01—Abstract
Summary
Summary of the 10-K filed February 25, 2016. Cited figures are marked; the original filing is the authoritative source.
Live Nation Entertainment, Inc. reported record 2015 revenue of $7.25 billiona (up from $6.87 billion in 2014), with operating income of $131.4 million compared with $7.2 million in 2014, which included $135.0 million of goodwill impairments.
The company reported a net loss attributable to common stockholders of Live Nation of $32.5 millionb, or $(0.33) per share, versus $(90.8) million, or $(0.49) per share, in 2014. Concerts generated $4.96 billion of revenue (68.5% of total) and an operating loss of $105.3 million, while Ticketing generated $1.64 billion of revenue and operating income of $158.2 million. Management attributed revenue growth largely to more events and fans in Concerts and higher primary and resale ticket volume in Ticketing, and noted that foreign exchange translation reduced reported revenue by approximately $359.5 million.
At December 31, 2015, the company had cash and cash equivalents of $1.30 billionc and total indebtedness of $2.1 billion, including a senior secured credit facility, 7% senior notes due 2020, 5.375% senior notes due 2022 and 2.5% convertible senior notes due 2019. Available revolver borrowing capacity was $258.9 million, and the company reported compliance with all debt covenants. Capital expenditures were $144.7 million in 2015, and management expects approximately $165 million for 2016.
The filing highlights concentration of risk in consumer discretionary spending, reliance on popular artists touring, intense competition, data security and regulatory exposure, particularly around ticket resale practices subject to agreements with the FTC and several states. The company has not paid dividends and does not intend to in the foreseeable future.
02—Key points
Key Highlights
- Total revenue of $7,245.7 million in 2015, up from $6,867.0 million in 2014; the filing describes this as a record level for the company.
- Operating income of $131.4 million in 2015 versus $7.2 million in 2014, which had $135.0 million of goodwill impairments.
- Net loss attributable to common stockholders of Live Nation of $32.5 million, or $(0.33) per share, in 2015, compared with $90.8 million, or $(0.49) per share, in 2014.
- Ticketing segment operating income rose to $158.2 million from $117.3 million; the segment sold 160 million tickets for which fees were earned.
- Concerts segment revenue of $4,965.0 million (68.5% of total revenue) produced an operating loss of $105.3 million, after acquisition and depreciation costs.
- Cash and cash equivalents of $1,303.1 million at December 31, 2015, against total indebtedness of about $2.1 billion; $258.9 million was available under the revolver.
- No dividends have been paid since the Separation, and the company does not expect to pay dividends in the foreseeable future.
03—One dollar
04—Financials
Financial Highlights
Figures from 10-KFY2015filed February 25, 2016Financial Statements
FY2015 against FY2014
| Line item | FY2015FY2014 | Change |
|---|---|---|
| Revenue | $7.25B$6.87B | +5.5% |
| SG&A Expenses | $1.41B$1.34B | +5.6% |
| Operating Income | $131.37M$7.16M | +1733.8% |
| Interest Expense | $102.88M$106.31M | −3.2% |
| Net Income | -$32.51M-$90.81M | +64.2% |
| EPS (Basic) | $-0.33$-0.49 | +32.7% |
| Shares Outstanding (Basic) | 200.97M198.87M | +1.1% |
05—Questions
Frequently Asked Questions
What drove the increase in Live Nation's 2015 revenue?
The filing attributes the $378.8 million increase largely to Concerts, with higher event and fan counts (25,519 estimated events versus 22,801 in 2014) and incremental acquisition revenue. Ticketing grew on higher primary ticket volume and resale fees. Foreign exchange rate changes reduced reported revenue by about $359.5 million; excluding that effect, revenue rose $738.3 million, or 11%.
Why did operating income improve so much in 2015?
Operating income was $131.4 million in 2015 compared with $7.2 million in 2014. The 2014 result included $135.0 million of goodwill impairments, so the improvement is largely due to the absence of that charge in 2015, partly offset by higher depreciation and amortization of $397.2 million.
How much debt does Live Nation carry and when does it mature?
Total indebtedness was $2.1 billion at December 31, 2015. Of this, $42.5 million is due in 2016, $404.6 million in 2017 and 2018, $1.4 billion in 2019 and 2020, and $273.6 million thereafter. The weighted-average cost of debt was 4.2%, and the company stated it was in compliance with all debt covenants.
What are the main risks identified in the filing?
Key risks include dependence on popular artists touring and changing consumer tastes, intense competition in concerts and ticketing, cybersecurity and personal data breaches, international operations, extensive government regulation including ticket resale restrictions under agreements with the FTC and several states, and seasonality of results, which are typically lowest in the first and fourth quarters.
06—Continue