EXHIBIT 99.1
LIVE NATION, INC.
UNAUDITED PRO FORMA CONSOLIDATED FINANCIAL INFORMATION
On January 23, 2008, Live Nation Worldwide, Inc., a controlled subsidiary of Live Nation, Inc. (“Live Nation” or the “Company”), sold all of the stock of (i) Live Nation Theatrical Group, Inc., (ii) Live Nation Family Holdings, Inc., (iii) SFX Theatrical Group, Inc. and (iv) TCN Theatre Group, Inc. (collectively the “Theatrical Business”) as well as certain debt owed to Live Nation by the Theatrical Business to Key Brand Entertainment Inc. and its lenders for a gross sales price of $90.4 million pursuant to a Stock Purchase Agreement. After fees, expenses, an adjustment to replace the show cash of the Theatrical Business that was previously removed from the operations and utilized by the Company and other adjustments, Live Nation received approximately $61.0 million of net proceeds. The assets of the Theatrical Business include theBroadway Across America business, which produces or presents Broadway shows at primarily third-party venues in the United States and Canada, two owned theatrical venues in Toronto, one owned venue and one leased venue in Boston, one managed venue in Baltimore and a 51% interest in three managed venues in Minneapolis. The following unaudited pro forma consolidated financial statements give effect to this transaction.
The unaudited pro forma consolidated balance sheet of Live Nation gives effect to the transaction as if it occurred on September 30, 2007. The unaudited pro forma consolidated statements of operations for the year ended December 31, 2006 and the nine months ended September 30, 2007 give effect to the transaction as if it had occurred on January 1, 2006. The unaudited pro forma consolidated financial information is not intended to represent what Live Nation’s financial position was or results of operations would have been if the disposition had occurred on those dates or to project Live Nation’s financial position or results of operations for any future period.
The unaudited pro forma consolidated financial statements and the accompanying notes thereto should be read in conjunction with, and are qualified by, the historical financial statements and notes thereto of Live Nation. Live Nation’s historical financial statements are included in its Annual Report on Form 10-K for the year ended December 31, 2006 and its Quarterly Report on Form 10-Q for the nine months ended September 30, 2007.
UNAUDITED PRO FORMA CONSOLIDATED BALANCE SHEET
SEPTEMBER 30, 2007
Historical | Pro Forma | Pro Forma | ||||||||||||||
Live Nation | Adjustments | Consolidated | ||||||||||||||
(in thousands) | ||||||||||||||||
ASSETS | ||||||||||||||||
CURRENT ASSETS | ||||||||||||||||
Cash and cash equivalents | $ | 351,342 | $ | 60,987 | (D) | $ | 388,859 | |||||||||
(23,470 | ) | (A) | ||||||||||||||
Accounts receivable, less allowance | 390,349 | (9,990 | ) | (A) | 380,359 | |||||||||||
Prepaid expenses | 204,261 | (10,147 | ) | (A) | 194,114 | |||||||||||
Other current assets | 32,426 | (5,755 | ) | (A) | 26,671 | |||||||||||
Total Current Assets | 978,378 | 11,625 | 990,003 | |||||||||||||
PROPERTY, PLANT AND EQUIPMENT | ||||||||||||||||
Land, buildings and improvements | 1,034,860 | (67,887 | ) | (A) | 966,973 | |||||||||||
Furniture and other equipment | 212,468 | (7,713 | ) | (A) | 204,755 | |||||||||||
Construction in progress | 53,330 | (764 | ) | (A) | 52,566 | |||||||||||
1,300,658 | (76,364 | ) | 1,224,294 | |||||||||||||
Less accumulated depreciation | 385,968 | (17,351 | ) | (A) | 368,617 | |||||||||||
914,690 | (59,013 | ) | 855,677 | |||||||||||||
INTANGIBLE ASSETS | ||||||||||||||||
Intangible assets — net | 302,769 | (104 | ) | (A) | 302,665 | |||||||||||
Goodwill | 440,318 | (2,835 | ) | (A) | 437,483 | |||||||||||
OTHER ASSETS | ||||||||||||||||
Notes receivable, less allowance | 1,941 | — | 1,941 | |||||||||||||
Investments in nonconsolidated affiliates | 32,721 | — | 32,721 | |||||||||||||
Other assets | 91,964 | (11,412 | ) | (A) | 80,552 | |||||||||||
Total Assets | $ | 2,762,781 | $ | (61,739 | ) | $ | 2,701,042 | |||||||||
LIABILITIES AND SHAREHOLDERS’ EQUITY | ||||||||||||||||
CURRENT LIABILITIES | ||||||||||||||||
Accounts payable | $ | 84,374 | $ | (2,357 | ) | (A) | $ | 82,017 | ||||||||
Accrued expenses | 561,886 | (35,197 | ) | (A) | 526,689 | |||||||||||
Deferred revenue | 328,767 | (51,315 | ) | (A) | 277,452 | |||||||||||
Current portion of long-term debt | 48,465 | — | 48,465 | |||||||||||||
Total Current Liabilities | 1,023,492 | (88,869 | ) | 934,623 | ||||||||||||
Long-term debt | 724,975 | — | 724,975 | |||||||||||||
Other long-term liabilities | 92,053 | (102 | ) | (A) | 91,951 | |||||||||||
Minority interest liability | 63,268 | (630 | ) | (A) | 62,638 | |||||||||||
Series A and Series B redeemable preferred stock | 40,000 | — | 40,000 | |||||||||||||
SHAREHOLDERS’ EQUITY | ||||||||||||||||
Common stock | 721 | — | 721 | |||||||||||||
Additional paid-in capital | 880,323 | — | 880,323 | |||||||||||||
Retained deficit | (112,579 | ) | 27,862 | (B) | (84,717 | ) | ||||||||||
Accumulated other comprehensive income | 50,528 | — | 50,528 | |||||||||||||
Total Shareholders’ Equity | 818,993 | 27,862 | 846,855 | |||||||||||||
Total Liabilities and Shareholders’ Equity | $ | 2,762,781 | $ | (61,739 | ) | $ | 2,701,042 | |||||||||
See Notes to Unaudited Pro Forma Consolidated Financial Statements
UNAUDITED PRO FORMA CONSOLIDATED STATEMENT OF OPERATIONS
FOR THE YEAR ENDED DECEMBER 31, 2006
Historical | Pro Forma | |||||||||||||||
Live Nation | Adjustments | Pro Forma Combined | ||||||||||||||
(in thousands except share and per share data) | ||||||||||||||||
Revenue | $ | 3,711,715 | $ | (247,253 | ) | (C) | $ | 3,464,462 | ||||||||
Operating expenses: | ||||||||||||||||
Direct operating expenses | 2,997,863 | (196,544 | ) | (C) | 2,801,319 | |||||||||||
Selling, general and administrative expenses | 530,340 | (38,279 | ) | (C) | 492,061 | |||||||||||
Depreciation and amortization | 128,167 | (3,362 | ) | (C) | 124,805 | |||||||||||
Gain on sale of operating assets | (11,640 | ) | 1,637 | (C) | (10,003 | ) | ||||||||||
Corporate expenses | 33,863 | — | 33,863 | |||||||||||||
Operating income | 33,122 | (10,705 | ) | 22,417 | ||||||||||||
Interest expense | 37,218 | (24 | ) | (C) | 37,194 | |||||||||||
Interest income | (12,446 | ) | 2,171 | (C) | (10,275 | ) | ||||||||||
Equity in earnings of nonconsolidated affiliates | (8,407 | ) | — | (8,407 | ) | |||||||||||
Minority interest expense | 12,209 | 292 | (C) | 12,501 | ||||||||||||
Other income — net | (1,220 | ) | 713 | (C) | (507 | ) | ||||||||||
Income (loss) before income taxes | 5,768 | (13,857 | ) | (8,089 | ) | |||||||||||
Income tax expense: | ||||||||||||||||
Current | 26,876 | (1,804 | ) | (E) | 25,072 | |||||||||||
Deferred | 10,334 | — | (E) | 10,334 | ||||||||||||
Net loss | $ | (31,442 | ) | $ | (12,053 | ) | $ | (43,495 | ) | |||||||
Basic and diluted net loss per common share | $ | (0.48 | ) | $ | (0.67 | ) | ||||||||||
Basic and diluted weighted average common shares outstanding | 64,853,243 | 64,853,243 | ||||||||||||||
See Notes to Unaudited Pro Forma Consolidated Financial Statements
UNAUDITED PRO FORMA CONSOLIDATED STATEMENT OF OPERATIONS
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2007
Historical | Pro Forma | |||||||||||||||
Live Nation | Adjustments | Pro Forma Combined | ||||||||||||||
(in thousands except share and per share data) | ||||||||||||||||
Revenue | $ | 3,171,481 | $ | (144,581 | ) | (C) | $ | 3,026,900 | ||||||||
Operating expenses: | ||||||||||||||||
Direct operating expenses | 2,513,870 | (105,786 | ) | (C) | 2,408,084 | |||||||||||
Selling, general and administrative expenses | 490,515 | (27,265 | ) | (C) | 463,250 | |||||||||||
Depreciation and amortization | 79,684 | (1,956 | ) | (C) | 77,728 | |||||||||||
Gain on sale of operating assets | (20,934 | ) | 87 | (C) | (20,847 | ) | ||||||||||
Corporate expenses | 30,394 | — | 30,394 | |||||||||||||
Operating income | 77,952 | (9,661 | ) | 68,291 | ||||||||||||
Interest expense | 45,302 | (108 | ) | (C) | 45,194 | |||||||||||
Interest income | (11,181 | ) | 373 | (C) | (10,808 | ) | ||||||||||
Equity in earnings of nonconsolidated affiliates | (3,377 | ) | — | (3,377 | ) | |||||||||||
Minority interest expense | 8,190 | 472 | (C) | 8,662 | ||||||||||||
Other income — net | (461 | ) | (102 | ) | (C) | (563 | ) | |||||||||
Income before income taxes | 39,479 | (10,296 | ) | 29,183 | ||||||||||||
Income tax expense: | ||||||||||||||||
Current | 22,653 | (652 | ) | (E) | 22,001 | |||||||||||
Deferred | 10,400 | 149 | (E) | 10,549 | ||||||||||||
Net income (loss) | $ | 6,426 | $ | (9,793 | ) | $ | (3,367 | ) | ||||||||
Net income (loss) per common share: | ||||||||||||||||
Basic | $ | 0.10 | $ | (0.05 | ) | |||||||||||
Diluted | $ | 0.09 | $ | (0.05 | ) | |||||||||||
Weighted average common shares outstanding: | ||||||||||||||||
Basic | 66,820,837 | 66,820,837 | ||||||||||||||
Diluted | 68,779,190 | 66,820,837 | ||||||||||||||
See Notes to Unaudited Pro Forma Consolidated Financial Statements
NOTES TO UNAUDITED PRO FORMA CONSOLIDATED FINANCIAL STATEMENTS
The following unaudited pro forma adjustments give effect to the disposition as if it had occurred as of September 30, 2007 for the unaudited pro forma consolidated balance sheet and as of January 1, 2006 for the unaudited pro forma consolidated statements of operations.
(A) | Adjustment reflects the elimination of the assets and liabilities included in the balance sheet of Live Nation for its interests in the Theatrical Business as of September 30, 2007. The cash and cash equivalents adjustment primarily represents cash received for ticket sales in advance of the event. The adjustment to goodwill includes a write-off of goodwill allocated to the Company’s Global Theater segment. The goodwill write-off was determined using the purchase price as the fair value of the Theatrical Business relative to the estimated fair value of the Global Theater segment. |
(B) | Adjustment represents the estimated gain on the disposition as if the transaction occurred as of September 30, 2007. |
(C) | Adjustment reflects the elimination of the results of operations of the Theatrical Business for the year ended December 31, 2006 and the nine months ended September 30, 2007. |
(D) | Adjustment reflects the proceeds, net of certain adjustments and estimated transaction fees and expenses, from the disposition that were retained to meet operating and investing cash requirements. |
(E) | Adjustment represents the tax effects related to the reversal of tax on certain profitable Canadian operations. The pro forma adjustments have no effect on Live Nation’s current or deferred United States income tax expense for the year ended December 31, 2006 and the nine months ended September 30, 2007. For both periods presented, the pro forma adjustments increase Live Nation’s United States tax losses for which no current tax benefit may be recognized. The pro forma adjustments also increase Live Nation’s net deferred tax assets and corresponding valuation allowances by equal amounts, resulting in no net effect on deferred tax expense. |