2014 ANNUAL REPORT
2014 - Record Year
• Record-Setting Ticketmaster GTV of $23 Billion
• TM+ GTV Over $1 Billion Since Launch
• Over 1 Billion Fans Visit Websites
• Online Advertising Profit up 15% with 80% Margin
• Revenue Up 6% to $6.9 Billion
• AOI Up 10% to $555 Million
TO OUR STOCKHOLDERS:
2014 Results
Live Nation continues to be the global leader in the live events industry with another record year. In 2014, the
company grew adjusted operating income (AOI) by 10%, revenue by 6%, and free cash flow by 9%.
We continue to see the tremendous power of live events, with strong global consumer demand. Live is a truly
unique entertainment form; it cannot be duplicated. It is elevated, not threatened, by technology and is
borderless. Fans around the world can now discover, follow, share and embrace artists, creating greater demand
for live shows.
Technology is similarly transforming ticketing. Ticket sales are continuing their rapid shift to mobile, with 35%
growth in 2014 to 18% of total ticket sales, leading to higher fan engagement, conversion and a better purchase
flow.
We believe the live business will continue to have strong growth for years to come as connected fans drive
demand, artists are motivated to tour and mobile technology drives conversion.
Our Concerts Market Share Continues to Grow
In 2014, we built on a record 2013 by growing Concerts revenue 5%. We again grew our global market share, as
we promoted the majority of shows for 22 of the top 25 global tours. At the same time, we expanded our global
footprint in the Philippines, Thailand, Taiwan and Indonesia, while also building our portfolio of marquee North
America festival assets with the acquisition of Austin City Limits and Lollapalooza festivals and brands.
Artist Nation Business Delivered Strong Growth
Our artist management business grew AOI by 50% as we attracted more managers and artists to Live Nation last
year, including U2, Madonna, Lady Gaga, Miley Cyrus, Britney Spears, Nicki Minaj, Lil Wayne and Alicia Keys.
And the benefit from aligning with our concerts business is proving successful as these artists chose to tour with
Live Nation for over 700 shows in 2014, more than double the number in 2012.
Sponsorship and Advertising Continue Double-Digit Growth
From this expanded concert base we again grew our advertising business at a double-digit pace, with a 10%
increase in AOI for the year in our highest margin business at over 70% of revenue. As part of this, online
advertising AOI grew even faster, at 15%.
This growth was driven by two initiatives. First, we have remained focused on growing our fan network,
increasing traffic by 17%, for a total of over one billion visitors throughout the year. And second, we are now
monetizing our content, notably our deal with Yahoo! to distribute a streaming concert every day, which has
driven increased interest by advertisers to our online platform, spurring the growing profitability of the business.
Yahoo! and VICE are just the beginning of our entry into the media space, driving advertising with high quality
live music-related video offerings that we believe will continue to expand and drive advertising growth.
Our unique ad platform has enabled us to attract new strategic sponsors such as Pepsi, Hilton and SAP last
year. With these additions, we now have approximately 60 companies that pay us over $1 million each year for
sponsorship and advertising, accounting for over $200 million in spend with Live Nation, and an additional 700
companies that also advertise on our platform, generating a collective $300 million in revenue. We believe we
can continue to upsell and convert these 700 sponsors as we grow our average deal size.
Ticketmaster Platform Driving Growth Through New Products
Ticketmaster continued to build on its global leadership with the introduction of new products that instantly scale
on Ticketmaster’s platform and drive revenue. In 2014, these new products helped drive a 7% increase in the
gross transaction value of primary tickets to $23 billion, and a 55% increase in secondary gross transaction
value.
Our most successful new product launch has been integrated secondary ticketing, with over $1 billion of
secondary gross transaction value since its launch in the fall of 2013. The number of events activated in 2014
increased 500% to 10,000 integrated events listed on Ticketmaster. Secondary growth for concerts in particular
has been very strong, with a 350% year-on-year GTV increase, demonstrating how Ticketmaster can leverage
Live Nation Concerts as its top customer to immediately establish scale with new products. And despite this
strong growth, only 6% of Ticketmaster events in 2014 were activated with secondary inventory, so we have
substantial runway for growth ahead.
At the same time we have shifted our product focus for event discovery, purchase, and ticket management to
mobile. As a result, in the fourth quarter of 2014 for the first time we had more visitors to our mobile sites than
desktop. There remain tremendous growth opportunities for Ticketmaster traffic and conversion. The shift to
mobile will more effectively link fans with shows and Ticketmaster’s ability to drive mobile app installations, as it
continues to be the number one place to discover and buy tickets.
Our commitment to our venue clients is to provide them with the best service and products in the industry, and
this continues to bear out as we achieved a net renewal rate of over 100% for the fifth straight year.
In addition to enabling better products, as a result of our technology investments we are also lowering our
operating costs, and by the end of 2014 we reduced our cost per ticket in North America by almost 25 cents per
ticket, ahead of our planned timetable.
Demonstrating Ticketmaster’s robust business, it had the second biggest day in its over 30-year history in
February 2015, selling over one million tickets. The top day was 12 years ago, and we expect we can still break
that this year.
2015 Growth Drivers
We are confident that our business model, and its scale, provides ongoing growth potential. There remain
continued opportunities to consolidate the global concerts business, and we will use that scale to drive fan
monetization, advertising and ticketing.
Thank you to our stockholders, employees and the artists, venues and fans we serve for continued belief in, and
support of, Live Nation Entertainment!
Michael Rapino
President & Chief Executive Officer
Live Nation Entertainment, Inc.
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
__________________________________________
Form 10-K
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended December 31, 2014,
or
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF
1934
For the transition period from to
Commission File Number 001-32601
____________________________________
LIVE NATION ENTERTAINMENT, INC.
(Exact name of registrant as specified in its charter)
Delaware
(State of Incorporation)
20-3247759
(I.R.S. Employer Identification No.)
9348 Civic Center Drive
Beverly Hills, CA 90210
(Address of principal executive offices, including zip code)
(310) 867-7000
(Registrant’s telephone number, including area code)
____________________________________
Securities registered pursuant to Section 12(b) of the Act:
Title of Each Class
Common Stock, $.01 Par Value per Share;
Preferred Stock Purchase Rights
Name of Each Exchange on which Registered
New York Stock Exchange
Securities registered pursuant to Section 12(g) of the Act:
None
_____________________
Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act.
Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act.
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the
Yes
Yes
No
No
preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past
90 days.
Yes
No
Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Website, if any, every Interactive Data File required to be
submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was
required to submit and post such files). Yes
No
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K (§ 229.405 of this chapter) is not contained herein, and will not be
contained, to the best of registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to
this Form 10-K.
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the
definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.
Large accelerated filer
Accelerated filer
Non-accelerated filer
(Do not check if a smaller reporting company)
Smaller reporting company
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).
Yes
No
On June 30, 2014, the last business day of the registrant’s most recently completed second fiscal quarter, the aggregate market value of the Common Stock
beneficially held by non-affiliates of the registrant was approximately $3,565,000,000. (For purposes hereof, directors, executive officers and 10% or greater stockholders
have been deemed affiliates).
On February 20, 2015, there were 201,500,637 outstanding shares of the registrant’s common stock, $0.01 par value per share, including 1,385,134 shares of
unvested restricted stock awards and excluding 408,024 shares held in treasury.
Portions of our Definitive Proxy Statement for the 2015 Annual Meeting of Stockholders, expected to be filed within 120 days of our fiscal year end, are
incorporated by reference into Part III.
DOCUMENTS INCORPORATED BY REFERENCE
LIVE NATION ENTERTAINMENT, INC.
INDEX TO FORM 10-K
ITEM 1.
BUSINESS
PART I
RISK FACTORS
ITEM 1A.
ITEM 1B. UNRESOLVED STAFF COMMENTS
ITEM 2.
ITEM 3.
PROPERTIES
LEGAL PROCEEDINGS
PART II
ITEM 5.
ITEM 6.
ITEM 7.
MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER
MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES
SELECTED FINANCIAL DATA
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
ITEM 8.
ITEM 9.
FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE
ITEM 9A.
ITEM 9B. OTHER INFORMATION
CONTROLS AND PROCEDURES
PART III
ITEM 10.
DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE
ITEM 11.
EXECUTIVE COMPENSATION
ITEM 12.
ITEM 13.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
AND RELATED STOCKHOLDER MATTERS
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR
INDEPENDENCE
ITEM 14.
PRINCIPAL ACCOUNTING FEES AND SERVICES
PART IV
ITEM 15.
EXHIBITS, FINANCIAL STATEMENT SCHEDULES
Page
2
12
25
25
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26
27
27
52
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99
99
101
101
101
101
101
101
102
ADA
AOCI
AOI
Clear Channel
Company
DDA
FASB
FTC
GAAP
Liberty Media
Live Nation
SEC
Separation
Trust
Trust Note
VIE
Ticketmaster
LIVE NATION ENTERTAINMENT, INC.
GLOSSARY OF KEY TERMS
Americans with Disabilities Act of 1990
Accumulated other comprehensive income (loss)
Adjusted operating income (loss)
Clear Channel Communications, Inc.
Live Nation Entertainment, Inc. and subsidiaries
United Kingdom's Disability Discrimination Act of 1995
Financial Accounting Standards Board
Federal Trade Commission
United States Generally Accepted Accounting Principles
Liberty Media Corporation
Live Nation Entertainment, Inc., formerly known as Live Nation, Inc., and
subsidiaries
United States Securities and Exchange Commission
The contribution and transfer by Clear Channel of substantially all of its
entertainment assets and liabilities to Live Nation
The family trust of a former executive, of which the former executive is co-
Trustee
A note issued to the Trust as part of a prior acquisition. This note had been
issued in exchange for shares of Ticketmaster’s series A convertible
redeemable preferred stock held by this trust
Variable interest entity
For periods prior to May 6, 2010, Ticketmaster means Ticketmaster
Entertainment LLC and its predecessor companies (including without
limitation Ticketmaster Entertainment, Inc.); for periods on and after
May 6, 2010, Ticketmaster means the Ticketmaster ticketing business of the
Company
1
PART I
“Live Nation” (which may be referred to as the “Company,” “we,” “us” or “our”) means Live Nation Entertainment,
Inc. and its subsidiaries, or one of our segments or subsidiaries, as the context requires.
Special Note About Forward-Looking Statements
Certain statements contained in this Form 10-K (or otherwise made by us or on our behalf from time to time in other
reports, filings with the SEC, news releases, conferences, internet postings or otherwise) that are not statements of historical
fact constitute “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933, as amended, and
Section 21E of the Exchange Act of 1934, as amended, notwithstanding that such statements are not specifically identified.
Forward-looking statements include, but are not limited to, statements about our financial position, business strategy,
competitive position, potential growth opportunities, potential operating performance improvements, the effects of competition,
the effects of future legislation or regulations and plans and objectives of our management for future operations. We have based
our forward-looking statements on our beliefs and assumptions based on information available to us at the time the statements
are made. Use of the words “may,” “should,” “continue,” “plan,” “potential,” “anticipate,” “believe,” “estimate,” “expect,”
“intend,” “outlook,” “could,” “target,” “project,” “seek,” “predict,” or variations of such words and similar expressions are
intended to identify forward-looking statements but are not the exclusive means of identifying such statements.
Forward-looking statements are not guarantees of future performance and are subject to risks and uncertainties that could
cause actual results to differ materially from those in such statements. Factors that could cause actual results to differ from
those discussed in the forward-looking statements include, but are not limited to, those set forth under Item 1A.—Risk Factors
as well as other factors described herein or in our quarterly and other reports we file with the SEC (collectively, “cautionary
statements”). Based upon changing conditions, should any one or more of these risks or uncertainties materialize, or should any
underlying assumptions prove incorrect, actual results may vary materially from those described in any forward-looking
statements. All subsequent written and oral forward-looking statements attributable to us or persons acting on our behalf are
expressly qualified in their entirety by the applicable cautionary statements. We do not intend to update these forward-looking
statements, except as required by applicable law.
ITEM 1.
BUSINESS
Our Company
We believe that we are the largest live entertainment company in the world, connecting nearly 519 million fans across all
of our platforms in 33 countries in 2014.
We believe we are the largest producer of live music concerts in the world, based on total fans that attend Live Nation
events as compared to events of other promoters, connecting nearly 59 million fans to almost 23,000 events for over 2,700
artists in 2014. Live Nation owns, operates, has exclusive booking rights for or has an equity interest in 158 venues, including
House of Blues ® music venues and prestigious locations such as The Fillmore in San Francisco, the Hollywood Palladium, the
Ziggo Dome in Amsterdam and 3Arena in Ireland.
We believe we are the world’s leading live entertainment ticketing sales and marketing company, based on the number of
tickets we sell. Ticketmaster provides ticket sales, ticket resale services and marketing and distribution globally through
www.ticketmaster.com and www.livenation.com, numerous retail outlets and call centers. Ticketmaster serves clients worldwide
across multiple event categories, providing ticketing services for leading arenas, stadiums, professional sports franchises and
leagues, college sports teams, performing arts venues, museums and theaters.
We believe we are one of the world’s leading artist management companies based on the number of artists represented.
Our artist management companies manage musical artists and acts across all music genres. As of December 31, 2014, we had
over 60 managers providing services to approximately 280 artists.
We believe our global network is the world’s largest music marketing network for corporate brands and includes one of
the world’s leading ecommerce websites, based on a comparison of gross sales of top internet retailers. In 2014, we had over
130 million customers in our database based on visitors to www.livenation.com and www.ticketmaster.com and our other online
properties.
Our principal executive offices are located at 9348 Civic Center Drive, Beverly Hills, California 90210 (telephone:
310-867-7000). Our principal website is www.livenationentertainment.com. Live Nation is listed on the New York Stock
Exchange, trading under the symbol “LYV.”
Our Strategy
Our strategy is to leverage our leadership position in live entertainment and our relationships with fans, venues, artists
and advertisers to sell more tickets and grow our revenue, earnings and cash flow. We pay artists, venues and teams to secure
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content and tickets; we invest in technology to build innovative products which advance our ticketing, advertising and mobile
platforms; and we are paid by sponsors and advertisers that want to connect their brands with our passionate fan base.
Our core businesses surrounding the promotion of live events include ticketing, sponsorship and advertising, and artist
management. We believe our focus on growing these businesses will increase shareholder value as we continue to enhance our
revenue streams and achieve economies of scale with our global platforms. We also continue to strengthen our core operations,
further expanding into additional global markets and optimizing our cost structure. Our strategy is to grow and innovate
through the initiatives listed below.
• Expand our Concert Platform. We will grow our fan base and increase our ticket sales by continuing to build our
portfolio of festivals globally, expanding our business into select additional top global music markets, and further
building our presence in existing markets.
• Drive Conversion of Ticket Sales through Development of Innovative Products. We are focused on selling tickets
through a wide set of sales channels, including mobile and online, and leveraging our extensive fan database to better
reach consumers. We will continue to focus on developing innovative products to build fan traffic to our sales
channels and drive increased ticket sales.
• Grow Sponsorship and Advertising. Our goal is to continue to drive growth in this area and capture a larger share of
the music sponsorship market. We will focus on expanding and developing new relationships with corporate sponsors
to provide them with targeted strategic programs through our unique relationship with fans and artists, our network of
venues and our extensive ticketing operations and online presence. In addition, we have established one of the few
ecommerce sites that has a substantial and growing online advertising platform.
•
Sell more Tickets and Drive Reductions in the Cost to Sell a Ticket. We will continue to invest in our ticketing
platforms and related venue and fan products to strengthen the functionality of our system and drive additional ticket
sales through an improved user experience while also creating a more efficient system.
• Grow Secondary Ticket Volume. We will continue to grow the volume of secondary tickets sold in partnership with
content owners through a trusted environment for fan ticket exchanges. We will expand globally the availability of
secondary tickets, allowing our fans to have a dependable, secure destination for all events.
• Drive Artist Management through our Other Core Businesses. We believe that effective artist management provides
further connections to our concert platform, supporting its growth. By delivering strong and consistent services to our
artist managers and their clients, we believe we can continue to build our market share in both artist management and
concert promotion.
Our Assets
We believe we have a unique portfolio of assets that is unmatched in the live entertainment industry.
• Fans. During 2014, our events were attended by nearly 59 million live music fans. Our database of our fans and their
interests provides us with the means to efficiently market our shows to them as well as to offer other music-related
products and services. This fan database is an invaluable asset that we are able to use to provide unique services to our
artists and corporate clients.
• Artists. We have extensive relationships with artists ranging from those acts that are just beginning their careers to
established superstars. In 2014, we promoted shows or tours for over 2,700 artists globally. In addition, through our
artist management companies, we manage approximately 280 artists. We believe our artist relationships are a
competitive advantage and will help us pursue our strategy to develop additional ancillary revenue streams around the
ticket purchase, live event and the artists themselves.
• Online Services and Ticketing. We own and operate various branded websites, both in the United States and abroad,
which are customized to reflect services offered in each jurisdiction. Our primary online websites, www.livenation.com
and www.ticketmaster.com, together with our other branded ticketing websites, are designed to promote ticket sales for
live events and to disseminate event and related merchandise information online. Fans can access www.livenation.com
and www.ticketmaster.com directly, from affiliated websites and through numerous direct links from banners and event
profiles hosted by approved third-party websites. We also have both Live Nation and Ticketmaster mobile apps that
our fans can use to access event information and buy tickets.
• Distribution Network. We believe that our global distribution network of promoters, venues and festivals provides us
with a strong position in the live concert industry. We believe we have one of the largest global networks of live
entertainment businesses in the world, with offices in 76 cities in North America and 27 countries worldwide. In
addition, we own, operate, have exclusive booking rights or have an equity interest in 158 venues located across six
countries as of the end of 2014, making us, we believe, the second largest operator of music venues in the world. We
3
also believe that we are one of the largest music festival producers in the world with more than 60 festivals globally. In
addition, we believe that our global ticketing distribution network, with one of the largest ecommerce sites on the
internet, approximately 8,400 sales outlets and 16 call centers serving more than 12,000 clients worldwide, makes us
the largest ticketing network in the industry.
•
Sponsors. We employ a sales force of approximately 230 people that worked with approximately 750 sponsors during
2014, through a combination of local venue-related deals and national deals, both in North America and
internationally. Our sponsors include some of the most well-recognized national and global brands including Citi,
American Express, Carlsberg, O2, Anheuser-Busch, Red Bull, Pepsi and SAP (each of these brands is a registered
trademark of the sponsor).
• Employees. At December 31, 2014, we employed approximately 7,900 full-time employees who are dedicated to
providing first-class service to our artists, fans, ticketing clients and corporate sponsors. Many of our employees have
decades of experience in promoting and producing live concerts, ticketing operations, sales and marketing, artist
management and venue management.
Our History
We were incorporated in Delaware on August 2, 2005 in preparation for the contribution and transfer by Clear Channel of
substantially all of its entertainment assets and liabilities to us. We completed the Separation on December 21, 2005, and
became a publicly traded company on the New York Stock Exchange trading under the symbol “LYV.”
On January 25, 2010, we merged with Ticketmaster and it became a wholly-owned subsidiary of Live Nation. Effective
with the merger Live Nation, Inc. changed its name to Live Nation Entertainment, Inc.
Our Industry
We operate in five main industries within the live entertainment business, including live music events, venue operations,
ticketing services, sponsorship and advertising sales and artist management and services.
The live music industry includes concert promotion and/or production of music events or tours. Typically, to initiate live
music events or tours, booking agents directly contract with artists to represent them for defined periods. Booking agents then
contact promoters, who will contract with them or directly with artists to arrange events. Booking agents generally receive
fixed or percentage fees from artists for their services. Promoters earn revenue primarily from the sale of tickets. Artists are
paid by the promoter under one of several different formulas, which may include fixed guarantees and/or a percentage of ticket
sales or event profits. In addition, promoters may also reimburse artists for certain costs of production, such as sound and
lights. Under guaranteed payment formulas, promoters assume the risks of unprofitable events. Promoters may renegotiate
lower guarantees or cancel events because of insufficient ticket sales in order to reduce their losses. Promoters can also reduce
the risk of losses by entering into global or national touring agreements with artists and including the right to offset lower
performing shows against higher performing shows on the tour in the determination of overall artist fees.
For music tours, two to nine months typically elapse between initially booking artists and the first performances.
Promoters, in conjunction with artists, managers and booking agents, set ticket prices and advertise events. Promoters market
events, sell tickets, rent or otherwise provide venues and arrange for local production services, such as stages and equipment.
Venue operators typically contract with promoters to rent their venues for specific events on specific dates and receive
fixed fees or percentages of ticket sales as rental income. In addition, venue operators provide services such as concessions,
parking, security, ushering and ticket-taking, and receive some or all of the revenue from concessions, merchandise, venue
sponsorships, parking and premium seating.
Ticketing services include the sale of tickets primarily through online channels but also through phone, mobile devices,
outlet and box office channels. Ticketing companies will contract with venues and/or promoters to sell tickets to events over a
period of time, generally three to five years. The ticketing company does not set ticket prices or seating charts for events as this
information is given to them by the venue and/or promoter in charge of the event. The ticketing company generally gets paid a
fixed fee per ticket sold or a percentage of the total ticket service charges. Venues will often also sell tickets through a local box
office at the venue using the ticketing company’s technology. The ticketing company will generally not earn a fee on these box
office tickets. The ticketing company receives the cash for the ticket sales and related service charges at the time the ticket is
sold and periodically remits these receipts to the venue and/or promoter after deducting their fee. As ticket sales increase,
related ticketing operating income generally increases as well.
Ticketing resale services refers to the sale of tickets by a holder who originally purchased the tickets from a venue,
promoter or other entity, or a ticketing services provider selling on behalf of a venue, promoter or other entity. Resale tickets
are also referred to as secondary tickets. Generally, the ticket reseller is paid a service charge when the ticket is resold and the
negotiated ticket value is paid to the holder.
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Artist managers primarily provide services to music recording artists to manage their careers. The artist manager
negotiates on behalf of the artist and is paid a fee, generally as a percentage of the artist’s earnings. Artist services creates and
sells merchandise for music artists at live performances, to retailers and directly to consumers via the internet, and also
connects artists to corporate clients for events, and generally are paid a percentage of the artist’s earnings.
The sponsorship and advertising industry within the live entertainment business involves the sale of international,
national, regional and local advertising campaigns and promotional programs to a variety of companies to advertise or promote
their brand or product. The advertising campaigns typically include venue naming rights, on-site venue signage, online banner
advertisements and exclusive partner rights in various categories such as beverage, hotel and telecommunications. These
promotional programs may include event pre-sales and on-site product activation.
Our Business
Our reportable segments are Concerts, Ticketing, Artist Nation and Sponsorship & Advertising.
Concerts. Our Concerts segment principally involves the global promotion of live music events in our owned or operated
venues and in rented third-party venues, the operation and management of music venues and the production of music festivals
across the world. During 2014, our Concerts business generated approximately $4.7 billion, or 68.8%, of our total revenue. We
promoted 22,800 live music events in 2014, including artists such as One Direction, Jay-Z & Beyonce, Justin Timberlake, Luke
Bryan, Jason Aldean and Lady Gaga and through festivals such as Electric Daisy Carnival, Rock Werchter, Reading and T in
the Park. While our Concerts segment operates year-round, we generally experience higher revenue during the second and third
quarters due to the seasonal nature of shows at our outdoor amphitheaters and festivals, which primarily occur from May
through September.
As a promoter, we earn revenue primarily from the sale of tickets and pay artists under one of several formulas, including
a fixed guaranteed amount and/or a percentage of ticket sales or event profits. For each event, we either use a venue we own or
operate, or rent a third-party venue. Revenue is generally impacted by the number of events, volume of ticket sales and ticket
prices. Event costs such as artist fees and production service expenses are included in direct operating expenses and are
typically substantial in relation to the revenue. As a result, significant increases or decreases in promotion revenue do not
typically result in comparable changes to operating income.
As a venue operator, we generate revenue primarily from the sale of concessions, parking, premium seating, rental
income, venue sponsorships and ticket rebates or service charges earned on tickets sold through our internal ticketing
operations or by third parties under ticketing agreements. In our amphitheaters, the sale of concessions is outsourced and we
receive a share of the net revenue from the concessionaire, which is recorded in revenue with no significant direct operating
expenses associated with it. Revenue generated from venue operations typically has a higher margin than promotion revenue
and therefore typically has a more direct relationship to changes in operating income.
As a festival producer, we typically book artists, secure festival sites, provide for third-party production services, sell
tickets and advertise events to attract fans. We also provide or arrange for third-parties to provide operational services as
needed such as concessions, merchandising and security. We earn revenue from the sale of tickets and typically pay artists a
fixed guaranteed amount. We also earn revenue from the sale of concessions, camping fees, festival sponsorships and ticket
rebates or service charges earned on tickets sold. For each event, we either use a festival site we own or rent a third-party
festival site. Revenue is generally impacted by the number of events, volume of ticket sales and ticket prices. Event costs such
as artist fees and production service expenses are included in direct operating expenses and are typically substantial in relation
to the revenue. Since the artist fees are typically fixed guarantees for these events, significant increases or decreases in festival
promotion revenue will generally result in comparable changes to operating income.
Ticketing. Our Ticketing segment is primarily an agency business that sells tickets for events on behalf of its clients and
retains a fixed fee or a percentage of the total convenience charge and order processing fee for its services. We sell tickets for
our events and also for third-party clients across multiple live event categories, providing ticketing services for leading arenas,
stadiums, amphitheaters, music clubs, concert promoters, professional sports franchises and leagues, college sports teams,
performing arts venues, museums and theaters. We sell tickets through websites, mobile apps, ticket outlets and telephone call
centers. During the year ended December 31, 2014, we sold 69%, 18%, 9% and 4% of primary tickets through these channels,
respectively. Our Ticketing segment also manages our online activities including enhancements to our websites and bundled
product offerings. During 2014, our Ticketing business generated approximately $1.6 billion, or 22.7%, of our total revenue,
which excludes the face value of tickets sold. Through all of our ticketing services, we sold 154 million tickets in 2014 on
which we were paid fees for our services. In addition, approximately 300 million tickets in total were sold using our
Ticketmaster systems, through season seat packages and our venue clients’ box offices, for which we do not receive a fee. Our
ticketing sales are impacted by fluctuations in the availability of events for sale to the public, which may vary depending upon
event scheduling by our clients.
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We sell tickets on behalf of our clients through our ticketing platforms across the world. In order to provide state-of-the-
art ticketing technology services, we are currently in the process of re-platforming portions of our Ticketmaster ticketing
system which we believe will result in an improved experience for our fans and better tools and information resources for our
venue clients. We started this re-platforming for our North America business in 2011 and currently expect to start using the new
technology at certain of our venue clients in 2015. In addition to providing improved technology products, we believe that once
this re-platforming is complete and rolled out to all our clients it will allow us to improve the efficiency of our ticketing
systems and processes and lead to cost reductions.
We generally enter into written agreements with individual clients to provide primary ticketing services for specified
multi-year periods, typically ranging from three to five years. Pursuant to these agreements, clients generally determine and
then tell us what tickets will be available for sale, when such tickets will go on sale to the public and what the ticket price will
be. Agreements with venue clients generally grant us the right to sell tickets for all events presented at the relevant venue for
which tickets are made available to the general public. Agreements with promoter clients generally grant us the right to sell
tickets for all events presented by a given promoter at any venue, unless that venue is already covered by an existing exclusive
agreement with our ticketing business or another ticketing service provider. Where we have exclusive contracts, clients may not
utilize, authorize or promote the services of third-party ticketing companies or technologies while under contract with us. While
we generally have the right to sell a substantial portion of our clients’ tickets, venue and promoter clients often sell and
distribute group sales and season tickets in-house. In addition, under many written agreements between promoters and our
clients, the client often allocates certain tickets for artist, promoter, agent and venue use and does not make those tickets
available for sale by us. We also generally allow clients to make a certain limited number of tickets available for sale through
fan clubs, or other similar arrangements, from which we generally derive no revenue unless selected by the club to facilitate the
sales. As a result, we do not sell all of our clients’ tickets and the amount of tickets that we sell varies from client to client and
from event to event, and varies as to any single client from year to year.
We currently offer ticket resale services, or secondary ticketing, through our integrated inventory platform, referred to as
TM+, TicketsNow (in the United States and Canada), our TicketExchange service (in the United States, Europe and Canada)
and GET ME IN! (in the United Kingdom). We enter into listing agreements with ticket resellers to post their ticket inventory
for sale at a purchase price equal to a ticket resale price determined by the ticket reseller plus an amount equal to a percentage
of the ticket resale price and a pre-determined service fee. We remit the ticket resale price to the ticket resellers and retain the
remainder of the purchase price as our fee. While we do not generally acquire tickets for sale on our own behalf, we may do so
from time to time on a limited basis. In addition to enabling premium primary ticket sales, the TicketExchange service allows
consumers to resell and purchase tickets online for certain events for our venue clients who elect to participate in the
TicketExchange service. Sellers and buyers each pay a fee that has been negotiated with the relevant client, a portion of which
may be shared with the client.
Artist Nation. Our Artist Nation segment primarily provides management services to music artists in exchange for a
commission on the earnings of these artists. Our Artist Nation segment also creates and sells merchandise for music artists at
live performances, to retailers and directly to consumers via the internet. During 2014, our Artist Nation business generated
approximately $389 million, or 5.7%, of our total revenue. Revenue earned from our Artist Nation segment is impacted to a
large degree by the touring schedules of the artists we represent and generally we experience higher revenue during the second
and third quarters as the period from May through September tends to be a popular time for touring events.
Sponsorship & Advertising. Our Sponsorship & Advertising segment employs a sales force that creates and maintains
relationships with sponsors, through a combination of strategic, international, national and local opportunities that allow
businesses to reach customers through our concert, venue, artist relationship and ticketing assets, including advertising on our
websites. We work with our corporate clients to help create marketing programs that drive their business goals and connect
their brands directly with fans and artists. We also develop, book and produce custom events or programs for our clients’
specific brands which are typically experienced exclusively by the clients’ consumers. These custom events can involve live
music events with talent and media, using both online and traditional outlets. During 2014, our Sponsorship & Advertising
business generated approximately $300 million, or 4.4%, of our total revenue. We typically experience higher revenue in the
second and third quarters as a large portion of sponsorships are typically associated with our outdoor venues and festivals
which are primarily used in or occur from May through September.
We believe that we have a unique opportunity to connect the music fan to corporate sponsors and therefore seek to
optimize this relationship through strategic sponsorship programs. We continue to also pursue the sale of national and local
sponsorships, both domestically and internationally, and placement of advertising, including signage, online advertising and
promotional programs. Many of our venues have venue naming rights sponsorship programs. We believe national and
international sponsorships allow us to maximize our network of venues and to arrange multi-venue branding opportunities for
advertisers. Our local and venue-focused sponsorships include venue signage, promotional programs, on-site activation,
hospitality and tickets, and are derived from a variety of companies across various industry categories.
6
Live Nation Venue Details
In the live entertainment industry, venue types generally consist of:
•
Stadiums—Stadiums are multi-purpose facilities, often housing local sports teams. Stadiums typically have 30,000 or
more seats. Although they are the largest venues available for live music, they are not specifically designed for live
music.
• Amphitheaters—Amphitheaters are generally outdoor venues with between 5,000 and 30,000 seats that are used
primarily in the summer season. We believe they are popular because they are designed specifically for concert events,
with premium seat packages and better lines of sight and acoustics.
• Arenas—Arenas are indoor venues that are used as multi-purpose facilities, often housing local sports teams. Arenas
typically have between 5,000 and 20,000 seats. Because they are indoors, they are able to offer amenities that other
similar-sized outdoor venues cannot, such as luxury suites and premium club memberships. As a result, we believe
they have become increasingly popular for higher-priced concerts aimed at audiences willing to pay for these
amenities.
•
Theaters—Theaters are indoor venues that are built primarily for music events but may include theatrical
performances. These venues typically have a capacity between 1,000 and 6,500. Because these venues have a smaller
capacity than an amphitheater, they do not offer as much economic upside on a per show basis. However, because
theaters can be used year-round, unlike most amphitheaters, they can generate annual profits similar to those of an
amphitheater. Theaters represent less risk to concert promoters because they have lower fixed costs associated with
hosting a concert and may provide a more appropriately-sized venue for developing artists and more artists in general.
• Clubs—Clubs are indoor venues that are built primarily for music events but may also include comedy clubs. These
venues typically have a capacity of less than 1,000 and often without full fixed seating. Because of their small size,
they do not offer as much economic upside, but they also represent less risk to a concert promoter because they have
lower fixed costs associated with hosting a concert and also may provide a more appropriately-sized venue for
developing artists. Clubs can also be used year-round and can therefore generate higher profits for the year, even
though per show profits are lower.
• House of Blues—House of Blues venues are indoor venues that offer customers an integrated live music and dining
experience. The live music halls are specially designed to provide optimum acoustics and typically can accommodate
between 1,000 to 2,000 guests. A full-service restaurant and bar is located adjacent to the live music hall. We believe
that the high quality of the food, service and unique atmosphere in our restaurants attracts customers to these venues
independently from an entertainment event and generates a significant amount of repeat business from local
customers.
• Festival Sites—Festival sites are outdoor locations used primarily in the summer season to stage large single-day or
multi-day concert events featuring several artists on multiple stages. Depending on the location, festival site capacities
can range from 10,000 to 135,000. We believe they are popular because of the value provided to the fan by packaging
several artists together for an event. While festival sites only host a few events each year, they can provide higher
operating income because we are able to generate income from many different services provided at the event and they
have lower costs associated with producing the event and maintaining the site.
7
The following table summarizes the number of venues by type that we owned, leased, operated, had exclusive booking
rights for or had an equity interest in as of December 31, 2014:
Venue Type
Capacity
Owned
Leased Operated
Exclusive
Booking
Rights
Equity
Interest Total
Stadium
Amphitheater
Arena
Theater
Club
House of Blues
Festival Site
Total venues in operation
More than 30,000
5,000 - 30,000
5,000 - 20,000
1,000 - 6,500
Less than 1,000
1,000 - 2,000
N/A
Venues currently under construction
Venues not currently in operation
Total venues in operation:
North America
International
Competition
—
8
1
7
3
2
3
24
—
1
17
7
—
27
3
25
13
10
—
78
3
3
70
8
—
6
3
5
—
—
—
14
1
—
7
7
1
11
3
15
11
—
—
41
—
—
41
—
—
—
—
1
—
—
—
1
—
—
1
—
1
52
10
53
27
12
3
158
4
4
136
22
Competition in the live entertainment industry is intense. We believe that we compete primarily on the basis of our ability
to deliver quality music events, sell tickets and provide enhanced fan and artist experiences. We believe that our primary
strengths include:
•
•
•
•
•
•
•
•
•
the quality of service delivered to our artists, fans, ticketing clients and corporate sponsors;
our track record in promoting and producing live music events and tours both domestically and internationally;
artist relationships;
our global footprint;
ticketing software and services;
our ecommerce site and associated database;
distribution platform (venues);
the scope and effectiveness in our expertise of marketing and sponsorship programs; and
our financial stability.
Although we believe that our products and services currently compete favorably with respect to such factors, we cannot
provide any assurance that we can maintain our competitive position against current and potential competitors, especially those
with significantly greater brand recognition, or financial, marketing, support, technical and other resources.
In the markets in which we promote music concerts, we face competition from both promoters and venue operators. We
believe that barriers to entry into the promotion services business are low and that certain local promoters are increasingly
expanding the geographic scope of their operations.
Some of our competitors in the live music industry are Anschutz Entertainment Group, or AEG, Another Planet
Entertainment, Jam Productions, Ltd., I.M.P. and SFX Entertainment, in addition to numerous smaller regional companies and
various casinos and venues in North America and Europe. AEG operates under a number of different names including AEG
Live, Concerts West, Goldenvoice and The Messina Group. Some of our competitors in the live music industry have a stronger
presence in certain markets, have access to other sports and entertainment venues and may have greater financial resources in
those markets, which may enable them to gain a greater competitive advantage in relation to us.
8
In markets where we own or operate a venue, we compete with other venues to serve artists likely to perform in that
general region. Consequently, touring artists have various alternatives to our venues when scheduling tours. Our main
competitors in venue management include SMG, AEG and The Nederlander Organization, in addition to numerous smaller
regional companies in North America and Europe. Some of our competitors in venue management have a greater number of
venues in certain markets and may have greater financial resources in those markets.
The ticketing services industry includes the sale of tickets primarily through online channels, but also through telephone,
mobile devices and ticket outlets. As online and mobile ticket purchases increase, related ticketing costs generally decrease,
which has made it easier for technology-based companies to offer primary ticketing services and standalone, automated
ticketing systems that enable venues to perform their own ticketing services or utilize self-ticketing systems. In the online
environment, we compete with other websites, online event sites and ticketing companies to provide event information, sell
tickets and provide other online services such as fan clubs and artist websites.
We experience competition from other national, regional and local primary ticketing service providers to secure new
venues and to reach fans for events. Resale, or secondary, ticketing services and the consolidation of the resale industry, which
historically had been more fragmented and consisted of a significant number of local resellers with limited inventory selling
through traditional storefronts, has created more aggressive buying of primary tickets whereby brokers are using automated
internet “bot” technology to attempt to buy the best tickets when they go on sale. The internet allows fans and other ticket
resellers to reach a vastly larger audience through the aggregation of inventory on online resale websites and marketplaces, and
provides consumers with more convenient access to tickets for a larger number and greater variety of events. We also face
significant and increasing competition from companies that sell self-ticketing systems, as well as from venues that choose to
integrate self-ticketing systems into their existing operations or acquire primary ticketing service providers. Our main
competitors include primary ticketing companies such as Tickets.com, AXS, Paciolan, Inc., Veritix and CTS Eventim AG,
online and event companies such as Eventbrite, eTix and Ticketfly and secondary ticketing companies such as StubHub.
In the artist management business, we compete with other artist managers both at larger talent representation companies,
such as Red Light Management, as well as smaller artist management companies and individuals. In the artist services business,
we compete with companies typically only involved in one or a few of the services we provide. Some of these competitors
include Bravado, Artist Arena and Global Merchandising Services.
Our main competitors at the local market level for sponsorships and advertising dollars include local sports teams, which
often offer state-of-the-art venues and strong local media packages, as well as festivals, theme parks and other local events. On
the national level, our competitors include the major sports leagues that sell sponsorships combined with significant national
media packages.
Government Regulations
We are subject to federal, state and local laws, both domestically and internationally, governing matters such as:
•
•
•
•
construction, renovation and operation of our venues;
licensing, permitting and zoning, including noise ordinances;
human health, safety and sanitation requirements;
the service of food and alcoholic beverages;
• working conditions, labor, minimum wage and hour, citizenship and employment laws;
•
•
•
•
•
•
compliance with the ADA and the DDA;
historic landmark rules;
compliance with United States Foreign Corrupt Practices Act, the United Kingdom Bribery Act 2010 and similar
regulations in other countries;
hazardous and non-hazardous waste and other environmental protection laws;
sales and other taxes and withholding of taxes;
privacy laws and protection of personally identifiable information;
• marketing activities via the telephone and online; and
•
primary ticketing and ticket resale services.
We believe that we are in material compliance with these laws. The regulations relating to our food service in our venues
are many and complex. A variety of regulations at various governmental levels relating to the handling, preparation and serving
9
of food, the cleanliness of food production facilities and the hygiene of food-handling personnel are enforced primarily at the
local public health department level.
We also must comply with applicable licensing laws, as well as state and local service laws, commonly called dram shop
statutes. Dram shop statutes generally prohibit serving alcoholic beverages to certain persons such as an individual who is
intoxicated or a minor. If we violate dram shop laws, we may be liable to third parties for the acts of the customer. Although we
generally hire outside vendors to provide these services at our larger operated venues and regularly sponsor training programs
designed to minimize the likelihood of such a situation, we cannot guarantee that intoxicated or minor customers will not be
served or that liability for their acts will not be imposed on us.
We are also required to comply with the ADA, the DDA and certain state statutes and local ordinances that, among other
things, require that places of public accommodation, including both existing and newly-constructed venues, be accessible to
customers with disabilities. The ADA and the DDA require that venues be constructed to permit persons with disabilities full
use of a live entertainment venue. The ADA and the DDA may also require that certain modifications be made to existing
venues to make them accessible to customers and employees who are disabled. In order to comply with the ADA, the DDA and
other similar ordinances, we may face substantial capital expenditures in the future.
We are required to comply with the laws of the countries in which we operate and also the United States Foreign Corrupt
Practices Act and the United Kingdom Bribery Act 2010 regarding anti-bribery regulations. These regulations make it illegal
for us to pay, promise to pay or receive money or anything of value to, or from, any government or foreign public official for
the purpose of directly or indirectly obtaining or retaining business. This ban on illegal payments and bribes also applies to
agents or intermediaries who use funds for purposes prohibited by the statute.
We are required to comply with federal, state and international laws regarding privacy and the storing, sharing, use,
disclosure and protection of personally identifiable information and user data. Specifically, personally identifiable information
is increasingly subject to legislation and regulations in numerous jurisdictions around the world, the intent of which is to
protect the privacy of personal information that is collected, processed and transmitted in or from the governing jurisdiction.
From time to time, governmental bodies have proposed legislation that could have an effect on our business. For
example, some legislatures have proposed laws in the past that would impose potential liability on us and other promoters and
producers of live music events for entertainment taxes and for incidents that occur at our events, particularly relating to drugs
and alcohol. More recently, some jurisdictions have proposed legislation that would restrict ticketing methods, mandate ticket
inventory disclosure and attack current policies governing season tickets for sports teams.
In addition, we and our venues are subject to extensive environmental laws and regulations relating to the use, storage,
disposal, emission and release of hazardous and non-hazardous substances, as well as zoning and noise level restrictions which
may affect, among other things, the hours of operations of and the type of events we can produce at our venues.
Intellectual Property
We create, own and distribute intellectual property worldwide. It is our practice to protect our trademarks, brands,
copyrights, patents and other original and acquired works, ancillary goods and services. Our trademarks include, among others,
the word marks “Live Nation,” “Ticketmaster,” “House of Blues” and “The Fillmore,” as well as the Live Nation, Ticketmaster,
House of Blues and The Fillmore logos. We have registered many of our trademarks in numerous foreign countries. We believe
that our trademarks and other proprietary rights have significant value and are important to our brand-building efforts and the
marketing of our services. We cannot predict, however, whether steps taken by us to protect our proprietary rights will be
adequate to prevent misappropriation of these rights.
Employees
As of December 31, 2014, we had approximately 7,900 full-time employees, including 5,400 in North America and 2,500
international employees, of which approximately 7,700 were employed in our operations departments and approximately 200
were employed in our corporate group.
Our staffing needs vary significantly throughout the year. Therefore, we also employ part-time and/or seasonal
employees, primarily for our live music venues. As of December 31, 2014, we employed approximately 6,100 seasonal and/or
part-time employees and during peak seasonal periods, particularly in the summer months, we employed as many as 15,500
seasonal employees in 2014. The stagehands at some of our venues and other employees are subject to collective bargaining
agreements. Our union agreements typically have a term of three years and thus regularly expire and require negotiation in the
course of our business. We believe that we enjoy good relations with our employees and other unionized labor involved in our
events, and there have been no significant work stoppages in the past three years. Upon the expiration of any of our collective
bargaining agreements, however, we may be unable to renegotiate on terms favorable to us, and our business operations at one
or more of our facilities may be interrupted as a result of labor disputes or difficulties and delays in the process of renegotiating
our collective bargaining agreements. In addition, our business operations at one or more of our facilities may also be
10
interrupted as a result of labor disputes by outside unions attempting to unionize a venue even though we do not have unionized
labor at that venue currently. A work stoppage at one or more of our owned or operated venues or at our promoted events could
have a material adverse effect on our business, results of operations and financial condition. We cannot predict the effect that a
potential work stoppage will have on our results of operations.
Executive Officers
Set forth below are the names, ages and current positions of our executive officers and other significant employees as of
February 20, 2015.
Name
Michael Rapino
Ron Bension
Joe Berchtold
Mark Campana
Brian Capo
Arthur Fogel
John Hopmans
John Reid
Alan Ridgeway
Bob Roux
Michael Rowles
Jared Smith
Russell Wallach
Kathy Willard
Mark Yovich
David Zedeck
Age
49
60
Position
President, Chief Executive Officer and Director
President–HOB Entertainment
50 Chief Operating Officer
57 Co-President–North America Concerts
48 Chief Accounting Officer
61 Chairman–Global Music and President–Global Touring
56
53
48
Executive Vice President–Mergers and Acquisitions and Strategic Finance
President–Live Nation Europe Concerts
President–International and Emerging Markets
57 Co-President–North America Concerts
49 General Counsel and Secretary
37
49
President–Ticketmaster North America
President–North America Sponsorships
48 Chief Financial Officer
40
50
President–Ticketmaster International
President–Global Talent and Artist Development
Michael Rapino is our President and Chief Executive Officer and has served in this capacity since August 2005. He has
also served on our board of directors since December 2005. Mr. Rapino has worked for us or our predecessors since 1999.
Ron Bension is President of our HOB Entertainment division and has served in this capacity since November 2010. Until
November 2010, Mr. Bension served as Chief Executive Officer for TicketsNow, a division of Ticketmaster, since joining us in
January 2010.
Joe Berchtold is our Chief Operating Officer and has served in this capacity since joining us in April 2011. Prior to that,
Mr. Berchtold was at Technicolor, where he was most recently President of Technicolor Creative Services, after joining them in
2003.
Mark Campana is Co-President of our North America Concerts division and has served in this capacity since October
2010. Prior to that, Mr. Campana served as President of our Midwest Region in North America Concerts. Mr. Campana has
worked for us or our predecessors since 1980.
Brian Capo is our Chief Accounting Officer and has served in this capacity since joining us in December 2007.
Arthur Fogel is the Chairman of our Global Music group and President of our Global Touring division and has served in
this capacity since 2005. Mr. Fogel has worked for us or our predecessors since 1999.
John Hopmans is our Executive Vice President of Mergers and Acquisitions and Strategic Finance and has served in this
capacity since joining us in April 2008.
John Reid is President of our Europe Concerts division and has served in that capacity since joining us in January 2012.
Prior to that, Mr. Reid was the Chief Executive Officer of Warner Music Europe and International Marketing from November
2010 to December 2011. From February 2007 to October 2010, Mr. Reid was the Vice Chairman of Warner Music International
and President of Warner Music Continental Europe.
Alan Ridgeway is President of our International and Emerging Markets division and has served in this capacity since
November 2011. Prior to that, Mr. Ridgeway was Chief Executive Officer of our International divisions from September 2007
11
to October 2011. From September 2005 to August 2007, Mr. Ridgeway was our Chief Financial Officer. Mr. Ridgeway has
worked for us or our predecessors since 2002.
Bob Roux is Co-President of our North America Concerts division and has served in this capacity since October 2010.
Prior to that, Mr. Roux served as President of our Southwest Region in North America Concerts. Mr. Roux has worked for us or
our predecessors since 1990.
Michael Rowles is our General Counsel and has served in this capacity since joining us in March 2006 and as our
Secretary since May 2007.
Jared Smith is President of Ticketmaster’s North America division and has served in this capacity since May 2013. Prior
to that, Mr. Smith served as Ticketmaster’s Chief Operating Officer from May 2010 to April 2013 and has worked for us or our
predecessors since 2003.
Russell Wallach is President of our North America Sponsorships division and has served in this capacity since July 2006.
Mr. Wallach has worked for us or our predecessors since 1996.
Kathy Willard is our Chief Financial Officer and has served in this capacity since September 2007. From September 2005
to August 2007, Ms. Willard was our Chief Accounting Officer. Ms. Willard has worked for us or our predecessors since 1998.
Mark Yovich is President of Ticketmaster’s International division and has served in this capacity since November 2011.
Prior to that, Mr. Yovich served as Executive Vice President and General Manager of our International eCommerce division
from January 2010 to October 2011. Mr. Yovich has worked for us or our predecessors since 2000.
David Zedeck is President of Global Talent and Artist Development for our Concerts segment and has served in this
capacity since joining us in July 2013. Prior to that, Mr. Zedeck was a music agent, most recently spending eight years at
Creative Artists Agency.
Available Information
We are required to file annual, quarterly and current reports, proxy statements and other information with the SEC. You
may read and copy any materials we have filed with the SEC at the SEC’s Public Reference Room at 100 F Street, NE,
Washington, DC 20549. You may obtain information on the operation of the Public Reference Room by calling the SEC at
1-800-SEC-0330. Our filings with the SEC are also available to the public through the SEC’s website at www.sec.gov.
You can find more information about us online at our investor relations website located at
investors.livenationentertainment.com. Our Annual Report on Form 10-K, our Quarterly Reports on Form 10-Q, our Current
Reports on Form 8-K and any amendments to those reports are available free of charge on our website as soon as reasonably
practicable after we electronically file such material with the SEC. The information posted on or accessible through our website
is not incorporated into this annual report on Form 10-K.
ITEM 1A. RISK FACTORS
You should carefully consider each of the following risks and all of the other information set forth in this Annual Report.
The following risks relate principally to our business and operations, our leverage and our common stock. If any of the risks
and uncertainties develop into actual events, this could have a material adverse effect on our business, financial condition or
results of operations. In that case, the trading price of our common stock could decline.
12
Risks Relating to Our Business and Operations
Our business is highly sensitive to public tastes and is dependent on our ability to secure popular artists and other live
music events, and we and our ticketing clients may be unable to anticipate or respond to changes in consumer
preferences, which may result in decreased demand for our services.
Our business is highly sensitive to rapidly changing public tastes and is dependent on the availability of popular artists
and events. Our live entertainment business depends in part on our ability to anticipate the tastes of consumers and to offer
events that appeal to them. Since we rely on unrelated parties to create and perform at live music events, any unwillingness to
tour or lack of availability of popular artists could limit our ability to generate revenue. In particular, there are a limited number
of artists that can headline a major North American or global tour or who can sell out larger venues, including many of our
amphitheaters. If those artists do not choose to tour, or if we are unable to secure the rights to their future tours, then our
business would be adversely affected. Our ticketing business relies on third parties to create and perform live entertainment,
sporting and leisure events and to price tickets to such events. Accordingly, our ticketing business’ success depends, in part,
upon the ability of these third parties to correctly anticipate public demand for particular events, as well as the availability of
popular artists, entertainers and teams. Our artist management business could be adversely affected if the artists it represents do
not tour or perform as frequently as anticipated, or if such tours or performances are not as widely attended by fans as
anticipated due to changing tastes, general economic conditions or otherwise.
In addition, our live entertainment business typically books our live music tours two to nine months in advance of the
beginning of the tour and often agrees to pay an artist a fixed guaranteed amount prior to our receiving any revenue. Therefore,
if the public is not receptive to the tour, or we or an artist cancel the tour, we may incur a loss for the tour depending on the
amount of the fixed guarantee or incurred costs relative to any revenue earned, as well as revenue we could have earned at
booked venues. We have cancellation insurance policies in place to cover a portion of our losses if an artist cancels a tour but
such policies may not be sufficient and are subject to deductibles. Furthermore, consumer preferences change from time to
time, and our failure to anticipate, identify or react to these changes could result in reduced demand for our services, which
would adversely affect our business, financial condition and results of operations.
Our business depends on relationships between key promoters, executives, agents, managers, artists and clients and any
adverse changes in these relationships could adversely affect our business, financial condition and results of operations.
The live music business is uniquely dependent upon personal relationships, as promoters and executives within live
music companies such as ours leverage their existing network of relationships with artists, agents and managers in order to
secure the rights to the live music tours and events which are critical to our success. Due to the importance of those industry
contacts to our business, the loss of any of our promoters, officers or other key personnel could adversely affect our business.
Similarly, the artist management business is dependent upon the highly personalized relationship between a manager and an
artist, and the loss of a manager may also result in a loss in the artist represented by the manager, which could adversely affect
our business. Although we have entered into long-term agreements with many of those individuals described above to protect
our interests in those relationships, we can give no assurance that all or any of these key employees or managers will remain
with us or will retain their associations with key business contacts, including musical artists.
The success of our ticketing business depends, in significant part, on our ability to maintain and renew relationships with
existing clients and to establish new client relationships. We anticipate that, for the foreseeable future, the substantial majority
of our Ticketing segment revenue will be derived from both online and direct sales of tickets. We also expect that revenue from
primary ticketing services, which consist primarily of per ticket convenience charges and per order “order processing” fees,
will continue to comprise the substantial majority of our Ticketing segment revenue. We cannot provide assurances that we will
be able to maintain existing client contracts, or enter into or maintain new client contracts, on acceptable terms, if at all, and the
failure to do so could have a material adverse effect on our business, financial condition and results of operations.
Another important component of our success is our ability to maintain existing and to build new relationships with third-
party distribution channels, advertisers, sponsors and service providers. Any adverse change in these relationships, including
the inability of these parties to fulfill their obligations to our businesses for any reason, could adversely affect our business,
financial condition and results of operations.
We face intense competition in the live music, ticketing and artist management industries, and we may not be able to
maintain or increase our current revenue, which could adversely affect our business, financial condition and results of
operations.
Our businesses are in highly competitive industries, and we may not be able to maintain or increase our current revenue
due to such competition. The live music industry competes with other forms of entertainment for consumers’ discretionary
spending and within this industry we compete with other venues to book artists, and, in the markets in which we promote music
concerts, we face competition from other promoters and venue operators. Our competitors compete with us for key employees
who have relationships with popular music artists and that have a history of being able to book such artists for concerts and
13
tours. These competitors may engage in more extensive development efforts, undertake more far-reaching marketing
campaigns, adopt more aggressive pricing policies and make more attractive offers to existing and potential artists. Our
competitors may develop services, advertising options or music venues that are equal or superior to those we provide or that
achieve greater market acceptance and brand recognition than we achieve. It is possible that new competitors may emerge and
rapidly acquire significant market share.
Our ticketing business faces significant competition from other national, regional and local primary ticketing service
providers to secure new and retain existing clients on a continuous basis. Additionally, we face significant and increasing
challenges from companies that sell self-ticketing systems and from clients who choose to self-ticket, through the integration of
such systems into their existing operations or the acquisition of primary ticket services providers or by increasing sales through
venue box offices and season, subscription or group sales. We also face competition in the resale of tickets from online auction
websites and resale marketplaces and from other ticket resellers with online distribution capabilities. The advent of new
technology, particularly as it relates to online ticketing, has amplified this competition. The intense competition that we face in
the ticketing industry could cause the volume of our ticketing services business to decline. As we are also a content provider
and venue operator we may face direct competition with our prospective or current primary ticketing clients, who primarily
include live event content providers. This direct competition with our prospective or current primary ticketing clients could
result in a decline in the number of ticketing clients we have and a decline in the volume of our ticketing business, which could
adversely affect our business, financial condition and results of operations.
In the secondary ticket sales market, we have restrictions on our business that are not faced by our competitors, which
restrictions include those that are self-imposed, imposed as a result of agreements entered into with the FTC and the Attorneys
General of several individual states, and statutory. These restrictions include: restrictions on linking from our page on the
www.ticketmaster.com website that informs consumers that no tickets were found in response to their ticket request to our resale
ticketing options without first obtaining approval from the State of New Jersey as to any changes to our current linking
practices; a restriction on using or allowing our affiliates to use domain names that, among other things, contain the unique
names of venues, sports teams or performers, or contain names that are substantially similar to or are misspelled versions of
same; a requirement to clearly and conspicuously disclose on any resale website owned by us or on any primary ticketing
website where a link or redirect to such a resale website is posted that it is a resale website and ticket prices often exceed the
ticket’s original price; and a requirement to make certain clear and conspicuous disclosures and in certain instances to create
separate listings when a ticket being offered for resale is not “in-hand” as well as a requirement to monitor and enforce the
compliance of third parties offering tickets on our websites with such disclosure requirements. Our competitors in the
secondary ticket sales market are not, to our knowledge, bound by similar restrictions. As a result, our ability to effectively
compete in the secondary ticket sales market may be adversely affected, which could in turn adversely affect our business,
financial condition and results of operations.
The artist management industry is also a highly competitive industry, with numerous other artist management companies
and individual managers in the United States alone. We compete with these companies and individuals to discover new and
emerging artists and to represent established artists. In addition, certain of our arrangements with clients of our artist
management business are terminable at will by either party, leading to competition to retain those artists as clients. Competition
is intense and may contribute to a decline in the volume of our artist management business, which could adversely affect our
business, financial condition and results of operations.
In connection with our merger with Ticketmaster, we became subject to both a court-imposed final judgment in the
United States and a consent agreement with Canadian authorities, pursuant to which we have agreed to abide by certain
behavioral remedies that prevent us from engaging in retaliatory business tactics or improper tying arrangements. In addition,
we are restricted from engaging in certain business activities that would be lawful for us to undertake absent the final judgment
and the consent agreement. Our inability to undertake these business strategies could disadvantage us when we compete against
firms that are not restricted by any such order, and we therefore face certain unquantifiable business risks as a result of
compliance.
Other variables that could adversely affect our financial performance by, among other things, leading to decreases in
overall revenue, the number of sponsors, event attendance, ticket prices and fees or profit margins include:
•
•
•
an increased level of competition for advertising dollars, which may lead to lower sponsorships as we attempt to retain
advertisers or which may cause us to lose advertisers to our competitors offering better programs that we are unable or
unwilling to match;
unfavorable fluctuations in operating costs, including increased guarantees to artists, which we may be unwilling or
unable to pass through to our customers via ticket prices;
inability to fund the significant up-front cash requirements associated with our touring and ticketing businesses due to
insufficient cash on hand or capacity under our senior secured credit facility, which could result in the loss of key tours to
competitors or the inability to secure and retain ticketing clients;
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•
•
•
•
•
competitors’ offerings that may include more favorable terms than we do in order to obtain agreements for new venues or
ticketing arrangements or to obtain events for the venues they operate;
technological changes and innovations that we are unable to adopt or are late in adopting that offer more attractive
entertainment alternatives than we or other live entertainment providers currently offer, which may lead to a reduction in
attendance at live events, a loss of ticket sales or to lower ticket fees;
other entertainment options available to our audiences that we do not offer;
general economic conditions which could cause our consumers to reduce discretionary spending; and
unfavorable changes in labor conditions which may require us to spend more to retain and attract key employees.
Our operations are seasonal and our results of operations vary from quarter to quarter and year over year, so our
financial performance in certain financial quarters or years may not be indicative of, or comparable to, our financial
performance in subsequent financial quarters or years.
We believe our financial results and cash needs will vary greatly from quarter to quarter and year to year depending on,
among other things, the timing of tours, tour cancellations, event ticket on-sales, capital expenditures, seasonal and other
fluctuations in our operating results, the timing of guaranteed payments and receipt of ticket sales and fees, financing activities,
acquisitions and investments and receivables management. Because our results may vary significantly from quarter to quarter
and year to year, our financial results for one quarter or year cannot necessarily be compared to another quarter or year and may
not be indicative of our future financial performance in subsequent quarters or years. Typically, we experience our lowest
financial performance in the first and fourth quarters of the calendar year as our outdoor venues are primarily used, and our
festivals primarily occur, during May through September. In addition, the timing of tours of top grossing acts can impact
comparability of quarterly results year over year and potentially annual results. The timing of event on-sales by our ticketing
clients can also impact this comparability.
The following table sets forth our operating income (loss) for the last eight fiscal quarters:
Fiscal Quarter Ended
March 31, 2013
June 30, 2013
September 30, 2013
December 31, 2013
March 31, 2014
June 30, 2014
September 30, 2014
December 31, 2014
Operating
income (loss)
(in thousands)
$
$
$
$
$
$
$
$
(33,189)
97,806
126,037
(50,994)
(12,308)
55,686
150,604
(186,818)
Our success depends, in significant part, on entertainment, sporting and leisure events and economic and other factors
adversely affecting such events could have a material adverse effect on our business, financial condition and results of
operations.
A decline in attendance at or reduction in the number of live entertainment, sporting and leisure events may have an
adverse effect on our revenue and operating income. In addition, during periods of economic slowdown and recession, many
consumers have historically reduced their discretionary spending and advertisers have reduced their advertising expenditures.
The impact of economic slowdowns on our business is difficult to predict, but they may result in reductions in ticket sales,
sponsorship opportunities and our ability to generate revenue. The risks associated with our businesses may become more acute
in periods of a slowing economy or recession, which may be accompanied by a decrease in attendance at live entertainment,
sporting and leisure events. Many of the factors affecting the number and availability of live entertainment, sporting and leisure
events are beyond our control. For instance, certain sports leagues have recently had labor disputes leading to threatened or
actual player lockouts. Any such lockouts that result in shortened or canceled seasons would adversely impact our business to
the extent that we provide ticketing services to the affected teams both due to the loss of games and ticketing opportunities as
well as the possibility of decreased attendance following such a lockout due to adverse fan reaction.
Our business depends on discretionary consumer and corporate spending. Many factors related to corporate spending and
discretionary consumer spending, including economic conditions affecting disposable consumer income such as employment,
fuel prices, interest and tax rates and inflation can significantly impact our operating results. Business conditions, as well as
15
various industry conditions, including corporate marketing and promotional spending and interest levels, can also significantly
impact our operating results. These factors can affect attendance at our events, premium seat sales, sponsorship, advertising and
hospitality spending, concession and merchandise sales, as well as the financial results of sponsors of our venues, events and
the industry. Negative factors such as challenging economic conditions, public concerns over terrorism and security incidents,
particularly when combined, can impact corporate and consumer spending, and one negative factor can impact our results more
than another. There can be no assurance that consumer and corporate spending will not be adversely impacted by current
economic conditions, or by any future deterioration in economic conditions, thereby possibly impacting our operating results
and growth.
We operate in international markets which subject us to risks associated with the legislative, judicial, accounting,
regulatory, political and economic risks and conditions specific to such markets, which could adversely affect our
business, financial condition and results of operations.
We provide services in various jurisdictions abroad through a number of brands and businesses that we own and operate,
as well as through joint ventures, and we expect to continue to expand our international presence. We face, and expect to
continue to face, additional risks in the case of our existing and future international operations, including:
•
political instability, adverse changes in diplomatic relations and unfavorable economic conditions in the markets in
which we currently have international operations or into which we may expand;
• more restrictive or otherwise unfavorable government regulation of the live entertainment and ticketing industries,
which could result in increased compliance costs and/or otherwise restrict the manner in which we provide services
and the amount of related fees charged for such services;
•
•
•
•
•
•
•
•
limitations on the enforcement of intellectual property rights;
limitations on the ability of foreign subsidiaries to repatriate profits or otherwise remit earnings;
adverse tax consequences;
expropriations of property and risks of renegotiation or modification of existing agreements with governmental
authorities;
diminished ability to legally enforce our contractual rights in foreign countries;
limitations on technology infrastructure, which could limit our ability to migrate international operations to a
common ticketing system;
lower levels of internet usage, credit card usage and consumer spending in comparison to those in the United
States; and
difficulties in managing operations and adapting to consumer desires due to distance, language and cultural
differences, including issues associated with (i) business practices and customs that are common in certain foreign
countries but might be prohibited by United States law and our internal policies and procedures, and
(ii) management and operational systems and infrastructures, including internal financial control and reporting
systems and functions, staffing and managing of foreign operations, which we might not be able to do effectively or
cost-efficiently.
Our ability to expand our international operations into new jurisdictions, or further into existing jurisdictions will depend,
in significant part, on our ability to identify potential acquisition candidates, joint venture or other partners, and enter into
arrangements with these parties on favorable terms, as well as our ability to make continued investments to maintain and grow
existing international operations. If the revenue generated by international operations is insufficient to offset expenses incurred
in connection with the maintenance and growth of these operations, our business, financial condition and results of operations
could be materially and adversely affected. In addition, in an effort to make international operations in one or more given
jurisdictions profitable over the long term, significant additional investments that are not profitable over the short term could be
required over a prolonged period.
In foreign countries in which we operate, a risk exists that our employees, contractors or agents could, in contravention of
our policies, engage in business practices prohibited by applicable United States laws and regulations, such as the United States
Foreign Corrupt Practices Act, as well as the laws and regulations of other countries prohibiting corrupt payments to
government officials such as the United Kingdom Bribery Act 2010. We maintain policies prohibiting such business practices
and have in place global anti-corruption compliance programs designed to ensure compliance with these laws and regulations.
Nevertheless, the risk remains that one or more of our employees, contractors or agents, including those based in or from
countries where practices that violate such United States laws and regulations or the laws and regulations of other countries
may be customary, will engage in business practices that are prohibited by our policies, circumvent our compliance programs
and, by doing so, violate such laws and regulations. Any such violations, even if prohibited by our internal policies, could result
16
in fines, criminal sanctions against us and/or our employees, prohibitions on the conduct of our business and damage to our
reputation, which could adversely affect our business, financial condition and results of operations.
Exchange rates may cause fluctuations in our results of operations that are not related to our operations.
Because we own assets overseas and derive revenue from our international operations, we may incur currency translation
losses or gains due to changes in the values of foreign currencies relative to the United States Dollar. We cannot predict the
effect of exchange rate fluctuations upon future operating results. For the year ended December 31, 2014, our international
operations accounted for approximately 34% of our revenue. Although we cannot predict the future relationship between the
United States Dollar and the currencies used by our international businesses, principally the British Pound, Euro, Australian
Dollar and Canadian Dollar, we experienced foreign exchange rate operating losses of $6.2 million, $0.4 million and $5.3
million for the years ended 2014, 2013 and 2012, respectively, which had a negative impact on our operating income (loss). See
Item 7A—Quantitative and Qualitative Disclosures about Market Risk.
We may enter into future acquisitions and take certain actions in connection with such transactions, including actions
taken to comply with antitrust, competition and other regulations, that could affect our business and results of
operations; if we are unsuccessful in our future acquisition endeavors, our business could be adversely impacted.
Our future growth rate depends in part on our selective acquisition of additional businesses. A significant portion of our
growth has been attributable to acquisitions. We may be unable to identify other suitable targets for further acquisition or make
further acquisitions at favorable prices. If we identify a suitable acquisition candidate, our ability to successfully complete the
acquisition would depend on a variety of factors, and may include our ability to obtain financing on acceptable terms and
requisite government approvals. In addition, the credit agreement for our senior secured credit facility restricts our ability to
make certain acquisitions. In connection with future acquisitions, we could take certain actions that could adversely affect our
business, including:
•
•
•
•
•
•
using a significant portion of our available cash;
issuing equity securities, which would dilute current stockholders’ percentage ownership;
incurring substantial debt;
incurring or assuming contingent liabilities, known or unknown;
incurring amortization expenses related to intangibles; and
incurring large accounting write-offs or impairments.
In addition, acquisitions involve inherent risks which, if realized, could adversely affect our business and results of
operations, including those associated with:
•
integrating the operations, financial reporting, technologies and personnel of acquired companies;
• managing geographically dispersed operations;
•
•
•
the diversion of management’s attention from other business concerns;
the inherent risks in entering markets or lines of business in which we have either limited or no direct experience;
and
the potential loss of key employees, customers and strategic partners of acquired companies.
We are also subject to laws and regulations, including those relating to antitrust at the state, federal and international
levels, that could significantly affect our ability to expand our business through acquisitions. For example, the FTC and the
Antitrust Division of the United States Department of Justice with respect to our domestic acquisitions, and the European
Commission (the antitrust regulator of the European Union) and the United Kingdom Competition Commission with respect to
our European acquisitions, have the authority to challenge our acquisitions on antitrust grounds before or after the acquisitions
are completed. Our failure or inability to complete future acquisitions as a result of such laws and regulations, or the imposition
of unfavorable terms as a condition to the completion of an acquisition, could have a material adverse effect on our business
and results of operations.
Failure to successfully complete the re-platforming of our Ticketmaster ticketing system in a timely or cost-effective
manner could adversely affect our business, financial condition and results of operations.
We are currently in the process of re-platforming our Ticketmaster ticketing system and migrating our international
brands and businesses to a common ticketing platform in an attempt to provide consistent and state-of-the-art services across
our businesses and to reduce the cost and expense of maintaining multiple systems, which we may not be able to complete in a
timely or cost-effective manner. As with any significant capital project, there are numerous factors, many of which are beyond
17
our control, which could influence the ultimate costs and timing of the re-platforming project. Delays or difficulties in making
these changes to our ticketing systems, as well as any new or enhanced systems, may limit our ability to achieve the desired
results in a timely manner. Similarly, there can be no assurance that the project, once completed, will yield the anticipated
benefits. Notwithstanding the current re-platforming project, we may in the future be unable to devote financial resources to
new technologies and systems that may become necessary or desirable. If any of the foregoing risks related to the re-
platforming of our Ticketmaster ticketing system were to occur, our business, financial condition and results of operations
could be adversely impacted.
There is the risk of personal injuries and accidents in connection with our live music events, which could subject us to
personal injury or other claims and increase our expenses, as well as reduce attendance at our live music events, causing
a decrease in our revenue.
There are inherent risks involved with producing live music events. As a result, personal injuries and accidents have, and
may, occur from time to time, which could subject us to claims and liabilities for personal injuries. Incidents in connection with
our live music events at any of our venues or festival sites that we own or rent could also result in claims, reducing operating
income or reducing attendance at our events, which could cause a decrease in our revenue. We have been subject to wrongful
death claims and are currently subject to other litigation. While we maintain insurance policies that provide coverage within
limits that are sufficient, in management’s judgment, to protect us from material financial loss for personal injuries sustained by
persons at our venues or events or accidents in the ordinary course of business, there can be no assurance that such insurance
will be adequate at all times and in all circumstances.
The success of our ticketing operations depends, in part, on the integrity of our systems and infrastructures. System
interruption, the lack of integration and redundancy in these systems and infrastructures may have an adverse impact on
our business, financial condition and results of operations.
The success of our ticketing operations depends, in part, on our ability to maintain the integrity of our systems and
infrastructures, including websites, information technology systems, call centers and distribution and fulfillment facilities.
System interruption and the lack of integration and redundancy in our information systems and infrastructures of our ticketing
operations may adversely affect our ability to operate websites, process and fulfill transactions, respond to customer inquiries
and generally maintain cost-efficient operations. We may experience occasional system interruptions that make some or all
systems or data unavailable or prevent our businesses from efficiently providing services or fulfilling orders. We lack
documentation regarding certain components of our key ticketing software and systems operations and rely on certain key
technology personnel to maintain such software and systems. The loss of some or all of such personnel could require us to
expend additional resources to continue to maintain such software and systems and could subject us to frequent systems
interruptions.
We also rely on affiliate and third-party computer systems, broadband and other communications systems and service
providers in connection with the provision of services, as well as to facilitate, process and fulfill transactions. Any
interruptions, outages or delays in their systems, infrastructures, or businesses, or deterioration in the performance of these
systems and infrastructures, could impair our ability to provide services, fulfill orders and/or process transactions. Fire, flood,
power loss, telecommunications failure, hurricanes, tornadoes, earthquakes, acts of war or terrorism, other acts of God and
similar events or disruptions may damage or interrupt computer, broadband or other communications systems and
infrastructures at any time. Any of these events could cause system interruption, delays and loss of critical data, and could
prevent us from providing services, fulfilling orders and/or processing transactions. While we have backup systems for certain
aspects of our operations, disaster recovery planning by its nature cannot be sufficient for all eventualities. In addition, we may
not have adequate insurance coverage to compensate for losses from a major interruption. If any of these adverse events were
to occur, it could adversely affect our business, financial condition and results of operations.
Data loss or other breaches of our network security could materially harm our business and results of operations, and
the processing, storage, use and disclosure of personal data could give rise to liabilities as a result of governmental
regulation, conflicting legal requirements or differing views of personal privacy rights.
Due to the internet-based nature of a significant portion of our ticketing and other businesses, we process, store, use and
disclose large amounts of data, including personal information, for our customers. Any penetration of network security or other
misappropriation or misuse of personal consumer information and data, including credit card information could cause
interruptions in our operations and subject us to increased costs, litigation and other liabilities. Network security issues could
lead to claims against us for others’ misuse of personal information, such as for credit card fraud or identity theft, which could
result in litigation and financial liabilities, as well as administrative action from governmental authorities. In addition, security
breaches or the inability to protect our data could lead to increased incidents of ticketing fraud and counterfeit tickets. Security
breaches could also significantly damage our reputation with consumers, ticketing clients and other third parties and impose
significant costs related to remediation efforts, such as credit or identity theft monitoring or repair costs for impacted
customers. Although we have developed systems and processes that are designed to protect customer information and prevent
18
data loss and other security breaches, such measures cannot provide absolute security or certainty. It is possible that advances in
computer capabilities, new discoveries, undetected fraud, inadvertent violations of company policies or procedures or other
developments could result in a compromise of information or a breach of the technology and security processes that are used to
protect consumer transaction data. Recently, large retailers and website operators have been the victims of targeted security
breaches resulting in the disclosure and/or misappropriation of large amounts of customer data, including credit card
information. We have expended significant capital and other resources to protect against and remedy any such potential security
breaches and their consequences, including the establishment of a dedicated cybersecurity organization within our larger
technology environment, and will be required to continue to do so in the future. We also face risks associated with security
breaches affecting third parties with which we are affiliated or with which we otherwise conduct business. Consumers are
generally concerned with security and privacy of the internet, and any publicized security problems affecting our businesses
and/or those of third parties may discourage consumers from doing business with us, which could have an adverse effect on our
business, financial condition and results of operations.
In addition to the above concerns related to network and data security, the sharing, use, disclosure and protection of
personally identifiable information and other user data are governed by federal, state and international laws. Specifically,
personally identifiable information is increasingly subject to legislation and regulations in numerous jurisdictions around the
world, the intent of which is to protect the privacy of personal information that is collected, processed and transmitted in or
from the governing jurisdiction. We could be adversely affected if legislation or regulations are expanded to require changes in
business practices or privacy policies, or if governing jurisdictions interpret or implement their legislation or regulations in
ways that negatively affect our business, financial condition and results of operations. As we expand our operations into new
jurisdictions worldwide, the costs associated with compliance with these regulations increases. It is possible that government or
industry regulation in these markets will require us to deviate from our standard deployment mechanism(s), which will increase
operational cost and risk.
We may also become exposed to potential liabilities as a result of differing views on the privacy of the consumer and
other user data collected by us. Our failure or the failure of the various third-party vendors and service providers with which we
do business to comply with applicable privacy policies or federal, state or similar international laws and regulations or any
compromise of security that results in the unauthorized release of personally identifiable information or other user data could
damage our reputation, discourage potential users from trying our products and services and/or result in fines and/or
proceedings by governmental agencies and/or consumers, one or all of which could adversely affect our business, financial
condition and results of operations.
Costs associated with, and our ability to obtain, adequate insurance could adversely affect our profitability and financial
condition.
Heightened concerns and challenges regarding property, casualty, liability, business interruption and other insurance
coverage have resulted from terrorist and related security incidents along with varying weather-related conditions and incidents.
As a result, we may experience increased difficulty obtaining high policy limits of coverage at a reasonable cost, including
coverage for acts of terrorism and weather-related property damage. We have a material investment in property and equipment
at each of our venues, which are generally located near major cities and which hold events typically attended by a large number
of fans. We also have a significant investment in technology including our ticketing systems. At December 31, 2014, we had
property and equipment with a net book value of $695.3 million.
These operational, geographical and situational factors, among others, may result in significant increases in insurance
premium costs and difficulties obtaining sufficiently high policy limits with premiums and deductibles that we believe to be
reasonable. We cannot assure you that future increases in insurance costs and difficulties obtaining high policy limits will not
adversely impact our profitability, thereby possibly impacting our operating results and growth.
In addition, we enter into various agreements with artists from time to time, including long-term artist rights
arrangements. The profitability of those arrangements depends upon those artists’ willingness and ability to continue
performing, and we may not be able to obtain sufficient insurance coverage at a reasonable cost to adequately protect us against
the death, disability or other failure of such artists to continue engaging in revenue-generating activities under those
agreements.
We cannot guarantee that our insurance policy coverage limits, including insurance coverage for property, casualty,
liability, artists and business interruption losses and acts of terrorism, would be adequate under the circumstances should one or
multiple events occur at or near any of our venues, or that our insurers would have adequate financial resources to sufficiently
or fully pay our related claims or damages. We cannot guarantee that adequate coverage limits will be available, offered at a
reasonable cost, or offered by insurers with sufficient financial soundness. The occurrence of such an incident or incidents
affecting any one or more of our venues could have a material adverse effect on our financial position and future results of
operations if asset damage and/or company liability were to exceed insurance coverage limits or if an insurer were unable to
sufficiently or fully pay our related claims or damages.
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We may fail to adequately protect our intellectual property rights or may be accused of infringing upon intellectual
property rights of third parties.
We regard our intellectual property rights, including patents, service marks, trademarks and domain names, copyrights,
trade secrets and similar intellectual property (as applicable) as critical to our success. We also rely heavily upon software
codes, informational databases and other components that make up our products and services.
We rely on a combination of laws and contractual restrictions with employees, customers, suppliers, affiliates and others
to establish and protect these proprietary rights. Despite these precautions, it may be possible for a third party to copy or
otherwise obtain and use trade secrets or copyrighted intellectual property without authorization which, if discovered, might
require legal action to correct. In addition, third parties may independently and lawfully develop substantially similar
intellectual properties.
We have generally registered and continue to apply to register, or secure by contract when appropriate, our trademarks
and service marks as they are developed and used, and reserve and register domain names as we deem appropriate. We consider
the protection of our trademarks to be important for purposes of brand maintenance and reputation. While we vigorously
protect our trademarks, service marks and domain names, effective trademark protection may not be available or may not be
sought in every country in which we operate, and contractual disputes may affect the use of marks governed by private
contract. Similarly, not every variation of a domain name may be available or be registered, even if available. Our failure to
protect our intellectual property rights in a meaningful manner or challenges to related contractual rights could result in erosion
of brand names and limit our ability to control marketing on or through the internet using our various domain names or
otherwise, which could adversely affect our business, financial condition and results of operations.
Some of our businesses have been granted patents and/or have patent applications pending with the United States Patent
and Trademark Office and/or various foreign patent authorities for various proprietary technologies and other inventions. We
consider applying for patents or for other appropriate statutory protection when we develop valuable new or improved
proprietary technologies or identify inventions, and will continue to consider the appropriateness of filing for patents to protect
future proprietary technologies and inventions as circumstances may warrant. The status of any patent involves complex legal
and factual questions, and the breadth of claims allowed is uncertain. Accordingly, any patent application filed may not result in
a patent being issued or existing or future patents may not be adjudicated valid by a court or be afforded adequate protection
against competitors with similar technology. In addition, third parties may create new products or methods that achieve similar
results without infringing upon patents that we own. Likewise, the issuance of a patent to us does not mean that its processes or
inventions will not be found to infringe upon patents or other rights previously issued to third parties.
From time to time, we are subject to legal proceedings and claims in the ordinary course of business, including claims of
alleged infringement of the trademarks, copyrights, patents and other intellectual property rights of third parties. In addition,
litigation may be necessary in the future to enforce our intellectual property rights, protect trade secrets or determine the
validity and scope of proprietary rights claimed by others. Any litigation of this nature, regardless of outcome or merit, could
result in substantial costs and diversion of management and technical resources, any of which could adversely affect our
business, financial condition and results of operations. Patent litigation tends to be particularly protracted and expensive.
We are subject to extensive governmental regulation, and our failure to comply with these regulations could adversely
affect our business, financial condition and results of operations.
Our operations are subject to federal, state and local statutes, rules, regulations policies and procedures, both domestically
and internationally, which are subject to change at any time, governing matters such as:
•
•
•
•
construction, renovation and operation of our venues;
licensing, permitting and zoning, including noise ordinances;
human health, safety and sanitation requirements;
the service of food and alcoholic beverages;
• working conditions, labor, minimum wage and hour, citizenship and employment laws;
•
•
•
compliance with the ADA and the DDA;
historic landmark rules;
compliance with the United States Foreign Corrupt Practices Act, the United Kingdom Bribery Act 2010 and
similar regulations in other countries, as more particularly described above under the risk factor related to our
international operations;
•
hazardous and non-hazardous waste and other environmental protection laws;
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•
•
sales and other taxes and withholding of taxes;
privacy laws and protection of personally identifiable information;
• marketing activities via the telephone and online; and
•
primary ticketing and ticket resale services.
Our failure to comply with these laws and regulations could result in fines and/or proceedings against us by governmental
agencies and/or consumers, which if material, could adversely affect our business, financial condition and results of operations.
While we attempt to conduct our business and operations in a manner that we believe to be in compliance with such laws and
regulations, there can be no assurance that a law or regulation will not be interpreted or enforced in a manner contrary to our
current understanding of the law or regulation. In addition, the promulgation of new laws, rules and regulations could restrict or
unfavorably impact our business, which could decrease demand for services, reduce revenue, increase costs and/or subject us to
additional liabilities. For example, some legislatures have proposed laws in the past that would impose potential liability on us
and other promoters and producers of live music events for entertainment taxes and for incidents that occur at our events,
particularly relating to drugs and alcohol. New legislation could be passed that may negatively impact our business, such as
provisions that have recently been proposed in various jurisdictions that would restrict ticketing methods, mandate ticket
inventory disclosure and attack current policies governing season tickets for sports teams. Additionally, governmental actions
such as the recent sanctions by the U.S. Department of the Treasury’s Office of Foreign Assets Control and European regulators
on certain Russian individuals and entities could restrict or limit our business activities in certain areas or subject us to sanction
for noncompliance, even if inadvertent.
From time to time, federal, state and local authorities and/or consumers commence investigations, inquiries or litigation
with respect to our compliance with applicable consumer protection, advertising, unfair business practice, antitrust (and similar
or related laws) and other laws. Our businesses have historically cooperated with authorities in connection with these
investigations and have satisfactorily resolved each such material investigation, inquiry or litigation. We are currently subject to
agreements with the States of New Jersey, Maryland and Illinois and the FTC which govern, and in certain cases place
limitations on, our ticketing resale practices. Our competitors in the secondary ticket sales market are not, to our knowledge,
bound by such limitations and as a result, we may be at a competitive disadvantage. Other states and Canadian provinces have
commenced investigations or inquiries regarding the relationship between us and certain of our subsidiaries and other aspects
of our ticketing business. We have incurred significant legal expenses in connection with the defense of governmental
investigations and litigation in the past and may be required to incur additional expenses in the future regarding such
investigations and litigation. In the case of antitrust (and similar or related) matters, any adverse outcome could limit or prevent
us from engaging in the ticketing business generally (or in a particular market thereof) or subject us to potential damage
assessments, all of which could have a material adverse effect on our business, financial condition and results of operations.
Unfavorable outcomes in legal proceedings may adversely affect our business and operating results.
Our results may be affected by the outcome of pending and future litigation. Unfavorable rulings in our legal
proceedings, including those described in Note 7—Commitments and Contingent Liabilities to our consolidated financial
statements, may have a negative impact on us that may be greater or smaller depending on the nature of the rulings. In addition,
we are currently, and from time to time in the future may be, subject to various other claims, investigations, legal and
administrative cases and proceedings (whether civil or criminal) or lawsuits by governmental agencies or private parties, as
further described in the immediately preceding risk factor. If the results of these investigations, proceedings or suits are
unfavorable to us or if we are unable to successfully defend against third-party lawsuits, we may be required to pay monetary
damages or may be subject to fines, penalties, injunctions or other censure that could have a material adverse effect on our
business, financial condition and results of operations. Even if we adequately address the issues raised by an investigation or
proceeding or successfully defend a third-party lawsuit or counterclaim, we may have to devote significant financial and
management resources to address these issues, which could harm our business, financial condition and results of operations.
We depend upon unionized labor for the provision of some of our services and any work stoppages or labor disturbances
could disrupt our business; potential union pension obligations could cause us to incur unplanned liabilities.
The stagehands at some of our venues and other employees are subject to collective bargaining agreements. Our union
agreements typically have a term of three years and thus regularly expire and require negotiation in the ordinary course of our
business. Upon the expiration of any of our collective bargaining agreements, however, we may be unable to negotiate new
collective bargaining agreements on terms favorable to us, and our business operations may be interrupted as a result of labor
disputes or difficulties and delays in the process of renegotiating our collective bargaining agreements. In addition, our business
operations at one or more of our facilities may also be interrupted as a result of labor disputes by outside unions attempting to
unionize a venue even though we do not have unionized labor at that venue currently. A work stoppage at one or more of our
owned or operated venues or at our promoted events could have a material adverse effect on our business, financial condition
and results of operations. We cannot predict the effect that a potential work stoppage would have on our business.
21
We participate in, and make recurrent contributions to, various multiemployer pension plans that cover many of our
current and former union employees. Our required recurrent contributions to these plans could unexpectedly increase during the
term of a collective bargaining agreement due to ERISA laws that require additional contributions to be made when a pension
fund enters into critical status, which may occur for reasons that are beyond our control. In addition, we may be required by law
to fulfill our pension withdrawal liability with respect to any multiemployer pension plans from which we may withdraw or
partially withdraw. Our potential withdrawal liability will increase if a multiemployer pension plan in which we participate has
significant underfunded liabilities. Any unplanned multiemployer pension liabilities could have a material adverse effect on our
business, financial condition and results of operations.
We are dependent upon our ability to lease, acquire and develop live music venues, and if we are unable to do so on
acceptable terms, or at all, our results of operations could be adversely affected.
Our Concerts and Sponsorship & Advertising segments require access to venues to generate revenue from live music
events. For these events, we use venues that we own, but we also operate a number of our live music venues under various
agreements which include leases with third parties, ownership through an equity interest or booking agreements, which are
agreements where we contract to book the events at a venue for a specific period of time. Our long-term success in the live
music business will depend in part on the availability of venues, our ability to lease these venues and our ability to enter into
booking agreements upon their expiration. As many of these agreements are with third parties over whom we have little or no
control, we may be unable to renew these agreements or enter into new agreements on acceptable terms or at all, and may be
unable to obtain favorable agreements with venues. Our ability to renew these agreements or obtain new agreements on
favorable terms depends on a number of other factors, many of which are also beyond our control, such as national and local
business conditions and competition from other promoters. If the cost of renewing these agreements is too high or the terms of
any new agreement with a new venue are unacceptable or incompatible with our existing operations, we may decide to forego
these opportunities. There can be no assurance that we will be able to renew these agreements on acceptable terms or at all, or
that we will be able to obtain attractive agreements with substitute venues, which could have a material adverse effect on our
results of operations.
We may continue to expand our operations through the development of live music venues and the expansion of existing
live music venues, which poses a number of risks, including:
•
•
•
construction of live music venues may result in cost overruns, delays or unanticipated expenses;
desirable sites for live music venues may be unavailable or costly; and
the attractiveness of our venue locations may deteriorate over time.
Growth or maintenance of our existing revenue depends in part on consistent investment in our venues. Therefore, we
expect to continue to make substantial capital improvements to meet long-term increasing demand, improve value and grow
revenue. We frequently have a number of significant capital projects underway. Numerous factors, many of which are beyond
our control, may influence the ultimate costs and timing of various capital improvements.
The amount of capital expenditures can vary significantly from year to year. In addition, actual costs could vary
materially from our estimates if our assumptions about the quality of materials, equipment or workmanship required or the cost
of financing such expenditures were to change. Construction is also subject to governmental permitting processes which, if
changed, could materially affect the ultimate cost.
Additionally, the market potential of live music venue sites cannot be precisely determined, and our live music venues
may face competition in markets from unexpected sources. Newly constructed live music venues may not perform up to our
expectations. We face significant competition for potential live music venue locations and for opportunities to acquire existing
live music venues. Because of this competition, we may be unable to add to or maintain the number of our live music venues
on terms we consider acceptable.
Poor weather adversely affects attendance at our live music events, which could negatively impact our financial
performance from period to period.
We promote and/or ticket many live music events. Weather conditions surrounding these events affect sales of tickets,
concessions and merchandise, among other things. Poor weather conditions can have a material effect on our results of
operations particularly because we promote and/or ticket a finite number of events. Due to weather conditions, we may be
required to cancel or reschedule an event to another available day or a different venue, which would increase our costs for the
event and could negatively impact the attendance at the event, as well as concession and merchandise sales. Poor weather can
affect current periods as well as successive events in future periods.
22
We may be adversely affected by the occurrence of extraordinary events, such as terrorist attacks.
The occurrence and threat of extraordinary events, such as terrorist attacks, intentional or unintentional mass-casualty
incidents, natural disasters or similar events, may substantially decrease the use of and demand for our services and the
attendance at live music events, which may decrease our revenue or expose us to substantial liability. The terrorism and
security incidents in the past, military actions in foreign locations and periodic elevated terrorism alerts have raised numerous
challenging operating factors, including public concerns regarding air travel, military actions and additional national or local
catastrophic incidents, causing a nationwide disruption of commercial and leisure activities.
Following past terrorism actions, some artists refused to travel or book tours, which adversely affected our business. The
occurrence or threat of future terrorist attacks, military actions by the United States or others, contagious disease outbreaks,
natural disasters such as earthquakes and severe floods or similar events cannot be predicted, and their occurrence can be
expected to negatively affect the economies of the United States and other foreign countries where we do business.
Risks Relating to Our Leverage
We have a large amount of debt and lease obligations that could restrict our operations and impair our financial
condition. The agreements governing our senior secured credit facility and certain of our other indebtedness impose
restrictions on us that limit the discretion of management in operating our business and that, in turn, could impair our
ability to meet our obligations under our debt.
The agreements governing our senior secured credit facility and certain of our other indebtedness include restrictive
covenants that, among other things, restrict our ability to:
•
•
incur additional debt;
pay dividends and make distributions;
• make certain investments;
•
•
•
repurchase our stock and prepay certain indebtedness;
create liens;
enter into transactions with affiliates;
• modify the nature of our business;
•
•
enter into sale-leaseback transactions;
transfer and sell material assets; and
• merge or consolidate.
In addition, our senior secured credit facility includes other restrictions, including requirements to maintain certain
financial ratios. Our failure to comply with the terms and covenants of our indebtedness could lead to a default under the terms
of the governing documents, which would entitle the lenders to accelerate the indebtedness and declare all amounts owed due
and payable.
As of December 31, 2014, our total indebtedness, excluding unamortized debt discounts of $33.0 million and including
debt premium of $7.3 million was $2.1 billion. Our available borrowing capacity under the revolving portion of our senior
secured credit facility at that date was $273.0 million, with outstanding letters of credit of $62.0 million. We may also incur
significant additional indebtedness in the future.
Our substantial indebtedness could have adverse consequences, including:
• making it more difficult for us to satisfy our obligations;
•
•
•
•
increasing our vulnerability to adverse economic, regulatory and industry conditions;
limiting our ability to obtain additional financing for future working capital, capital expenditures, acquisitions and
other purposes;
requiring us to dedicate a substantial portion of our cash flow from operations to fund payments on our debt,
thereby reducing funds available for operations and other purposes;
limiting our flexibility in planning for, or reacting to, changes in our business and the industry in which we operate;
• making us more vulnerable to increases in interest rates; and
•
placing us at a competitive disadvantage compared to our competitors that have less debt.
23
To service our debt and lease obligations and to fund potential acquisitions, artist and ticketing advances and capital
expenditures, we will require a significant amount of cash, which depends on many factors beyond our control.
As of December 31, 2014, $47.5 million of our total indebtedness (excluding interest and unamortized debt discount) is
due in 2015, $100.8 million is due in the aggregate in 2016 and 2017, $346.8 million is due in the aggregate in 2018 and 2019
and $1.6 billion is due thereafter. In addition, as of December 31, 2014, we had $2.2 billion in operating lease agreements, of
which $135.8 million is due in 2015 and $135.0 million is due in 2016. All long-term debt without a stated maturity date is
considered current and is reflected here as due in 2015. See the table in Item 7—Management’s Discussion and Analysis of
Financial Condition and Results of Operations—Contractual Obligations and Commitments—Firm Commitments.
Our ability to service our debt and lease obligations and to fund potential acquisitions, artist and ticketing advances and
capital expenditures will require a significant amount of cash, which depends on many factors beyond our control. Our ability
to make payments on and to refinance our debt will also depend on our ability to generate cash in the future. This is, to an
extent, subject to general economic, financial, competitive, legislative, regulatory and other factors that are beyond our control.
We cannot assure you that our business will generate sufficient cash flow or that future borrowings will be available to us
in an amount sufficient to enable us to pay our debt or to fund our other liquidity needs. If our future cash flow from operations
and other capital resources is insufficient to pay our obligations as they mature or to fund our liquidity needs, we may be forced
to reduce or delay our business activities and capital expenditures, sell assets, obtain additional equity capital or restructure or
refinance all or a portion of our debt on or before maturity. In addition, the terms of our existing debt, including our senior
secured credit facility, and other future debt may limit our ability to pursue any of these alternatives.
These measures might also be unsuccessful or inadequate in permitting us to meet scheduled debt service or lease
obligations. We may be unable to restructure or refinance our obligations and obtain additional debt or equity financing or sell
assets on satisfactory terms or at all. Capital markets have been volatile in the recent past; a downturn could negatively impact
our ability to access capital should the need arise. As a result, the inability to meet our debt or lease obligations could cause us
to default on those obligations. Any such defaults could materially harm our financial condition and liquidity.
We depend on the cash flows of our subsidiaries in order to satisfy our obligations.
We rely on distributions and loans from our subsidiaries to meet our payment requirements under our obligations. If our
subsidiaries are unable to pay dividends or otherwise make payments to us, we may not be able to make debt service payments
on our obligations. We conduct substantially all of our operations through our subsidiaries. Our operating cash flows and
consequently our ability to service our debt is therefore principally dependent upon our subsidiaries’ earnings and their
distributions of those earnings to us and may also be dependent upon loans or other payments of funds to us by those
subsidiaries. Our subsidiaries are separate legal entities and may have no obligation, contingent or otherwise, to pay any
amount due pursuant to our obligations or to make any funds available for that purpose. Our foreign subsidiaries generate a
portion of our operating cash flows. Although we do not intend to repatriate these funds from our foreign subsidiaries in order
to satisfy payment requirements in the United States, we would be required to accrue and pay United States federal and state
income taxes on any future repatriations, net of applicable foreign tax credits. These taxes could be substantial and could have a
material adverse effect on our financial condition and results of operations. In addition, the ability of our subsidiaries to provide
funds to us may be subject to restrictions under our senior secured credit facility and may be subject to the terms of such
subsidiaries’ future indebtedness, as well as the availability of sufficient surplus funds under applicable law.
Risks Relating to Our Common Stock
Our corporate governance documents, rights agreement and Delaware law may delay, deter or prevent an acquisition of
us that stockholders may consider favorable, which could decrease the value of our common stock.
Our amended and restated certificate of incorporation and amended and restated bylaws and Delaware law contain
provisions that could make it more difficult for a third party to acquire us without the consent of the board of directors. These
provisions include supermajority voting requirements for stockholders to amend our organizational documents and to remove
directors as well as limitations on action by our stockholders by written consent. In addition, the board of directors has the right
to issue preferred stock without stockholder approval, which could be used to dilute the stock ownership of a potential hostile
acquirer. Delaware law, for instance, also imposes some restrictions on mergers and other business combinations between any
holder of 15% or more of our outstanding common stock and us. Although we believe these provisions protect our stockholders
from coercive or otherwise unfair takeover tactics and thereby provide for an opportunity to receive a higher bid by requiring
potential acquirers to negotiate with the board of directors, these provisions apply even if the offer may be considered
beneficial by some stockholders.
We have also adopted a stockholder rights plan intended to deter hostile or coercive attempts to acquire us. Under the
plan, if any person or group acquires, or begins a tender or exchange offer that could result in such person acquiring, 15% or
more of our common stock, and in the case of certain Schedule 13G filers, 20% or more of our common stock, and in the case
of Liberty Media and certain of its affiliates, more than 35% of our common stock, without approval of the board of directors
24
under specified circumstances, our other stockholders have the right to purchase shares of our common stock, or shares of the
acquiring company, at a substantial discount to the public market price. Therefore, the plan makes an acquisition much more
costly to a potential acquirer.
In addition, the terms of our senior secured credit facility provide that the lenders can require us to repay all outstanding
indebtedness upon a change of control. These provisions make an acquisition more costly to a potential acquirer. See Item 7—
Management’s Discussion and Analysis of Financial Condition and Results of Operations—Liquidity and Capital Resources.
We have no plans to pay dividends on our common stock, which could affect its market price.
We currently intend to retain any future earnings to finance the growth, development and expansion of our business and/
or to repay existing indebtedness. Accordingly, we do not intend to declare or pay any dividends on our common stock for the
foreseeable future. The declaration, payment and amount of future dividends, if any, will be at the sole discretion of the board
of directors after taking into account various factors, including our financial condition, results of operations, cash flow from
operations, current and anticipated capital requirements and expansion plans, the income tax laws then in effect and the
requirements of Delaware law. In addition, the agreement governing our senior secured credit facility includes restrictions on
our ability to pay cash dividends without meeting certain financial ratios and obtaining the consent of the lenders. Accordingly,
holders of common stock will not receive cash payments on their investment and the market price may be adversely affected.
Conversion of our convertible notes may dilute the ownership interest of existing stockholders and may affect our per
share results and the trading price of our common stock.
The issuance of shares of our common stock upon conversion of our convertible notes may dilute the ownership interests
of existing stockholders. Issuances of stock on conversion may also affect our per share results of operations. Any sales in the
public market of our common stock issuable upon such conversion could adversely affect prevailing market prices of our
common stock.
We can issue preferred stock without stockholder approval, which could materially adversely affect the rights of common
stockholders.
Our certificate of incorporation authorizes us to issue “blank check” preferred stock, the designation, number, voting
powers, preferences and rights of which may be fixed or altered from time to time by the board of directors. Our subsidiaries
may also issue additional shares of preferred stock. Accordingly, the board of directors has the authority, without stockholder
approval, to issue preferred stock with rights that could materially adversely affect the voting power or other rights of the
common stockholders or the market value of the common stock.
ITEM 1B. UNRESOLVED STAFF COMMENTS
None.
ITEM 2.
PROPERTIES
As of December 31, 2014, we own, operate or lease 94 entertainment venues and 112 other facilities, including office
leases, throughout North America and 22 entertainment venues and 92 other facilities internationally. We believe our venues
and facilities are generally well-maintained and in good operating condition and have adequate capacity to meet our current
business needs. We have a lease ending June 30, 2020 for our corporate headquarters in Beverly Hills, California, used
primarily by our executive and certain of our domestic operations management staff.
Our leases are for varying terms ranging from monthly to multi-year. These leases can typically be for terms of three to
five years for our office leases and ten to 20 years for our venue leases, and many include renewal options. There is no
significant concentration of venues under any one lease or subject to negotiation with any one landlord. We believe that an
important part of our management activity is to negotiate suitable lease renewals and extensions.
ITEM 3.
LEGAL PROCEEDINGS
Information regarding our legal proceedings can be found in Part II—Financial Information—Item 8. Financial
Statements and Supplementary Data—Note 7—Commitments and Contingent Liabilities.
25
PART II—FINANCIAL INFORMATION
ITEM 5. MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND
ISSUER PURCHASES OF EQUITY SECURITIES
Our common stock was listed on the New York Stock Exchange under the symbol “LYV” on December 21, 2005. There
were 4,178 stockholders of record as of February 20, 2015. This figure does not include an estimate of the indeterminate
number of beneficial holders whose shares may be held of record by brokerage firms and clearing agencies. The following table
presents the high and low sales prices of our common stock on the New York Stock Exchange during the calendar quarter
indicated.
2013
First Quarter
Second Quarter
Third Quarter
Fourth Quarter
2014
First Quarter
Second Quarter
Third Quarter
Fourth Quarter
Dividend Policy
Common Stock
Market Price
High
Low
$12.68
$ 9.37
$16.31
$11.76
$18.93
$15.53
$19.94
$17.16
$24.80
$19.75
$24.71
$19.61
$25.28
$20.82
$27.42
$21.14
Since the Separation and through December 31, 2014, we have not declared or paid any dividends. We presently intend
to retain any future earnings to finance the expansion of our business and to make debt repayments as they become due.
Therefore, we do not expect to pay any cash dividends in the foreseeable future. Moreover, the terms of our senior secured
credit facility limit the amount of funds that we will have available to declare and distribute as dividends on our common stock.
Payment of future cash dividends, if any, will be at the discretion of our board of directors in accordance with applicable law
after taking into account various factors, including our financial condition, operating results, current and anticipated cash needs,
plans for expansion and contractual restrictions with respect to the payment of dividends.
26
ITEM 6. SELECTED FINANCIAL DATA
The Selected Financial Data should be read in conjunction with Item 7—Management’s Discussion and Analysis of
Financial Condition and Results of Operations.
Year Ended December 31,
2014
2013
2012
2011
(in thousands except per share data)
2010
Results of Operations Data (1):
Revenue
Operating income (loss) (2)
Loss from continuing operations before income
taxes (2)
Net loss attributable to common stockholders of
Live Nation (3)
Basic and diluted loss from continuing
operations per common share attributable to
common stockholders of Live Nation (4)
Cash dividends per share
Balance Sheet Data (1):
Total assets
Long-term debt, net (including current
maturities)
$ 6,866,964
7,164
$
$ 6,478,547
139,660
$
$ 5,819,047
$
(21,639) $
$ 5,383,998
18,337
$ 5,063,748
(63,700)
$
$
$
$
$
(99,820) $
(5,137) $
(132,161) $
(96,627) $
(188,654)
(90,807) $
(43,378) $
(163,227) $
(83,016) $
(228,390)
(0.49) $
— $
(0.23) $
— $
(0.88) $
— $
(0.46) $
— $
(1.36)
—
2014
2013
As of December 31,
2012
(in thousands)
2011
2010
$ 5,988,361
$ 5,683,521
$ 5,290,806
$ 5,077,344
$ 5,195,560
$ 2,063,400
$ 1,808,887
$ 1,740,005
$ 1,705,261
$ 1,731,864
_________
(1)
Acquisitions and dispositions significantly impact the comparability of the historical consolidated financial data
reflected in this schedule of Selected Financial Data.
(2)
(3)
(4)
The year ended December 31, 2014 includes $135.0 million of goodwill impairments recorded in conjunction with our
annual impairment tests.
The year ended December 31, 2014 includes $97.4 million of goodwill impairments, net of the noncontrolling interests
share of the impairments, recorded in conjunction with our annual impairment tests.
The year ended December 31, 2014 includes a loss of $0.48 per common share from the impact of the goodwill
impairments.
ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS
You should read the following discussion of our financial condition and results of operations together with the audited
consolidated financial statements and notes to the financial statements included elsewhere in this Annual Report. This
discussion contains forward-looking statements that involve risks and uncertainties. The forward-looking statements are not
historical facts, but rather are based on current expectations, estimates, assumptions and projections about our industry,
business and future financial results. Our actual results could differ materially from the results contemplated by these forward-
looking statements due to a number of factors, including those discussed under 1A.—Risk Factors and other sections in this
Annual Report.
Executive Overview
In 2014, all of our segments reported revenue growth as a result of higher attendance at our North America concerts,
increased ticket sales globally in our Ticketing segment, higher artist management commissions and expansion of our
sponsorship business. This led to our fourth consecutive year of overall revenue growth. Revenue increased 6% as compared to
last year and while all our segments contributed to this success, it was largely driven by an increase in the number of stadium
concert events in North America along with growth in our primary and resale businesses in Ticketing. Excluding the impact of
a goodwill impairment in 2014, operating income and net income for the year both improved. As the leading global live event
27
and ticketing company, we believe that we are well-positioned to provide the best service to artists, teams, fans and venues and
therefore drive growth across all our businesses. We believe that by leveraging our leadership position in the entertainment
industry to reach fans through the live concert experience, we will sell more tickets which will then grow our sponsorship and
advertising revenue.
Our Concerts segment revenue increased 5% as compared to last year driven by our North America business which had
sell-out stadium tours as well as increased festival attendance resulting from our expanding portfolio of events. The number of
fans attending our Concert events in North America rose by 6% for the year as a result of creatively packaged tours and
festivals crossing all genres of music including rock/pop, country and electronic dance music. Due to a reduction of touring
content in our international markets, we had fewer arena shows and, therefore, fewer fans attending events internationally
which caused global concert attendance to fall by 2% for the year. Our overall Concerts operating results declined to a loss of
$190.5 million for the year which includes a $117.0 million charge for a goodwill impairment relating to our international
concerts division. We will continue to look for expansion opportunities in Concerts, both domestically and internationally, as
well as ways to market our events more effectively in order to continue to expand our fan base and geographic reach and to sell
more tickets.
Our Ticketing segment revenue increased 11% as compared to last year largely due to growth of our primary and resale
businesses in North America. Our TM+ resale product continued to perform very strongly, delivering significant growth in
gross transaction value in each quarter of 2014 as compared to the prior year. At the same time, we continued to invest in our
primary ticketing platform in order to improve the ticket buying experience for our fans and provide better tools and
information resources for our venue clients. Overall, the total number of tickets sold increased 3% due to strong concert ticket
sales as well as growth in the arts and family categories. In our resale business, gross transaction value of resale tickets sold
increased by 55% to over $900 million for the year due in large part to the success of our new TM+ product, which drove
significant growth in concert and professional sports ticket sales. Throughout the year, 18% of our total tickets were sold via
mobile and tablet devices, up from 14% last year, as we continued to implement new features that are driving further expansion
of mobile ticket transactions. Operating margins for the year also improved from 7.2% in 2013 to 7.5% in 2014 as we continue
to deliver reductions in our cost structure and to grow our resale business.
Our Artist Nation segment revenue increased 10% as compared to last year primarily due to increased artist management
commissions. New manager and artist relationships resulted in increased revenue from touring, recording and other
performance fees, leading to the year-over-year growth. Our artist services business declined due to lower retail merchandise
sales and less international touring activity. Excluding the impact of a goodwill impairment charge of $17.9 million relating to
our artist services (non-management) business, operating results for the Artist Nation segment improved significantly in the
year, due to the increased artist activity along with continued alignment between artist managers and the rest of the Live Nation
organization to deliver more services to these artists. Our Artist Nation segment is focused on serving its existing artists as well
as developing new relationships with top artists and extending the various services it provides.
Our Sponsorship & Advertising segment revenue increased by 5% as compared to last year driven by growth in online
sales in North America as well as new sponsorship deals. Overall, operating income is up due to increased revenue as well as
improved margins on our sponsorships compared to last year when we had several clients with higher activation program costs.
Our extensive on-site and online reach, global venue distribution network, artist relationships and ticketing operations are the
key to securing long-term sponsorship agreements with major brands and we plan to expand these assets while extending our
sales reach further into new markets internationally.
We continue to be optimistic about the long-term potential of our company and are focused on the key elements of our
business model: expand our concert platform, drive conversion of ticket sales through development of innovative products,
grow sponsorship and advertising, sell more tickets and drive reductions in the cost to sell a ticket, grow secondary ticket
volume and drive artist management through our other core businesses.
Segment Overview
Our reportable segments are Concerts, Ticketing, Artist Nation and Sponsorship & Advertising.
Concerts
Our Concerts segment principally involves the global promotion of live music events in our owned or operated venues
and in rented third-party venues, the operation and management of music venues and the production of music festivals across
the world. While our Concerts segment operates year-round, we experience higher revenue during the second and third quarters
due to the seasonal nature of shows at our outdoor amphitheaters and festivals, which primarily occur from May through
September. Revenue and related costs for events are generally deferred and recognized when the event occurs. All advertising
costs incurred during the year for shows in future years are expensed at the end of the year.
To judge the health of our Concerts segment, we primarily monitor the number of confirmed events in our network of
owned or operated and third-party venues, talent fees, average paid attendance and advance ticket sales. In addition, at our
28
owned or operated venues, we monitor attendance, ancillary revenue per fan and premium ticket sales. For business that is
conducted in foreign markets, we also compare the operating results from our foreign operations to prior periods on a constant
currency basis.
Ticketing
The Ticketing segment is primarily an agency business that sells tickets for events on behalf of our clients and retains a
convenience charge and order processing fee for these services. We sell tickets through websites, mobile apps, ticket outlets and
telephone call centers. Our ticketing sales are impacted by fluctuations in the availability of events for sale to the public, which
may vary depending upon scheduling by our clients. We also offer ticket resale services, or secondary ticketing, primarily
through our integrated inventory platform, referred to as TM+. Our Ticketing segment also manages our online activities
including enhancements to our websites and bundling product offerings. Through our websites, we sell tickets to our own
events as well as tickets for our ticketing clients and provide event information. Revenue related to ticketing service charges is
recognized when the ticket is sold except for our own events where we control ticketing and then the revenue is deferred and
recognized as the event occurs.
To judge the health of our Ticketing segment, we primarily review the gross transaction value and the number of tickets
sold through our ticketing operations, average convenience charges and order processing fees, the number of clients renewed or
added and the average royalty rate paid to clients who use our ticketing services. In addition, we review the number of visits to
our websites, the overall number of customers in our database, the number of tickets sold via mobile apps and the gross
transaction value and fees related to secondary ticket sales. For business that is conducted in foreign markets, we also compare
the operating results from our foreign operations to prior periods on a constant currency basis.
Artist Nation
The Artist Nation segment primarily provides management services to music artists in exchange for a commission on the
earnings of these artists. Our Artist Nation segment also creates and sells merchandise for music artists at live performances, to
retailers and directly to consumers via the internet. Revenue earned from our Artist Nation segment is impacted to a large
degree by the touring schedules of the artists we represent and generally, we experience higher revenue during the second and
third quarters as the period from May through September tends to be a popular time for touring events.
To judge the health of our Artist Nation segment, we primarily review the annual commissions earned for each artist
represented and the percentage of top artists on tour or with planned album releases, as these activities tend to drive higher
revenue. For business that is conducted in foreign markets, we also compare the operating results from our foreign operations
to prior periods on a constant currency basis.
Sponsorship & Advertising
Our Sponsorship & Advertising segment employs a sales force that creates and maintains relationships with sponsors,
through a combination of strategic, international, national and local opportunities that allow businesses to reach customers
through our concert, venue, artist relationship and ticketing assets, including advertising on our websites. We drive increased
advertising scale to further monetize our concert platform through rich media offerings including live streaming and music-
related original content. We work with our corporate clients to help create marketing programs that drive their business goals
and connect their brands directly with fans and artists. We also develop, book and produce custom events or programs for our
clients’ specific brands which are typically experienced exclusively by the clients’ consumers. These custom events can involve
live music events with talent and media, using both online and traditional outlets. We typically experience higher revenue in the
second and third quarters, as a large portion of sponsorships are typically associated with our outdoor venues and festivals
which are primarily used in or occur from May through September.
To judge the health of our Sponsorship & Advertising segment, we primarily review the average revenue per sponsor, the
total revenue generated through sponsorship arrangements, the percentage of expected revenue under contract and the online
revenue received from sponsors advertising on our websites. For business that is conducted in foreign markets, we also
compare the operating results from our foreign operations to prior periods on a constant currency basis.
29
Consolidated Results of Operations
Revenue
Operating expenses:
Direct operating expenses
Selling, general and administrative expenses
Depreciation and amortization
Goodwill impairment
Gain on disposal of operating assets
Corporate expenses
Acquisition transaction expenses
Operating income (loss)
Operating margin
Interest expense
Loss (gain) on extinguishment of debt
Interest income
Equity in earnings of nonconsolidated affiliates
Other expense, net
Loss before income taxes
Income tax expense
Net loss
Net income (loss) attributable to noncontrolling
interests
Net loss attributable to common stockholders of
Live Nation
_________
* Percentages are not meaningful.
Year Ended December 31,
2014
2013
2012
% Change
2014 vs 2013
% Change
2013 vs 2012
6%
5%
8%
0%
*
*
7%
*
(95)%
11%
13%
7%
(14)%
*
*
(17)%
*
*
(in thousands)
$ 6,866,964
$ 6,478,547
$5,819,047
4,919,969
1,330,160
368,143
134,961
(4,494)
101,000
10,061
7,164
4,680,507
1,226,892
368,923
4,151,277
1,143,632
429,557
—
(38,259)
94,385
6,439
139,660
—
(514)
113,364
3,370
(21,639)
0.1%
2.2%
(0.4)%
106,312
188
(3,606)
(4,166)
8,256
(99,820)
4,630
(104,450)
111,659
123,740
36,269
(5,071)
(856)
2,796
(5,137)
30,878
(36,015)
(460)
(4,170)
(9,921)
1,333
(132,161)
29,736
(161,897)
(13,643)
7,363
1,330
$
(90,807)
$
(43,378)
$ (163,227)
30
Key Operating Metrics
Concerts (1)
Estimated events:
North America
International
Total estimated events
Estimated fans (rounded):
North America
International
Total estimated fans
Ticketing
Year Ended December 31,
2014
2013
2012
15,948
6,853
22,801
15,580
7,270
22,850
14,942
6,996
21,938
40,092,000
37,954,000
32,079,000
18,486,000
21,527,000
17,915,000
58,578,000
59,481,000
49,994,000
Number of tickets sold (in thousands) (2)
153,744
148,852
147,732
_________
(1)
(2)
Events generally represent a single performance by an artist. Fans generally represent the number of people who attend an
event. Festivals are counted as one event in the quarter in which the festival begins, but the number of fans is based on the
days the fans were present at the festival and thus can be reported across multiple quarters. Events and fan attendance
metrics are estimated each quarter.
The number of tickets sold includes primary tickets only and excludes tickets sold for the 2012 Olympics. This metric
includes tickets sold during the year regardless of event timing except for our promoted events in our owned or operated
venues and in certain European territories where these tickets are reported as the events occur. The total number of tickets
sold reported above for 2014, 2013 and 2012 excludes approximately 300 million, 301 million and 284 million,
respectively, of estimated tickets sold using our Ticketmaster systems, through season seat packages and our venue
clients’ box offices, for which we do not receive a fee.
31
Revenue
Our revenue increased $388.4 million, or 6%, during the year ended December 31, 2014 as compared to the prior year.
The overall increase in revenue was primarily due to increases in our Concerts and Ticketing segments of $209.7 million and
$149.4 million, respectively. Excluding the decrease of approximately $0.1 million related to the impact of changes in foreign
exchange rates, revenue increased $388.5 million, or 6%.
Our revenue increased $659.5 million, or 11%, during the year ended December 31, 2013 as compared to the prior year.
The overall increase in revenue was primarily due to an increase in our Concerts segment of $646.8 million. Excluding the
decrease of approximately $3.9 million related to the impact of changes in foreign exchange rates, revenue increased $663.4
million, or 11%.
More detailed explanations of these changes along with the impact of changes in foreign exchange rates, if significant,
are included in the applicable segment discussions below.
Direct operating expenses
Our direct operating expenses increased $239.5 million, or 5%, during the year ended December 31, 2014 as compared to
the prior year. The overall increase in direct operating expenses was primarily due to increases in our Concerts and Ticketing
segments of $186.5 million and $91.1 million, respectively. Excluding the increase of approximately $5.3 million related to the
impact of changes in foreign exchange rates, direct operating expenses increased $234.2 million, or 5%.
Our direct operating expenses increased $529.2 million, or 13% during the year ended December 31, 2013 as compared
to the prior year. The overall increase in direct operating expenses was primarily due to an increase in our Concerts segment of
$555.0 million. Excluding the decrease of approximately $3.2 million related to the impact of changes in foreign exchange
rates, direct operating expenses increased $532.4 million, or 13%.
Direct operating expenses include artist fees, event production costs, ticketing client royalties, show-related marketing
and advertising expenses, along with other costs.
More detailed explanations of these changes along with the impact of changes in foreign exchange rates, if significant,
are included in the applicable segment discussions below.
Selling, general and administrative expenses
Our selling, general and administrative expenses increased $103.3 million, or 8%, during the year ended December 31,
2014 as compared to the prior year. The overall increase in selling, general and administrative expenses was primarily due to
increases in our Concerts, Ticketing and Artist Nation segments of $33.9 million, $29.2 million and $34.8 million, respectively.
Excluding the increase of approximately $1.0 million related to the impact of changes in foreign exchange rates, selling,
general and administrative expenses increased $102.3 million, or 8%.
Our selling, general and administrative expenses increased $83.3 million, or 7%, during the year ended December 31,
2013 as compared to the prior year. The overall increase in selling, general and administrative expenses was primarily due to an
increase in our Concerts segment of $63.0 million. Excluding the decrease of approximately $0.3 million related to the impact
of changes in foreign exchange rates, selling, general and administrative expenses increased $83.6 million, or 7%.
More detailed explanations of these changes along with the impact of changes in foreign exchange rates, if significant,
are included in the applicable segment discussions below.
Depreciation and amortization
Depreciation and amortization decreased $0.8 million during the year ended December 31, 2014 as compared to the prior
year. The overall decrease in depreciation and amortization was primarily due to a decrease in our Concerts segment of $17.3
million partially offset by an increase in our Ticketing segment of $14.1 million.
Depreciation and amortization decreased $60.6 million, or 14%, during the year ended December 31, 2013 as compared
to the prior year. The overall decrease in depreciation and amortization was primarily due to decreases in our Concerts and
Artist Nation segments of $13.2 million and $73.1 million, respectively, partially offset by an increase in our Ticketing segment
of $24.9 million.
More detailed explanations of these changes along with the impact of changes in foreign exchange rates, if significant,
are included in the applicable segment discussions below.
32
Goodwill impairment
Goodwill impairments of $117.0 million and $17.9 million were recorded in conjunction with our annual impairment tests
related to the International Concerts reporting unit in the Concerts segment and the Artist Services (non-management) reporting
unit in the Artist Nation segment, respectively. See “—Critical Accounting Policies and Estimates —Goodwill” for further
discussion of the factors impacting this impairment.
Gain on disposal of operating assets
Gain on disposal of operating assets for the year ended December 31, 2014 was $4.5 million consisting primarily of a
gain recognized in our Concerts segment in connection with the final insurance recovery received for storm damage to an
amphitheater in New York during Hurricane Sandy in 2012.
Gain on disposal of operating assets for the year ended December 31, 2013 was $38.3 million consisting primarily of a
$24.8 million gain recognized in our Concerts segment from the May 2013 sale of a theater in New York. In addition, we
recognized a gain in our Concerts segment of $14.1 million in connection with insurance recoveries for storm damage sustained
to an amphitheater as discussed above.
Corporate expenses
Corporate expenses increased $6.6 million, or 7%, during the year ended December 31, 2014 as compared to the prior
year primarily due to higher compensation-related costs driven by higher headcount and annual salary increases.
Corporate expenses decreased $19.0 million, or 17%, during the year ended December 31, 2013 as compared to the prior
year primarily from a reduction in stock-based compensation and expense related to payments on the Trust Note due to the
resignation of an executive on December 31, 2012.
Acquisition transaction expenses
Acquisition transaction expenses were $10.1 million, $6.4 million and $3.4 million during the years ended December 31,
2014, 2013 and 2012, respectively. All years include current-year acquisition costs that vary based on the size and number of
acquisitions in the year and ongoing litigation costs relating to our merger with Ticketmaster.
Interest expense
Interest expense decreased $5.3 million, or 5%, during the year ended December 31, 2014 as compared to the prior year
primarily due to the interest cost reduction realized from the August 2013 redemption of the 8.125% senior notes and the
September 2014 redemption of the 2.875% convertible senior notes partially offset by additional interest cost from the 7%
senior notes issued in August 2013 and the 5.375% senior notes and the 2.5% convertible senior notes issued in May 2014.
Interest expense decreased $12.1 million, or 10%, for the year ended December 31, 2013 as compared to the prior year
primarily due to the interest cost reduction realized from the August 2012 redemption of the 10.75% senior notes and the
August 2013 redemption of the 8.125% senior notes, partially offset by the additional interest cost from the 7% senior notes
issued in August 2012 and 2013.
Our debt balances and weighted-average cost of debt, excluding unamortized debt discounts of $33.0 million and
including debt premium of $7.3 million, were $2.1 billion and 4.3%, respectively, as of December 31, 2014.
Loss (gain) on extinguishment of debt
We recorded a loss on extinguishment of debt of $36.3 million for the year ended December 31, 2013 in connection with
the refinancing of the term loans under our senior secured credit facility and the redemption of our 8.125% senior notes in
August 2013. These obligations were paid with proceeds from incremental term loans under our amended senior secured credit
facility and the issuance of additional 7% senior notes.
Equity in earnings of nonconsolidated affiliates
Equity in earnings of nonconsolidated affiliates increased $3.3 million during the year ended December 31, 2014 as
compared to the prior year primarily due to impairment charges of $9.2 million recorded in 2013 related to investments in a
concert promoter located in Europe and an ecommerce business, partially offset by lower earnings in 2014 on certain
investments in the Concerts and Ticketing segments.
Equity in earnings of nonconsolidated affiliates decreased $9.1 million during the year ended December 31, 2013 as
compared to the prior year primarily due to impairment charges of $9.2 million recorded in 2013 as discussed above.
Other expense, net
Other expense, net includes the impact of changes in foreign exchange rates of $28.9 million and $2.8 million in net
losses for the years ended December 31, 2014 and 2013, respectively, and a net gain of $1.4 million for the year ended
33
December 31, 2012. The 2014 net loss was partially offset by a gain of $17.1 million recorded in connection with the
consolidation of an artist management business that had been previously accounted for as an equity investment, due to a change
in the governing agreements.
Income taxes
For the year ended December 31, 2014, we had a net tax expense of $4.6 million on a loss before income taxes of $99.8
million compared to a net tax expense of $30.9 million on a loss before income taxes of $5.1 million for 2013. In 2014, income
tax expense primarily included $8.5 million related to tax expense for foreign entities and $7.0 million related to state and local
income taxes partially offset by $12.9 million related to the reversal of valuation allowances in connection with certain
acquisitions. The net decrease is due to a reduction in earnings in our foreign tax jurisdictions and the reversal of valuation
allowances. These decreases were partially offset by increased state and local income taxes due to income in excess of available
net operating loss carryforwards in certain states.
For the year ended December 31, 2013, we had a net tax expense of $30.9 million on a loss before income taxes of $5.1
million compared to a net tax expense of $29.7 million on a loss before income taxes of $132.2 million for 2012. In 2013,
income tax expense primarily included $27.8 million related to tax expense for foreign entities and $3.9 million related to
current state and local income taxes. The net increase in 2013 tax expense as compared to 2012 is principally due to higher
earnings attributable to the 2012 acquisitions of foreign entities.
Net income (loss) attributable to noncontrolling interests
Net income (loss) attributable to noncontrolling interests decreased $21.0 million to a loss of $13.6 million during the
year ended December 31, 2014 as compared to the prior year primarily due to the portion of the goodwill impairment
attributable to noncontrolling interests partially offset by the prospective consolidation of, and improved operating results from,
certain artist management companies.
Net income attributable to noncontrolling interests increased $6.0 million during the year ended December 31, 2013 as
compared to the prior year primarily due to improved operating results from certain artist management businesses driven by an
impairment in 2012 partially offset by lower operating results from certain concert promotion businesses.
Concerts Results of Operations
Our Concerts segment operating results were, and discussions of significant variances are, as follows:
Year Ended December 31,
2014
2013
2012
% Change
2014 vs 2013
% Change
2013 vs 2012
Revenue
Direct operating expenses
Selling, general and
administrative expenses
Depreciation and amortization
Goodwill impairment
Gain on disposal of operating
assets
Acquisition transaction expenses
(in thousands)
$ 4,726,877
$ 4,517,191
$ 3,870,371
4,016,540
3,829,991
3,274,951
666,475
115,088
117,013
(2,954)
5,171
632,614
132,386
—
(38,927)
723
569,570
145,552
—
(453)
847
(39,596)
$ (120,096)
(0.9)%
(3.1)%
5%
5%
5%
(13)%
*
*
*
*
60,326
$
31,364
(16)%
17%
17%
11%
(9)%
*
*
*
67%
92%
Operating loss
Operating margin
$ (190,456)
(4.0)%
Adjusted operating income **
$
50,547
$
$
_______
* Percentages are not meaningful.
** AOI is defined and reconciled to operating income (loss) below.
34
Year Ended 2014 Compared to Year Ended 2013
Concerts revenue increased $209.7 million, or 5%, during the year ended December 31, 2014 as compared to the prior
year. Excluding the increase of $8.2 million related to the impact of changes in foreign exchange rates, revenue increased
$201.5 million, or 4%, primarily due to more shows at North America stadiums and amphitheaters and increased North
America festival activity offset by fewer events in international arenas and stadiums driven by less available touring content.
Revenue was also impacted by incremental revenue of $48.1 million primarily from the acquisition of festival promoter
businesses.
Concerts direct operating expenses increased $186.5 million, or 5%, during the year ended December 31, 2014 as
compared to the prior year. Excluding the increase of $9.3 million related to the impact of changes in foreign exchange rates,
direct operating expenses increased $177.2 million, or 5%, primarily due to higher expenses associated with the increased show
activity discussed above. In addition, we incurred incremental expenses of $50.6 million from the acquisitions noted above.
Concerts selling, general and administrative expenses increased $33.9 million, or 5%, during the year ended
December 31, 2014 as compared to the prior year primarily due to higher compensation costs driven by annual salary increases
and additional headcount along with a reduction in rent expense during 2013 due to the recognition of an incentive payment for
early termination of a venue lease. In addition, we incurred incremental expenses of $8.6 million from the acquisitions noted
above.
Concerts depreciation and amortization decreased $17.3 million, or 13%, during the year ended December 31, 2014 as
compared to the prior year primarily due to higher impairment charges and amortization acceleration of certain intangible
assets recorded during 2013. We recorded impairment charges of $8.6 million in 2013 primarily associated with venue
management and leasehold intangible assets when it was determined that the estimated undiscounted cash flows associated
with the respective intangible asset was less than its carrying value. In addition, in 2013 we accelerated $6.7 million of
amortization associated with a change in the estimated useful lives of certain venue management and leasehold intangible
assets. We did not record any significant impairment charges or accelerated amortization of long-lived assets during 2014.
Concerts recorded a goodwill impairment of $117.0 million related to our international concerts business. The
impairment was recorded in the fourth quarter of 2014 in connection with our annual impairment test discussed in “—Critical
Accounting Policies —Goodwill.”
Concerts gain on disposal of operating assets of $3.0 million for the year ended December 31, 2014 consists primarily of
the final insurance recovery for storm damage to an amphitheater in New York during Hurricane Sandy in 2012. Concerts gain
on disposal of operating assets of $38.9 million for the year ended December 31, 2013 was primarily due to a $24.8 million
gain on the sale of a theater in New York and $14.1 million related to insurance recoveries from the storm damage discussed
above.
Concerts acquisition transaction expenses increased $4.4 million for the year ended December 31, 2014 as compared to
the prior year primarily due to costs associated with our acquisition of a festival and concert promoter in the United States.
The increased operating loss for Concerts for the year ended December 31, 2014 was primarily driven by the goodwill
impairment, lower gain on disposal of operating assets, higher selling, general and administrative expenses and lower results
from our international business. These decreases were partially offset by increased North America show activity.
Year Ended 2013 Compared to Year Ended 2012
Concerts revenue increased $646.8 million, or 17%, during the year ended December 31, 2013 as compared to the prior
year partially due to incremental revenue of $144.7 million from the acquisitions of various festival promoters. In addition,
revenue increased due to more shows and higher average attendance in our arenas globally and North America owned or
operated amphitheaters, increased shows in third-party stadiums globally and expansion of premium ticket package sales.
These increases were partially offset by less global touring activity.
Concerts direct operating expenses increased $555.0 million, or 17%, during the year ended December 31, 2013 as
compared to the prior year partially due to incremental direct operating expenses of $162.1 million from acquisitions. In
addition, we incurred higher expenses associated with the additional shows and attendance as discussed above. These increases
were partially offset by lower costs due to reduced global touring activity.
Concerts selling, general and administrative expenses increased $63.0 million, or 11%, during the year ended
December 31, 2013 as compared to the prior year primarily due to higher compensation costs associated with improved
operating results and increased headcount along with incremental expenses of $8.4 million from the acquisitions noted above.
Concerts depreciation and amortization decreased $13.2 million, or 9%, during the year ended December 31, 2013 as
compared to the prior year primarily due to higher impairments of intangible assets in 2012. We recorded impairment charges
of $8.6 million in 2013 primarily associated with venue management and leasehold intangible assets as compared to
35
impairment charges of $26.9 million in 2012 primarily related to revenue-generating contract intangibles. In each case, it was
determined that the estimated undiscounted cash flows associated with the respective intangible asset was less than its carrying
value. This decrease was partially offset by additional amortization associated with recent acquisitions and $6.7 million of
accelerated amortization recorded in 2013 resulting from a change in the estimated useful life of certain venue management and
leasehold intangible assets.
Concerts gain on disposal of operating assets of $38.9 million for the year ended December 31, 2013 is primarily due to a
$24.8 million gain on sale of a theater in New York and $14.1 million of insurance recoveries for storm damage to an
amphitheater in New York during Hurricane Sandy in 2012.
The decreased operating loss for Concerts for the year ended December 31, 2013 was primarily driven by more shows
and higher average attendance, reduced amortization expense and the gain on disposal of operating assets. These increases were
partially offset by higher compensation costs related to the improved operating results.
Ticketing Results of Operations
Our Ticketing segment operating results were, and discussions of significant variances are, as follows:
Year Ended December 31,
2014
2013
2012
(in thousands)
$ 1,557,254
$ 1,407,817
$ 1,374,049
763,280
672,221
651,055
471,982
204,901
(1,583)
1,381
117,293
7.5%
326,121
$
$
442,788
190,801
(4)
245
101,766
7.2%
298,121
$
$
$
$
434,310
165,947
(225)
153
122,809
8.9%
%
Change
2014 vs
2013
%
Change
2013 vs
2012
11%
14%
7%
7%
*
*
2%
3%
2%
15%
*
*
15%
(17)%
294,625
9%
1%
Revenue
Direct operating expenses
Selling, general and administrative
expenses
Depreciation and amortization
Gain on disposal of operating assets
Acquisition transaction expenses
Operating income
Operating margin
Adjusted operating income **
_________________
* Percentages are not meaningful.
** AOI is defined and reconciled to operating income (loss) below.
Year Ended 2014 Compared to Year Ended 2013
Ticketing revenue increased $149.4 million, or 11%, during the year ended December 31, 2014 as compared to the prior
year. Excluding the decrease of $11.2 million related to the impact of changes in foreign exchange rates, revenue increased
$160.6 million, or 11%, primarily due to increased primary ticket sales and fees along with higher domestic resale ticket fees
driven by growth in concert and professional sports ticket sales as a result of the continuing success of our TM+ resale product.
Ticketing direct operating expenses increased $91.1 million, or 14%, during the year ended December 31, 2014 as
compared to the prior year. Excluding the decrease of $5.2 million related to the impact of changes in foreign exchange rates,
direct operating expenses increased $96.3 million, or 14%, primarily due to higher costs associated with the increased primary
and resale ticket sales discussed above partially offset by a legal settlement received in 2014.
Ticketing selling, general and administrative expenses increased $29.2 million, or 7%, during the year ended
December 31, 2014 as compared to the prior year primarily due to higher compensation costs associated with annual salary
increases and legal settlements received from insurance carriers in 2013.
Ticketing depreciation and amortization increased $14.1 million, or 7%, during the year ended December 31, 2014 as
compared to the prior year primarily due to increased depreciation from continued investment in our technology platform and
higher amortization associated with the impairment of certain intangible assets. In 2014, we recorded impairment charges of
$9.2 million associated with an indefinite-lived intangible trade name in connection with the decision to rebrand certain
markets that were not currently using the Ticketmaster trade name along with the impairment of certain technology intangible
36
assets as it was determined that the estimated undiscounted cash flows associated with the respective intangible asset were less
than their carrying value.
Ticketing operating income increased for the year ended December 31, 2014 primarily due to increased domestic primary
and resale ticket revenue partially offset by higher compensation costs and increased depreciation and amortization.
Year Ended 2013 Compared to Year Ended 2012
Ticketing revenue increased $33.8 million, or 2%, during the year ended December 31, 2013 as compared to the prior
year primarily due to higher domestic primary and resale ticket volumes partially offset by a reduction in fees associated with
the 2012 Olympics and lower domestic primary ticket fees resulting from the mix of fee structures on certain domestic primary
ticket arrangements.
Ticketing direct operating expenses increased $21.2 million, or 3%, during the year ended December 31, 2013 as
compared to the prior year primarily due to costs related to the higher ticket volumes discussed above. These increases were
partially offset by a reduction in expenses associated with the 2012 Olympics and the change in fee structure noted above.
Ticketing selling, general and administrative expenses increased $8.5 million, or 2%, during the year ended
December 31, 2013 as compared to the prior year primarily due to increased compensation costs driven by the re-platforming
of our ticketing systems and increased costs associated with the renewal of certain sports league ticketing agreements. These
increases were partially offset by legal settlements received from insurance carriers in 2013.
Ticketing depreciation and amortization increased $24.9 million, or 15%, during the year ended December 31, 2013 as
compared to the prior year primarily due to higher amortization of non-recoupable contract advances associated with an
increase in the amount of advances paid in 2013 as compared to the completion of the amortization related to several contracts
in the prior year.
Ticketing operating income decreased for the year ended December 31, 2013 primarily due to increased compensation
expenses associated with the re-platforming of our ticketing systems, increased amortization of contract advances and the
reduction due to the 2012 Olympics. These decreases were partially offset by increases in primary and resale ticket volumes.
Artist Nation Results of Operations
Our Artist Nation segment operating results were, and discussions of significant variances are, as follows:
Year Ended December 31,
2014
2013
2012
(in thousands)
Revenue
$ 389,437
$ 352,947
$ 399,940
Direct operating expenses
212,302
218,113
263,896
Selling, general and administrative
expenses
Depreciation and amortization
Goodwill impairment
Loss (gain) on disposal of operating
assets
Acquisition transaction expenses
138,066
43,343
17,948
34
566
103,304
42,613
—
665
3
99,786
115,696
—
(42)
1,163
%
Change
2014 vs
2013
%
Change
2013 vs
2012
10%
(3)%
34%
2%
*
*
*
(12)%
(17)%
4%
(63)%
*
*
*
Operating loss
Operating margin
$ (22,822)
$ (11,751)
$ (80,559)
(94)%
85%
(5.9)%
(3.3)%
(20.1)%
Adjusted operating income **
$
48,063
$
32,084
$
38,134
50%
(16)%
_______
* Percentages are not meaningful.
** AOI is defined and reconciled to operating income (loss) below.
Year Ended 2014 Compared to Year Ended 2013
Artist Nation revenue increased $36.5 million, or 10%, during the year ended December 31, 2014 as compared to the
prior year primarily due to incremental revenue of $27.3 million resulting from the acquisition or prospective consolidation of
various artist management companies. In addition, revenue increased due to higher management commissions and the
37
expansion of production management projects. These increases were partially offset by a reduction in VIP ticket revenue due to
the decision by the Concerts segment in July 2013 to expand their premium ticket packages and no longer outsource this
service to Artist Nation.
Artist Nation direct operating expenses decreased $5.8 million, or 3%, during the year ended December 31, 2014 as
compared to the prior year primarily due to a reduction in costs associated with the VIP ticket program discontinuation partially
offset by increased costs related to the production management activity as discussed above.
Artist Nation selling, general and administrative expenses increased $34.8 million, or 34%, during the year ended
December 31, 2014 as compared to the prior year primarily due to higher compensation and non-cash compensation expenses
in the management business along with incremental expenses of $10.8 million resulting from the acquisitions and prospective
consolidations discussed above.
Artist Nation depreciation and amortization increased $0.7 million, or 2%, during the year ended December 31, 2014 as
compared to the prior year resulting primarily from an impairment charge of $6.1 million related to a client/vendor relationship
intangible in the management business as it was determined that the estimated undiscounted cash flows associated with the
respective intangible asset were less than their carrying value. The increase was partially offset by lower amortization from
certain intangible assets that became fully amortized in 2013.
Artist Nation recorded a goodwill impairment of $17.9 million related to our artist services (non-management) business.
The impairment was recorded in the fourth quarter of 2014 in connection with our annual impairment test discussed in “—
Critical Accounting Policies —Goodwill”
The increased operating loss for Artist Nation for the year ended December 31, 2014 was primarily driven by the
goodwill impairment. This was partially offset by higher management commissions and the acquisition or prospective
consolidation of various artist management companies.
Year Ended 2013 Compared to Year Ended 2012
Artist Nation revenue decreased $47.0 million, or 12%, during the year ended December 31, 2013 as compared to the
prior year primarily from the decision by the Concerts segment in July 2013 to expand their premium ticket packages and no
longer outsource VIP ticket sales to Artist Nation along with a reduction in management revenue due to the departure of certain
artist managers. This decrease was partially offset by incremental revenue of $5.2 million resulting from the acquisition of a
production services company in July 2012 along with several artist management companies.
Artist Nation direct operating expenses decreased $45.8 million, or 17%, during the year ended December 31, 2013 as
compared to the prior year primarily due to a reduction in costs associated with the VIP ticket program discontinuation
discussed above.
Artist Nation depreciation and amortization decreased $73.1 million, or 63%, during the year ended December 31, 2013
as compared to the prior year primarily due to higher impairments of intangible assets in 2012 in the management business. We
recorded impairment charges, primarily associated with client/vendor relationship intangible assets, of $2.0 million in 2013
compared to $62.7 million in 2012.
The decreased operating loss for Artist Nation for the year ended December 31, 2013 was primarily driven by the lower
amortization expense.
38
Sponsorship & Advertising Results of Operations
Our Sponsorship & Advertising segment operating results were, and discussions of significant variances are, as follows:
Year Ended December 31,
2014
2013
2012
(in thousands)
%
Change
2014 vs
2013
%
Change
2013 vs
2012
Revenue
Direct operating expenses
Selling, general and administrative
expenses
Depreciation and amortization
Acquisition transaction expenses
Operating income
Operating margin
Adjusted operating income **
_______
* Percentages are not meaningful.
$
300,279
$
284,692
$
247,921
5%
37,973
45,021
34,738
(16)%
50,292
4,281
—
207,733
69.2%
213,410
$
$
45,618
2,351
64
191,638
67.3%
194,807
$
$
$
$
38,198
1,187
—
173,798
70.1%
10%
82%
*
8%
175,619
10%
11%
15%
30%
19%
*
*
10%
** AOI is defined and reconciled to operating income (loss) below.
Year Ended 2014 Compared to Year Ended 2013
Sponsorship & Advertising revenue increased $15.6 million, or 5%, during the year ended December 31, 2014 as
compared to the prior year. Excluding the increase of $1.9 million related to the impact of changes in foreign exchange rates,
revenue increased $13.7 million, or 5%, primarily due to higher domestic online advertising and new, or expansion of existing,
domestic sponsorship agreements along with incremental revenue of $4.2 million from the acquisition of various festival
businesses. These increases were partially offset by lower international festival sponsorships.
Sponsorship & Advertising direct operating expenses decreased $7.0 million, or 16%, during the year ended
December 31, 2014 as compared to the prior year primarily driven by lower fulfillment costs on certain sponsorship agreements
and lower costs associated with the reduction in international festival sponsorships.
Sponsorship & Advertising selling, general and administrative expenses increased $4.7 million, or 10%, during the year
ended December 31, 2014 as compared to the prior year primarily due to higher compensation costs from increased headcount
to drive additional sales in future periods.
Sponsorship & Advertising depreciation and amortization increased $1.9 million, or 82%, during the year ended
December 31, 2014 as compared to the prior year primarily due to incremental amortization related to certain intangible assets
associated with the acquisitions discussed above.
The increased operating income for the year ended December 31, 2014 was primarily due to increased domestic online
advertising and sponsorship programs.
Year Ended 2013 Compared to Year Ended 2012
Sponsorship & Advertising revenue increased $36.8 million, or 15%, during the year ended December 31, 2013 as
compared to the prior year due to growth in online advertising, new sponsorship agreements globally, expansion of existing
sponsorship arrangements and increased custom events. In addition, incremental revenue of $4.3 million resulting from
sponsorships associated with recent acquisitions of festival promoters contributed to the increase.
Sponsorship & Advertising direct operating expenses increased $10.3 million, or 30%, during the year ended
December 31, 2013 as compared to the prior year primarily driven by increased revenue and, in certain cases, higher fulfillment
costs related to custom events.
Sponsorship & Advertising selling, general and administrative expenses increased $7.4 million, or 19%, during the year
ended December 31, 2013 as compared to the prior year primarily due to higher compensation costs associated with improved
performance and increased headcount to drive additional digital and sponsorship sales.
The increased operating income for the year ended December 31, 2013 was primarily due to higher online advertising
and new sponsorship agreements globally partially offset by increased compensation costs.
39
Reconciliation of Segment Adjusted Operating Income (Loss)
AOI is a non-GAAP financial measure that we define as operating income (loss) before acquisition expenses (including
transaction costs, changes in the fair value of accrued acquisition-related contingent consideration arrangements, payments
under the Trust Note and acquisition-related severance), depreciation and amortization (including goodwill impairment), loss
(gain) on disposal of operating assets and non-cash and certain stock-based compensation expense (including expense
associated with grants of certain stock-based awards which were classified as liabilities). We use AOI to evaluate the
performance of our operating segments. We believe that information about AOI assists investors by allowing them to evaluate
changes in the operating results of our portfolio of businesses separate from non-operational factors that affect net income, thus
providing insights into both operations and the other factors that affect reported results. AOI is not calculated or presented in
accordance with GAAP. A limitation of the use of AOI as a performance measure is that it does not reflect the periodic costs of
certain amortizing assets used in generating revenue in our business. Accordingly, AOI should be considered in addition to, and
not as a substitute for, operating income (loss), net income (loss), and other measures of financial performance reported in
accordance with GAAP. Furthermore, this measure may vary among other companies; thus, AOI as presented herein may not
be comparable to similarly titled measures of other companies.
The following table sets forth the reconciliation of adjusted operating income (loss) to operating income (loss):
Adjusted
operating
income
(loss)
Non-cash
and stock-
based
compensation
expense
Loss (gain)
on disposal
of
operating
assets
Depreciation
and
amortization
Goodwill
impairment
Acquisition
expenses
Operating
income
(loss)
(in thousands)
2014
Concerts
Ticketing
Artist Nation
Sponsorship & Advertising
Other and Eliminations
Corporate
Total
2013
Concerts
Ticketing
Artist Nation
Sponsorship & Advertising
Other and Eliminations
Corporate
Total
2012
Concerts
Ticketing
Artist Nation
Sponsorship & Advertising
Other and Eliminations
Corporate
Total
$ 50,547
326,121
48,063
213,410
(102)
(83,175)
$ 554,864
$ 60,326
298,121
32,084
194,807
(1,829)
(78,331)
$ 505,178
$ 31,364
294,625
38,134
175,619
(1,639)
(78,965)
$ 459,138
$
$
$
$
$
$
6,685
4,129
8,994
1,396
—
17,825
39,029
5,740
5,313
554
754
—
16,054
28,415
5,514
6,273
1,876
634
—
22,766
37,063
$
$
(2,954) $ 115,088
(1,583)
204,901
43,343
34
—
4,281
(2,062)
(29)
2,592
38
(4,494) $ 368,143
$ 117,013
—
17,948
—
—
—
$ 134,961
$
5,171
1,381
566
—
38
2,905
$ 10,061
$ (190,456)
117,293
(22,822)
207,733
1,951
(106,535)
7,164
$
$
$
(39,596)
101,766
(11,751)
191,638
3
(102,400)
139,660
— $
—
—
—
—
—
— $
723
245
3
64
—
5,404
6,439
847
— $
(179)
—
1,163
—
—
—
—
—
—
12,840
— $ 14,671
$ (120,096)
122,809
(80,559)
173,798
(191)
(117,400)
(21,639)
$
$ (38,927) $ 132,386
190,801
42,613
2,351
(1,839)
2,611
$ (38,259) $ 368,923
(4)
665
—
7
—
$
$
(453) $ 145,552
(225)
165,947
(42)
115,696
—
1,187
(1,654)
206
2,829
—
(514) $ 429,557
$
$
$
$
40
Liquidity and Capital Resources
Our working capital requirements and capital for our general corporate purposes, including acquisitions and capital
expenditures, are funded from operations or from borrowings under our senior secured credit facility described below. Our cash
is centrally managed on a worldwide basis. Our primary short-term liquidity needs are to fund general working capital
requirements, capital expenditures and debt service requirements while our long-term liquidity needs are primarily related to
acquisitions and debt repayment. Our primary sources of funds for our short-term liquidity needs will be cash flows from
operations and borrowings under our senior secured credit facility, while our long-term sources of funds will be from cash
flows from operations, long-term bank borrowings and other debt or equity financings. We may from time to time engage in
open market purchases of our outstanding debt securities or redeem or otherwise repay such debt.
Our balance sheet reflects cash and cash equivalents of $1.4 billion at December 31, 2014 and $1.3 billion at
December 31, 2013. Included in the December 31, 2014 and 2013 cash and cash equivalents balance is $533.8 million and
$538.4 million, respectively, of cash received that includes the face value of tickets sold on behalf of clients and the clients’
share of convenience and order processing charges, or client cash. We generally do not utilize client cash for our own financing
or investing activities as the amounts are payable to clients on a regular basis. Our foreign subsidiaries held approximately
$477.1 million in cash and cash equivalents, excluding client cash, at December 31, 2014. We do not intend to repatriate these
funds, but if we did, we would need to accrue and pay United States federal and state income taxes on any future repatriations,
net of applicable foreign tax credits. We may from time to time enter into borrowings under our revolving credit facility. If the
original maturity of these borrowings is ninety days or less, we present the borrowings and subsequent repayments on a net
basis in the statement of cash flows to better represent our financing activities. Our balance sheet reflects current and long-term
debt of $2.1 billion at December 31, 2014 and $1.8 billion at December 31, 2013. Our weighted-average cost of debt, excluding
the debt discounts and including the debt premium on our term loans and notes, was 4.3% at December 31, 2014.
Our cash and cash equivalents are held in accounts managed by third-party financial institutions and consist of cash in
our operating accounts and invested cash. Cash held in interest-bearing operating accounts in many cases exceeds the Federal
Deposit Insurance Corporation insurance limits. The invested cash is in interest-bearing funds consisting primarily of bank
deposits and money market funds. While we monitor cash and cash equivalent balances in our operating accounts on a regular
basis and adjust the balances as appropriate, these balances could be impacted if the underlying financial institutions fail. To
date, we have experienced no loss or lack of access to our cash and cash equivalents; however, we can provide no assurances
that access to our cash and cash equivalents will not be impacted by adverse conditions in the financial markets.
For our Concerts segment, we generally receive cash related to ticket revenue at our owned or operated venues in
advance of the event, which is recorded in deferred revenue until the event occurs. With the exception of some upfront costs
and artist deposits, which are recorded in prepaid expenses until the event occurs, we pay the majority of event-related
expenses at or after the event.
We view our available cash as cash and cash equivalents, less ticketing-related client cash, less event-related deferred
revenue, less accrued expenses due to artists and cash collected on behalf of others for ticket sales, plus event-related prepaids.
This is essentially our cash available to, among other things, repay debt balances, make acquisitions and finance capital
expenditures.
Our intra-year cash fluctuations are impacted by the seasonality of our various businesses. Examples of seasonal effects
include our Concerts and Artist Nation segments, which report the majority of their revenue in the second and third quarters.
Cash inflows and outflows depend on the timing of event-related payments but the majority of the inflows generally occur prior
to the event. See “—Seasonality” below. We believe that we have sufficient financial flexibility to fund these fluctuations and
to access the global capital markets on satisfactory terms and in adequate amounts, although there can be no assurance that this
will be the case, and capital could be less accessible and/or more costly given current economic conditions. We expect cash
flows from operations and borrowings under our senior secured credit facility, along with other financing alternatives, to satisfy
working capital requirements, capital expenditures and debt service requirements for at least the succeeding year.
We may need to incur additional debt or issue equity to make other strategic acquisitions or investments. There can be no
assurance that such financing will be available to us on acceptable terms or at all. We may make significant acquisitions in the
near term, subject to limitations imposed by our financing agreements and market conditions.
The lenders under our revolving loans and counterparties to our interest rate hedge agreements consist of banks and other
third-party financial institutions. While we currently have no indications or expectations that such lenders and counterparties
will be unable to fund their commitments as required, we can provide no assurances that future funding availability will not be
impacted by adverse conditions in the financial markets. Should an individual lender default on its obligations, the remaining
lenders would not be required to fund the shortfall, resulting in a reduction in the total amount available to us for future
borrowings, but would remain obligated to fund their own commitments. Should any counterparty to our interest rate hedge
agreements default on its obligations, we could experience higher interest rate volatility during the period of any such default.
41
Sources of Cash
Senior Secured Credit Facility
At December 31, 2014, our senior secured credit facility consisted of (i) a $115 million term loan A, (ii) a $950 million
term loan B and (iii) a $335 million revolving credit facility. In addition, subject to certain conditions, we have the right to
increase the facility by at least $450 million or a greater amount so long as the senior secured leverage ratio calculated on a pro-
forma basis (as defined in the credit agreement) is no greater than 3.25x. The revolving credit facility provides for borrowings
up to the amount of the facility with sublimits of up to (i) $150 million to be available for the issuance of letters of credit,
(ii) $50 million to be available for swingline loans and (iii) $150 million to be available for borrowings in Euros or British
Pounds and (iv) $50 million to be available for borrowings in one or more other approved currencies. The senior secured credit
facility is secured by a first priority lien on substantially all of our tangible and intangible personal property and the domestic
subsidiaries that are guarantors, and by a pledge of substantially all of the shares of stock, partnership interests and limited
liability company interests of our direct and indirect domestic subsidiaries and 65% of each class of capital stock of any first-
tier foreign subsidiaries.
The interest rates per annum applicable to revolving credit facility loans and term loan A under the senior secured credit
facility are, at our option, equal to either LIBOR plus 2.25% or a base rate plus 1.25%, subject to stepdowns based on our net
leverage ratio. The interest rates per annum applicable to term loan B are, at our option, equal to either LIBOR plus 2.75% or a
base rate plus 1.75%, subject to a LIBOR floor of 0.75% and a base rate floor of 1.75%. We are required to pay a commitment
fee of 0.5% per year on the undrawn portion available under the revolving credit facility, subject to stepdowns based on our net
leverage ratio, and variable fees on outstanding letters of credit.
For the term loan A, we are required to make quarterly payments increasing over time from $2.9 million to $13.8 million
with the balance due at maturity in August 2018. For the term loan B, we are required to make quarterly payments of $2.4
million with the balance due at maturity in August 2020. The revolving credit facility matures in August 2018. We are also
required to make mandatory prepayments of the loans under the credit agreement, subject to specified exceptions, from excess
cash flow, and with the proceeds of asset sales, debt issuances and specified other events.
During the year ended December 31, 2014, we made principal payments totaling $18.1 million primarily on these term
loans. At December 31, 2014, the outstanding balances on these term loans, net of discounts, were $1.0 billion. There were no
borrowings under the revolving credit facility as of December 31, 2014. Based on our letters of credit of $62.0 million, $273.0
million was available for future borrowings.
7% Senior Notes
In August 2013, we issued an additional $200 million principal amount of notes under the indenture governing our
existing 7% senior notes due 2020 with a $9.0 million premium, which increased the total principal amount of such notes
outstanding to $425 million. Interest on the notes is payable semi-annually in arrears on March 1 and September 1 of each year
and the notes will mature on September 1, 2020. We may redeem some or all of the notes at any time prior to September 1,
2016 at a price equal to 100% of the aggregate principal amount, plus any accrued and unpaid interest to the date of
redemption, plus a ‘make-whole’ premium using a discount rate equal to the treasury rate plus 50 basis points. We may also
redeem up to 35% of the notes from the proceeds of certain equity offerings prior to September 1, 2015, at a price equal to
107% of the principal amount, plus any accrued and unpaid interest. In addition, on or after September 1, 2016, we may redeem
at our option some or all of the notes at redemption prices that start at 103.5% of their principal amount, plus any accrued and
unpaid interest to the date of redemption. We must make an offer to redeem the notes at 101% of the aggregate principal
amount, plus any accrued and unpaid interest to the repurchase date, if we experience certain defined changes of control.
Proceeds from the issuance of the additional 7% senior notes and refinancing of our senior secured credit facility,
excluding the outstanding principal amounts for lenders who elected to convert their outstanding term loans, of $802.2 million
were used to repay $472.5 million principal amount of our outstanding borrowings under our then existing senior secured credit
facility, to repay all of our outstanding 8.125% senior notes due 2018 with a principal amount of $250 million and to pay the
related ‘make-whole’ premium on these senior notes and total accrued interest and fees of $35.3 million along with related fees
and expenses for the refinancing of $22.0 million, leaving $22.4 million in additional cash for general corporate purposes. We
recorded $36.3 million as a loss on extinguishment of debt related to this refinancing in 2013.
42
5.375% Senior Notes
In May 2014, we issued $250 million of 5.375% senior notes due 2022. Interest on the notes is payable semi-annually in
arrears on June 15 and December 15, beginning December 15, 2014, and the notes will mature in June 2022. We may redeem
some or all of the notes at any time prior to June 15, 2017 at a price equal to 100% of the principal amount, plus any accrued
and unpaid interest to the date of redemption, plus a ‘make-whole’ premium. We may also redeem up to 35% of the aggregate
principal amount of the notes from the proceeds of certain equity offerings prior to June 15, 2017, at a price equal to 105.375%
of the principal amount, plus any accrued and unpaid interest. In addition, on or after June 15, 2017, we may redeem at our
option some or all of the notes at redemption prices that start at 104.0313% of their principal amount, plus any accrued and
unpaid interest to the date of redemption. We must make an offer to redeem the notes at 101% of the aggregate principal
amount, plus any accrued and unpaid interest to the repurchase date, if we experience certain defined changes of control.
2.5% Convertible Senior Notes
In May 2014, we issued $275 million of convertible senior notes due 2019. The notes pay interest semiannually in arrears
on May 15 and November 15 at a rate of 2.5% per annum, beginning on November 15, 2014. The notes will mature in May
2019 and may not be redeemed by us prior to the maturity date. The notes will be convertible, under certain circumstances,
until November 15, 2018, and on or after such date without condition, at an initial conversion rate of 28.8363 shares of our
common stock per $1,000 principal amount of notes, subject to adjustment, which represents a 52.5% conversion premium
based on the last reported sale price for our common stock of $22.74 on May 19, 2014. Upon conversion, the notes may be
settled in shares of common stock or, at our election, cash or a combination of cash and shares of common stock. Assuming we
fully settled the notes in shares, the maximum number of shares that could be issued to satisfy the conversion is currently 7.9
million.
If we experience a fundamental change, as defined in the indenture governing the notes, the holders of the 2.5%
convertible senior notes may require us to purchase for cash all or a portion of their notes, subject to specified exceptions, at a
price equal to 100% of the principal amount of the notes plus accrued and unpaid interest, if any.
Extinguishment of Debt
In July 2014, the holders of $29.3 million in aggregate outstanding principal of the 2.875% convertible senior notes
exercised their right to redeem their notes for cash and in late September 2014, pursuant to our option under the indenture
governing the notes, we redeemed the remaining outstanding notes using the net proceeds from the issuances of our 5.375%
senior notes and our 2.5% convertible senior notes. In addition to redeeming the principal amount of $220 million of the notes,
we paid total accrued interest of $1.1 million and related fees and expenses of $0.2 million, leaving $293.9 million in additional
cash available for general corporate purposes. The loss on extinguishment of debt in 2014 related to the redemption of the
2.875% convertible senior notes was not significant.
Debt Covenants
Our amended senior secured credit facility contains a number of covenants and restrictions that, among other things,
requires us to satisfy certain financial covenants and restricts our and our subsidiaries’ ability to incur additional debt, make
certain investments and acquisitions, repurchase our stock and prepay certain indebtedness, create liens, enter into agreements
with affiliates, modify the nature of our business, enter into sale-leaseback transactions, transfer and sell material assets, merge
or consolidate, and pay dividends and make distributions (with the exception of subsidiary dividends or distributions to the
parent company or other subsidiaries on at least a pro-rata basis with any noncontrolling interest partners). Non-compliance
with one or more of the covenants and restrictions could result in the full or partial principal balance of the credit facility
becoming immediately due and payable. The amended senior secured credit facility agreement has one covenant, measured
quarterly, that relates to total leverage. The consolidated total leverage covenant requires us to maintain a ratio of consolidated
total funded debt to consolidated EBITDA (both as defined in the amended credit agreement) of 5.0x over the trailing four
consecutive quarters through September 30, 2015. The consolidated total leverage ratio will reduce to 4.75x on December 31,
2015 and 4.50x on December 31, 2016.
The indentures governing our 7% senior notes and 5.375% senior notes contain covenants that limit, among other things,
our ability and the ability of our restricted subsidiaries to incur certain additional indebtedness and issue preferred stock, make
certain distributions, investments and other restricted payments, sell certain assets, agree to any restrictions on the ability of
restricted subsidiaries to make payments to us, merge, consolidate or sell all of our assets, create certain liens, and engage in
transactions with affiliates on terms that are not arms-length. Certain covenants, including those pertaining to incurrence of
indebtedness, restricted payments, asset sales, mergers and transactions with affiliates will be suspended during any period in
which the notes are rated investment grade by both rating agencies and no default or event of default under the indenture has
occurred and is continuing. The 7% senior notes and the 5.375% senior notes contain two incurrence-based financial covenants,
as defined, requiring a minimum fixed charge coverage ratio of 2.0x and a maximum secured indebtedness leverage ratio of
3.25x for the 7% senior notes and 3.5x for the 5.375% senior notes.
43
Some of our other subsidiary indebtedness includes restrictions on entering into various transactions, such as acquisitions
and disposals, and prohibits payment of ordinary dividends. They also have financial covenants including minimum
consolidated EBITDA to consolidated net interest payable, minimum consolidated cash flow to consolidated debt service and
maximum consolidated debt to consolidated EBITDA, all as defined in the applicable debt agreements.
As of December 31, 2014, we believe we were in compliance with all of our debt covenants. We expect to remain in
compliance with all of our debt covenants throughout 2015.
Disposals of Assets
During 2013 we received $82.6 million of proceeds primarily related to the sale of a theater in New York and insurance
recoveries for storm damage sustained to an amphitheater located in New York. There were no significant disposals of
operating assets in 2014 and 2012.
Stock Option Exercises
During 2014 and 2013 we received $21.8 million and $85.1 million, respectively, of proceeds from the exercise of stock
options. There were no significant stock option exercises during 2012.
Uses of Cash
Acquisitions
When we make acquisitions, the acquired entity may have cash on its balance sheet at the time of acquisition. All amounts
discussed in this section are presented net of any cash acquired. During 2014, we used $210.2 million of cash primarily for
acquisitions of a controlling interest in a festival and concert promoter located in the United States in our Concerts and
Sponsorship & Advertising segments and three acquisitions of artist management businesses located in the United States in our
Artist Nation segment.
During 2013, we used $93.5 million of cash primarily for acquisitions of controlling interests in festival promoters
located in the United States and the United Kingdom, both in our Concerts segment, along with the acquisition in our Artist
Nation segment of an artist management business located in the United Kingdom.
During 2012, we used $75.6 million of cash primarily for acquisitions in our Concerts segment of a controlling interest in
a concert promoter located in Australia and two festival promoters located in the United States and the United Kingdom.
Intangibles
During 2012, we used $14.6 million of cash primarily related to the purchase of rights to a festival in Europe. There was
no significant use of cash to purchase intangible assets during 2014 and 2013.
Purchases of Noncontrolling Interests
During 2013, we used $50.9 million of cash primarily for the acquisition of the remaining equity interest in a company
that owns the 3Arena in Ireland. There were no significant acquisitions of noncontrolling interests during 2014 and 2012.
Deferred and Contingent Consideration
We used $10.6 million of cash to settle deferred and contingent consideration liabilities for certain past acquisitions
during 2012. There were no significant payments during 2014 and 2013.
Capital Expenditures
Venue and ticketing operations are capital intensive businesses, requiring continual investment in our existing venues and
ticketing systems in order to address audience and artist expectations, technological industry advances and various federal, state
and/or local regulations.
We categorize capital outlays between maintenance capital expenditures and revenue generating capital expenditures.
Maintenance capital expenditures are associated with the renewal and improvement of existing venues and technology systems,
web development and administrative offices. Revenue generating capital expenditures generally relate to the construction of
new venues, major renovations to existing buildings or buildings that are being added to our venue network, the development
of new online or ticketing tools and technology enhancements. Revenue generating capital expenditures can also include
smaller projects whose purpose is to increase revenue and/or improve operating income. Capital expenditures typically increase
during periods when venues are not in operation since that is the time that such improvements can be completed.
44
Our capital expenditures, including accruals but excluding expenditures funded by outside parties such as landlords or
replacements funded by insurance companies, consisted of the following:
Maintenance capital expenditures
Revenue generating capital expenditures
Total capital expenditures
Year Ended December 31,
2014
2013
2012
(in thousands)
$
60,320
$
59,645
$
73,476
56,732
62,962
60,255
$ 133,796
$ 116,377
$ 123,217
Revenue generating capital expenditures for 2014 increased from the prior year primarily due to an increase in venue-
related projects and higher investments in technology and development of innovative new products.
Revenue generating capital expenditures for 2013 decreased from the prior year primarily due to reduced expenditures
related to the re-platforming of our ticketing system and other ticketing products.
For the years ended December 31, 2014, 2013 and 2012, $4.4 million, $24.7 million and $1.2 million, respectively, of
insurance proceeds and landlord reimbursements have been excluded from capital expenditures in the table above. Included in
this total for 2013, is $18.5 million of insurance proceeds, excluded from revenue generating capital expenditures, to restore an
amphitheater in New York that sustained storm damage.
We currently expect capital expenditures to be approximately $145 million for the year ending December 31, 2015.
Contractual Obligations and Commitments
Firm Commitments
In addition to the scheduled maturities on our debt, we have future cash obligations under various types of contracts. We
lease office space, certain equipment and many of the venues used in our concert operations under long-term operating leases.
Some of our lease agreements contain renewal options and annual rental escalation clauses (generally tied to the consumer
price index), as well as provisions for our payment of utilities and maintenance. We also have minimum payments associated
with non-cancelable contracts related to our operations such as artist guarantee contracts and client ticketing agreements. As
part of our ongoing capital projects, we will enter into construction-related commitments for future capital expenditure work.
The scheduled maturities discussed below represent contractual obligations as of December 31, 2014 and thus do not represent
all expected expenditures for those periods.
The scheduled maturities of our outstanding long-term debt (excluding unamortized debt discounts and premium), future
minimum rental commitments under non-cancelable lease agreements, minimum payments under other non-cancelable
contracts, capital expenditure commitments and expected payments of contingent consideration liabilities as of December 31,
2014 are as follows:
Long-term debt obligations, including current
maturities:
Term loans and revolving credit facility
7% senior notes
2.5% convertible senior notes (1)
5.375% senior note
Other long-term debt
Estimated interest payments (2)
Non-cancelable operating leases (3)
Non-cancelable contracts (3)
Capital expenditures
Contingent and deferred consideration
Total
Payments Due by Period
Total
2015
2016-2017
(in thousands)
2020 and
2018-2019
thereafter
$ 1,043,062
425,000
275,000
250,000
96,031
504,278
2,240,542
1,392,307
10,107
25,951
$ 6,262,278
$
$
21,000
—
—
—
26,485
69,600
—
—
—
31,242
90,828
135,816
877,072
9,807
1,703
$ 1,162,711
173,918
264,831
427,777
50
21,850
$ 989,268
$
61,837
—
275,000
10,011
161,060
229,724
77,340
—
2,398
$ 817,370
$ 890,625
425,000
—
250,000
28,293
78,472
1,610,171
10,118
250
—
$ 3,292,929
45
(1) On or after November 2018, holders may convert their 2.5% convertible senior notes.
(2) Does not include interest on the revolving credit facility as the balance was zero as of December 31, 2014.
(3) Commitment amounts for non-cancelable operating leases and non-cancelable contracts which stipulate an increase in the
commitment amount based on an inflationary index have been estimated using an inflation factor of 2.4% for North
America, 3.3% for the United Kingdom and 1.8% for the Netherlands.
_____________
During 2006, in connection with our acquisition of the Historic Theatre Group, we guaranteed obligations related to a
lease agreement. In the event of default, we could be liable for obligations which have future lease payments (undiscounted) of
approximately $20.0 million through the end of 2035 which are not reflected in the table above. The scheduled future minimum
rentals for this lease for the years 2015 through 2019 are $1.6 million each year. The venues under the lease agreement were
included in the sale of our North American theatrical business in 2008. The buyer assumed our obligations under the guaranty,
however we remain contingently liable to the lessor. We believe that the likelihood of a material liability being triggered under
this lease is remote, and no liability has been accrued for these contingent lease obligations as of December 31, 2014.
Aggregate minimum rentals of $70.5 million to be received in years 2015 through 2023 under non-cancelable subleases
are excluded from the commitment amounts in the above table.
Guarantees of Third-Party Obligations
As of December 31, 2014 and 2013, we guaranteed the debt of third parties of approximately $13.1 million, in each
respective year, primarily related to maximum credit limits on employee and tour-related credit cards and obligations under a
venue management agreement.
Cash Flows
Cash provided by (used in):
Operating activities
Investing activities
Financing activities
Operating Activities
Year Ended December 31,
2014
2013
2012
(in thousands)
$ 269,409
$ 367,098
$ 417,472
$ (384,294) $ (143,663) $ (203,791)
(19,891)
$ 240,864
32,984
$
$
Year Ended 2014 Compared to Year Ended 2013
Cash provided by operating activities was $269.4 million for the year ended December 31, 2014, compared to $417.5
million for the year ended December 31, 2013. The $148.1 million decrease in cash provided by operating activities resulted
primarily from net changes in the event-related operating accounts which are dependent on the timing of ticket sales along with
the size and number of future events. During 2014, this change was primarily due to an increase in prepaid event-related
expenses driven by the timing of artist advances. Partially offsetting this use of operating cash was an increase in the cash
portion of net income driven by growth in operating results in 2014.
Year Ended 2013 Compared to Year Ended 2012
Cash provided by operating activities was $417.5 million for the year ended December 31, 2013, compared to $367.1
million for the year ended December 31, 2012. The $50.4 million increase in cash provided by operating activities resulted
primarily from an increase in the cash-related portion of net income driven by our improved operating results in 2013. In
addition, we had higher collections of accounts receivable and also benefited from increases in accrued expenses in 2013 as
compared to the prior year.
Investing Activities
Year Ended 2014 Compared to Year Ended 2013
Cash used in investing activities was $384.3 million for the year ended December 31, 2014, compared to $143.7 million
for the year ended December 31, 2013. The $240.6 million increase in cash used in investing activities is primarily due to
higher payments for acquisitions and lower proceeds received from the disposal of operating assets as compared to the prior
year. See “—Sources of Cash” and “—Uses of Cash” above for further discussion.
46
Year Ended 2013 Compared to Year Ended 2012
Cash used in investing activities was $143.7 million for the year ended December 31, 2013, compared to $203.8 million
for the year ended December 31, 2012. The $60.1 million decrease in cash used in investing activities is primarily due to higher
proceeds received from the disposal of operating assets in 2013 as compared to the prior year. See “—Sources of Cash” above
for further discussion.
Financing Activities
Year Ended 2014 Compared to Year Ended 2013
Cash provided by financing activities was $240.9 million for the year ended December 31, 2014, compared to $33.0
million for the year ended December 31, 2013. The $207.9 million increase in cash provided by financing activities is primarily
a result of higher net proceeds from the issuance of the 5.375% senior notes and 2.5% convertible senior notes after repayment
of the 2.875% convertible senior notes and lower payments for purchases of noncontrolling interests partially offset by lower
proceeds from the exercise of stock options in 2014 as compared to the prior year.
Year Ended 2013 Compared to Year Ended 2012
Cash provided by financing activities was $33.0 million for the year ended December 31, 2013, compared to cash used in
financing activities of $19.9 million for the year ended December 31, 2012. The $52.9 million increase in cash provided by
financing activities is primarily a result of higher proceeds from the exercise of stock options partially offset by higher
purchases of non-controlling interests in 2013 as compared to the prior year.
Seasonality
Our Concerts, Artist Nation and Sponsorship & Advertising segments typically experience higher operating income in the
second and third quarters as our outdoor venues and festivals are primarily used in or occur during May through September,
and our artist touring activity is higher. In addition, the timing of the on-sale of tickets and the tours of top-grossing acts can
impact comparability of quarterly results year over year, although annual results may not be impacted. Our Ticketing segment
sales are impacted by fluctuations in the availability of events for sale to the public, which vary depending upon scheduling by
our clients.
Cash flows from our Concerts segment typically have a slightly different seasonality as payments are often made for
artist performance fees and production costs for global tours in advance of the date the related event tickets go on sale. These
artist fees and production costs are expensed when the event occurs. Once tickets for an event go on sale, we generally begin to
receive payments from ticket sales at our owned or operated venues in advance of when the event occurs. We record these
ticket sales as revenue when the event occurs.
We expect these trends to continue in the future. See Item 1A.—Risk Factors-Our operations are seasonal and our results
of operations vary from quarter to quarter and year over year, so our financial performance in certain financial quarters or years
may not be indicative of, or comparable to, our financial performance in subsequent quarters or years.
Market Risk
We are exposed to market risks arising from changes in market rates and prices, including movements in foreign currency
exchange rates and interest rates.
Foreign Currency Risk
We have operations in countries throughout the world. The financial results of our foreign operations are measured in
their local currencies. As a result, our financial results could be affected by factors such as changes in foreign currency
exchange rates or weak economic conditions in the foreign markets in which we have operations. Currently, we do not operate
in any hyper-inflationary countries. Excluding the goodwill impairment, our foreign operations reported operating income of
$85.9 million for the year ended December 31, 2014. We estimate that a 10% change in the value of the United States dollar
relative to foreign currencies would change our operating income for the year ended December 31, 2014 by $8.6 million. As of
December 31, 2014, our most significant foreign exchange exposure included the Euro, British Pound, Australian Dollar and
Canadian Dollar. This analysis does not consider the implication such currency fluctuations could have on the overall economic
conditions of the United States or other foreign countries in which we operate or on the results of operations of our foreign
entities.
We primarily use forward currency contracts in addition to options to reduce our exposure to foreign currency risk
associated with short-term artist fee commitments. We also may enter into forward currency contracts to minimize the risks
and/or costs associated with changes in foreign currency rates on forecasted operating income. At December 31, 2014, we had
forward currency contracts and options outstanding with a notional amount of $63.3 million.
47
Interest Rate Risk
Our market risk is also affected by changes in interest rates. We had $2.1 billion of total debt, net of unamortized
discounts and premium, outstanding as of December 31, 2014. Of the total amount, taking into consideration existing interest
rate hedges, we had $1.0 billion of fixed-rate debt and $1.1 billion of floating-rate debt.
Based on the amount of our floating-rate debt as of December 31, 2014, each 25 basis point increase or decrease in
interest rates would increase or decrease our annual interest expense and cash outlay by approximately $2.6 million when the
floor rate is not applicable. This potential increase or decrease is based on the simplified assumption that the level of floating-
rate debt remains constant with an immediate across-the-board increase or decrease as of December 31, 2014 with no
subsequent change in rates for the remainder of the period.
At December 31, 2014, we have an interest rate swap agreement that is designated as a cash flow hedge for accounting
purposes. The interest rate swap had a notional amount of $6.8 million at December 31, 2014, to effectively convert a portion
of our floating-rate debt to a fixed-rate basis, and expires in May 2015. The fair value of this agreement at December 31, 2014
was not significant. This agreement was put into place to reduce the variability of the cash flows from the interest payments
related to certain financing.
We have two interest rate swap agreements with a $22.5 million aggregate notional amount at December 31, 2014, that
effectively convert a portion of our floating-rate debt to a fixed-rate basis. Both agreements expire in December 2015. These
interest rate swap agreements have not been designated as hedging instruments. Therefore, any change in fair value is recorded
in earnings during the period of the change.
Recent Accounting Pronouncements
Recently Issued Pronouncements
In April 2014, the FASB issued guidance that raises the threshold for a disposal to qualify as a discontinued operation and
requires new disclosures of both discontinued operations and certain other disposals that do not meet the definition of a
discontinued operation. The guidance is effective for disposals (or classifications as held for sale) of components of an entity
that occur within annual periods beginning on or after December 15, 2014 and interim periods within that year. This guidance is
applied prospectively and early adoption is permitted. We will adopt this guidance on January 1, 2015 and will apply it
prospectively to disposals occurring on or after January 1, 2015.
In May 2014, the FASB issued a comprehensive new revenue recognition standard that will supersede nearly all existing
revenue recognition guidance under GAAP. The new standard provides a five-step analysis of transactions to determine when
and how revenue is recognized. The core principle of the guidance is that a company should recognize revenue to depict the
transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to
be entitled in exchange for those goods or services. The standard is effective for annual and interim periods beginning after
December 15, 2016, and early adoption of the standard is not permitted. The guidance should be applied retrospectively, either
to each prior period presented in the financial statements, or only to the most current reporting period presented in the financial
statements with a cumulative-effect adjustment as of the date of adoption. We will adopt this standard on January 1, 2017, and
are currently assessing which implementation method we will apply and the impact its adoption will have on our financial
position and results of operations.
In June 2014, the FASB issued guidance that requires a performance target in a share-based payment that affects vesting,
and that could be achieved after the requisite service period, be accounted for as a performance condition. The guidance is
effective for annual periods beginning after December 15, 2015 and interim periods within that year, and early adoption is
permitted. The guidance should be applied on a prospective basis to awards that are granted or modified on or after the
effective date. The guidance may be applied on a modified retrospective basis for performance targets outstanding on or after
the beginning of the first annual period presented as of the date of adoption. We do not currently expect to grant these type of
awards, but will adopt this guidance on January 1, 2016 and will apply it prospectively to any awards granted on or after
January 1, 2016 that include these terms.
In February 2015, the FASB issued new guidance for evaluating whether a reporting organization should consolidate
certain legal entities. This guidance is effective for annual and interim periods beginning after December 15, 2015, and early
adoption is permitted. The guidance should be applied either using a modified retrospective approach or retrospectively. We
will adopt this standard on January 1, 2016, and we are currently assessing which implementation method we will apply and
the impact its adoption will have on our financial position and results of operations.
Critical Accounting Policies and Estimates
The preparation of our financial statements in conformity with GAAP requires management to make estimates,
judgments and assumptions that affect the reported amounts of assets and liabilities, disclosure of contingent assets and
48
liabilities at the date of the financial statements and the reported amount of revenue and expenses during the reporting period.
On an ongoing basis, we evaluate our estimates that are based on historical experience and on various other assumptions that
are believed to be reasonable under the circumstances. The result of these evaluations forms the basis for making judgments
about the carrying values of assets and liabilities and the reported amount of revenue and expenses that are not readily apparent
from other sources. Because future events and their effects cannot be determined with certainty, actual results could differ from
our assumptions and estimates, and such difference could be material. Management believes that the following accounting
estimates are the most critical to aid in fully understanding and evaluating our reported financial results, and they require
management’s most difficult, subjective or complex judgments, resulting from the need to make estimates about the effect of
matters that are inherently uncertain. The following narrative describes these critical accounting estimates, the judgments and
assumptions and the effect if actual results differ from these assumptions where applicable.
Consolidation
We consolidate entities in which we own more than 50% of the voting common stock and control operations and also
VIEs for which we are the primary beneficiary. Investments in nonconsolidated affiliates in which we own more than 20% of
the voting common stock or otherwise exercise significant influence over operating and financial policies, but not control of the
nonconsolidated affiliate, are accounted for using the equity method of accounting. Investments in nonconsolidated affiliates in
which we own less than 20% of the voting common stock are accounted for using the cost method of accounting. Intercompany
accounts among the consolidated businesses have been eliminated in consolidation. Net income (loss) attributable to
noncontrolling interests is reflected in the statements of operations for consolidated affiliates.
Business Combinations
We account for our business combinations under the acquisition method of accounting. Identifiable assets acquired,
liabilities assumed and any noncontrolling interest in the acquiree are recognized and measured as of the acquisition date at fair
value. Additionally, contingent consideration is recorded at fair value on the acquisition date and classified as a liability.
Goodwill is recognized to the extent by which the aggregate of the acquisition-date fair value of the consideration transferred
and any noncontrolling interest in the acquiree exceeds the recognized basis of the identifiable assets acquired, net of assumed
liabilities. Determining the fair value of assets acquired, liabilities assumed and noncontrolling interest requires management’s
judgment and often involves the use of significant estimates and assumptions, including assumptions with respect to future cash
flows, discount rates and asset lives among other items.
Property, Plant and Equipment
We test for possible impairment of property, plant and equipment whenever events or circumstances change, such as a
current period operating cash flow loss combined with a history of, or projected, operating cash flow losses or a significant
adverse change in the manner in which the asset is intended to be used, which may indicate that the carrying amount of the
asset may not be recoverable. If indicators exist, we compare the estimated undiscounted future cash flows related to the assets
to the carrying amount of those assets. If the carrying value is greater than the estimated undiscounted future cash flows, the
cost basis of the asset is reduced to reflect the current fair value. We use various assumptions in determining the current fair
value of these assets, including future expected cash flows and discount rates, as well as future salvage values and other fair
value measures. Our impairment loss calculations require us to apply judgment in estimating future cash flows, including
forecasting useful lives of the assets and selecting the discount rate that reflects the risk inherent in future cash flows.
If actual results are not consistent with our assumptions and judgments used in estimating future cash flows and asset fair
values, we may be exposed to future impairment losses that could be material to our results of operations.
Intangibles
We test for possible impairment of definite-lived intangible assets whenever events or circumstances change, such as a
current period operating cash flow loss combined with a history of, or projected, operating cash flow losses or a significant
adverse change in the manner in which the asset is intended to be used, which may indicate that the carrying amount of the
asset may not be recoverable. When specific assets are determined to be unrecoverable, the cost basis of the asset is reduced to
reflect the current fair value.
We test for possible impairment of indefinite-lived intangible assets on at least an annual basis. Based on facts and
circumstances, we perform either a qualitative or a quantitative assessment for impairment. If a qualitative assessment is
performed, and the existence of events and circumstances indicate that it is more likely than not that an indefinite-lived
intangible asset is impaired, then we perform the quantitative impairment test by comparing the fair value with the carrying
amount. When specific assets are determined to be impaired, the cost basis of the asset is reduced to reflect the current fair
value.
We use various assumptions in determining the current fair value of these definite-lived and indefinite-lived intangible
assets, including future expected cash flows and discount rates, as well as other fair value measures. For intangibles related to
49
artist rights, we use assumptions about future revenue and operating income for the rights acquired. These projections are based
on information about the artists’ past results and expectations about future results. Our impairment loss calculations require us
to apply judgment in estimating future cash flows, including forecasting useful lives of the assets and selecting the discount rate
that reflects the risk inherent in future cash flows.
If actual results are not consistent with our assumptions and judgments used in estimating future cash flows and asset fair
values, we may be exposed to future impairment losses that could be material to our results of operations.
Goodwill
We currently have seven reporting units with goodwill balances: International Concerts and North American Concerts
within the Concerts segment; Artist Management and Artist Services (non-management) within the Artist Nation segment;
International Ticketing and North American Ticketing within the Ticketing segment; and Sponsorship & Advertising.
We review goodwill for impairment annually, as of October 1, using a three-step process. We also test goodwill for
impairment in other periods if an event occurs or circumstances change that would more likely than not reduce the fair value of
a reporting unit below its carrying amount or when we change our operating segments or reporting units.
The first step is a qualitative evaluation as to whether it is more likely than not that the fair value of any of our reporting
units is less than its carrying value using an assessment of relevant events and circumstances. Examples of such events and
circumstances include historical financial performance, industry and market conditions, macroeconomic conditions, reporting
unit-specific events, historical results of goodwill impairment testing and the timing of the last performance of a quantitative
assessment. If any reporting units are concluded to be more likely than not impaired, or if that conclusion cannot be determined
qualitatively, a second step is performed for that reporting unit. Regardless, all reporting units undergo a second step at least
once every five years. This second step, used to quantitatively screen for potential impairment, compares the fair value of the
reporting unit with its carrying amount, including goodwill. The third step, employed for any reporting unit that fails the second
step, is used to measure the amount of any potential impairment and compares the implied fair value of the reporting unit’s
goodwill with the carrying amount of goodwill. If a reporting unit’s carrying value is negative, we do not follow this three step
process. In this case, a qualitative evaluation is performed to determine whether it is more likely than not that the reporting
unit’s goodwill is impaired. If it is, the comparison of the implied fair value of the reporting unit’s goodwill with the carrying
amount of goodwill described above is performed. In all three steps, discount rates, market multiples and sensitivity tests are
derived and/or computed with the assistance of external valuation consultants.
The second and third steps that we use to evaluate goodwill for impairment involve the determination of the fair value of
our reporting units. Inherent in such fair value determinations are certain judgments and estimates relating to future cash flows,
including our interpretation of current economic indicators and market valuations, and assumptions about our strategic plans
with regard to our operations. Due to the uncertainties associated with such estimates, actual results could differ from such
estimates.
In developing fair values for our reporting units, we may employ a market multiple or a discounted cash flow
methodology, or a combination thereof. The market multiple methodology compares us to similar companies on the basis of
risk characteristics to determine our risk profile relative to those companies as a group. This analysis generally focuses on both
quantitative considerations, which include financial performance and other quantifiable data, and qualitative considerations,
which include any factors which are expected to impact future financial performance. The most significant assumptions
affecting the market multiple methodology are the market multiples and control premium. A control premium represents the
additional value an investor would pay in order to obtain a controlling interest in the respective company.
The discounted cash flow methodology establishes fair value by estimating the present value of the projected future cash
flows to be generated from the reporting unit. It is important to note that items such as depreciation, amortization and stock-
based compensation expense are not part of cash flows which is more akin to our adjusted operating income metric. The
discount rate applied to the projected future cash flows to arrive at the present value is intended to reflect all risks of ownership
and the associated risks of realizing the stream of projected future cash flows. The discounted cash flow methodology uses our
estimates of future financial performance. The most significant assumptions used in the discounted cash flow methodology are
the discount rate, the attrition rate and expected future revenue, which vary among reporting units.
If actual results are not consistent with our assumptions and judgments used in estimating future cash flows and asset fair
values, we may be exposed to future impairment losses that could be material to our results of operations.
We perform sensitivity analyses when the most likely result is unclear in the first step and for both the second and third
steps in our process. Generally, we test for sensitivities to discount rate, revenue growth, market multiples and customer
attrition, which are the most significant assumptions. We did not identify any reporting units with sensitivity test results that
would change our first step conclusions. The reporting units that did not advance to the second step each had a significant
excess of fair value over their carrying value in the most recent quantitative tests, outperformed their recent financial
expectations, and/or had improvement in their discount rates and market multiples. Although we cannot predict future
50
performance or market conditions, we do not currently believe that any of these reporting units are at risk of failing the second
step in the near future.
The North American Concerts and Artist Management reporting units did advance to the second step, but did not advance
to the third step and their excess of fair value over carrying value ranged from 22% to 37%. Both of these reporting units had
outperformed their recent financial expectations and had improvement in their discount rates. North American Concerts had
improvement in its market multiple whereas Artist Management had a slight decline. Sensitivity tests on North American
Concerts showed that a 300 basis point change in the discount rate was needed to change the conclusion. It was not sensitive to
revenue growth rate, market multiple or control premium changes. Artist Management showed a 150 basis point change in the
discount rate or a 40% decline in the revenue growth rate was needed to change the conclusion. It was not sensitive to market
multiple or control premium changes. Given the amount of excess fair value over carrying value and the results of the
sensitivity tests performed, although we cannot predict future performance or market conditions, we do not currently believe
these two reporting units are at risk of failing the second step in the near future.
Both the International Concerts and Artist Services (non-management) reporting units recorded goodwill impairments in
the fourth quarter of 2014. Both of these reporting units did not meet their financial expectations in the current year, and for
Artist Services, the market multiple decreased slightly. Offsetting these changes were improved discount rates for both
reporting units and an increase in the market multiple for International Concerts. Although both reporting units failed the
second step by only 6% or less and showed some sensitivity to the discount rate, revenue growth and market multiples, such
that it would not take a large change in some of these assumptions to pass the second step, it was concluded that they should
advance to the third step. Sensitivities were performed for the third step; however, those assumptions tested needed more than a
minor improvement to change the conclusion of impairment. After taking into consideration the impairment recorded in 2014,
although we cannot predict future performance or market conditions, we do not currently believe these two reporting units are
at risk of failing the second step in the near future.
Revenue Recognition
Revenue from the promotion and production of an event is recognized after the show occurs. Revenue related to larger
global tours is recognized after the show occurs; however, any profits related to these tours, primarily related to music tour
production and tour management services, is recognized after minimum revenue thresholds, if any, have been achieved.
Revenue collected in advance of the event is recorded as deferred revenue until the event occurs. Revenue collected from
sponsorships and other revenue, which is not related to any single event, is classified as deferred revenue and generally
amortized over the operating season or the term of the contract.
Revenue from our ticketing operations primarily consists of convenience and order processing fees charged at the time a
ticket for an event is sold and is recorded on a net basis (net of the face value of the ticket). For tickets sold for events at our
owned or operated venues in the United States, and where we control the tickets internationally, revenue is recognized after the
show occurs. Revenue for these ticket service charges collected in advance of the event is recorded as deferred revenue until
the event occurs. These service charges will be shared between our Ticketing and Concerts segments. For tickets sold for events
at third-party venues, this revenue is recognized at the time of the sale and is recorded by our Ticketing segment.
We account for taxes that are externally imposed on revenue producing transactions on a net basis, as a reduction of
revenue.
Litigation Accruals
We are currently involved in certain legal proceedings and, as required, have accrued our estimate of the probable costs
for the resolution of these claims. Management’s estimates used have been developed in consultation with counsel and are
based upon an analysis of potential results, assuming a combination of litigation and settlement strategies. It is possible,
however, that future results of operations for any particular period could be materially affected by changes in our assumptions
or the effectiveness of our strategies related to these proceedings.
Income Taxes
We account for income taxes using the liability method in accordance with the FASB guidance for income taxes. Under
this method, deferred tax assets and liabilities are determined based on differences between financial reporting bases and tax
bases of assets and liabilities and are measured using the enacted tax rates expected to apply to taxable income in the periods in
which the deferred tax asset or liability is expected to be realized or settled. Deferred tax assets are reduced by valuation
allowances if we believe it is more likely than not that some portion or the entire asset will not be realized. As almost all
earnings from our continuing foreign operations are permanently reinvested and not distributed, our income tax provision does
not include additional United States taxes on those foreign operations. The amount of earnings at December 31, 2014 that is
permanently reinvested was approximately $1.1 billion. It is not practical to determine the amount of federal and state income
taxes, if any, that might become due in the event that the earnings were distributed.
51
The FASB guidance for income taxes prescribes a recognition threshold and a measurement attribute for the financial
statement recognition and measurement of tax positions taken or expected to be taken in a tax return. For those benefits to be
recognized, a tax position must be more likely than not to be sustained upon examination by taxing authorities. The amount
recognized is measured as the largest amount of benefit that is more likely than not to be realized upon ultimate settlement.
Ratio of Earnings to Fixed Charges
The ratio of earnings to fixed charges is as follows:
2014
*
2013
*
2012
*
2011
*
2010
*
Year Ended December 31,
* For the years ended December 31, 2014, 2013, 2012, 2011 and 2010, fixed charges exceeded earnings from continuing
operations before income taxes and fixed charges by $65.2 million, $6.0 million, $142.1 million, $104.4 million and
$193.6 million, respectively.
The ratio of earnings to fixed charges was computed on a total company basis. Earnings represent income from
continuing operations before income taxes less equity in undistributed net income (loss) of nonconsolidated affiliates plus fixed
charges. Fixed charges represent interest, amortization of debt discounts, premium and expense and the estimated interest
portion of rental charges. Rental charges exclude variable rent expense for events in third-party venues.
ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
Required information is within Item 7. Management’s Discussion and Analysis of Financial Condition and Results of
Operations—Market Risk.
52
Item 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
The Board of Directors and Stockholders of Live Nation Entertainment, Inc.
Report of Independent Registered Public Accounting Firm
We have audited the accompanying consolidated balance sheets of Live Nation Entertainment, Inc. as of December 31, 2014
and 2013, and the related consolidated statements of operations, comprehensive loss, changes in equity and cash flows for each
of the three years in the period ended December 31, 2014. Our audits also included the financial statement schedule listed in the
index at Item 15(a)2. These financial statements and schedule are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements and schedule based on our audits.
We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States).
Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and
disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates
made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in all material respects, the consolidated financial
position of Live Nation Entertainment, Inc. at December 31, 2014 and 2013, and the consolidated results of its operations and
its cash flows for each of the three years in the period ended December 31, 2014, in conformity with U.S. generally accepted
accounting principles. Also in our opinion, the related financial statement schedule, when considered in relation to the basic
financial statements taken as a whole, presents fairly in all material respects the information set forth therein.
We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States),
Live Nation Entertainment, Inc.’s internal control over financial reporting as of December 31, 2014, based on criteria
established in Internal Control-Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway
Commission (2013 framework) and our report dated February 26, 2015 expressed an unqualified opinion thereon.
Los Angeles, California
February 26, 2015
53
LIVE NATION ENTERTAINMENT, INC.
CONSOLIDATED BALANCE SHEETS
Current assets
ASSETS
Cash and cash equivalents
Accounts receivable, less allowance of $17,489 and $19,850 in 2014 and 2013,
respectively
Prepaid expenses
Other current assets
Total current assets
Property, plant and equipment
Land, buildings and improvements
Computer equipment and capitalized software
Furniture and other equipment
Construction in progress
Less accumulated depreciation
Intangible assets
Definite-lived intangible assets, net
Indefinite-lived intangible assets
Goodwill
Other long-term assets
Total assets
Current liabilities
LIABILITIES AND EQUITY
Accounts payable, client accounts
Accounts payable
Accrued expenses
Deferred revenue
Current portion of long-term debt
Other current liabilities
Total current liabilities
Long-term debt, net
Long-term deferred income taxes
Other long-term liabilities
Commitments and contingent liabilities
Redeemable noncontrolling interests
Stockholders’ equity
Preferred stock—Series A Junior Participating, $.01 par value; 20,000,000 shares
authorized; no shares issued and outstanding
Preferred stock, $.01 par value; 30,000,000 shares authorized; no shares issued and
outstanding
Common stock, $.01 par value; 450,000,000 shares authorized; 201,601,859 and
199,974,160 shares issued and 201,193,835 and 199,566,136 shares outstanding in
2014 and 2013, respectively
Additional paid-in capital
Accumulated deficit
Cost of shares held in treasury (408,024 shares)
Accumulated other comprehensive loss
Total Live Nation Entertainment, Inc. stockholders’ equity
Noncontrolling interests
Total equity
Total liabilities and equity
See Notes to Consolidated Financial Statements
54
December 31,
2014
2013
(in thousands, except share data)
$
1,382,029
$
1,299,184
419,301
440,272
26,089
2,267,691
808,116
454,925
209,624
78,111
1,550,776
855,439
695,337
682,713
369,480
1,479,037
494,103
5,988,361
658,108
74,151
675,880
543,122
47,485
12,035
2,010,781
2,015,915
196,759
112,204
$
$
439,151
378,342
43,427
2,160,104
816,931
421,846
210,866
52,883
1,502,526
795,726
706,800
676,564
376,736
1,466,983
296,334
5,683,521
656,253
111,320
668,799
486,433
278,403
54,310
2,255,518
1,530,484
161,637
85,035
$
$
168,855
61,041
—
—
—
—
2,004
2,414,428
(1,042,603)
(6,865)
(70,010)
1,296,954
186,893
1,483,847
5,988,361
$
1,978
2,368,281
(951,796)
(6,865)
(2,370)
1,409,228
180,578
1,589,806
5,683,521
$
LIVE NATION ENTERTAINMENT, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
Revenue
Operating expenses:
Direct operating expenses
Selling, general and administrative expenses
Depreciation and amortization
Goodwill impairment
Gain on disposal of operating assets
Corporate expenses
Acquisition transaction expenses
Operating income (loss)
Interest expense
Loss (gain) on extinguishment of debt
Interest income
Equity in earnings of nonconsolidated affiliates
Other expense, net
Loss before income taxes
Income tax expense
Net loss
Net income (loss) attributable to noncontrolling interests
Net loss attributable to common stockholders of Live Nation
Basic and diluted net loss per common share attributable to common
stockholders of Live Nation
Weighted average common shares outstanding:
Basic and diluted
$
$
Year Ended December 31,
2014
2013
2012
(in thousands except share and per share data)
$
6,866,964
$
6,478,547
$
5,819,047
4,919,969
1,330,160
368,143
134,961
(4,494)
101,000
10,061
7,164
106,312
188
(3,606)
(4,166)
8,256
(99,820)
4,630
(104,450)
(13,643)
(90,807) $
4,680,507
1,226,892
368,923
—
(38,259)
94,385
6,439
139,660
111,659
36,269
(5,071)
(856)
2,796
(5,137)
30,878
(36,015)
7,363
(43,378) $
4,151,277
1,143,632
429,557
—
(514)
113,364
3,370
(21,639)
123,740
(460)
(4,170)
(9,921)
1,333
(132,161)
29,736
(161,897)
1,330
(163,227)
(0.49) $
(0.23) $
(0.88)
198,874,019
193,885,066
186,955,748
See Notes to Consolidated Financial Statements
55
LIVE NATION ENTERTAINMENT, INC.
CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS
Net loss
Other comprehensive income (loss), net of tax:
Unrealized gain (loss) on cash flow hedges
Realized loss (gain) on cash flow hedges
Change in funded status of defined benefit pension plan
Foreign currency translation adjustments
Comprehensive loss
Comprehensive income (loss) attributable to noncontrolling interests
Year Ended December 31,
2014
2013
2012
(in thousands)
$ (104,450) $
(36,015) $ (161,897)
(6)
60
30
(67,724)
(172,090)
(13,643)
20
496
—
8,037
(27,462)
7,363
(148)
(16)
(390)
26,005
(136,446)
1,330
Comprehensive loss attributable to common stockholders of Live Nation
$ (158,447) $
(34,825) $ (137,776)
See Notes to Consolidated Financial Statements
56
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a
LIVE NATION ENTERTAINMENT, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
CASH FLOWS FROM OPERATING ACTIVITIES
Net loss
Reconciling items:
Depreciation
Amortization
Goodwill impairment
Deferred income tax benefit
Amortization of debt issuance costs and discount/premium, net
Loss (gain) on extinguishment of debt
Non-cash compensation expense
Gain on disposal of operating assets
Equity in earnings of nonconsolidated affiliates
Loss (gain) on consolidation of nonconsolidated affiliates
Other, net
Changes in operating assets and liabilities, net of effects of acquisitions and
dispositions:
Decrease (increase) in accounts receivable
Increase in prepaid expenses
Increase in other assets
Increase in accounts payable, accrued expenses and other liabilities
Increase in deferred revenue
Net cash provided by operating activities
CASH FLOWS FROM INVESTING ACTIVITIES
Collections and advances of notes receivable
Distributions from nonconsolidated affiliates
Investments made in nonconsolidated affiliates
Purchases of property, plant and equipment
Proceeds from disposal of operating assets, net of cash divested
Cash paid for acquisitions, net of cash acquired
Purchases of intangible assets
Other, net
Net cash used in investing activities
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from long-term debt, net of debt issuance costs
Payments on long-term debt
Contributions from noncontrolling interests
Distributions to noncontrolling interests
Purchases and sales of noncontrolling interests, net
Proceeds from exercise of stock options
Payments for deferred and contingent consideration
Net cash provided by (used in) financing activities
Effect of exchange rate changes on cash and cash equivalents
Net increase in cash and cash equivalents
Cash and cash equivalents at beginning of period
Cash and cash equivalents at end of period
SUPPLEMENTAL DISCLOSURE
Cash paid during the year for:
Interest, net of interest income
Income taxes, net of refunds
Year Ended December 31,
2014
2013
2012
(in thousands)
$
(104,450) $
(36,015) $
(161,897)
127,168
240,975
134,961
(17,664)
16,038
188
39,029
(4,494)
(4,166)
(16,356)
(1,512)
(14,356)
(187,113)
(44,447)
31,878
73,730
269,409
(25,627)
7,864
(19,600)
(139,587)
7,045
(210,243)
(3,350)
(796)
(384,294)
122,164
246,759
—
(15,888)
20,187
36,269
28,415
(38,259)
(856)
(986)
4,907
34,344
(8,410)
(102,756)
90,809
36,788
417,472
(1,193)
13,889
(9,628)
(134,868)
82,618
(93,537)
(522)
(422)
(143,663)
124,593
304,964
—
(10,957)
16,696
(460)
37,063
(514)
(9,921)
2,373
8,062
(20,319)
(88,841)
(22,316)
63,812
124,760
367,098
(2,408)
9,241
(3,788)
(123,811)
8,293
(75,641)
(14,562)
(1,115)
(203,791)
515,385
(253,773)
81
(32,513)
(4,391)
21,797
(5,722)
240,864
(43,134)
82,845
1,299,184
$ 1,382,029
903,179
(886,597)
363
(17,384)
(50,876)
85,110
(811)
32,984
(8,664)
298,129
1,001,055
$ 1,299,184
538,124
(525,060)
825
(20,079)
(4,259)
1,143
(10,585)
(19,891)
13,386
156,802
844,253
$ 1,001,055
$
$
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41,471
$
$
86,669
45,567
$
$
107,975
(2,238)
See Notes to Consolidated Financial Statements
60
LIVE NATION ENTERTAINMENT, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 1—THE COMPANY AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
History
Live Nation was incorporated in Delaware on August 2, 2005 in preparation for the contribution and transfer by Clear
Channel of substantially all of its entertainment assets and liabilities to the Company. The Company completed the Separation
on December 21, 2005 and became a publicly traded company on the New York Stock Exchange trading under the symbol
“LYV.” Prior to the Separation, Live Nation was a wholly-owned subsidiary of Clear Channel.
On January 25, 2010, the Company merged with Ticketmaster and it became a wholly-owned subsidiary of Live Nation.
Effective with the merger Live Nation, Inc. changed its name to Live Nation Entertainment, Inc.
Seasonality
Due to the seasonal nature of shows at outdoor amphitheaters and festivals, which primarily occur from May through
September, the Company experiences higher revenue for the Concerts and Sponsorship & Advertising segments during the
second and third quarters. The Artist Nation segment’s revenue is impacted, to a large degree, by the touring schedules of artists
it represents and generally, the Company experiences higher revenue in this segment during the second and third quarters as the
period from May through September tends to be a popular time for touring events. The Ticketing segment’s sales are impacted
by fluctuations in the availability of events for sale to the public, which vary depending upon scheduling by its clients. The
Company’s seasonality also results in higher balances in cash and cash equivalents, accounts receivable, prepaid expenses,
accrued expenses and deferred revenue at different times in the year.
Basis of Presentation and Principles of Consolidation
The Company’s consolidated financial statements include all accounts of the Company, its majority owned and controlled
subsidiaries and VIEs for which the Company is the primary beneficiary. Intercompany accounts among the consolidated
businesses have been eliminated in consolidation. Net income (loss) attributable to noncontrolling interests is reflected in the
statements of operations.
Typically the Company consolidates entities in which the Company owns more than 50% of the voting common stock
and controls operations and also VIEs for which the Company is the primary beneficiary. Investments in nonconsolidated
affiliates in which the Company owns more than 20% of the voting common stock or otherwise exercises significant influence
over operating and financial policies but not control of the nonconsolidated affiliate are accounted for using the equity method
of accounting. Investments in nonconsolidated affiliates in which the Company owns less than 20% of the voting common
stock and does not exercise significant influence over operating and financial policies are accounted for using the cost method
of accounting.
All cash flow activity reflected on the consolidated statements of cash flows for the Company is presented net of any
non-cash transactions so the amounts reflected may be different than amounts shown in other places in the Company’s financial
statements that are based on accrual accounting and therefore include non-cash amounts. For example, the purchases of
property, plant and equipment reflected on the consolidated statements of cash flows reflects the amount of cash paid during the
year for these purchases and does not include the impact of the changes in accrued expenses related to capital expenditures
during the year.
Variable Interest Entities
In the normal course of business, the Company enters into joint ventures or makes investments in companies that will
allow it to expand its core business and enter new markets. In certain instances, such ventures or investments may be
considered a VIE because the equity at risk is insufficient to permit it to carry on its activities without additional financial
support from its equity owners. In determining whether the Company is the primary beneficiary of a VIE, it assesses whether it
has the power to direct activities that most significantly impact the economic performance of the entity and has the obligation
to absorb losses or the right to receive benefits from the entity that could potentially be significant to the VIE. The activities the
Company believes most significantly impact the economic performance of its VIEs include the unilateral ability to approve the
annual budget, the unilateral ability to terminate key management and the unilateral ability to approve entering into agreements
with artists, among others. The Company has certain rights and obligations related to its involvement in the VIEs, including the
requirement to provide operational cash flow funding. As of December 31, 2014 and 2013, excluding intercompany balances
and allocated goodwill and intangible assets, there were $177.6 million and $109.1 million of assets and $54.9 million and
$53.6 million of liabilities, respectively, related to VIEs included in the balance sheets. None of the Company’s VIEs are
significant on an individual basis.
61
Cash and Cash Equivalents
Cash and cash equivalents include all highly liquid investments with an original maturity of three months or less. The
Company’s cash and cash equivalents consist primarily of domestic and foreign bank accounts as well as money market
accounts. To reduce its credit risk, the Company monitors the credit standing of the financial institutions that hold the
Company’s cash and cash equivalents. These balances are stated at cost, which approximates fair value.
Included in the December 31, 2014 and 2013 cash and cash equivalents balance is $533.8 million and $538.4 million,
respectively, of cash received that includes the face value of tickets sold on behalf of clients and the clients’ share of
convenience and order processing charges (“client cash”). The Company generally does not utilize client cash for its own
financing or investing activities as the amounts are payable to clients on a regular basis. These amounts due to clients are
included in accounts payable, client accounts.
The Company’s available cash and cash equivalents are held in accounts managed by third-party financial institutions and
consist of cash in operating accounts and invested cash. Cash held in interest-bearing operating accounts in many cases exceeds
the Federal Deposit Insurance Corporation insurance limits. The invested cash is held in interest-bearing funds consisting
primarily of bank deposits and money market funds.
While the Company monitors cash and cash equivalents balances in its operating accounts on a regular basis and adjusts
the balances as appropriate, these balances could be impacted in the future if the underlying financial institutions fail. To date,
the Company has experienced no loss or lack of access to its cash or cash equivalents; however, the Company can provide no
assurances that access to its cash and cash equivalents will not be impacted in the future by adverse conditions in the financial
markets.
Allowance for Doubtful Accounts
The Company evaluates the collectability of its accounts receivable based on a combination of factors. Generally, it
records specific reserves to reduce the amounts recorded to what it believes will be collected when a customer’s account ages
beyond typical collection patterns, or the Company becomes aware of a customer’s inability to meet its financial obligations.
The Company believes that the credit risk with respect to trade receivables is limited due to the large number and the
geographic diversification of its customers.
Prepaid Expenses
The majority of the Company’s prepaid expenses relate to event expenses including show advances and deposits and
other costs directly related to future concert events. For advances that are expected to be recouped over a period of more than
12 months, the long-term portion of the advance is classified as other long-term assets. These prepaid costs are charged to
operations upon completion of the related events.
Ticketing contract advances, which can be either recoupable or non-recoupable, represent amounts paid in advance to the
Company’s clients pursuant to ticketing agreements and are reflected in prepaid expenses or in other long-term assets if the
amount is expected to be recouped or recognized over a period of more than 12 months. Recoupable ticketing contract
advances are generally recoupable against future royalties earned by the clients, based on the contract terms, over the life of the
contract. Non-recoupable ticketing contract advances, excluding those amounts paid to support clients’ advertising costs, are
fixed additional incentives occasionally paid by the Company to secure exclusive rights with certain clients and are normally
amortized over the life of the contract on a straight-line basis. Amortization of these non-recoupable ticketing contract advances
is included in depreciation and amortization in the statements of operations. For the years ended December 31, 2014, 2013 and
2012, the Company amortized $79.4 million, $73.6 million and $48.1 million, respectively, related to non-recoupable ticketing
contract advances.
Business Combinations
The Company accounts for its business combinations under the acquisition method of accounting. Identifiable assets
acquired, liabilities assumed and any noncontrolling interest in the acquiree are recognized and measured as of the acquisition
date at fair value. Additionally, any contingent consideration is recorded at fair value on the acquisition date and classified as a
liability. Goodwill is recognized to the extent by which the aggregate of the acquisition-date fair value of the consideration
transferred and any noncontrolling interest in the acquiree exceeds the recognized basis of the identifiable assets acquired, net
of assumed liabilities. Determining the fair value of assets acquired, liabilities assumed and noncontrolling interests requires
management’s judgment and often involves the use of significant estimates and assumptions, including assumptions with
respect to future cash flows, discount rates and asset lives among other items.
62
Property, Plant and Equipment
Property, plant and equipment are stated at cost or fair value at date of acquisition. Depreciation, which is recorded for
both owned assets and assets under capital leases, is computed using the straight-line method over their estimated useful lives,
which are as follows:
Buildings and improvements - 10 to 50 years
Computer equipment and capitalized software - 3 to 10 years
Furniture and other equipment - 3 to 10 years
Leasehold improvements are depreciated over the shorter of the economic life or associated lease term assuming the
Company exercises renewal periods, if appropriate. Expenditures for maintenance and repairs are charged to operations as
incurred, whereas expenditures for asset renewal and improvements are capitalized.
The Company tests for possible impairment of property, plant and equipment whenever events or circumstances change,
such as a current period operating cash flow loss combined with a history of, or projected, operating cash flow losses or a
significant adverse change in the manner in which the asset is intended to be used, which may indicate that the carrying amount
of the asset may not be recoverable. If indicators exist, the Company compares the estimated undiscounted future cash flows
related to the asset to the carrying value of the asset. If the carrying value is greater than the estimated undiscounted future cash
flow amount, an impairment charge is recorded based on the difference between the fair value and the carrying value. Any such
impairment charge is recorded in depreciation and amortization in the statement of operations. The impairment loss calculations
require management to apply judgment in estimating future cash flows and the discount rates that reflect the risk inherent in
future cash flows.
Intangible Assets
The Company classifies intangible assets as definite-lived or indefinite-lived. Definite-lived intangibles include revenue-
generating contracts, client/vendor relationships, non-compete agreements, venue management and leasehold agreements,
technology and trademarks and naming rights, all of which are amortized either on a straight-line basis over the respective lives
of the agreements, typically three to fifteen years, or on a basis more representative of the time pattern over which the benefit is
derived. The Company periodically reviews the appropriateness of the amortization periods related to its definite-lived
intangible assets. These assets are stated at cost or fair value. Indefinite-lived intangibles primarily include trade names. The
excess cost over fair value of net assets acquired is classified as goodwill. Indefinite-lived intangibles are not subject to
amortization, but are reviewed for impairment at least annually.
The Company tests for possible impairment of definite-lived intangible assets whenever events or circumstances change,
such as a current period operating cash flow loss combined with a history of, or projected, operating cash flow losses or a
significant adverse change in the manner in which the asset is intended to be used, which may indicate that the carrying amount
of the asset may not be recoverable. If indicators exist, the Company compares the estimated undiscounted future cash flows
related to the asset to the carrying value of the asset. If the carrying value is greater than the estimated undiscounted future cash
flow amount, an impairment charge is recorded based on the difference between the fair value and the carrying value. Any such
impairment charge is recorded in depreciation and amortization in the statement of operations.
The Company tests for possible impairment of indefinite-lived intangible assets at least annually. Depending on facts and
circumstances, qualitative factors may first be assessed to determine whether the existence of events and circumstances indicate
that it is more likely than not that an indefinite-lived intangible asset is impaired. If it is concluded that it is more likely than not
impaired, then the Company performs a quantitative impairment test by comparing the fair value with the carrying amount. If
the qualitative assessment is not performed first, the Company performs only this quantitative test. When specific assets are
determined to be impaired, the cost basis of the asset is reduced to reflect the current fair value. Any such impairment charge is
recorded in depreciation and amortization in the statement of operations.
The impairment loss calculations require management to apply judgment in estimating future cash flows and the discount
rates that reflect the risk inherent in future cash flows.
Goodwill
The Company reviews goodwill for impairment annually, as of October 1, using a three-step process. It also tests
goodwill for impairment in other periods if an event occurs or circumstances change that would more likely than not reduce the
fair value of a reporting unit below its carrying amount or when the Company changes its operating segments or reporting
units. The first step is a qualitative evaluation as to whether it is more likely than not that the fair value of any of the
Company’s reporting units is less than its carrying value using an assessment of relevant events and circumstances. Examples
of such events and circumstances include historical financial performance, industry and market conditions, macroeconomic
conditions, reporting unit-specific events, historical results of goodwill impairment testing and the timing of the last
63
performance of a quantitative assessment. If any reporting units are concluded to be more likely than not impaired, or if that
conclusion cannot be determined qualitatively, a second step is performed for that reporting unit. Regardless, all reporting units
undergo a second step at least once every five years. This second step, used to quantitatively screen for potential impairment,
compares the fair value of the reporting unit’s goodwill with its carrying amount, including goodwill. The third step, employed
for any reporting unit that fails the second step, is used to measure the amount of any potential impairment and compares the
implied fair value of the reporting unit’s goodwill with the carrying amount of goodwill. If a reporting unit’s carrying value is
negative, the Company does not follow this three-step process. In this case, a qualitative evaluation is performed to determine
whether it is more likely than not that the reporting unit’s goodwill is impaired. If it is, the comparison of the implied fair value
of the reporting unit’s goodwill with the carrying amount of goodwill described above is performed. In all three steps, discount
rates, market multiples and sensitivity tests are derived and/or computed with the assistance of external valuation consultants.
The second and third steps that the Company uses to evaluate goodwill for impairment involve the determination of the
fair value of the Company’s reporting units. Inherent in such fair value determinations are certain judgments and estimates
relating to future cash flows, including the Company’s interpretation of current economic indicators and market valuations, and
assumptions about the Company’s strategic plans with regard to its operations. Due to the uncertainties associated with such
estimates, actual results could differ from such estimates.
In developing fair values for its reporting units, the Company may employ a market multiple or a discounted cash flow
methodology, or a combination thereof. The market multiple methodology compares the Company to similar companies on the
basis of risk characteristics to determine its risk profile relative to those companies as a group. This analysis generally focuses
on both quantitative considerations, which include financial performance and other quantifiable data, and qualitative
considerations, which include any factors which are expected to impact future financial performance. The most significant
assumptions affecting the market multiple methodology are the market multiples used and control premium. A control premium
represents the additional value an investor would pay in order to obtain a controlling interest in the respective company.
The discounted cash flow methodology establishes fair value by estimating the present value of the projected future cash
flows to be generated from the reporting unit. It is important to note that items such as depreciation, amortization and stock-
based compensation expense are not part of cash flows which is more akin to the Company’s adjusted operating income metric.
The discount rate applied to the projected future cash flows to arrive at the present value is intended to reflect all risks of
ownership and the associated risks of realizing the stream of projected future cash flows. The discounted cash flow
methodology uses the Company’s estimates of future financial performance. The most significant assumptions used in the
discounted cash flow methodology are the discount rate, attrition rate and expected future revenue, which vary among reporting
units.
Nonconsolidated Affiliates
In general, nonconsolidated investments in which the Company owns more than 20% of the common stock or otherwise
exercises significant influence over an affiliate are accounted for under the equity method. The Company recognizes gains or
losses upon the issuance of securities by any of its equity method investees. The Company reviews the value of equity method
investments and records impairment charges in the statements of operations for any decline in value that is determined to be
other-than-temporary. If the Company obtains control of a nonconsolidated affiliate through the purchase of additional
ownership interest or changes in the governing agreements, it remeasures its investment to fair value first and then applies the
accounting guidance for business combinations. Any gain or loss resulting from the remeasurement to fair value is recorded as
a component of other expense, net in the statements of operations.
Accounts Payable, Client Accounts
Accounts payable, client accounts consists of contractual amounts due to ticketing clients which includes the face value
of tickets sold and the clients’ share of convenience and order processing charges.
Income Taxes
The Company accounts for income taxes using the liability method in accordance with the FASB guidance for income
taxes. Under this method, deferred tax assets and liabilities are determined based on differences between financial reporting
bases and tax bases of assets and liabilities and are measured using the enacted tax rates expected to apply to taxable income in
the periods in which the deferred tax asset or liability is expected to be realized or settled. Deferred tax assets are reduced by
valuation allowances if the Company believes it is more likely than not that some portion of or the entire asset will not be
realized. As almost all earnings from the Company’s continuing foreign operations are permanently reinvested and not
distributed, the Company’s income tax provision does not include additional United States taxes on those foreign operations.
The amount of earnings at December 31, 2014 that was permanently reinvested was approximately $1.1 billion. It is not
practical to determine the amount of federal and state income taxes, if any, that might become due in the event that the earnings
were distributed.
64
The FASB guidance for income taxes prescribes a recognition threshold and a measurement attribute for the financial
statement recognition and measurement of tax positions taken or expected to be taken in a tax return. For those benefits to be
recognized, a tax position must be more likely than not to be sustained upon examination by taxing authorities. The amount
recognized is measured as the largest amount of benefit that is more likely than not to be realized upon ultimate settlement.
The Company has established a policy of including interest related to tax loss contingencies in income tax expense
(benefit).
Revenue Recognition
Revenue from the promotion and production of an event in the Concerts segment is recognized after the show occurs.
Revenue related to larger global tours is recognized after the show occurs; however, any profits related to these tours, primarily
related to music tour production and tour management services, is recognized after minimum revenue guarantee thresholds, if
any, have been achieved. Revenue collected in advance of the event is recorded as deferred revenue until the event occurs.
Revenue collected from sponsorships and other revenue, which is not related to any single event, is classified as deferred
revenue and generally amortized over the operating season or the term of the contract.
Revenue from the Company’s ticketing operations primarily consists of convenience charges and order processing fees
charged at the time a ticket for an event is sold. For tickets sold to events at the Company’s owned or operated venues in the
United States, and where the Company controls the tickets internationally, the revenue for the associated ticket service charges
collected in advance of the event is recorded as deferred revenue until the event occurs. These service charges are shared
between the Company’s Ticketing and Concerts segments. For tickets sold for events at third-party venues, the revenue is
recognized at the time of the sale and is recorded by the Company’s Ticketing segment.
The Company accounts for taxes that are externally imposed on revenue producing transactions on a net basis, as a
reduction of revenue.
Gross versus Net Revenue Recognition
The Company reports revenue on a gross or net basis based on management’s assessment of whether the Company acts as
a principal or agent in the transaction. To the extent the Company acts as the principal, revenue is reported on a gross basis. The
determination of whether the Company acts as a principal or an agent in a transaction is based on an evaluation of whether the
Company has the substantial risks and rewards of ownership under the terms of an arrangement. The Ticketing segment’s
revenue, which primarily consists of convenience charges and order processing fees from its ticketing operations, is recorded
net of the face value of the ticket as the Company generally acts as an agent in these transactions.
Foreign Currency
Results of operations for foreign subsidiaries and foreign equity investees are translated into United States dollars using
the average exchange rates during the year. The assets and liabilities of those subsidiaries and investees are translated into
United States dollars using the exchange rates at the balance sheet date. The related translation adjustments are recorded in a
separate component of stockholders’ equity in AOCI. Foreign currency transaction gains and losses are included in the
statements of operations. For the years ended December 31, 2014 and 2013, the Company recorded net foreign currency
transaction losses of $28.9 million and $2.8 million, respectively, and a foreign currency transaction gain of $1.4 million for the
year ended December 31, 2012. The Company does not currently have operations in highly inflationary countries.
Advertising Expense
The Company records advertising expense in the year that it is incurred. Throughout the year, general advertising
expenses are recognized as they are incurred but event-related advertising for concerts is recognized once the show occurs.
However, all advertising costs incurred during the year and not previously recognized are expensed at the end of the year.
Advertising expenses of $242.9 million, $224.0 million and $208.0 million for the years ended December 31, 2014, 2013 and
2012, respectively, were recorded as a component of direct operating expenses. Advertising expenses of $28.8 million, $27.7
million and $21.5 million for the years ended December 31, 2014, 2013 and 2012, respectively, were recorded as a component
of selling, general and administrative expenses.
Direct Operating Expenses
Direct operating expenses include artist fees, show related marketing and advertising expenses, royalties paid to clients
for a share of convenience and order processing fees, rent expense for events in third-party venues, credit card fees,
telecommunications and data communication costs associated with the Company’s call centers, commissions paid on tickets
distributed through independent sales outlets away from the box office, and salaries and wages related to seasonal employees at
the Company’s venues along with other costs, including ticket stock and shipping. These costs are primarily variable in nature.
65
Selling, General and Administrative Expenses
Selling, general and administrative expenses include salaries and other compensation costs related to full-time
employees, fixed rent, travel and entertainment, legal expenses and consulting along with other costs.
Depreciation and Amortization
The Company’s depreciation and amortization is presented as a separate line item in the statements of operations. There
is no depreciation or amortization included in direct operating expenses, selling, general and administrative expenses or
corporate expenses.
Non-cash and Stock-based Compensation
The Company follows the fair value recognition provisions in the FASB guidance for stock compensation. Stock-based
compensation expense recognized includes compensation expense for all share-based payments using the estimated grant date
fair value net of expected forfeitures. Judgment is required in estimating the amount of stock-based awards expected to be
forfeited prior to vesting. If actual forfeitures differ from these estimates, non-cash compensation expense could vary.
The fair value for options in Live Nation stock is estimated on the date of grant using the Black-Scholes option-pricing
model. The fair value of the options is amortized to expense, net of estimated forfeitures, on a straight-line basis over the
options’ vesting period. The Company uses an expected volatility based on an even weighting of its own traded options and
historical volatility. The Company uses the simplified method for estimating the expected life within the valuation model which
is the period of time that options granted are expected to be outstanding. The Company uses the simplified method as it does
not believe its historical experience provides a reasonable basis with which to estimate the expected term due to the impact of a
number of divestitures after the Separation, the varying vesting terms of awards issued since the Separation and the impact
from the type and amount of awards converted pursuant to the Company’s merger with Ticketmaster. The risk-free rate for
periods within the expected life of the option is based on the United States Treasury note rate.
The fair value of restricted stock and restricted stock units, which is generally the stock price on the date of issuance, is
amortized to expense, net of expected forfeitures, on a straight-line basis over the vesting period.
Acquisition Transaction Expenses
Acquisition transaction expenses consist of direct costs related to business combinations, such as legal and accounting
transaction charges related to reviewing and closing an acquisition and also other legal costs directly tied to the
transaction. These expenses also reflect changes in the fair value of accrued acquisition-related contingent consideration
arrangements. The Company records transaction costs incurred in connection with the purchase or sale of a noncontrolling
interest in a subsidiary, when control is maintained, as a deduction from equity in additional paid-in capital.
Use of Estimates
The preparation of financial statements in conformity with GAAP requires management to make estimates, judgments,
and assumptions that affect the amounts reported in the financial statements and accompanying notes including, but not limited
to, legal, tax and insurance accruals, acquisition accounting and impairments. The Company bases its estimates on historical
experience and on various other assumptions that are believed to be reasonable under the circumstances. Actual results could
differ from those estimates.
Reclassifications
Certain reclassifications have been made to the prior year consolidated financial statements and notes to conform to the
2014 presentation. The reclassifications related to changes in operating assets and liabilities, net of effects of acquisitions and
dispositions in the statements of cash flows and deferred tax assets related to net operating loss carryforwards and the
associated valuation allowances in the notes to consolidated financial statements.
Recent Accounting Pronouncements
Recently Issued Pronouncements
In April 2014, the FASB issued guidance that raises the threshold for a disposal to qualify as a discontinued operation and
requires new disclosures of both discontinued operations and certain other disposals that do not meet the definition of a
discontinued operation. The guidance is effective for disposals (or classifications as held for sale) of components of an entity
that occur within annual periods beginning on or after December 15, 2014 and interim periods within that year. This guidance is
applied prospectively and early adoption is permitted. The Company will adopt this guidance on January 1, 2015 and will apply
it prospectively to disposals occurring on or after January 1, 2015.
In May 2014, the FASB issued a comprehensive new revenue recognition standard that will supersede nearly all existing
revenue recognition guidance under GAAP. The new standard provides a five-step analysis of transactions to determine when
66
and how revenue is recognized. The core principle of the guidance is that a company should recognize revenue to depict the
transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to
be entitled in exchange for those goods or services. The standard is effective for annual and interim periods beginning after
December 15, 2016, and early adoption of the standard is not permitted. The guidance should be applied retrospectively, either
to each prior period presented in the financial statements, or only to the most current reporting period presented in the financial
statements with a cumulative-effect adjustment as of the date of adoption. The Company will adopt this standard on January 1,
2017, and is currently assessing which implementation method it will apply and the impact its adoption will have on its
financial position and results of operations.
In June 2014, the FASB issued guidance that requires a performance target in a share-based payment that affects vesting,
and that could be achieved after the requisite service period, be accounted for as a performance condition. The guidance is
effective for annual periods beginning after December 15, 2015 and interim periods within that year, and early adoption is
permitted. The guidance should be applied on a prospective basis to awards that are granted or modified on or after the
effective date. The guidance may be applied on a modified retrospective basis for performance targets outstanding on or after
the beginning of the first annual period presented as of the date of adoption. The Company does not currently expect to grant
these type of awards, but will adopt this guidance on January 1, 2016 and will apply it prospectively to any awards granted on
or after January 1, 2016 that include these terms.
In February 2015, the FASB issued new guidance for evaluating whether a reporting organization should consolidate
certain legal entities. This guidance is effective for annual and interim periods beginning after December 15, 2015, and early
adoption is permitted. The guidance should be applied either using a modified retrospective approach or retrospectively. The
Company will adopt this standard on January 1, 2016, and is currently assessing which implementation method it will apply
and the impact its adoption will have on its financial position and results of operations.
NOTE 2—LONG-LIVED ASSETS
Property, Plant and Equipment
In the fourth quarter of 2012, an amphitheater in New York that is operated by the Company sustained substantial damage
during Hurricane Sandy. During 2014 and 2013, the Company received insurance recoveries and recorded gains of $3.8 million
and $14.1 million for the years ended December 31, 2014 and 2013, respectively, as a component of gain on disposal of
operating assets in the Concerts segment representing the proceeds received in excess of the carrying value of the assets. The
Company received the final insurance recovery in the second quarter of 2014.
During each year presented, the Company reviewed the carrying value of certain property, plant and equipment that
management determined would, more likely than not, be disposed of before the end of their previously estimated useful lives or
had an indicator that future operating cash flows may not support their carrying value. For the year ended December 31, 2012,
the Company recorded impairment charges of $4.3 million as a component of depreciation and amortization. It was determined
that certain assets were impaired since the estimated undiscounted cash flows associated with the respective assets were less
than their carrying value. The 2012 impairment charges were primarily related to certain leasehold improvements and office
furniture and equipment in the Artist Nation segment, an amphitheater in the Concerts segment and a theater in other
operations. See Note 6—Fair Value Measurements for further discussion of the inputs used to determine the fair values. There
were no significant impairment charges recorded during 2014 and 2013.
Definite-lived Intangible Assets
The Company has definite-lived intangible assets which are amortized over the shorter of either the lives of the respective
agreements or the period of time the assets are expected to contribute to the Company’s future cash flows. The amortization is
recognized on either a straight-line or expected cash flows basis.
67
The following table presents the changes in the gross carrying amount and accumulated amortization of definite-lived
intangible assets for the years ended December 31, 2014 and 2013:
Revenue-
generating
contracts
Client /
vendor
relationships
Non-
compete
agreements
Venue
management
and
leaseholds
Technology
Trademarks
and
naming
rights
(in thousands)
Other
Total
Balance as of December 31, 2012:
Gross carrying
amount
Accumulated
amortization
Net
Gross carrying amount:
Acquisitions—
current year
Acquisitions—
prior year
Dispositions
Foreign exchange
Other (1)
Net change
Accumulated amortization:
Amortization
Dispositions
Foreign exchange
Other (1)
Net change
Gross carrying
amount
Accumulated
amortization
Net
Gross carrying amount:
Acquisitions—
current year
Acquisitions—
prior year
Dispositions
Foreign exchange
Other (1)
Net change
Accumulated amortization:
Amortization
Dispositions
Foreign exchange
Other (1)
Net change
$ 515,071
$ 261,655
$ 168,418
$ 118,259
$ 101,424
$
18,423
$ 6,452
$1,189,702
(197,549)
317,522
(39,807)
221,848
(111,369)
57,049
(51,891)
66,368
(53,295)
48,129
(6,678)
11,745
(4,650)
1,802
(465,239)
724,463
85,927
31,582
—
—
3,370
10,500
—
131,379
(1,028)
—
2,476
(17,352)
70,023
(49,972)
—
(884)
17,352
(33,504)
(2,833)
(1,354)
(6,525)
(4,588)
16,282
(47,918)
61
1,412
4,443
(42,002)
—
—
98
(31,317)
(31,219)
(21,984)
—
(92)
32,317
10,241
—
—
(17)
(32,600)
(32,617)
(24,615)
—
219
32,600
8,204
—
—
826
(4,956)
(760)
(24,116)
—
(655)
4,956
(19,815)
—
—
376
(775)
10,101
(4,160)
—
(209)
1,955
(2,414)
—
—
(34)
(4,043)
(4,077)
(416)
—
31
4,043
3,658
(3,861)
(1,354)
(2,800)
(95,631)
27,733
(173,181)
61
(178)
97,666
(75,632)
585,094
277,937
137,199
85,642
100,664
28,524
2,375
1,217,435
(231,053)
354,041
(81,809)
196,128
(101,128)
36,071
(43,687)
41,955
(73,110)
27,554
(9,092)
19,432
(992)
1,383
(540,871)
676,564
75,304
92,974
—
—
8,415
—
1,100
177,793
(1,851)
(1,600)
(19,056)
(2,764)
50,033
(52,664)
605
8,277
2,764
(41,018)
2,857
—
(8,508)
(9,268)
78,055
(52,389)
—
1,735
9,268
(41,386)
1,500
—
—
(15,147)
(13,647)
(12,531)
—
—
15,147
2,616
—
—
(2,324)
4
(2,320)
(7,960)
—
1,161
(4)
(6,803)
407
—
(1,608)
(92,548)
(85,334)
(24,946)
—
1,262
92,548
68,864
—
—
(1,176)
(3,082)
(4,258)
(3,458)
—
767
3,082
391
—
—
(5)
111
1,206
(713)
—
3
460
(250)
2,913
(1,600)
(32,677)
(122,694)
23,735
(154,661)
605
13,205
123,265
(17,586)
Balance as of December 31, 2013:
Balance as of December 31, 2014:
Gross carrying
amount
Accumulated
amortization
Net
635,127
355,992
123,552
83,322
15,330
24,266
3,581
1,241,170
(272,071)
$ 363,056
(123,195)
$ 232,797
(98,512)
$ 25,040
$
(50,490)
32,832
(4,246)
$ 11,084
$
(8,701)
15,565
(1,242)
$ 2,339
(558,457)
$ 682,713
(1) Other includes netdowns of fully amortized or impaired assets and, for 2013, a $1.2 million reclassification from
indefinite-lived intangible assets due to a change in the asset’s estimated useful life.
___________
68
Included in the current year acquisitions amount above for 2014 is $177.8 million of definite-lived intangible assets
primarily related to revenue-generating contracts and client/vendor relationships. These additions are primarily associated with
the acquisitions of a controlling interest in a festival and concert promoter and five artist management businesses located in the
United States and the United Kingdom.
Included in the current year acquisitions amount above for 2013 is $131.4 million of definite-lived intangible assets
primarily related to revenue-generating contracts, client/vendor relationships and trademarks and naming rights. These
additions are primarily associated with the acquisitions of controlling interests in festival promoters located in the United States
and the United Kingdom along with an artist management business located in the United Kingdom.
The 2014 and 2013 additions to definite-lived intangible assets from acquisitions have weighted-average lives as follows:
Revenue-generating contracts
Client/vendor relationships
Technology
Trademarks and naming rights
Other
All categories
Weighted-
Average
Life (years)
2014
2013
9
7
5
—
10
8
9
8
5
10
—
9
During all years presented, the Company reviewed the carrying value of certain definite-lived intangible assets that
management determined would not be renewed or that had an indicator that future operating cash flows may not support its
carrying value. It was determined that certain assets were impaired since the estimated undiscounted future cash flows
associated with those assets were less than their carrying value. For the years ended December 31, 2014, 2013 and 2012, the
Company recorded impairment charges related to definite-lived intangible assets of $11.1 million, $10.6 million and $89.6
million, respectively, as a component of depreciation and amortization. The 2014 impairment charges primarily related to
client/vendor relationship intangible assets in the Artist Nation segment and technology intangible assets in the Ticketing
segment. The 2013 impairment charges primarily related to venue management and leasehold intangible assets in the Concerts
segment and client/vendor relationship intangible assets in the Artist Nation segment. The 2012 impairment charges primarily
related to client/vendor relationship intangible assets in the Artist Nation segment and revenue-generating contracts and client/
vendor relationship intangible assets in the Concerts segment. See Note 6—Fair Value Measurements for further discussion of
the inputs used to determine the fair values.
Amortization of definite-lived intangible assets for the years ended December 31, 2014, 2013 and 2012 was $154.7
million, $173.2 million and $256.9 million, respectively.
The following table presents the Company’s estimate of amortization expense for each of the five succeeding fiscal years
for definite-lived intangible assets that exist at December 31, 2014:
2015
2016
2017
2018
2019
(in thousands)
$
$
$
$
$
130,262
125,166
104,932
86,048
73,680
As acquisitions and dispositions occur in the future and the valuations of intangible assets for recent acquisitions are
completed, amortization may vary.
Indefinite-lived Intangibles
The Company has indefinite-lived intangible assets which consist primarily of trade names. These indefinite-lived
intangible assets had a carrying value of $369.5 million and $376.7 million as of December 31, 2014 and 2013, respectively.
69
The Company tests for possible impairment of indefinite-lived intangible assets on at least an annual basis. For the year
ended December 31, 2014, the Company recorded an impairment charge of $6.0 million as a component of depreciation and
amortization in the Ticketing segment. During 2014, the Company made a decision to rebrand certain of its markets that were
not using the Ticketmaster trade name. In connection with the rebranding, it was determined that an indefinite-lived intangible
asset for a certain market was fully impaired since the transition to the Ticketmaster trade name was substantially completed for
that market during the year. See Note 6—Fair Value Measurements for further discussion of the inputs used to determine the
fair value. There were no impairment charges of indefinite-lived intangible assets recorded for the years ended December 31,
2013 and 2012.
Goodwill
The Company currently has seven reporting units with goodwill balances: International Concerts and North American
Concerts within the Concerts segment; Artist Management and Artist Services (non-management) within the Artist Nation
segment; International Ticketing and North American Ticketing within the Ticketing segment; and Sponsorship & Advertising.
The Company reviews goodwill for impairment annually, as of October 1, using a three-step process: a qualitative review, a
quantitative analysis and a measurement of implied goodwill. The Company also tests goodwill for impairment in other periods
if an event occurs or circumstances change that would more likely than not reduce the fair value of a reporting unit below its
carrying amount or when the Company changes its operating segments or reporting units. As part of the Company’s annual test
for impairment of goodwill, three reporting units were assessed under the initial qualitative evaluation and did not require a
quantitative analysis. These reporting units account for approximately 65% of the Company’s goodwill at December 31, 2014.
Considerations included the considerable excess of fair values over carrying values in the most recent quantitative analysis
performed together with the following comparison of current information to the most recent quantitative analysis: (a) financial
results outperforming prior expectations, (b) a flat or declining discount rate and (c) a large increase in market multiples.
For two reporting units that account for approximately 26% of the Company’s goodwill at December 31, 2014, although
these reporting units outperformed financial expectations and showed improved discount rates, the qualitative analysis was
inconclusive. As such, quantitative analysis was also performed for these reporting units, but did not require advancing to the
final step to measure impairment.
Finally, an assessment of the implied fair value of goodwill was performed for the International Concerts and Artist
Services (non-management) reporting units that account for approximately 9% of the Company’s goodwill at December 31,
2014. Although some of their key assumptions had improved, due to recent financial performance against prior year
expectations driven from reduced touring content internationally in the year, foreign exchange impacts to results, further
expansion and related investment in emerging markets along with reduced merchandise results, a qualitative assessment was
inconclusive and these reporting units did not pass the subsequent quantitative test. An excess of the carrying value of goodwill
over the implied fair value of goodwill was calculated for these reporting units and impairments were recorded. The Company
calculated the impairments using a combination of a discounted cash flows methodology, which uses both market-based and
internal assumptions, and a market multiple methodology, which uses primarily market-based assumptions. The impairment
resulted principally from the recent financial performance ending with the conclusion of the concert season in the fourth quarter
of 2014, an increase in the carrying value of goodwill and the fair value of intangibles over carrying value. Based upon the
results of the annual test for 2014, the Company recorded impairment charges of $117.0 million and $17.9 million related to its
International Concerts and Artist Services (non-management) reporting units, respectively. There were no impairment charges
in 2013 and 2012.
70
The following table presents the changes in the carrying amount of goodwill in each of the Company’s reportable segments
for the years ended December 31, 2014 and 2013:
Balance as of December 31, 2012:
Goodwill (1)
Accumulated impairment losses (1)
Net
Concerts
Ticketing
Sponsorship
&
Advertising
Total
Artist
Nation
(in thousands)
$ 468,891
$ 637,642
$266,820
$ 254,376
(269,902)
—
—
—
198,989
637,642
266,820
254,376
$1,627,729
(269,902)
1,357,827
Acquisitions—current year
Acquisitions—prior year
Dispositions
Foreign exchange
42,826
(2,811)
(3,691)
1,715
—
—
257
2,892
3,253
9,203
(251)
(102)
49,748
—
—
6,117
97,542
6,392
(3,942)
9,164
Balance as of December 31, 2013:
Goodwill
505,472
642,249
278,923
310,241
Accumulated impairment losses
(269,902)
—
—
—
1,736,885
(269,902)
Net
235,570
642,249
278,923
310,241
1,466,983
Acquisitions—current year
Acquisitions—prior year
Dispositions
Impairment
Foreign exchange
Balance as of December 31, 2014:
Goodwill
Accumulated impairment losses
Net
92,393
1,997
—
(117,013)
(21,971)
577,891
(386,915)
$ 190,976
27,943
—
(4,434)
68,107
(2,304)
—
— (17,948)
787
(8,127)
657,631
345,513
— (17,948)
$327,565
$ 657,631
15,774
(625)
—
—
(22,525)
204,217
(932)
(4,434)
(134,961)
(51,836)
302,865
—
$ 302,865
1,883,900
(404,863)
$1,479,037
(1)
The previously reported total balance has been reduced by $13.0 million due to the net down of fully impaired goodwill
related to the Company’s non-core events business which was sold in 2008.
_______________
Included in the current year acquisitions amount above for 2014 is $204.2 million of goodwill primarily associated with
the acquisitions of a controlling interest in a festival and concert promoter and three artist management businesses located in the
United States and the United Kingdom.
Included in the current year acquisitions amount above for 2013 is $97.5 million of goodwill primarily associated with
the acquisitions of controlling interests in festival promoters located in the United States and the United Kingdom.
Of the total amount of goodwill recognized in connection with the 2014 and 2013 acquisitions, $76.4 million and $30.3
million, respectively, is expected to be deductible for tax purposes.
The Company is in the process of finalizing its acquisition accounting for recent acquisitions which could result in a
change to the associated purchase price allocations, including goodwill and its allocation between segments.
71
Investments in nonconsolidated affiliates
The Company has investments in various affiliates which are not consolidated and are accounted for under the equity
method of accounting. The Company records its investments in these entities in the balance sheet as investments in
nonconsolidated affiliates reported as part of other long-term assets. The Company’s interests in these operations are recorded
in the statement of operations as equity in earnings of nonconsolidated affiliates. For the year ended December 31, 2014, the
Company’s investment in Venta de Boletos por Computadora S.A. de C.V (“VBC”), a 33% owned ticketing distribution
services company, is considered significant. Summarized balance sheet and income statement information for VBC is as
follows (at 100%):
Current assets
Noncurrent assets
Current liabilities
Noncontrolling interests
$
$
$
$
December 31,
2014
2013
(in thousands)
37,239
6,340
21,729
391
$
$
$
$
38,387
6,545
21,031
296
Revenue
Operating income
Net income
Net income attributable to the
common stockholders of the
equity investees
$
$
$
$
Year Ended December 31,
2014
2013
2012
(in thousands)
43,490
20,092
14,641
$
$
$
51,940
27,027
20,574
$
$
$
49,306
26,427
20,340
14,500
$
20,515
$
20,309
The Company reviews its investments in nonconsolidated affiliates for impairment whenever events or changes in
circumstances indicate that the carrying amount of the asset may not be recoverable. For the year ended December 31, 2013,
the Company recorded impairment charges related to these investments of $9.2 million as equity in earnings of nonconsolidated
affiliates. The impairments primarily related to an investment in a concert promoter located in Europe and an investment in an
ecommerce business. See Note 6—Fair Value Measurements for further discussion of the inputs used to determine the fair
values. There were no significant impairments of investments in nonconsolidated affiliates during 2014 and 2012.
Long-lived Asset Disposals
In May 2013, the Company completed the sale of a theater in New York. There were no significant disposals of long-
lived assets during 2014 and 2012. The table below summarizes the asset and liability values at the time of sale for significant
disposals and the resulting gain or loss recorded.
Divested Asset
Segment
Gain on
Disposal of
Operating
Assets
Current
Assets
Noncurrent
Assets
Current
Liabilities
Noncurrent
Liabilities
(in thousands)
2013 Divestiture
New York theater
NOTE 3—ACQUISITIONS
Concerts
$
(24,845) $
— $
35,785
$
— $
3,636
During 2014, the Company completed its acquisitions of a controlling interest in a festival and concert promoter located
in the United States, three artist management businesses located in the United States and several other smaller acquisitions.
These acquisitions were accounted for as business combinations under the acquisition method of accounting and were not
significant on an individual basis or in the aggregate.
During 2013, the Company completed its acquisitions of controlling interests in festival promoters located in the United
States and the United Kingdom, an artist management business located in the United Kingdom and other smaller acquisitions.
72
These acquisitions were accounted for as business combinations under the acquisition method of accounting and were not
significant on an individual basis or in the aggregate.
During 2012, the Company completed its acquisitions of a controlling interest in a concert promotion business in
Australia and New Zealand, a controlling interest in a festival promoter located in the United Kingdom, a festival promoter
located in the United States and other smaller acquisitions. These acquisitions were accounted for as business combinations
under the acquisition method of accounting and were not significant on an individual basis or in the aggregate.
NOTE 4—LONG-TERM DEBT
Long-term debt, which includes capital leases, consisted of the following:
Senior Secured Credit Facility:
Term loan A, net of unamortized discount of $1.4 million and $2.0 million
in 2014 and 2013, respectively
$
103,517
$
111,578
December 31,
2014
2013
(in thousands)
Term loan B, net of unamortized discount of $12.2 million and
$14.4 million in 2014 and 2013, respectively
Revolving credit facility
7% Senior Notes due 2020, plus unamortized premium of $7.3 million and
$8.6 million in 2014 and 2013, respectively
5.375% Senior Notes due 2022
2.875% Convertible Senior Notes due 2027, net of unamortized discount of
$7.6 million in 2013
2.5% Convertible Senior Notes due 2019, net of unamortized discount of
$19.4 million in 2014
Other long-term debt
Less: current portion
Total long-term debt, net
Future maturities of long-term debt at December 31, 2014 are as follows:
2015
2016
2017
2018
2019
Thereafter
Total
Debt discount
Debt premium
Total, including premium and discount
925,962
933,226
—
—
432,286
250,000
433,571
—
—
212,415
255,604
96,031
2,063,400
47,485
—
118,097
1,808,887
278,403
$
2,015,915
$
1,530,484
$
(in thousands)
47,485
50,662
50,180
332,172
14,676
1,593,918
2,089,093
(32,979)
7,286
$
2,063,400
All long-term debt without a stated maturity date is considered current and is reflected as maturing in the earliest period
shown in the table above. See Note 6—Fair Value Measurements for discussion of fair value measurement of the Company’s
long-term debt.
73
Senior Secured Credit Facility
At December 31, 2014, the Company’s senior secured credit facility consisted of (i) a $115 million term loan A facility
with a maturity of five years, (ii) a $950 million term loan B facility with a maturity of seven years and (iii) a $335 million
revolving credit facility with a maturity of five years. In addition, subject to certain conditions, the Company has the right to
increase such facilities by at least $450 million or a greater amount so long as the senior secured leverage ratio calculated on a
pro-forma basis (as defined in the credit agreement) is no greater than 3.25x. The revolving credit facility provides for
borrowings up to the amount of the facility with sublimits of up to (i) $150 million to be available for the issuance of letters of
credit, (ii) $50 million to be available for swingline loans, (iii) $150 million to be available for borrowings in Euros or British
Pounds and (iv) $50 million to be available for borrowings in one or more other approved currencies. The senior secured credit
facility is secured by a first priority lien on substantially all of the tangible and intangible personal property of the Company
and the domestic subsidiaries that are guarantors, and by a pledge of substantially all of the shares of stock, partnership
interests and limited liability company interests of the Company’s direct and indirect domestic subsidiaries and 65% of each
class of capital stock of any first-tier foreign subsidiaries.
The interest rates per annum applicable to revolving credit facility loans and the term loan A under the amended senior
secured credit facility are, at the Company’s option, equal to either LIBOR plus 2.25% or a base rate plus 1.25%, subject to
stepdowns based on the Company’s net leverage ratio. The interest rates per annum applicable to the term loan B are, at the
Company’s option, equal to either LIBOR plus 2.75% or a base rate plus 1.75%, subject to a LIBOR floor of 0.75% and a base
rate floor of 1.75%. The Company is required to pay a commitment fee of 0.5% per year on the undrawn portion available
under the revolving credit facility, subject to stepdowns based on the Company’s net leverage ratio, and variable fees on
outstanding letters of credit.
For the term loan A, the Company is required to make quarterly payments increasing over time from $2.9 million to $13.8
million with the balance due at maturity in August 2018. For the term loan B, the Company is required to make quarterly
payments of $2.4 million with the balance due at maturity in August 2020. The Company is also required to make mandatory
prepayments of the loans under the credit agreement, subject to specified exceptions, from excess cash flow and with the
proceeds of asset sales, debt issuances and specified other events.
Based on the Company’s outstanding letters of credit of $62.0 million, $273.0 million was available for future borrowings
under the revolving credit facility at December 31, 2014.
7% Senior Notes
In August 2013, the Company issued an additional $200 million principal amount of its existing 7% senior notes due 2020
with a $9.0 million premium, which increased the total principal amount of such notes outstanding to $425 million. Interest on
the notes is payable semi-annually in arrears on March 1 and September 1 of each year and the notes will mature on September
1, 2020. The Company may redeem some or all of the notes at any time prior to September 1, 2016 at a price equal to 100% of
the aggregate principal amount, plus any accrued and unpaid interest to the date of redemption, plus a ‘make-whole’ premium
using a discount rate equal to the treasury rate plus 50 basis points. The Company may also redeem up to 35% of the notes from
the proceeds of certain equity offerings prior to September 1, 2015, at a price equal to 107% of the principal amount, plus any
accrued and unpaid interest. In addition, on or after September 1, 2016, the Company may redeem at its option some or all of
the notes at redemption prices that start at 103.5% of their principal amount, plus any accrued and unpaid interest to the date of
redemption. The Company must make an offer to redeem the notes at 101% of the aggregate principal amount, plus any
accrued and unpaid interest to the repurchase date, if it experiences certain defined changes of control.
5.375% Senior Notes
In May 2014, the Company issued $250 million of 5.375% senior notes due 2022. Interest on the notes is payable semi-
annually in arrears on June 15 and December 15, beginning December 15, 2014, and the notes will mature on June 15, 2022.
The Company may redeem some or all of the notes at any time prior to June 15, 2017 at a price equal to 100% of the principal
amount, plus any accrued and unpaid interest to the date of redemption, plus a ‘make-whole’ premium. The Company may also
redeem up to 35% of the aggregate principal amount of the notes from the proceeds of certain equity offerings prior to June 15,
2017, at a price equal to 105.375% of the principal amount, plus any accrued and unpaid interest. In addition, on or after June
15, 2017, the Company may redeem at its option some or all of the notes at redemption prices that start at 104.0313% of their
principal amount, plus any accrued and unpaid interest to the date of redemption. The Company must make an offer to redeem
the notes at 101% of the aggregate principal amount, plus any accrued and unpaid interest to the repurchase date, if it
experiences certain defined changes of control.
2.5% Convertible Senior Notes
In May 2014, the Company issued $275 million of convertible senior notes due 2019. The notes pay interest semiannually
in arrears on May 15 and November 15 at a rate of 2.5% per annum, beginning on November 15, 2014. The notes will mature
on May 15, 2019, and may not be redeemed by the Company prior to the maturity date. The notes will be convertible, under
74
certain circumstances, until November 15, 2018, and on or after such date without condition, at an initial conversion rate of
28.8363 shares of the Company’s common stock per $1,000 principal amount of notes, subject to adjustment, which represents
a 52.5% conversion premium based on the last reported sale price for the Company’s common stock of $22.74 on May 19,
2014. Upon conversion, the notes may be settled in shares of common stock or, at the Company’s election, cash or a
combination of cash and shares of common stock. Assuming the Company fully settled the notes in shares, the maximum
number of shares that could be issued to satisfy the conversion is currently 7.9 million.
If the Company experiences a fundamental change, as defined in the indenture governing the notes, the holders of the
2.5% convertible senior notes may require the Company to purchase for cash all or a portion of their notes, subject to specified
exceptions, at a price equal to 100% of the principal amount of the notes plus accrued and unpaid interest, if any.
The carrying amount of the equity component of the notes is $22.0 million and the principal amount of the liability
component (face value of the notes) is $275 million. As of December 31, 2014, the remaining period for the debt discount was
approximately four years and the value of the notes, if converted and fully settled in shares, did not exceed the principal amount
of the notes. As of December 31, 2014, the effective interest rate on the liability component of the notes was 5.0%. The
following table summarizes the amount of pre-tax interest cost recognized on the 2.5% convertible senior notes and the 2.875%
convertible senior notes which were redeemed in September 2014:
Interest cost recognized relating to:
Contractual interest coupon
Amortization of debt discount
Amortization of debt issuance costs
Total interest cost recognized on the notes
Other Long-term Debt
Year Ended December 31,
2014
2013
(in thousands)
2012
$
$
8,701
10,165
1,175
20,041
$
$
6,325
12,995
703
20,023
$
$
6,325
11,792
703
18,820
Other long-term debt is comprised of capital leases of $9.0 million and notes payable and other debt of $87.0 million,
including debt to noncontrolling interest partners of $30.0 million and $32.7 million of long-term debt for Academy Music
Holdings Limited Group which consists of term loans and shareholder loan notes. Total notes payable consist primarily of
seventeen notes with interest rates ranging from 0.3% to 11.0% and maturities of up to seven years.
Debt Extinguishment
In May 2014, the Company issued $250 million of 5.375% senior notes due 2022 and $275 million of 2.5% convertible
senior notes due 2019 and paid related fees and expenses of $9.8 million. In July 2014, the holders of $29.3 million of
aggregate outstanding principal of the 2.875% convertible senior notes exercised their right to redeem their notes for cash and
in late September 2014, pursuant to the Company’s option under the indenture governing the notes, the Company redeemed the
remainder of these notes using the net proceeds noted above. In addition to redeeming the $220 million principal amount of
these notes, the Company paid total accrued interest of $1.1 million and related fees and expenses of $0.2 million for the
redemption, leaving $293.9 million in additional cash available for general corporate purposes. The loss on extinguishment of
debt related to the redemption of the 2.875% convertible senior notes was not significant in 2014.
In August 2013, the Company issued additional notes under the indenture governing its existing 7% senior notes due 2020
with a $9.0 million premium and amended its senior secured credit facility. The amendment to the senior secured credit facility
provided the existing term loan A and term loan B lenders with an option to convert their outstanding principal amounts into the
new term loans. Excluding the outstanding principal amounts for lenders who elected to convert their outstanding term loans,
proceeds of $802.2 million from issuance of these borrowings were used to repay $472.5 million principal amount of the
Company’s outstanding borrowings under the existing senior secured credit facility, to repay the entire $250 million principal
amount of the Company’s outstanding 8.125% senior notes due 2018 and to pay the related ‘make-whole’ premium on these
senior notes and total accrued interest and fees of $35.3 million along with related fees and expenses for the refinancing of
$22.0 million, leaving $22.4 million in additional cash for general corporate purposes. The Company recorded $36.3 million as
a loss on extinguishment of debt related to this refinancing in 2013.
75
Debt Covenants
The Company’s senior secured credit facility contains a number of covenants and restrictions that, among other things,
require the Company to satisfy certain financial covenants and restrict the Company’s and its subsidiaries’ ability to incur
additional debt, make certain investments and acquisitions, repurchase its stock and prepay certain indebtedness, create liens,
enter into agreements with affiliates, modify the nature of its business, enter into sale-leaseback transactions, transfer and sell
material assets, merge or consolidate, and pay dividends and make distributions (with the exception of subsidiary dividends or
distributions to the parent company or other subsidiaries on at least a pro-rata basis with any noncontrolling interest partners).
Non-compliance with one or more of the covenants and restrictions could result in the full or partial principal balance of the
credit facility becoming immediately due and payable. The senior secured credit facility agreement has a covenant, measured
quarterly that relates to total leverage. The consolidated total leverage covenant requires the Company to maintain a ratio of
consolidated total funded debt to consolidated EBITDA (both as defined in the credit agreement) of 5.0x over the trailing four
consecutive quarters through September 30, 2015. The consolidated total leverage ratio will reduce to 4.75x on December 31,
2015 and 4.50x on December 31, 2016.
The indentures governing the 7% senior notes and the 5.375% senior notes contain covenants that limit, among other
things, the Company’s ability and the ability of its restricted subsidiaries to incur certain additional indebtedness and issue
preferred stock, make certain distributions, investments and other restricted payments, sell certain assets, agree to any
restrictions on the ability of restricted subsidiaries to make payments to the Company, merge, consolidate or sell all of the
Company’s assets, create certain liens, and engage in transactions with affiliates on terms that are not arms-length. Certain
covenants, including those pertaining to incurrence of indebtedness, restricted payments, asset sales, mergers and transactions
with affiliates will be suspended during any period in which the notes are rated investment grade by both rating agencies and no
default or event of default under the indenture has occurred and is continuing. The 7% senior notes and the 5.375% senior
notes contain two incurrence-based financial covenants, as defined, requiring a minimum fixed charge coverage ratio of 2.0x
and a maximum secured indebtedness leverage ratio of 3.25x for the 7% senior notes and 3.50x for the 5.375% senior notes.
Some of the Company’s other subsidiary indebtedness includes restrictions on entering into various transactions, such as
acquisitions and disposals, and prohibits payment of ordinary dividends. They also have financial covenants including
minimum consolidated EBITDA to consolidated net interest payable, minimum consolidated cash flow to consolidated debt
service and maximum consolidated debt to consolidated EBITDA, all as defined in the applicable debt agreements.
As of December 31, 2014, the Company believes it was in compliance with all of its debt covenants. The Company
expects to remain in compliance with all of these covenants throughout 2015.
NOTE 5—DERIVATIVE INSTRUMENTS
The Company primarily uses forward currency contracts and options to reduce its exposure to foreign currency risk
associated with short-term artist fee commitments. The Company may also enter into forward currency contracts to minimize
the risks and/or costs associated with changes in foreign currency rates on forecasted operating income. At December 31, 2014
and 2013, the Company had forward currency contracts and options outstanding with notional amounts of $63.3 million and
$96.0 million, respectively. These instruments have not been designated as hedging instruments and any change in fair value is
reported in earnings during the period of the change. The Company’s foreign currency derivative activity, including the related
fair values, are not material to any period presented.
Additionally, the Company has entered into certain interest rate swap agreements to limit its exposure to variable interest
rates, related to portions of the Company’s outstanding debt, one of which has been designated as a cash flow hedge. At
December 31, 2014 and 2013, the Company had interest rate swaps outstanding with notional amounts of $29.3 million and
$39.3 million, respectively. The Company’s interest rate swap activity, including the related fair values, are not material to any
period presented. As of December 31, 2014 and 2013, there was no ineffective portion or amount excluded from effectiveness
testing for derivatives designated as cash flow hedging instruments.
The Company does not enter into derivative instruments for speculative or trading purposes and does not anticipate any
significant recognition of derivative activity through the income statement in the future related to the instruments currently
held. See Note 6—Fair Value Measurements for further discussion and disclosure of the fair values for the Company’s
derivative instruments.
76
NOTE 6—FAIR VALUE MEASUREMENTS
The Company currently has various financial instruments carried at fair value, such as marketable securities, derivatives
and contingent consideration, but does not currently have nonfinancial assets and liabilities that are required to be measured at
fair value on a recurring basis. The Company’s financial assets and liabilities are measured using inputs from all levels of the
fair value hierarchy as defined in the FASB guidance for fair values. For this categorization, only inputs that are significant to
the fair value are considered. The three levels are defined as follows:
Level 1—Inputs are unadjusted quoted prices in active markets for identical assets or liabilities that can be accessed at the
measurement date.
Level 2—Inputs include quoted prices for similar assets and liabilities in active markets, quoted prices for identical or
similar assets or liabilities in markets that are not active, inputs other than quoted prices that are observable for the asset or
liability (i.e., interest rates, yield curves, etc.) and inputs that are derived principally from or corroborated by observable market
data by correlation or other means (i.e., market corroborated inputs).
Level 3—Unobservable inputs that reflect assumptions about what market participants would use in pricing the asset or
liability. These inputs would be based on the best information available, including the Company’s own data.
In accordance with the fair value hierarchy described above, the following table shows the fair value of the Company’s
financial assets and liabilities that are required to be measured at fair value on a recurring basis, which are classified on the
balance sheets as cash and cash equivalents, other current assets, other long-term assets, other current liabilities and other long-
term liabilities:
Fair Value Measurements
at December 31, 2014
Fair Value Measurements
at December 31, 2013
Level 1
Level 2
Level 3
Total
Level 1
Level 2
Level 3
Total
(in thousands)
(in thousands)
$
111
$
— $
— $
111
$ 26,627
$
— $
— $ 26,627
—
—
1,910
—
111
$
1,910
— $
1,004
$
$
$
$
—
445
445
1,910
445
—
—
$
2,466
$ 26,627
$
297
—
297
— $
1,004
$
— $
1,491
—
—
—
5
—
—
—
—
5
—
8,927
8,927
—
—
—
1,543
—
—
$
$
—
469
469
297
469
$ 27,393
— $
1,491
—
435
1,543
435
5,934
5,934
$
— $
1,009
$
8,927
$
9,936
$
— $
3,034
$
6,369
$
9,403
Assets:
Cash equivalents
Forward currency
contracts
Stock options
Total
Liabilities:
Interest rate swaps
Forward currency
contracts
Put option
Contingent
consideration
Total
Cash equivalents consist of money market funds. Fair values for cash equivalents are based on quoted prices in an active
market. Fair values for forward currency contracts are based on observable market transactions of spot and forward rates. Fair
values for the interest rate swaps are based on inputs corroborated by observable market data with similar tenors.
The Company has stock options in both publicly traded and non-publicly traded companies that are measured at fair
value using Level 3 inputs. The stock options were received as consideration in connection with operational agreements entered
into by subsidiaries of the Company. The Company has recorded assets for these options which were valued using the Black-
Scholes option pricing model.
A third-party had a put option to sell its noncontrolling interest to the Company in the second quarter of 2014 that was
entered into as a separate transaction and therefore was carried at fair value using Level 3 inputs. The Company recorded a
current liability for this put option which was valued using the Black-Scholes option pricing model. Changes in the fair value
were recorded in acquisition transaction expenses.
The Company has certain contingent consideration obligations related to acquisitions which are measured at fair value
using Level 3 inputs. The amounts due to the sellers are based on the achievement of agreed-upon financial performance
metrics by the acquired companies where the contingent obligation is either earned or not earned. The Company records the
liability at the time of the acquisition based on the present value of management’s best estimates of the future results of the
77
acquired companies compared to the agreed-upon metrics. Subsequent to the date of acquisition, the Company updates the
original valuation to reflect current projections of future results of the acquired companies and the passage of time. Accretion
of, and changes in the valuations of, contingent consideration are reported in acquisition transaction expenses. See Note 7—
Commitments and Contingent Liabilities for additional information related to the contingent payments.
Due to their short maturity, the carrying amounts of accounts receivable, accounts payable and accrued expenses
approximated their fair values at December 31, 2014 and 2013.
The Company’s outstanding debt held by third-party financial institutions is carried at cost, adjusted for premium or
discounts. The Company’s debt is not publicly traded and the carrying amounts typically approximate fair value for the
Company’s debt that accrues interest at a variable rate, which are considered to be Level 2 inputs. The estimated fair values of
the 7% senior notes, the 5.375% senior notes and the 2.5% convertible senior notes were $451.3 million, $250.3 million and
$296.3 million, respectively, at December 31, 2014. The estimated fair values of the 7% senior notes and the 2.875%
convertible senior notes were $461.9 million and $223.0 million, respectively, at December 31, 2013. The estimated fair value
of the Company’s third-party fixed-rate debt is based on quoted market prices in active markets for the same or similar debt,
which are considered to be Level 2 inputs. See Note 4—Long-Term Debt for discussion of the issuance of the 5.375% senior
notes and the 2.5% convertible senior notes and redemption of the 2.875% convertible senior notes. The Company has fixed
rate debt held by noncontrolling interest partners with a face value of $30.0 million and $34.6 million at December 31, 2014
and 2013, respectively. The Company is unable to determine the fair value of this debt.
The following table shows the fair value of the Company’s financial assets that have been adjusted to fair value on a non-
recurring basis which had a significant impact on the Company’s results of operations for the years ended December 31, 2014
and 2013:
Description
2014
Definite-lived intangible assets, net
Indefinite-lived intangible assets, net
Goodwill
Investments in nonconsolidated affiliates
2013
Definite-lived intangible assets, net
Investments in nonconsolidated affiliates
$
$
$
$
$
$
Fair Value
Fair Value Measurements Using
Measurement
Level 1
Level 2
Level 3
Loss
(Gain)
(in thousands)
627
$
— $
$
— $
142,719
— $
— $
— $
— $
$
627
— $
— $
— $
— $ 142,719
— $
11,107
5,963
$ 134,961
— $ (16,356)
660
$
— $
— $
— $
— $
— $
660
$
— $
10,625
9,174
During 2014, 2013 and 2012, the Company recorded impairment charges related to definite-lived intangible assets of
$11.1 million, $10.6 million and $89.6 million, respectively, as a component of depreciation and amortization. The 2014
impairment charges were primarily related to intangible assets for client/vendor relationships in the Artist Nation segment and
technology in the Ticketing segment. The 2013 impairment charges were primarily related to intangible assets for venue
management and leaseholds in the Concerts segment and client/vendor relationships in the Concerts and Artist Nation
segments. The 2012 impairment charges were primarily related to intangible assets for client/vendor relationships in the Artist
Nation segment and revenue-generating contracts and client/vendor relationships in the Concerts segment. In all these cases it
was determined that these assets were impaired since the most recent estimated undiscounted future cash flows associated with
these assets were less than their carrying value or that the technology would no longer be used. These impairments were then
calculated using operating cash flows which were discounted to approximate fair value. The key inputs in these calculations
include future cash flow projections, including revenue and profit margins, attrition rates as applicable, and, for the fair value
computation, a discount rate. The key inputs used for these non-recurring fair value measurements are considered Level 3
inputs.
During 2014, goodwill impairments were recorded for the International Concerts reporting unit in the Concerts segment
and the Artist Services (non-management) reporting unit in the Artist Nation segment in the amounts of $117.0 million and
$17.9 million, respectively, in conjunction with our annual impairment tests. The Company calculated these impairments using
a combination of a discounted cash flows methodology, which uses both Level 2 and Level 3 inputs, and a market multiple
methodology, which uses primarily Level 2 inputs. These key inputs include discount rates, market multiples, control
premiums, revenue growth, estimates of future financial performance and attrition rates. See Note 1—The Company and
78
Summary of Significant Accounting Policies and Note 2—Long-Lived Assets for further discussion of the Company’s
methodology and these impairments.
During 2014, the Company recorded an impairment charge related to indefinite-lived intangible assets of $6.0 million as
a component of depreciation and amortization. The Company made a decision to rebrand certain of its markets that were not
using the Ticketmaster trade name. In connection with the rebranding, it was determined that an indefinite-lived intangible asset
for a certain market was fully impaired since the transition to the Ticketmaster trade name was substantially completed for that
market during the third quarter. The fair value of this asset was calculated using a relief-from royalty method. The relief-from
royalty method applied a royalty rate to the projected earnings attributable to the indefinite-lived intangible asset. The projected
earnings for this non-recurring fair value measurement are considered Level 3 inputs.
During 2014, the Company recorded a net gain related to investments in nonconsolidated affiliates of $16.4 million as a
component of other expense, net. The net gain was related to changes in the governing agreements of two artist management
businesses resulting in those businesses being consolidated by the Company on a prospective basis. Prior to consolidation, the
Company remeasured these investments to fair value using a discounted cash flow methodology. The key inputs in these fair
value measurements include future cash flow projections, including revenue and profit margins, discount rates and attrition
rates. The key inputs used for these non-recurring fair value measurements are considered Level 3 inputs.
During 2013, the Company recorded impairment charges related to investments in nonconsolidated affiliates of $9.2
million as a component of equity in earnings of nonconsolidated affiliates. The impairment charges primarily related to
investments in a concert promoter located in Europe and an ecommerce business. Based on financial information received
regarding the sale or liquidation of the nonconsolidated affiliates, the Company believed its investment balances were fully
impaired. The financial information received from the nonconsolidated affiliates used for these non-recurring fair value
measurements are considered Level 3 inputs.
In 2014 and 2013, there were no significant impairment charges recorded related to property, plant and equipment.
During 2012, the Company recorded impairment charges of $4.3 million as a component of depreciation and amortization for
certain property, plant and equipment. The 2012 impairment charges were primarily related to certain leasehold improvements
and office furniture and equipment in the Artist Nation segment, an amphitheater in the Concerts segment and a theater in other
operations. It was determined that these assets were impaired since the estimated undiscounted future cash flows associated
with the respective asset were less than its carrying value. These cash flows were calculated using the estimated sale values for
the assets being sold and/or operating cash flows, all of which were discounted to approximate fair value. The estimated sale
values and operating cash flows used for these non-recurring fair value measurements are considered Level 2 inputs.
NOTE 7—COMMITMENTS AND CONTINGENT LIABILITIES
The Company leases office space, certain equipment and many of its concert venues. Some of the lease agreements
contain renewal options and annual rental escalation clauses (generally tied to the consumer price index), as well as provisions
for the payment of utilities and maintenance by the Company. The Company also has non-cancelable contracts related to
minimum performance payments with various artists, other event-related costs and nonrecoupable ticketing contract advances.
In addition, the Company has commitments relating to additions to property, plant, and equipment under certain construction
commitments for facilities and venues.
As of December 31, 2014, the Company’s future minimum rental commitments under non-cancelable operating lease
agreements with terms in excess of one year, minimum payments under non-cancelable contracts in excess of one year and
capital expenditure commitments consist of the following:
Non-cancelable
Operating Leases
Non-cancelable
Contracts
(in thousands)
Capital
Expenditures
$
$
135,816
135,047
129,784
118,865
110,859
1,610,171
2,240,542
$
$
877,072
237,016
190,761
43,261
34,079
10,118
1,392,307
$
$
9,807
25
25
—
—
250
10,107
2015
2016
2017
2018
2019
Thereafter
Total
79
Commitment amounts for non-cancelable operating leases and non-cancelable contracts which stipulate an increase in the
commitment amount based on an inflationary index have been estimated using an inflation factor of 2.4% for North America,
3.3% for the United Kingdom and 1.8% for the Netherlands.
Aggregate minimum rentals of $70.5 million to be received in years 2015 through 2023 under non-cancelable subleases
are excluded from the commitment amounts in the above table.
Total rent expense charged to operations for 2014, 2013 and 2012 was $155.7 million, $162.6 million and $145.2 million,
respectively. In addition to the minimum rental commitments included in the table above, the Company has leases that contain
contingent payment requirements for which payments vary depending on revenue, tickets sold or other variables. Contingent
rent expense charged to operations for 2014, 2013 and 2012 was $28.9 million, $46.5 million and $30.0 million, respectively.
The above table above does not include contingent rent or rent expense for events in third-party venues.
In connection with asset and business disposals, the Company generally provides indemnifications to the buyers
including claims resulting from employment matters, commercial claims and governmental actions that may be taken against
the assets or businesses sold. Settlement of these claims is subject to various statutory limitations that are dependent upon the
nature of the claim.
Certain agreements relating to acquisitions provide for deferred purchase consideration payments at future dates. A
liability is established at the time of the acquisition for these fixed payments. For obligations payable at a date greater than
twelve months from the acquisition date, the Company applies a discount rate to present value the obligations. As of December
31, 2014, the Company has accrued $0.1 million in other current liabilities and $15.5 million in other long-term liabilities
related to these deferred purchase consideration payments. There were no deferred purchase consideration payment liabilities at
December 31, 2013.
The Company has contingent obligations related to acquisitions which are accounted for as business combinations.
Contingent consideration associated with business combinations is recorded at its fair value at the time of the acquisition and
reflected at current fair value for each subsequent reporting period thereafter until settled. The Company records these fair
value changes in its statements of operations as acquisition transaction expenses. The contingent consideration is generally
subject to payout following the achievement of future performance targets and a portion is expected to be payable in the next
twelve months. As of December 31, 2014, the Company has accrued $0.1 million in other current liabilities and $8.8 million in
other long-term liabilities and, as of December 31, 2013, the Company had accrued $1.9 million in other current liabilities and
$4.0 million in other long-term liabilities, representing the fair value of these estimated payments. The last contingency period
for which the Company has an outstanding contingent payment is for the period ending May 2019. See Note 6—Fair Value
Measurements for further discussion related to the valuation of these contingent payments.
During 2006, in connection with the Company’s acquisition of Historic Theatre Group, the Company guaranteed
obligations related to a lease agreement. In the event of default, the Company could be liable for obligations through the end of
2035 which have future lease payments (undiscounted) of approximately $20.0 million as of December 31, 2014. The
scheduled future minimum rentals for this lease for the years 2015 through 2019 are $1.6 million each year. The venues under
the lease agreement were included in the sale of the Company’s North American theatrical business in 2008. The buyer has
assumed the Company’s obligations under the guaranty, however the Company remains contingently liable to the lessor. The
Company believes that the likelihood of a material liability being triggered under this lease is remote, and no liability has been
accrued for these contingent lease obligations as of December 31, 2014.
As of December 31, 2014 and 2013, the Company guaranteed the debt of third parties of approximately $13.1 million in
each respective period primarily related to maximum credit limits on employee and tour-related credit cards and obligations
under a venue management agreement.
Litigation
Ticketing Fees Consumer Class Action Litigation
In October 2003, a putative representative action was filed in the Superior Court of California challenging Ticketmaster’s
charges to online customers for shipping fees and alleging that its failure to disclose on its website that the charges contain a
profit component is unlawful. The complaint asserted a claim for violation of California’s Unfair Competition Law (“UCL”)
and sought restitution or disgorgement of the difference between (i) the total shipping fees charged by Ticketmaster in
connection with online ticket sales during the applicable period, and (ii) the amount that Ticketmaster actually paid to the
shipper for delivery of those tickets. In August 2005, the plaintiffs filed a first amended complaint, then pleading the case as a
putative class action and adding the claim that Ticketmaster’s website disclosures in respect of its ticket order processing fees
constitute false advertising in violation of California’s False Advertising Law. On this new claim, the amended complaint seeks
restitution or disgorgement of the entire amount of order processing fees charged by Ticketmaster during the applicable period.
In April 2009, the Court granted the plaintiffs’ motion for leave to file a second amended complaint adding new claims that
(a) Ticketmaster’s order processing fees are unconscionable under the UCL, and (b) Ticketmaster’s alleged business practices
80
further violate the California Consumer Legal Remedies Act. Plaintiffs later filed a third amended complaint, to which
Ticketmaster filed a demurrer in July 2009. The Court overruled Ticketmaster’s demurrer in October 2009.
The plaintiffs filed a class certification motion in August 2009, which Ticketmaster opposed. In February 2010, the Court
granted certification of a class on the first and second causes of action, which allege that Ticketmaster misrepresents/omits the
fact of a profit component in Ticketmaster’s shipping and order processing fees. The class would consist of California
consumers who purchased tickets through Ticketmaster’s website from 1999 to present. The Court denied certification of a
class on the third and fourth causes of action, which allege that Ticketmaster’s shipping and order processing fees are
unconscionably high. In March 2010, Ticketmaster filed a Petition for Writ of Mandate with the California Court of Appeal,
and plaintiffs also filed a motion for reconsideration of the Superior Court’s class certification order. In April 2010, the Superior
Court denied plaintiffs’ Motion for Reconsideration of the Court’s class certification order, and the Court of Appeal denied
Ticketmaster’s Petition for Writ of Mandate. In June 2010, the Court of Appeal granted the plaintiffs’ Petition for Writ of
Mandate and ordered the Superior Court to vacate its February 2010 order denying plaintiffs’ motion to certify a national class
and enter a new order granting plaintiffs’ motion to certify a nationwide class on the first and second claims. In September
2010, Ticketmaster filed its Motion for Summary Judgment on all causes of action in the Superior Court, and that same month
plaintiffs filed their Motion for Summary Adjudication of various affirmative defenses asserted by Ticketmaster. In November
2010, Ticketmaster filed its Motion to Decertify Class.
In December 2010, the parties entered into a binding agreement providing for the settlement of the litigation and the
resolution of all claims therein. In September 2011, the Court declined to approve the settlement in its then-current form.
Litigation continued, and later that same month, the Court granted in part and denied in part Ticketmaster’s Motion for
Summary Judgment. The parties reached a new settlement in September 2011, which was preliminarily approved, but in
September 2012 the Court declined to grant final approval. In June 2013, the parties reached a revised settlement, which was
preliminarily approved by the Court in April 2014. Ticketmaster and its parent, Live Nation, have not acknowledged any
violations of law or liability in connection with the matter.
As of December 31, 2014, the Company has accrued $34.9 million, its best estimate of the probable costs associated with
the settlement referred to above. This liability includes an estimated redemption rate. Any difference between the Company’s
estimated redemption rate and the actual redemption rate it experiences will impact the final settlement amount; however, the
Company does not expect this difference to be material.
Other Litigation
From time to time, the Company is involved in other legal proceedings arising in the ordinary course of its business,
including proceedings and claims based upon violations of antitrust laws and intellectual property rights, and tortious
interference, which could cause the Company to incur significant expenses. The Company has also been the subject of personal
injury and wrongful death claims relating to accidents at its venues in connection with its operations. As required, the Company
has accrued its estimate of the probable settlement or other losses for the resolution of any outstanding claims. These estimates
have been developed in consultation with counsel and are based upon an analysis of potential results, including, in some cases,
estimated redemption rates for the settlement offered, assuming a combination of litigation and settlement strategies. It is
possible, however, that future results of operations for any particular period could be materially affected by changes in the
Company’s assumptions or the effectiveness of its strategies related to these proceedings.
NOTE 8—CERTAIN RELATIONSHIPS AND RELATED-PARTY TRANSACTIONS
Transactions Involving Principal Owners and Directors
The following table sets forth revenue earned and expenses incurred from the transactions noted below:
Year Ended December 31,
2014
2013
2012
(in thousands)
Principal owner and director related-party
revenue
Principal owner and director related-party
expenses
$
$
3,995
424
$
$
6,050
5,006
$
$
21,532
22,291
Agreements and Transactions with Liberty Media
Two current members of our board of directors were originally nominated by Liberty Media pursuant to a stockholder
agreement.
81
The Company provides ticketing services to a sports franchise owned by Liberty Media and pays royalty fees and non-
recoupable ticketing contract advances to the sports franchise. The Company also receives transaction fees from the sports
franchise for tickets the sports franchise sells using the Company’s ticketing software. From time to time, the Company
purchases advertising from Sirius XM Satellite Radio, a subsidiary of Liberty Media. These transactions are entered into in the
ordinary course of business on an arms-length basis.
Relationship with Microsoft
The Company has a non-employee director who became an executive of Microsoft Corporation as of September 2, 2014.
This director receives directors’ fees, stock options and restricted stock awards on the same basis as other non-employee
members of the Company’s board of directors. From time to time, the Company purchases software licenses, advertising and
other products from and provides sponsorship and advertising opportunities to Microsoft Corporation and its subsidiaries in the
ordinary course of business on an arms-length basis.
Relationship with Clear Channel
For purposes of governing certain of the ongoing relationships between Clear Channel and Live Nation at and after the
Separation, Clear Channel and Live Nation entered into a tax matters agreement, among other agreements.
The Company has a non-employee director who was also a director and executive officer of Clear Channel until July
2013. This director receives directors’ fees, stock options and restricted stock awards on the same basis as other non-employee
members of the Company’s board of directors. From time to time, the Company purchases advertising from Clear Channel and
its subsidiaries in the ordinary course of business on an arm’s-length basis. The Company also has various lease and licensing
agreements with Clear Channel for office space. These transactions are included in the table above through July 2013.
Transactions with Madison Square Garden
The Company had a non-employee director until February 2013 who is also a director and executive officer of Madison
Square Garden (“MSG”) and Cablevision Systems Corporation. This director received directors’ fees, stock options and
restricted stock awards on the same basis as other non-employee members of the Company’s board of directors. From time to
time, the Company promotes events at venues owned and/or operated by MSG and pays rental fees and co-promote fees to
MSG and its subsidiaries. In addition, the Company provides ticketing services for venues and sports franchises owned or
operated by MSG and pays royalty fees and non-recoupable ticketing contract advances to MSG and its subsidiaries. The
Company also receives transaction fees from MSG and its subsidiaries for tickets MSG sells using the Company’s ticketing
software. Finally, the Company purchases advertising from Cablevision Systems Corporation and its subsidiaries from time to
time. All of these transactions are entered into in the ordinary course of business on an arms-length basis and are included in the
table above through February 2013.
Transactions Involving Executives
ATC Aviation, Inc. (“ATC”), which was owned by the Company’s former Executive Chairman who resigned on
December 31, 2012, owned an aircraft. The Company was charged market rates for the use of the aircraft when used by the
former executive or other executives on Company business, a portion of which was paid to ATC. These arrangements are no
longer in effect following the executive’s departure from the Company. For the year ended December 31, 2012, the Company
made payments totaling $1.9 million.
During 2012, the former executive noted above had a minority ownership interest in an entity that subleases office space
from the Company. Rent charged by the Company for the year ended December 31, 2012 totaled $0.7 million.
Trust Note
For the year ended December 31, 2012, the Company recorded $11.7 million of acquisition expenses related to the Trust
Note as a component of corporate expenses. The Trust Note was paid in full in December 2012 in connection with the
resignation of the executive affiliated with the trust that held the Trust Note.
Transactions Involving Equity Method Investees
The Company conducts business with certain of its equity method investees in the ordinary course of business.
Transactions relate to venue rentals, management fees and sponsorship revenue. Revenue of $6.5 million, $2.6 million and $2.3
million were earned in 2014, 2013 and 2012, respectively, and expenses of $5.2 million, $7.5 million and $6.8 million were
incurred in 2014, 2013 and 2012, respectively, from these equity investees for services rendered or provided in relation to these
business ventures.
82
Other Related Parties
The Company conducts certain transactions in the ordinary course of business with companies that are owned, in part or
in total, by various members of management of the Company’s subsidiaries or companies over which it has significant
influence. These transactions primarily relate to venue rentals, concession services, equipment rentals, ticketing, marketing and
other services. The following table sets forth expenses incurred and revenue earned from these companies for services rendered
or provided in relation to these business ventures. None of these transactions were with directors or executive officers of the
Company.
Other related-party revenue
Other related-party expenses
NOTE 9—INCOME TAXES
Year Ended December 31,
2014
2013
2012
(in thousands)
$
$
4,942
16,639
$
$
5,721
20,208
$
$
4,755
13,720
Significant components of the provision for income tax expense (benefit) are as follows:
Current:
Federal
Foreign
State
Total current
Deferred:
Federal
Foreign
State
Total deferred
Income tax expense
Year Ended December 31,
2014
2013
2012
(in thousands)
$
17
$
1,238
$
2,235
12,727
9,550
22,294
41,664
3,864
46,766
34,541
3,917
40,693
(10,827)
(4,249)
(2,588)
(17,664)
$
4,630
(852)
(14,606)
(430)
(15,888)
$ 30,878
(386)
(14,591)
4,020
(10,957)
29,736
$
The domestic net loss before income taxes was $16.2 million, $103.9 million and $232.3 million for 2014, 2013 and
2012, respectively. Foreign income (loss) before income taxes was a loss of $83.6 million and income of $98.8 million and
$100.1 million for 2014, 2013 and 2012, respectively.
83
Significant components of the Company’s deferred tax liabilities and assets are as follows:
Deferred tax liabilities:
Intangible assets
Prepaid expenses
Long-term debt
Total deferred tax liabilities
Deferred tax assets:
Intangible and fixed assets
Accrued expenses
Net operating loss carryforwards
Foreign tax credit carryforwards
Equity compensation
Other
December 31,
2014
2013
(in thousands)
$
232,521
$
234,454
2,518
8,521
7,089
51,166
243,560
292,709
—
59,081
526,811
55,806
9,868
2,065
8,991
59,944
538,644
42,323
24,930
14,597
Total gross deferred tax assets
653,631
689,429
Valuation allowance
Total deferred tax assets
Net deferred tax liabilities
593,305
580,594
60,326
108,835
$ (183,234) $ (183,874)
The valuation allowance was recorded due to the uncertainty of the ability to generate sufficient taxable income necessary
to realize certain deferred tax assets in future years. If, at a later date, it is determined that due to a change in circumstances, the
Company will utilize all or a portion of those deferred tax assets, the Company will reverse the corresponding valuation
allowance with the offset to income tax benefit.
The decrease in the long-term debt deferred tax liability is primarily attributable to the release of deferred taxes related to
interest expense deductions for tax purposes on the Company’s 2.875% convertible senior notes that were redeemed in
September 2014 partially offset by a deferred tax liability established for the equity component and related transaction costs of
the Company’s 2.5% convertible senior notes issued in May 2014.
During 2014 and 2013, the Company recorded net deferred tax liabilities of $23.2 million and $15.1 million, respectively,
due principally to differences in financial reporting and tax bases in assets acquired in business combinations.
As of December 31, 2014, the Company has United States federal, state and foreign deferred tax assets related to net
operating loss carryforwards of $248.1 million, $62.7 million and $216.0 million, respectively. Based on current statutory
carryforward periods, these losses will expire on various dates between the years 2024 and 2033. The Company’s federal net
operating loss is subject to statutory limitations on the amount that can be used in any given year.
84
The reconciliation of income tax computed at the United States federal statutory rates to income tax expense is:
Income tax benefit at United States statutory rates
$
State income taxes, net of federal tax benefits
Differences between foreign and United States
statutory rates
Non-United States income inclusions and exclusions
Nondeductible items
Tax contingencies
Change in valuation allowance
Other, net
$
Year Ended December 31,
2013
2012
2014
(in thousands)
(34,937) $
9,550
(1,798) $
3,864
(10,735)
2,926
55,469
950
(6,168)
(12,425)
4,630
(21,182)
18,525
7,570
697
15,912
7,290
$
30,878
$
(46,256)
3,917
(25,637)
9,901
9,005
4,316
79,214
(4,724)
29,736
During 2014, 2013 and 2012, the Company recorded income tax expense of approximately $4.6 million, $30.9 million
and $29.7 million, respectively, on losses before tax of $99.8 million, $5.1 million and $132.2 million, respectively. Income tax
expense is principally attributable to the Company’s earnings in foreign tax jurisdictions along with state income taxes. The
Company does not record current tax benefits associated with losses from operations within tax jurisdictions where the losses
cannot be carried back and/or for which future taxable income cannot be reasonably assured.
Differences between foreign and United States statutory rates of $(10.7) million, $(21.2) million and $(25.6) million for
the years ended December 31, 2014, 2013 and 2012, respectively, are primarily attributable to the Company’s Luxembourg
holding company structure and tax rulings received from the Luxembourg tax authorities.
Nondeductible items for 2014 primarily relate to the goodwill impairment that is not deductible for tax purposes.
During 2014, the Company recorded an income tax benefit of $12.9 million from the release of valuation allowances
related to deferred tax liabilities associated with certain acquisitions. In 2013 and 2012, there were no significant income tax
benefits recognized for valuation allowance reversals attributable to acquisitions.
The Company regularly assesses the likelihood of additional assessments in each taxing jurisdiction resulting from current
and subsequent years’ examinations. Liabilities for income taxes are established for future income tax assessments when it is
probable there will be future assessments and the amount thereof can be reasonably estimated. Once established, liabilities for
uncertain tax positions are adjusted only when there is more information available or when an event occurs necessitating a
change to the liabilities. The Company believes that the resolution of income tax matters for open years will not have a material
effect on its consolidated financial statements although the resolution of income tax matters could impact the Company’s
effective tax rate for a particular future period.
The Company recognizes interest and penalties related to uncertain tax positions in income tax expense. For the years
ended December 31, 2014, 2013 and 2012, the Company has recognized $0.5 million, $0.1 million and $0.7 million,
respectively, of interest and penalties related to uncertain tax positions. As of December 31, 2014 and 2013, the Company has
accrued interest related to uncertain tax positions of $1.3 million and $1.2 million, respectively.
The tax years 2005 through 2014 remain open to examination by the major tax jurisdictions to which the Company is
subject.
85
At December 31, 2014 and 2013, the Company had $12.6 million and $12.9 million, respectively, of unrecognized tax
benefits. All of these unrecognized tax benefits would favorably impact the effective tax rate if recognized at some point in the
future. The following table summarizes the activity related to the Company’s unrecognized tax benefits for the years ended
December 31, 2014, 2013 and 2012:
Balance at January 1
Additions:
Increase for current year positions
Increase for prior year positions
Decrease for prior year positions
Interest and penalties for prior years
Reductions:
Expiration of applicable statute of limitations
Settlements for prior year positions
Foreign exchange
Reclassification to other liabilities
Balance at December 31
2014
2013
2012
(in thousands)
$
12,860
$
15,974
$
13,357
306
1,089
—
511
(236)
(1,225)
(686)
—
396
800
(75)
148
(572)
(3,212)
(599)
—
$
12,619
$
12,860
$
2,978
652
—
686
—
(1,716)
247
(230)
15,974
NOTE 10—EQUITY
Dividends
The Company presently intends to retain future earnings, if any, to finance the expansion of its business. Therefore, it
does not expect to pay any cash dividends in the foreseeable future. Moreover, the terms of the Company’s senior secured
credit facility limit the amount of funds that the Company will have available to declare and distribute as dividends on its
common stock. Payment of future cash dividends, if any, will be at the discretion of the Company’s board of directors in
accordance with applicable laws after taking into account various factors, including the financial condition, operating results,
current and anticipated cash needs, plans for expansion and contractual restrictions with respect to the payment of dividends.
Common Stock
Issued shares of common stock reported on the balance sheets include 1.2 million and 2.2 million, at December 31, 2014
and 2013, respectively, of unvested restricted stock awards that have not been included in the common shares issued reported
on the statements of changes in equity. These shares will be reflected in the statements of changes in equity at the time of
vesting.
During 2014 and 2013, the Company issued 2.7 million shares and 10.1 million shares, respectively, of common stock in
connection with stock option exercises and vesting of restricted stock awards.
The above shares issued in 2013 include 0.5 million shares of common stock that were issued in connection with the
exercise of warrants to purchase the Company’s common stock. The transactions were cashless net exercises resulting in the
Company repurchasing 0.4 million of the shares issued which have been recorded in treasury stock at a value of $6.9 million.
Common Stock Reserved for Future Issuance
Common stock of approximately 23.3 million shares as of December 31, 2014 is reserved for future issuances under the
stock incentive plan (including 17.0 million options and 1.2 million restricted stock awards currently granted).
Noncontrolling Interests
Common securities held by the noncontrolling interests that do not include put arrangements exercisable outside of the
control of the Company are recorded in equity, separate from the Company’s stockholders’ equity.
The purchase or sale of additional ownership in an already controlled subsidiary is recorded as an equity transaction with
no gain or loss recognized in net income (loss) or comprehensive income (loss) as long as the subsidiary remains a controlled
subsidiary. In 2014, in connection with the acquisition of an artist management business, the Company exchanged a
noncontrolling interest in certain of its existing artist management businesses. In addition, the Company acquired the remaining
equity interests in a festival promoter based in Ireland along with other smaller companies. In 2013, the Company acquired the
86
remaining equity interests in a company that owns the 3Arena in Ireland along with other smaller companies. The following
schedule reflects the change in ownership interests for these transactions:
Net loss attributable to common stockholders of Live Nation
Transfers of noncontrolling interest:
Changes in Live Nation’s additional paid-in capital for
purchase of noncontrolling interests, net of transaction
costs
Changes in Live Nation’s additional paid-in capital for sale
of noncontrolling interests, net of transaction costs
Net transfers of noncontrolling interest
Year Ended December 31,
2014
2013
(in thousands)
2012
$
(90,807) $
(43,378) $ (163,227)
(3,796)
(17,732)
(11,748)
(15,544)
—
(17,732)
43
—
43
Change from net loss attributable to common stockholders of
Live Nation and transfers from noncontrolling interests
$ (106,351) $
(61,110) $ (163,184)
Redeemable Noncontrolling Interests
The Company is subject to put arrangements arising from business combinations where the holders of the noncontrolling
interests can require the Company to repurchase their shares at specified dates in the future or within specified periods in the
future. Certain of these puts can be exercised earlier upon the occurrence of triggering events as specified in the agreements.
The redemption amounts for these puts are either at a fixed amount, at fair value at the time of exercise or a variable amount
based on a formula linked to earnings. In accordance with the FASB guidance for business combinations, the redeemable
noncontrolling interests are recorded at their fair value at acquisition date. As these put arrangements are not currently
redeemable, the Company accretes up to the estimated redemption value over the period from the date of issuance to the
earliest redemption date of the individual puts, with the offset recorded to additional paid-in capital. Decreases in accretion are
only recognized to the extent that increases had been previously recognized. The estimated redemption values that are based on
a formula linked to future earnings are computed using projected cash flows each reporting period which take into account the
current expectations regarding profitability and the timing of revenue-generating events. The amounts for these put
arrangements are reflected in the Company’s balance sheets as redeemable noncontrolling interests outside of permanent equity.
The increase during the current year is primarily due to the acquisition of a controlling interest in a festival and concert
promoter located in the United States.
The Company’s estimate of redemption amounts for puts that are redeemable at fixed or determinable prices on fixed or
determinable dates for the years ended December 31, 2015, 2016, 2017, 2018 and 2019 are $14.6 million, $11.6 million, $9.2
million, $146.5 million and $8.1 million, respectively.
87
Accumulated Other Comprehensive Income (Loss)
The following table presents changes in the components of AOCI, net of taxes, for the years ended December 31, 2014,
2013 and 2012:
Balance at December 31, 2011
$
(431) $
(in thousands)
(221) $
(35,722) $
(36,374)
Gains and Losses
on Cash Flow
Hedges
Defined Benefit
Pension Items
Foreign Currency
Items
Total
Other comprehensive income (loss) before
reclassifications
Amount reclassified from AOCI
Net other comprehensive income (loss)
Balance at December 31, 2012
Other comprehensive income before
reclassifications
Amount reclassified from AOCI
Net other comprehensive income
Balance at December 31, 2013
Other comprehensive income (loss) before
reclassifications
Amount reclassified from AOCI
Net other comprehensive income (loss)
Balance at December 31, 2014
(148)
(16)
(164)
(595)
20
496
516
(79)
(6)
60
(390)
—
(390)
(611)
—
—
—
(611)
30
—
$
54
(25) $
30
(581) $
26,005
—
26,005
(9,717)
8,037
—
8,037
(1,680)
(67,724)
—
(67,724)
(69,404) $
25,467
(16)
25,451
(10,923)
8,057
496
8,553
(2,370)
(67,700)
60
(67,640)
(70,010)
The realized loss on cash flow hedges reclassified from AOCI consists of one interest rate swap agreement.
Earnings per Share
The following table sets forth the computation of basic and diluted net income (loss) per common share:
Net loss attributable to common stockholders of
Live Nation
Accretion of redeemable noncontrolling interests
Net loss available to common stockholders of Live
Nation—basic and diluted
Weighted average common shares—basic and
diluted
Basic and diluted net loss available to common
stockholders of Live Nation
$
$
$
Year ended December 31,
2014
2013
2012
(in thousands except share and per share data)
(90,807) $
(5,660)
(43,378) $
(569)
(163,227)
(801)
(96,467) $
(43,947) $
(164,028)
198,874,019
193,885,066
186,955,748
(0.49) $
(0.23) $
(0.88)
Basic net income (loss) per common share is computed by dividing the net income (loss) available to common shares by
the weighted average number of common shares outstanding during the period. Diluted net income per common share adjusts
basic net income per common share for the effects of stock options, restricted stock and other potentially dilutive financial
instruments only in the periods in which such effect is dilutive. The Company’s 2.5% and 2.875% convertible senior notes are
considered in the calculation of diluted net income per common share, if dilutive.
88
The calculation of diluted net income per common share includes the effects of the assumed exercise of any outstanding
stock options and warrants, the assumed vesting of shares of restricted stock awards and units and the assumed conversion of
the 2.5% and 2.875% convertible senior notes where dilutive. For the years ended December 31, 2014, 2013 and 2012 there
were no reconciling items to the weighted average common shares outstanding in the calculation of diluted net income per
common share. The following table shows securities excluded from the calculation of diluted net income per common share
because such securities were anti-dilutive:
Options to purchase shares of common stock
Restricted stock awards and units—unvested
Warrants
Conversion shares related to convertible senior notes
Number of anti-dilutive potentially issuable shares
excluded from diluted common shares outstanding
Year Ended December 31,
2014
2013
2012
(in thousands)
16,999
1,171
—
7,930
26,100
16,628
2,210
—
8,105
26,943
24,722
3,207
500
8,105
36,534
NOTE 11—STOCK-BASED COMPENSATION
In December 2005, the Company adopted its 2005 Stock Incentive Plan, which has been amended and/or restated on
several occasions. In connection with the Company’s merger with Ticketmaster, the Company adopted the Amended and
Restated Ticketmaster 2008 Stock & Annual Incentive Plan. The plans authorize the Company to grant stock option awards,
director shares, stock appreciation rights, restricted stock and deferred stock awards, other equity-based awards and
performance awards. The Company has granted restricted stock awards and options to purchase its common stock to
employees, directors and consultants of the Company and its affiliates under the stock incentive plans at no less than the fair
market value of the underlying stock on the date of grant. The stock incentive plans contain anti-dilutive provisions that require
the adjustment of the number of shares of the Company’s common stock represented by, and the exercise price of, each option
for any stock splits or stock dividends.
The following is a summary of stock-based compensation expense recorded by the Company during the respective
periods:
Selling, general and administrative expenses
Corporate expenses
Total
Year Ended December 31,
2014
2013
2012
(in thousands)
$
$
21,204
17,825
39,029
$
$
12,361
16,054
28,415
$
$
14,297
22,766
37,063
The increase in stock-based compensation expense for the year ended December 31, 2014 as compared to the prior year is
due primarily to 2.3 million options and 0.8 million shares of restricted stock granted to management and directors during
2014, which will generally vest over one to four years. In addition, the Company granted other equity awards to employees
during 2014, with a grant in the first quarter vesting over four years and a grant in the second quarter vesting at issuance.
During 2014, the Company recorded stock-based compensation expense for these other awards of $7.9 million as a component
of selling, general and administrative expenses.
The Trust held 1.5 million shares of restricted Live Nation common stock that were issued in connection with an
acquisition, which unvested shares at December 31, 2012 were accelerated in connection with the resignation of a former
executive. Stock-based compensation expense of $6.3 million related to this restricted Live Nation common stock was recorded
for the year ended December 31, 2012, as a component of corporate expenses. The value of all exchanged awards which related
to services already rendered as of the date of the Company’s merger with Ticketmaster was included as part of the consideration
transferred.
As of December 31, 2014, there was $51.4 million of total unrecognized compensation cost related to stock-based
compensation arrangements for stock options and restricted stock awards. This cost is expected to be recognized over a
weighted-average period of 2.5 years.
89
Stock Options
Stock options are granted for a term not exceeding ten years and the nonvested options are generally forfeited in the event
the employee or director terminates his or her employment or relationship with the Company or one of its affiliates. Any
options that have vested at the time of termination are forfeited to the extent they are not exercised within the applicable post-
employment exercise period provided in their option agreements. These options vest over two to five years.
The following assumptions were used to calculate the fair value of the Company’s options on the date of grant:
Risk-free interest rate
Dividend yield
Volatility factors
Weighted average expected life (in years)
Year Ended December 31,
2014
1.67% - 2.0%
0.0%
42.4% - 47.0%
2013
1.06% - 1.89%
0.0%
48.2% - 48.4%
2012
0.83% - 1.14%
0.0%
54.6% - 61.3%
6.06
5.87
6.46
The following table presents a summary of the Company’s stock options outstanding at, and stock option activity (“Price”
reflects the weighted average exercise price per share):
Year Ended December 31,
2014
2013
2012
Options
Price
Options
Price
Options
Price
(in thousands, except per share data)
16,628
2,345
(1,769)
(205)
16,999
10,669
$
$
$
$
12.68
21.03
12.32
19.58
13.78
13.68
9.82
24,722
1,269
(8,718)
(645)
16,628
9,443
$
$
$
11.68
13.30
9.76
14.93
12.68
21,429
5,495
(259)
(1,943)
24,722
14.94
15,529
$
$
$
12.33
8.80
4.39
11.70
11.68
13.46
$
6.18
$
3.93
Outstanding January 1
Granted
Exercised
Forfeited or expired
Outstanding December 31
Exercisable December 31
Weighted average fair value
per option granted
The total intrinsic value of stock options exercised during the years ended December 31, 2014, 2013 and 2012 was $20.2
million, $31.6 million and $1.3 million, respectively. Cash received from stock option exercises for the years ended
December 31, 2014, 2013 and 2012 was $21.8 million, $85.1 million and $1.1 million, respectively. Through December 31,
2014, no tax benefits from the exercise of stock options have been recognized. Any future excess tax benefits derived from the
exercise of stock options will be recorded prospectively and reported as cash flows from financing activities in accordance with
the FASB guidance for stock-based compensation.
90
There were 5.1 million shares available for future grants under the stock incentive plan at December 31, 2014. Upon
share option exercise or vesting of restricted stock and restricted stock units, the Company issues new shares or treasury shares
to fulfill these grants. Vesting dates on the stock options range from February 2015 to September 2018, and expiration dates
range from January 2015 to September 2024 at exercise prices and average contractual lives as follows:
Range of
Exercise
Prices
Outstanding
as of
12/31/14
Weighted
Average
Remaining
Contractual
Life
Weighted
Average
Exercise
Price
Exercisable
as of
12/31/14
Weighted
Average
Remaining
Contractual
Life
Weighted
Average
Exercise
Price
(in thousands)
(in years)
(in thousands)
(in years)
$2.75 - $4.99
$5.00 - $9.99
$10.00 - $14.99
$15.00 - $19.99
$20.00 - $24.99
$25.00 - $29.99
$35.00 - $39.99
2,306
5,174
3,676
901
3,821
708
413
4.2
7.6
5.9
4.8
6.3
0.4
0.4
$
$
$
$
$
$
$
2.87
8.81
11.40
18.64
22.47
29.68
39.95
2,306
2,237
2,796
694
1,515
708
413
4.2
7.3
5.5
3.6
2.2
0.4
0.4
$
$
$
$
$
$
$
2.87
8.83
11.35
18.67
24.65
29.68
39.95
The total intrinsic value of options outstanding and options exercisable as of December 31, 2014 was $217.8 million and
$140.9 million, respectively.
Restricted Stock and Restricted Stock Units
The Company has granted restricted stock awards to its employees and directors under its stock incentive plans. These
common shares carry a legend which restricts their transferability for a term of one to five years and are forfeited in the event
the recipient’s employment or relationship with the Company is terminated prior to the lapse of the restriction. In addition,
certain restricted stock awards require the Company or the recipient to achieve minimum performance targets or market
conditions in order for these awards to vest.
RSUs are awards in the form of phantom shares or units, denominated in a hypothetical equivalent number of shares of
the Company’s common stock with the value of each RSU equal to the fair value of the Company’s common stock at the date
of grant. RSUs may be settled in cash, stock or both, as determined at the time of the grant. The majority of RSUs are settled in
stock and are classified as equity. RSU grants to international employees require cash settlement at the end of the vesting term
and are therefore classified as liabilities. Each RSU is subject to service-based vesting, where a specific period of continued
employment must pass before an award vests.
In 2014, the Company granted 0.4 million shares of restricted stock and 0.3 million shares of performance-based awards
under the Company’s stock incentive plans. These awards will all generally vest over one or four years with the exception of
the performance-based awards which will vest within two years if the performance criteria are met.
In 2013, the Company granted 0.1 million shares of restricted stock and 0.4 million shares of market-based or
performance-based awards under the Company’s stock incentive plans. These awards will all generally vest over one or four
years with the exception of the market-based awards which will vest within two years if the performance criteria are met. As of
December 31, 2014, the performance or market-based criteria for these awards have been met unless otherwise forfeited.
In 2012, the Company granted 0.2 million shares of restricted stock and 1.0 million shares of market-based or
performance-based awards. These awards all vest over four years with the exception of the market-based awards which vest
over four years if a specified stock price is achieved over a specified number of consecutive days during the four years and the
performance-based awards which vest within two years if the performance criteria are met. As of December 31, 2014, the
performance or market-based criteria for these awards have been met unless otherwise forfeited.
91
The following table presents a summary of the Company’s unvested restricted stock awards and equity-settled RSUs
outstanding at December 31, 2014, 2013 and 2012 (“Price” reflects the weighted average share price at the date of grant):
Unvested at December 31, 2011
Granted
Forfeited
Vested
Unvested at December 31, 2012
Granted
Forfeited
Vested
Unvested at December 31, 2013
Granted
Forfeited
Vested
Unvested at December 31, 2014
Restricted Stock
RSUs
Awards
Price
Awards
Price
(in thousands, except per share data)
3,325
1,243
(151)
(1,215)
3,202
548
(141)
(1,399)
2,210
752
(237)
(1,554)
1,171
$
$
$
$
10.98
8.96
7.90
10.95
10.32
12.17
9.19
10.54
10.68
21.64
12.64
11.50
16.18
$
703
—
(373)
(325)
5
—
—
(5)
— $
—
—
—
— $
10.03
—
9.61
10.51
10.51
—
—
10.51
—
—
—
—
—
The total grant date fair market value of the shares issued upon the vesting of restricted stock awards during the years
ended December 31, 2014, 2013 and 2012 was $17.9 million, $18.8 million and $14.7 million, respectively. As of
December 31, 2014, there were 0.3 million restricted stock awards outstanding which require the Company or the recipient to
achieve minimum performance targets or market conditions in order for the awards to vest.
92
NOTE 12—OTHER INFORMATION
The following details the components of “Other current assets”:
Cash held in escrow
Inventory
Other
Total other current assets
The following details the components of “Other long-term assets”:
Long-term advances
Investments in nonconsolidated affiliates
Debt issuance costs
Other
Total other long-term assets
The following details the components of “Accrued expenses”:
Accrued compensation and benefits
Accrued event expenses
Accrued insurance
Accrued legal
Collections on behalf of others
Other
Total accrued expenses
The following details the components of “Other current liabilities”:
Contingent and deferred purchase consideration
Other
Total other current liabilities
The following details the components of “Other long-term liabilities”:
Accrued rent
Deferred revenue
Contingent and deferred purchase consideration
Other
Total other long-term liabilities
December 31,
2014
2013
(in thousands)
1,869
12,824
11,396
26,089
246,461
127,222
20,000
100,420
494,103
139,825
164,474
54,183
46,186
51,180
220,032
675,880
1,703
10,332
12,035
56,027
4,768
24,248
27,161
112,204
$
$
$
$
$
$
$
$
$
$
23,328
12,270
7,829
43,427
150,041
39,778
15,161
91,354
296,334
153,143
129,898
52,699
44,965
37,014
251,080
668,799
3,509
50,801
54,310
48,985
5,102
4,008
26,940
85,035
$
$
$
$
$
$
$
$
$
$
93
NOTE 13—SEGMENT DATA
The Company’s reportable segments are Concerts, Ticketing, Artist Nation and Sponsorship & Advertising. The Concerts
segment involves the promotion of live music events globally in the Company’s owned or operated venues and in rented third-
party venues, the production of music festivals and the operation and management of music venues. The Ticketing segment
involves the management of the Company’s global ticketing operations including providing ticketing software and services to
clients, ticket resale services and online access for customers relating to ticket and event information and is responsible for the
Company’s primary websites, www.livenation.com and www.ticketmaster.com. The Artist Nation segment provides management
services to artists and other services including merchandise sales. The Sponsorship & Advertising segment manages the
development of strategic sponsorship programs in addition to the sale of international, national and local sponsorships and
placement of advertising including signage, promotional programs and banner ads in the Company’s owned or operated venues
and on its primary websites.
Revenue and expenses earned and charged between segments are eliminated in consolidation. Corporate expenses and all
line items below operating income are managed on a total company basis. The Company’s capital expenditures below include
accruals and expenditures funded by outside parties such as landlords or replacements funded by insurance companies.
The Company manages its working capital on a consolidated basis. Accordingly, segment assets are not reported to, or
used by, the Company’s management to allocate resources to or assess performance of the segments, and therefore, total
segment assets have not been presented.
For the years ended December 31, 2013 and 2012, the previously reported capital expenditures amounts have been
increased by $24.7 million and $1.2 million to include insurance recoveries and landlord reimbursements. The expenditures had
previously been reported net of recoveries and reimbursements. The 2013 increase includes $21.8 million in the Concerts
segment of partial insurance recoveries received in connection with storm damage to an amphitheater in New York during
Hurricane Sandy.
There were no customers that individually accounted for more than 10% of the Company’s consolidated revenue in any
year.
The following table presents the results of operations for the Company’s reportable segments for the years ending
December 31, 2014, 2013 and 2012:
2014
Revenue
Direct operating
expenses
Selling, general
and
administrative
expenses
Depreciation and
amortization
Goodwill
impairment
Loss (gain) on
disposal of
operating assets
Corporate
expenses
Acquisition
transaction
expenses
Operating
income (loss)
Intersegment
revenue
Capital
expenditures
Concerts
Ticketing
Artist
Nation
Sponsorship
& Advertising
Other
Corporate
Eliminations
Consolidated
(in thousands)
$ 4,726,877
$ 1,557,254
$ 389,437
$
300,279
$ 3,171
$
— $ (110,054) $ 6,866,964
4,016,540
763,280
212,302
37,973
(2,174)
— (107,952)
4,919,969
666,475
471,982
138,066
50,292
3,345
—
— 1,330,160
2,592
(2,102)
368,143
115,088
204,901
43,343
4,281
117,013
—
17,948
(2,954)
(1,583)
—
—
34
—
5,171
1,381
566
—
—
—
—
40
—
(29)
—
38
—
101,000
38
2,905
—
134,961
—
—
—
(4,494)
101,000
10,061
$ (190,456) $
117,293
$ (22,822) $
207,733
$ 1,951
$ (106,535) $
— $
7,164
$
$
97,642
35,006
$
$
1,150
$ 11,262
89,990
$
1,892
$
$
94
— $ — $
— $ (110,054) $
—
1,834
$
6
$
9,490
$
— $
138,218
$
$
$
2013
Revenue
Direct operating
expenses
Selling, general
and
administrative
expenses
Depreciation and
amortization
Loss (gain) on
disposal of
operating assets
Corporate
expenses
Acquisition
transaction
expenses
Operating
income (loss)
Intersegment
revenue
Capital
expenditures
2012
Revenue
Direct operating
expenses
Selling, general
and
administrative
expenses
Depreciation and
amortization
Loss (gain) on
disposal of
operating assets
Corporate
expenses
Acquisition
transaction
expenses
Operating
income (loss)
Intersegment
revenue
Capital
expenditures
Concerts
Ticketing
Artist
Nation
Sponsorship
& Advertising
Other
Corporate
Eliminations
Consolidated
(in thousands)
$ 4,517,191
$ 1,407,817
$ 352,947
$
284,692
$ 3,164
$
— $ (87,264) $ 6,478,547
3,829,991
672,221
218,113
45,021
380
—
(85,219)
4,680,507
632,614
442,788
103,304
45,618
2,568
—
— 1,226,892
132,386
190,801
42,613
2,351
206
2,611
(2,045)
368,923
(38,927)
—
723
(4)
—
665
—
245
3
—
—
64
7
—
—
—
94,385
5,404
—
—
—
(38,259)
94,385
6,439
(39,596) $
101,766
$ (11,751) $
191,638
$
3
$ (102,400) $
— $
139,660
77,050
45,925
$
$
2,295
90,132
$
$
7,919
2,255
$ 3,870,371
$ 1,374,049
$ 399,940
$
$
$
— $ — $
— $ (87,264) $
—
1,424
$ — $
1,303
$
— $
141,039
247,921
$ 2,997
$
— $ (76,231) $ 5,819,047
3,274,951
651,055
263,896
34,738
816
—
(74,179)
4,151,277
569,570
434,310
99,786
38,198
1,768
—
— 1,143,632
145,552
165,947
115,696
1,187
398
2,829
(2,052)
429,557
(453)
(225)
(42)
—
—
—
847
153
1,163
—
—
—
206
—
—
113,364
—
1,207
—
—
—
(514)
113,364
3,370
$ (120,096) $
122,809
$ (80,559) $
173,798
$ (191) $ (117,400) $
— $
(21,639)
$
$
65,559
24,634
$
$
2,771
92,651
$
$
7,901
601
$
$
— $ — $
— $ (76,231) $
—
5,147
$
4
$
1,336
$
— $
124,373
95
The following table provides revenue and long-lived assets for the Company’s foreign operations included in the
consolidated financial statements:
United
Kingdom
Operations
Other Foreign
Operations
Total Foreign
Operations
Total
Domestic
Operations
Consolidated
Total
(in thousands)
$
$
$
$
$
$
772,445
$ 1,591,643
$ 2,364,088
$ 4,502,876
71,269
$
105,937
$
177,206
$
518,131
716,982
$ 1,773,088
$ 2,490,070
$ 3,988,477
76,607
$
116,859
$
193,466
$
513,334
691,849
$ 1,349,912
$ 2,041,761
$ 3,777,286
87,790
$
102,706
$
190,496
$
531,290
$
$
$
$
$
$
6,866,964
695,337
6,478,547
706,800
5,819,047
721,786
2014
Revenue
Long-lived assets
2013
Revenue
Long-lived assets
2012
Revenue
Long-lived assets
96
NOTE 14—QUARTERLY RESULTS OF OPERATIONS (Unaudited)
March 31,
June 30,
September 30,
December 31,
2014
2013
2014
2013
2014
2013
2014
2013
(in thousands)
$ 1,127,316
$ 923,698
$1,665,785
$1,679,513
$2,502,008
$2,262,236
$1,571,855
$1,613,100
$
$
(12,308) $ (33,189) $
55,686
(30,097) $ (64,187) $
25,822
$
$
97,806
$ 150,604
$ 126,037
$ (186,818) $ (50,994)
59,015
$ 115,827
$
50,418
$ (216,002) $ (81,261)
$
(32,448) $ (63,239) $
22,934
$
58,130
$ 105,163
$
43,774
$ (186,456) $ (82,043)
$
(0.17) $
(0.34) $
0.11
$
0.30
$
0.52
$
0.22
$
(0.94) $
(0.42)
$
(0.17) $
(0.34) $
0.11
$
0.30
$
0.49
$
0.22
$
(0.94) $
(0.42)
Revenue
Operating income (loss)
Net income (loss)
Net income (loss)
attributable to common
stockholders of Live
Nation
Basic net income (loss)
per common share
attributable to common
stockholders of Live
Nation
Diluted net income (loss)
per common share
attributable to common
stockholders of Live
Nation
The following summarizes unusual or infrequent items effecting the quarterly results of operations:
2014
The Company recorded an impairment charge related to indefinite-lived intangible assets of $6.0 million in the third
quarter of 2014 as a component of depreciation and amortization. See Note 2—Long-Lived Assets and Note 6—Fair Value
Measurements for further discussion.
The Company recorded impairment charges related to definite-lived intangible assets of $9.3 million in the fourth quarter
of 2014 as a component of depreciation and amortization primarily related to intangible assets for client/vendor relationships in
the Artist Nation segment and technology in the Ticketing segment. See Note 2—Long-Lived Assets and Note 6—Fair Value
Measurements for further discussion.
The Company recorded goodwill impairments of $135.0 million in the fourth quarter of 2014 in connection with its
annual impairment tests. See Note 2—Long-Lived Assets and Note 6—Fair Value Measurements for further discussion.
The Company received the final insurance recovery in the second quarter of 2014, related to an amphitheater in New York
that sustained damage during Hurricane Sandy in 2012 and recorded a gain of $3.6 million, as a component of gain on disposal
of operating assets. See Note 2—Long-Lived Assets for further discussion.
The Company recorded a gain of $17.1 million in the fourth quarter of 2014 as a component of other expense, net in
connection with the consolidation of an artist management business that had been previously accounted for as an equity
investment, due to a change in the governing agreements.
The Company recorded net foreign exchange currency losses of $12.3 million and $14.3 million in the third and fourth
quarters of 2014, respectively, as a component of other expense, net.
2013
The Company received insurance recoveries and recorded gains of $3.1 million, $9.4 million and $2.0 million in the first,
second and third quarters of 2013, respectively, as a component of gain on disposal of operating assets related to an
amphitheater in New York that sustained damage during Hurricane Sandy in 2012. See Note 2—Long-Lived Assets for further
discussion.
In May 2013, the Company completed the sale of a theater in New York and recorded a gain of $21.9 million and $7.0
million in the second and third quarters, respectively, and a loss of $4.1 million in the fourth quarter as a component of gain on
disposal of operating assets. See Note 2—Long-Lived Assets for further discussion.
The Company recorded $4.9 million, $4.1 million and $1.5 million in the second, third and fourth quarters of 2013,
respectively, for acceleration of amortization as a component of depreciation and amortization primarily related to changes in
97
estimates of the useful lives for certain venue management and leasehold intangible assets in the Concerts segment. See Note 2
—Long-Lived Assets for further discussion.
The Company recorded impairment charges related to definite-lived intangible assets of $9.2 million in the fourth quarter
of 2013 as a component of depreciation and amortization primarily related to intangible assets for venue management and
leasehold intangible assets in the Concerts segment and client/vendor relationship intangible assets in the Artist Nation
segment. See Note 2—Long-Lived Assets and Note 6—Fair Value Measurements for further discussion.
In the third quarter of 2013, the Company recorded a $36.3 million loss on extinguishment of debt related to the
refinancing of certain of its debt. See Note 4—Long-Term Debt for further discussion.
In the third quarter of 2013, the Company recorded impairment charges of $4.2 million primarily related to an investment
in a concert promoter and recorded a $5.0 million impairment charge in the fourth quarter of 2013 related to an investment in
an ecommerce business as a component of equity in earnings of nonconsolidated affiliates. See Note 2—Long-Lived Assets and
Note 6—Fair Value Measurements for further discussion.
98
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL
DISCLOSURE
None.
ITEM 9A. CONTROLS AND PROCEDURES
Evaluation of Disclosure Controls and Procedures
We have established disclosure controls and procedures to ensure that material information relating to our company,
including our consolidated subsidiaries, is made known to the officers who certify our financial reports and to other members of
senior management and our board of directors.
Based on their evaluation as of December 31, 2014, our Chief Executive Officer and Chief Financial Officer have
concluded that our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Securities
Exchange Act of 1934, as amended) are effective to ensure that (1) the information required to be disclosed by us in the reports
that we file or submit under the Securities Exchange Act of 1934, as amended, is recorded, processed, summarized and reported
within the time periods specified in SEC rules and forms, and (2) the information we are required to disclose in such reports is
accumulated and communicated to management, including our Chief Executive Officer and Chief Financial Officer, as
appropriate to allow timely decisions regarding required disclosure.
Our management, including our Chief Executive Officer and Chief Financial Officer, does not expect that our disclosure
controls and procedures or internal controls will prevent all possible errors and fraud. Our disclosure controls and procedures
are, however, designed to provide reasonable assurance of achieving their objectives, and our Chief Executive Officer and
Chief Financial Officer have concluded that our disclosure controls and procedures are effective at that reasonable assurance
level.
Management’s Report on Internal Control over Financial Reporting
Our management is responsible for establishing and maintaining adequate internal control over financial reporting as
defined in Rule 13a-15(f) under the Securities Exchange Act of 1934, as amended. Our management conducted an evaluation
of the effectiveness of our internal control over financial reporting based on the 2013 framework in Internal Control—
Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (the COSO
criteria). Based on its evaluation, our management concluded that our internal control over financial reporting was effective as
of December 31, 2014.
Ernst & Young LLP, an independent registered public accounting firm, has issued an attestation report on our internal
control over financial reporting. The attestation report is included herein.
Changes in Internal Control Over Financial Reporting
There has been no change in our internal control over financial reporting during the period covered by this report that has
materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.
99
The Board of Directors and Stockholders of Live Nation Entertainment, Inc.
Report of Independent Registered Public Accounting Firm
We have audited Live Nation Entertainment, Inc.’s internal control over financial reporting as of December 31, 2014, based on
criteria established in Internal Control-Integrated Framework issued by the Committee of Sponsoring Organizations of the
Treadway Commission (2013 framework) (the COSO criteria). Live Nation Entertainment Inc.’s management is responsible for
maintaining effective internal control over financial reporting, and for its assessment of the effectiveness of internal control
over financial reporting included in the accompanying Management’s Report on Internal Control over Financial Reporting. Our
responsibility is to express an opinion on the company’s internal control over financial reporting based on our audit.
We conducted our audit in accordance with the standards of the Public Company Accounting Oversight Board (United States).
Those standards require that we plan and perform the audit to obtain reasonable assurance about whether effective internal
control over financial reporting was maintained in all material respects. Our audit included obtaining an understanding of
internal control over financial reporting, assessing the risk that a material weakness exists, testing and evaluating the design and
operating effectiveness of internal control based on the assessed risk, and performing such other procedures as we considered
necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion.
A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the
reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally
accepted accounting principles. A company’s internal control over financial reporting includes those policies and procedures
that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and
dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit
preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and
expenditures of the company are being made only in accordance with authorizations of management and directors of the
company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or
disposition of the company’s assets that could have a material effect on the financial statements.
Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also,
projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate
because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.
In our opinion, Live Nation Entertainment, Inc. maintained, in all material respects, effective internal control over financial
reporting as of December 31, 2014, based on the COSO criteria.
We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States),
the consolidated balance sheets of Live Nation Entertainment, Inc. as of December 31, 2014 and 2013, and the related
consolidated statements of operations, comprehensive loss, changes in equity, and cash flows for each of the three years in the
period ended December 31, 2014 and our report dated February 26, 2015 expressed an unqualified opinion thereon.
Los Angeles, California
February 26, 2015
100
ITEM 9B. OTHER INFORMATION
None.
PART III
ITEM 10.
DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE
Other than the information set forth under Item 1. Business-Executive Officers, the information required by this Item is
incorporated by reference to our Definitive Proxy Statement, expected to be filed within 120 days of our fiscal year end.
ITEM 11.
EXECUTIVE COMPENSATION
The information required by this Item is incorporated by reference to our Definitive Proxy Statement, expected to be filed
within 120 days of our fiscal year end.
ITEM 12.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND
RELATED STOCKHOLDER MATTERS
The information required by this Item is incorporated by reference to our Definitive Proxy Statement, expected to be filed
within 120 days of our fiscal year end.
ITEM 13.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE
The information required by this Item is incorporated by reference to our Definitive Proxy Statement, expected to be filed
within 120 days of our fiscal year end.
ITEM 14.
PRINCIPAL ACCOUNTING FEES AND SERVICES
The information required by this Item is incorporated by reference to our Definitive Proxy Statement, expected to be filed
within 120 days of our fiscal year end.
101
PART IV
ITEM 15. EXHIBITS, FINANCIAL STATEMENT SCHEDULES
(a)1. Financial Statements.
The following consolidated financial statements are included in Item 8:
Consolidated Balance Sheets as of December 31, 2014 and 2013
Consolidated Statements of Operations for the Years Ended December 31, 2014, 2013 and 2012
Consolidated Statements of Comprehensive Loss for the Years Ended December 31, 2014, 2013 and 2012
Consolidated Statements of Changes in Equity for the Years Ended December 31, 2014, 2013 and 2012
Consolidated Statements of Cash Flows for the Years Ended December 31, 2014, 2013 and 2012
Notes to Consolidated Financial Statements
(a)2. Financial Statement Schedule.
54
55
56
57
60
61
The following financial statement schedule for the years ended December 31, 2014, 2013 and 2012 is filed as part of this
report and should be read in conjunction with the consolidated financial statements.
Schedule II Valuation and Qualifying Accounts
All other schedules for which provision is made in the applicable accounting regulation of the SEC are not required under
the related instructions or are inapplicable, and therefore have been omitted.
(a)3. Exhibits.
The information in the Exhibit Index of the Annual Report on Form 10-K is incorporated into this Item 15(a)3 by
reference.
(c) Separate financial statements of subsidiaries not consolidated and fifty percent or less owned persons.
Under Rule 3-09 of Regulation S-X, we are required to file separate financial statements of Venta de Boletos por
Computadora S.A. de C.V., unaudited for the year ended December 31, 2014 and audited for the year ended December 31,
2013. We expect to file those financial statements by amendment to our Annual Report on Form10-K/A on or before June 30,
2015.
102
LIVE NATION ENTERTAINMENT, INC.
SCHEDULE II
VALUATION AND QUALIFYING ACCOUNTS
Allowance for Doubtful Accounts
Description
Year ended December 31, 2012
Year ended December 31, 2013
Year ended December 31, 2014
_________________
Balance at
Beginning of
Period
Charges of
Costs,
Expenses and
Other
Write-off of
Accounts
Receivable
Other
Balance at
End of Period
$
$
$
16,986
19,794
19,850
$
$
$
6,963
5,875
3,684
(in thousands)
$
(4,383) $
228 (1) $
19,794
$
$
(6,423) $
604 (1) $
19,850
(4,763) $
(1,282) (1) $
17,489
(1) Foreign currency adjustments and acquisitions.
103
LIVE NATION ENTERTAINMENT, INC.
SCHEDULE II
VALUATION AND QUALIFYING ACCOUNTS
Deferred Tax Asset Valuation Allowance
Description
Balance at
Beginning
of Period
Charges of
Costs,
Expenses
and Other
Deletions
Other (1)
(in thousands)
Balance at
End of
Period
Year ended December 31, 2012 (2)
$ 415,449
Year ended December 31, 2013 (2)
$ 536,471
Year ended December 31, 2014
$ 580,594
________________________
$
$
$
79,214
$
— $ 41,808
$ 536,471
15,912
$ (6,088) $ 34,299
$ 580,594
(6,168) $
— $ 18,879
$ 593,305
(1) During 2014, 2013, and 2012, the valuation allowance was adjusted for acquisitions, divestitures and foreign currency
adjustments.
(2) Certain reclassifications have been made to the prior year amounts to conform to the 2014 presentation. The
reclassifications related to changes in deferred tax asset valuation allowances related to net operating loss carryforwards.
104
Exhibit
No.
3.1
3.2
4.1
4.2
4.3
4.4
4.5
4.6
10.1
10.2
10.3
10.4
10.5
EXHIBIT INDEX
Incorporated by Reference
Form File No.
8-K
001-32601
Exhibit
No.
3.1
Filing Date
6/7/2013
Filed By
Live Nation
Filed
HereWith
8-K
001-32601
3.2
6/7/2013
Live Nation
8-K
001-32601
4.1
12/23/2005 Live Nation
8-K
001-32601
4.1
3/3/2009
Live Nation
8-K
001-32601
4.1
9/28/2011
Live Nation
8-K
001-32601
4.1
1/17/2013
Live Nation
8-K
001-32601
4.2
12/23/2005 Live Nation
Exhibit Description
Certificate of Amendment to the
Amended and Restated Certificate of
Incorporation of Live Nation
Entertainment, Inc.
Fifth Amended and Restated Bylaws
of Live Nation Entertainment, Inc.
Rights Agreement, dated
December 21, 2005, between CCE
Spinco, Inc. and The Bank of New
York, as Rights Agent.
First Amendment to Rights
Agreement, dated February 25, 2009,
between Live Nation, Inc. and The
Bank of New York Mellon, as Rights
Agent.
Second Amendment to Rights
Agreement, effective as of
September 23, 2011, entered into by
and between Live Nation
Entertainment, Inc. and The Bank of
New York Mellon, as Rights Agent.
Third Amendment to Rights
Agreement, effective as of January 11,
2013, entered into by and between
Live Nation Entertainment, Inc. and
Computershare Shareowner Services,
LLC, as Rights Agent.
Form of Certificate of Designations of
Series A Junior Participating Preferred
Stock.
Form of Right Certificate.
8-K
001-32601
4.3
12/23/2005 Live Nation
Lockup and Registration Rights
Agreement, dated May 26, 2006,
among Live Nation, Inc., SAMCO
Investments Ltd., Concert Productions
International Inc., CPI Entertainment
Rights, Inc. and the other parties set
forth therein.
Stockholder Agreement, dated
February 10, 2009, among Live
Nation, Inc., Liberty Media
Corporation, Liberty USA Holdings,
LLC and Ticketmaster Entertainment,
Inc.
Note, dated January 24, 2010, among
Ticketmaster Entertainment, Inc.,
Azoff Family Trust of 1997 and Irving
Azoff.
Registration Rights Agreement, dated
January 25, 2010, among Live Nation,
Inc., Liberty Media Corporation and
Liberty Media Holdings USA, LLC.
Tax Matters Agreement, dated
December 21, 2005, among CCE
Spinco, Inc., CCE Holdco #2, Inc. and
Clear Channel Communications, Inc.
8-K
001-32601
4.1
6/2/2006
Live Nation
8-K
001-32601
10.2
2/13/2009
Live Nation
10-K 001-32601
10.17 2/25/2010
Live Nation
8-K
001-32601
10.1
1/29/2010
Live Nation
8-K
001-32601
10.2
12/23/2005 Live Nation
105
Exhibit
No.
10.6
10.7
10.8 §
10.9 §
10.10 §
10.11 §
10.12 §
10.13 §
10.14 §
10.15 §
10.16 §
10.17 §
10.18 §
10.19 §
Exhibit Description
Tax Sharing Agreement, dated
August 20, 2008, among IAC/
InterActiveCorp, HSN, Inc., Interval
Leisure Group, Inc., Ticketmaster and
Tree.com, Inc.
Form of Indemnification Agreement.
Live Nation Entertainment, Inc. 2005
Stock Incentive Plan, as amended and
restated as of April 15, 2011.
Amended and Restated Ticketmaster
Entertainment, Inc. 2008 Stock and
Annual Incentive Plan.
Amendment No. 1 to the Amended and
Restated Ticketmaster Entertainment,
Inc. 2008 Stock and Annual Incentive
Plan.
Live Nation Entertainment, Inc. 2006
Annual Incentive Plan, as amended
and restated as of April 15, 2011.
Amended and Restated Live Nation,
Inc. Stock Bonus Plan.
Employment Agreement, dated
October 21, 2009, among Live Nation,
Inc., Live Nation Worldwide, Inc. and
Michael Rapino.
First Amendment to Employment
Agreement, dated December 27, 2012
by and between Live Nation
Entertainment, Inc. and Michael
Rapino.
Employment Agreement, effective
January 1, 2014, between Live Nation
Entertainment, Inc. and Michael
Rowles.
Employment Agreement, effective
January 1, 2014, between Live Nation
Entertainment, Inc. and Kathy Willard.
Employment Agreement, effective
December 17, 2007, between Live
Nation Worldwide, Inc. and Brian
Capo.
First Amendment to Employment
Agreement, effective December 31,
2008, between Live Nation
Worldwide, Inc. and Brian Capo.
Employment Agreement, effective
January 1, 2014, between Live Nation
Entertainment, Inc. and Joe Berchtold.
Incorporated by Reference
Form File No.
8-K
001-34064
Exhibit
No.
10.2
Filing Date
8/25/2008
Filed By
Ticketmaster
Filed
HereWith
10-K 001-32601
10.23 2/25/2010
Live Nation
8-K
001-32601
10.3
6/20/2011
Live Nation
S-8
333-164507
10.1
1/26/2010
Live Nation
10-Q 001-32601
10.1
11/4/2010
Live Nation
8-K
001-32601
10.2
6/20/2011
Live Nation
8-K
001-32601
10.1
1/25/2010
Live Nation
8-K
001-32601
10.1
10/22/2009 Live Nation
10-K 001-32601
10.29 2/26/2013
Live Nation
10-K 001-32601
10.17 2/24/2014
Live Nation
10-K 001-32601
10.19 2/24/2014
Live Nation
10-Q 001-32601
10.4
8/7/2008
Live Nation
10-K 001-32601
10.30 3/5/2009
Live Nation
10-K 001-32601
10.24 2/24/2014
Live Nation
106
Exhibit
No.
10.20
10.21
10.22
10.23
10.24
10.25
10.26
Exhibit Description
Credit Agreement entered into as of
May 6, 2010, among Live Nation
Entertainment, Inc., the Foreign
Borrowers party thereto, the
Guarantors identified therein, the
Lenders party thereto, JPMorgan
Chase Bank, N.A., as Administrative
Agent and Collateral Agent, JPMorgan
Chase Bank, N.A., Toronto Branch, as
Canadian Agent and J.P. Morgan
Europe Limited, as London Agent.
Amendment No. 1, to the Credit
Agreement, dated as of June 29, 2012,
entered into by and among Live
Nation Entertainment, Inc., the
relevant Credit Parties identified
therein, the Lenders party thereto, and
JPMorgan Chase Bank, N.A., as
administrative agent for the Lenders.
Amendment No. 2 to the Credit
Agreement, dated as of August 16,
2013, entered into by and among Live
Nation Entertainment, Inc., the
Guarantors identified therein,
JPMorgan Chase Bank, N.A., as
administrative agent and collateral
agent for the Lenders, JPMorgan
Chase Bank, N.A., Toronto Branch, as
Canadian agent and J.P. Morgan
Europe Limited, as London agent.
Incremental Term Loan Joinder
Agreement No. 1, dated August 20,
2012, by and among Live Nation
Entertainment, Inc., JPMorganChase
Bank, N.A., as administrative agent,
each Incremental Term Loan Lender
defined therein and the relevant Credit
Parties identified therein.
Indenture, dated August 20, 2012, by
and among Live Nation Entertainment,
Inc., the Guarantors defined therein,
and the Bank of New York Mellon
Trust Company, N.A., as trustee.
First Supplemental Indenture, entered
into as of October 4, 2012, among
Live Nation Entertainment, Inc., the
Guarantors listed in Appendix I
attached thereto, Live Nation Ushtours
(USA), LLC, and The Bank of New
York Mellon Trust Company, N.A., as
trustee.
Second Supplemental Indenture,
entered into as of August 13, 2013,
among Live Nation Entertainment,
Inc., the Guarantors party thereto and
The Bank of New York Mellon Trust
Company, N.A., as trustee.
Incorporated by Reference
Form File No.
10-Q 001-32601
Exhibit
No.
10.4
Filing Date
8/5/2010
Filed By
Live Nation
Filed
HereWith
10-Q 001-32601
10.2
8/7/2012
Live Nation
10-Q 001-32601
10.2
5/6/2014
Live Nation
10-Q 001-32601
10.2
11/5/2012
Live Nation
10-Q 001-32601
10.1
11/5/2012
Live Nation
10-Q 001-32601
10.3
11/5/2012
Live Nation
8-K
001-32601
10.1
8/16/2013
Live Nation
107
Exhibit
No.
10.27
10.28
10.29
10.30
10.31
10.32
10.33
10.34
12.1
14.1
21.1
23.1
24.1
Exhibit Description
Third Supplemental Indenture, dated
as of February 6, 2014 among Live
Nation Entertainment, Inc.,
BigChampagne, LLC, the Existing
Guarantors Party thereto and The Bank
of New York Mellon Trust Company,
N.A., as trustee.
Fourth Supplemental Indenture, dated
as of May 27, 2014, among Live
Nation Entertainment, Inc., Reigndeer
Entertainment Corp., the Existing
Guarantors party thereto and The Bank
of New York Mellon Trust Company,
N.A., as trustee.
Fifth Supplemental Indenture, dated as
of August 27, 2014, among Live
Nation Entertainment, Inc.,
Ticketstoday, LLC, the Existing
Guarantors party thereto and The Bank
of New York Mellon Trust Company,
N.A., as trustee.
Sixth Supplemental Indenture, dated as
of October 31, 2014, among Live
Nation Entertainment, Inc., EXMO
Inc., Artist Nation Management, Inc.,
Guyo Entertainment, Inc., the Existing
Guarantors party thereto and The Bank
of New York Mellon Trust Company,
N.A., as trustee.
Indenture, dated as of May 23, 2014,
among Live Nation Entertainment,
Inc., the Guarantors and The Bank of
New York Mellon Trust Company,
N.A., as trustee.
First Supplemental Indenture, dated as
of August 27, 2014, among Live
Nation Entertainment, Inc.,
Ticketstoday, LLC, the Existing
Guarantors party thereto and The Bank
of New York Mellon Trust Company,
N.A., as trustee.
Second Supplemental Indenture, dated
as of October 31, 2014, among Live
Nation Entertainment, Inc., EXMO,
Inc., Artist Nation Management, Inc.,
Guyo Entertainment, Inc., the Existing
Guarantors party thereto and The Bank
of New York Mellon Trust Company,
N.A., as trustee.
Indenture, dated as of May 23, 2014,
between Live Nation Entertainment,
Inc., and HSBC Bank USA, National
Association, as trustee.
Computation of Ratio of Earnings to
Fixed Charges.
Code of Business Conduct and Ethics.
Subsidiaries of the Company.
Consent of Ernst & Young LLP.
Power of Attorney (see signature
page).
Incorporated by Reference
Form File No.
10-Q 001-32601
Exhibit
No.
10.1
Filing Date
5/6/2014
Filed By
Live Nation
Filed
HereWith
10-Q 001-32601
10.3
7/31/2014
Live Nation
10-Q 001-32601
10.2
10/30/2014 Live Nation
X
X
X
X
X
X
X
10-Q 001-32601
10.1
7/31/2014
Live Nation
10-Q 001-32601
10.1
10/30/2014 Live Nation
10-Q 001-32601
10.2
7/31/2014
Live Nation
108
Exhibit
No.
31.1
31.2
32.1
32.2
Exhibit Description
Form File No.
Exhibit
No.
Filing Date
Filed By
Incorporated by Reference
Certification of Chief Executive
Officer.
Certification of Chief Financial
Officer.
Section 1350 Certification of Chief
Executive Officer.
Section 1350 Certification of Chief
Financial Officer.
101.INS
XBRL Instance Document
101.SCH XBRL Taxonomy Schema Document
101.CAL XBRL Taxonomy Calculation
Linkbase Document
101.DEF XBRL Taxonomy Definition Linkbase
Document
101.LAB XBRL Taxonomy Label Linkbase
Document
101.PRE XBRL Taxonomy Presentation
Linkbase Document
§ Management contract or compensatory plan or arrangement.
Filed
HereWith
X
X
X
X
X
X
X
X
X
X
The Company has not filed long-term debt instruments of its subsidiaries where the total amount under such instruments
is less than ten percent of the total assets of the Company and its subsidiaries on a consolidated basis. However, the Company
will furnish a copy of such instruments to the Commission upon request.
109
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the Registrant has duly
caused this report to be signed on its behalf by the undersigned, thereunto duly authorized, on February 26, 2015.
SIGNATURES
LIVE NATION ENTERTAINMENT, INC.
By:
/s/ Michael Rapino
Michael Rapino
President and Chief Executive Officer
110
POWER OF ATTORNEY
KNOW ALL PERSONS BY THESE PRESENTS, that each person whose signature appears below constitutes and
appoints, jointly and severally, Michael Rapino and Kathy Willard, and each of them, as his or her true and lawful attorneys-in-
fact and agents, with full power of substitution and resubstitution, for him or her and in his or her name, place and stead, in any
and all capacities, to sign any and all amendments to this Annual Report on Form 10-K, and to file the same, with all exhibits
thereto, and other documents in connection therewith, with the Securities and Exchange Commission, granting unto said
attorneys-in-fact and agents, and each of them, full power and authority to do and perform each and every act and thing
requisite and necessary to be done in connection therewith, as fully to all intents and purposes as he or she might or could do in
person, hereby ratifying and confirming all that said attorneys-in-fact and agents, or any of them, or their or his or her substitute
or substitutes, may lawfully do or cause to be done by virtue hereof.
Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following
persons on behalf of the registrant and in the capacities and on the dates indicated.
Name
Title
Date
/s/ Michael Rapino
Michael Rapino
/s/ Kathy Willard
Kathy Willard
/s/ Brian Capo
Brian Capo
/s/ Mark Carleton
Mark Carleton
/s/ Jonathan Dolgen
Jonathan Dolgen
/s/ Ariel Emanuel
Ariel Emanuel
/s/ Robert Ted Enloe, III
Robert Ted Enloe, III
/s/ Jeffrey T. Hinson
Jeffrey T. Hinson
/s/ Jimmy Iovine
Jimmy Iovine
/s/ Margaret L. Johnson
Margaret L. Johnson
/s/ James S. Kahan
James S. Kahan
/s/ Gregory B. Maffei
Gregory B. Maffei
/s/ Randall T. Mays
Randall T. Mays
/s/ Mark S. Shapiro
Mark S. Shapiro
President and Chief Executive Officer
and Director
February 26, 2015
Chief Financial Officer
February 26, 2015
Chief Accounting Officer
February 26, 2015
February 26, 2015
February 26, 2015
February 26, 2015
February 26, 2015
February 26, 2015
February 26, 2015
February 26, 2015
February 26, 2015
February 26, 2015
February 26, 2015
February 26, 2015
Director
Director
Director
Director
Director
Director
Director
Director
Director
Director
Director
111
PERFORMANCE GRAPH
The graph below shows the relative investment performance of our common stock, the NYSE
Market Index and the Hemscott Group Index for the period from December 31, 2009 through December
31, 2014 assuming reinvestment of dividends at the date of payment into the common stock of the
indexes. The Hemscott Group Index consists of the following 12 companies: Bona Film Group Limited;
Comcast Corporation; Digital Domain Media Group, Inc.; Imax Corporation; Ku6 Media Co., Ltd.; Live
Nation Entertainment, Inc.; The Madison Square Garden Company; The Walt Disney Company; Time
Warner Inc.; Twenty-First Century Fox Inc.; Viacom Inc.; and World Wrestling Entertainment, Inc. The
information reflected below is not necessarily indicative of our future performance.
COMPARISON OF 5-YEAR CUMULATIVE TOTAL RETURN*
Among Live Nation Entertainment, Inc., the NYSE Composite Index,
and the Hemscott Group Index
$400
$350
$300
$250
$200
$150
$100
$50
$0
12/09
12/10
12/11
12/12
12/13
12/14
Live Nation Entertainment, Inc.
NYSE Composite
Hemscott Group Index
*$100 invested on 12/31/09 in stock or index, including reinvestment of dividends.
Fiscal year ending December 31.
Live Nation Entertainment, Inc.
NYSE Composite
Hemscott Group Index
12/31/09
$ 100.00
100.00
100.00
12/31/10
$ 134.20
113.39
119.39
12/31/11
$ 97.65
109.04
130.15
12/31/12
$ 109.40
126.47
185.35
12/31/13
$ 232.20
159.71
278.75
12/31/14
$ 306.82
170.49
333.46
Board of Directors
Corporate Information
Mark Carleton
Senior Vice President, Liberty Media Corporation
Jonathan Dolgen
Principal, Wood River Ventures, LLC
Ari Emanuel
Chief Executive Officer, WME Entertainment
Ted Enloe
Managing General Partner, Balquita Partners, Ltd.
Jeff Hinson
President, YouPlus Media, LLC
Jimmy Iovine
Creative Consultant, Apple Inc.
Peggy Johnson
Executive Vice President – Business Development, Microsoft
Corporation
Jim Kahan
AT&T Senior Executive Vice President – Corporate Development,
Retired
Greg Maffei (Chairman of the Board)
President and Chief Executive Officer, Liberty Media Corporation
Randall Mays
President, Running M Capital
Michael Rapino
President and Chief Executive Officer, Live Nation Entertainment
Mark Shapiro
Chief Content Officer, IMG
Executive and Other Key Officers
Michael Rapino
President and Chief Executive Officer
Ron Bension
President – HOB Entertainment
Joe Berchtold
Chief Operating Officer
Mark Campana
Co-President – North America Concerts
Brian Capo
Chief Accounting Officer
Independent Registered Public Accounting Firm
Ernst & Young LLP
Los Angeles, California
Investor Relations and Media Contacts
Maili Bergman (Investors)
Senior Vice President, Investor Relations
(310) 867-7000
Melissa Zukerman (Media)
Principal Communications Group
(323) 658-1555
Transfer Agent and Registrar
Computershare Shareowner Services
Stockholder correspondence should be mailed to:
Computershare
P.O. Box 30170
College Station, Texas 77842-3170
Overnight correspondence should be mailed to:
Computershare
211 Quality Circle, Suite 210
College Station, Texas 77845
(877) 296-7874
(201) 680-6578 (for callers outside the United States)
Stockholder website: www.computershare.com/investor
Stockholder online inquiries:
https://www-us.computershare.com/investor/contact
Stock Listing
Live Nation Entertainment’s common stock is listed on the New York
Stock Exchange under the symbol “LYV.”
Annual Report on Form 10-K
Live Nation Entertainment’s Annual Report on Form 10-K for the
year ended December 31, 2014 is included in this annual report. The
exhibits accompanying the report are filed with the U.S. Securities
and Exchange Commission and can be accessed in the EDGAR
database at the SEC’s website, www.sec.gov, or in the “Reports”
section of Live Nation Entertainment’s investor relations website, at
investors.livenationentertainment.com. We will provide these items to
stockholders upon request. Requests for any such exhibits should be
made to:
Arthur Fogel
Chairman – Global Music and President – Global Touring
John Hopmans
Executive Vice President – Mergers and Acquisitions and Strategic
Finance
Live Nation Entertainment
Attention: Corporate Secretary
9348 Civic Center Drive
Beverly Hills, California 90210
Forward-Looking Statements
forward-looking statements
In accordance with the Private Securities Litigation Reform Act of
1995, Live Nation Entertainment notes that this annual report
risks and
contains
uncertainties, including those relating to our company’s future
success and growth. Actual results may differ materially due to risks
and uncertainties as described in our filings with the U.S. Securities
and Exchange Commission. Live Nation Entertainment does not
intend to update these forward-looking statements.
involve
that
John Reid
President – Live Nation Europe Concerts
Alan Ridgeway
President – International and Emerging Markets
Bob Roux
Co-President – North America Concerts
Michael Rowles
General Counsel and Secretary
Jared Smith
President – Ticketmaster North America
Russell Wallach
President – North America Sponsorships
Kathy Willard
Chief Financial Officer
Mark Yovich
President – Ticketmaster International
David Zedeck
President – Global Talent and Artist Development
9348 CIVIC CENTER DRIVE
BEVERLY HILLS, CA 90210
310 867 7000