item | FY2011FY2010 | Change |
|---|---|---|
| Revenue | $5.38B$5.06B | +6.3% |
| SG&A Expenses | $1.11B$1.01B | +9.6% |
| Operating Income | $18.34M-$63.70M | +128.8% |
| Interest Expense | $120.41M$116.53M | +3.3% |
| Net Income | -$83.02M-$228.39M | +63.7% |
| EPS (Basic) | $-0.46$-1.39 | +66.9% |
| Shares Outstanding (Basic) | 182.39M164.41M | +10.9% |
| Shares Outstanding (Diluted) | 182.39M164.41M | +10.9% |
05—Questions
Frequently Asked Questions
Did Live Nation return to profitability in 2011?
Not at the net level. The company reported operating income of $18.3 million in 2011, but its net loss attributable to Live Nation Entertainment, Inc. was $83.0 million, though this was smaller than the $228.4 million loss in 2010.
What drove the revenue increase in 2011?
Revenue rose $320.3 million, or 6%. Ticketing contributed $150.7 million of the increase, Concerts $67.8 million, eCommerce $56.6 million and Artist Nation $31.0 million. The filing notes that $132.9 million of the total was from favorable foreign exchange rates and $77.3 million was incremental revenue from the timing of the Merger.
How much debt does the company carry and when does it mature?
Total indebtedness was approximately $1.732 billion at December 31, 2011. The filing states that $52.6 million is due in 2012, $293.5 million in 2013 and 2014, $1.126 billion in 2015 and 2016, and $259.7 million thereafter. Available revolver borrowing capacity was approximately $241.2 million.
What are the most significant legal risks disclosed?
The CTS arbitration, in which CTS seeks damages and royalties, has a decision expected in the first half of 2012, and the company says it cannot estimate a possible loss. The Live Concert Antitrust Litigation also remains pending, with a Southern California trial scheduled for April 2012. The company has accrued $44.0 million for specific cases, including $35.8 million for the Ticketing Fees Consumer Class Action settlement.
Does the company pay dividends?
No. The filing states that the company has not declared or paid dividends since the Separation and does not expect to pay cash dividends in the foreseeable future, as it intends to retain earnings and its senior secured credit facility limits distributions.
06—Continue