01—Abstract
Summary
Summary of the 10-K filed February 26, 2013. Cited figures are marked; the original filing is the authoritative source.
Live Nation Entertainment, Inc. (NYSE: LYV) reports that it believes it is the largest live entertainment company in the world, connecting more than 250 million fans across its platforms to over 180,000 events in about 47 countries in 2012.
Its four reportable segments are Concerts, Ticketing, Artist Nation and Sponsorship & Advertising. Concerts generated approximately $3.9 billiona, or 66.5%, of 2012 total revenue, Ticketing approximately $1.4 billion (23.6%), Artist Nation approximately $400 million (6.9%), and Sponsorship & Advertising approximately $248 million (4.3%). Consolidated revenue rose 8% to $5.82 billion, but operating income was a loss of $21.6 million (compared with income of $18.3 million in 2011), and the net loss attributable to common stockholders widened to $163.2 million from $83.0 million.
The balance sheet shows cash and cash equivalents of $1.0 billionb at December 31, 2012, against total indebtedness of about $1.776 billion (excluding unamortized discounts and premiums), with a weighted average cost of debt of 5.2%. Operating cash flow improved to $367.1 million from $135.7 million, while capital expenditures totaled $123.2 million. The company completed 2012 acquisitions including Coppel, Cream and HARD, and recorded impairments of $89.6 million on definite-lived intangible assets, including a $62.7 million impairment in Artist Nation.
The principal legal overhang is the CTS arbitration, in which CTS seeks damages and royalties, with a decision expected by spring 2013 and no loss currently considered probable. The company has accrued $35.4 millionc for the Ticketing Fees consumer class action settlement, which the court declined to approve in final form in September 2012, and it has accrued $40.6 million in total for specific legal cases.
02—Key points
Key Highlights
- Revenue increased 8% to $5.82 billion in 2012, driven primarily by the Concerts ($364.2 million increase) and Ticketing ($54.7 million increase) segments.
- Operating loss of $21.6 million in 2012 versus operating income of $18.3 million in 2011, with Artist Nation impairments of $62.7 million on client/vendor relationship intangibles contributing to the decline.
- Net loss attributable to common stockholders of $163.2 million in 2012, compared with $83.0 million in 2011.
- Operating cash flow of $367.1 million in 2012, up from $135.7 million in 2011, with year-end cash and cash equivalents of $1.0 billion.
- Total indebtedness of approximately $1.776 billion at December 31, 2012, with a weighted average cost of debt of 5.2% and $236.1 million available under the revolving credit facility.
- Concerts sold 48.8 million estimated attendees across 21,962 events, and Ticketing sold 147.7 million primary tickets with a gross value of $9.1 billion.
- Pending CTS arbitration seeks damages and royalties tied to ticketing platform claims, with a decision expected by spring 2013; the company does not consider a loss probable and cannot estimate a range.
03—One dollar
04—Financials
Financial Highlights
Figures from 10-KFY2012filed February 26, 2013Financial Statements
FY2012 against FY2011
| Line item | FY2012FY2011 | Change |
|---|---|---|
| Revenue | $5.82B$5.38B | +8.1% |
| SG&A Expenses | $1.14B$1.11B | +2.8% |
| Operating Income | -$21.64M$18.34M | −218.0% |
| Interest Expense | $123.74M$120.41M | +2.8% |
| Net Income | -$163.23M-$83.02M | −96.6% |
| EPS (Basic) | $-0.88$-0.46 | −91.3% |
| Shares Outstanding (Basic) | 186.96M182.39M | +2.5% |
| Shares Outstanding (Diluted) | 186.96M182.39M | +2.5% |
05—Questions
Frequently Asked Questions
How did Live Nation's profitability change in 2012?
Revenue grew 8% to $5.82 billion, but the company swung to an operating loss of $21.6 million from operating income of $18.3 million in 2011. The net loss attributable to common stockholders was $163.2 million, compared with $83.0 million a year earlier. The filing attributes much of the decline to impairments of $89.6 million on definite-lived intangible assets, including $62.7 million in Artist Nation, and to higher costs for future events and higher compensation costs in Concerts.
How much debt does Live Nation carry and when does it come due?
Total indebtedness was approximately $1.776 billion at December 31, 2012, excluding unamortized discounts and premiums. About $62.1 million is due in 2013, $344.0 million in 2014 and 2015 combined, $876.7 million in 2016 and 2017 combined, and $492.9 million thereafter. The company was in compliance with its debt covenants at year-end.
What are the main legal risks disclosed?
The CTS arbitration involves claims relating to ticketing platforms and purported royalties over a 10-year term, and a decision is expected by spring 2013. The Ticketing Fees consumer class action has $35.4 million accrued for the probable settlement cost, though the court declined final approval in September 2012 and modifications are being discussed. The company says it cannot currently estimate a possible loss range for the CTS matter.
Which business segments drive Live Nation's revenue?
Concerts generated approximately $3.9 billion, or 66.5%, of 2012 total revenue. Ticketing contributed approximately $1.4 billion (23.6%), Artist Nation about $400 million (6.9%), and Sponsorship & Advertising about $248 million (4.3%). The Concerts segment is seasonal, with higher revenue in the second and third quarters.
Does Live Nation pay dividends?
No. The company has not declared or paid any dividends since the Separation and does not intend to pay dividends for the foreseeable future. It plans to retain earnings to finance growth and repay debt, and its senior secured credit facility restricts dividend payments.
06—Continue