Live Nation Reports Strong Fourth Quarter and Full Year 2008 Financial Results

Live Nation Reports Strong Fourth Quarter and Full Year 2008 Financial Results

- Full year revenues increased 11% driving overall Adjusted Operating Income up 20% for the year, an increase of $28 million -

- Live Nation's largest division, the North American concert division, grew Adjusted Operating Income by 58% year-over-year, or $46 million, driven primarily by organic growth and cost controls -

- Core business metrics up substantially, outpacing industry - Number of concerts produced up 33% in the fourth quarter and 32% year-over-year - Total attendance at these concerts increased 14% in the fourth quarter and 12% over last year -

- Due to a goodwill impairment of $269.9 million recorded in the fourth quarter related to decreased market capitalization, operating loss for the year was $284.2 million for Live Nation and $145.9 million for North American Music -

LOS ANGELES, March 2 /PRNewswire-FirstCall/ -- Live Nation (NYSE:LYV), the world's largest live music company, announced today its financial results for the three and twelve months ended December 31, 2008.

(Logo: http://www.newscom.com/cgi-bin/prnh/20081203/LAW048LOGO-b)

Quarterly Summary Results
Unaudited; $in millions (except per share amounts)

Q4 2008 Q4 2007
------- -------

Revenue $916.0 $922.4

Adjusted Operating
Income $28.4 $33.9

Operating Income (Loss) $(317.1) $(24.0)
(with goodwill
impairment of $269.9)

Free Cash Flow $11.2 $(3.1)

Net Income (Loss) $(337.5) $(18.4)
(with goodwill
impairment of $269.9)

Basic and Diluted EPS $(4.33) $(0.25)

"Our fourth quarter results capped an outstanding year for Live Nation," said Michael Rapino, President and Chief Executive Officer. "We continued to successfully execute our strategy, and we generated improved results across our business. Both the number of concerts we produced and ticket sales increased over the prior year, outpacing the industry. We also achieved considerable strength in our sponsorship business, as we continued to attract larger and more profitable advertising and marketing campaigns. Looking ahead, we believe that the live music business remains resilient despite the global economic turndown and that we are well positioned to benefit from this. Our concert pipeline remains robust to date in 2009 - we are pacing in line with 2008 concert and attendance counts. Our ticketing platform is proceeding according to our plan. We are seeing steady increases in consumer traffic to our websites, and we have sold over 1 million tickets to over 1,300 shows since launching our new ticketing platform. We remain focused on maximizing the performance of our concert business and on expanding our artist-to-fan direct distribution platform to the benefit of our shareholders."

Highlights:

-- Entered into a definitive merger agreement with Ticketmaster
Entertainment, Inc. to create the world's premier live entertainment
company with a combined enterprise value of approximately $2.5
billion.
-- Continued our strategy to increase relationships with larger corporate
sponsors, generating an increase in average revenue per sponsor of
nearly 15% for the year. National sponsors include BlackBerry, Burger
King and State Farm. Internationally, we entered into a new
multi-asset/multi-platform, five-year agreement with O2.
-- Launched our new ticketing platform in December 2008 using an
established ticketing software system, licensed through CTS Eventim,
for most of our North American owned and/or operated venues to power
our online and e-commerce retail ticketing site.
-- Grew our core concert business in 2008, with both the number of shows
and attendance posting double-digit growth.

Below are what we believe to be our key metrics related to our businesses:

METRICS

($in millions except as noted)
Key Drivers Q4 2008 Q4 2007 Variance 2008 2007 Variance
(Qtr.) (YTD)
Rights Acquisitions - Global Music Businesses
Talent Costs and
Other Event
Direct Operating
Expenses $729.8 $740.2 (1.4%) $3,314.7 $2,954.9 12.2%
Talent and Other
Event Expenses
as % of Total
Revenue 81.7% 82.1% 81.2% 81.4%
Number of Live
Rights
(Concerts)
(est.) 6,949 5,234 32.8% 22,167 16,747 32.4%
Number of
Ancillary Live
Rights - as of
period end
(est.) 848 n/a n/a 848 n/a n/a
Revenue Recognized
for Artist
Services/
Ancillary
Live Rights $82.2 n/a n/a $244.5 n/a n/a
Distribution Platform - Global Music Businesses
Total
Attendance
(est.) 13,432,000 11,773,000 14.1% 52,114,000 46,437,000 12.2%
International
Music Festival
Attendance
(est.) 58,000 36,000 61.1% 1,160,000 879,000 32.0%
Ancillary
Revenue per
Attendee
- NA Music Amps
only ** ** $18.35 $19.10 (3.9%)
Total Revenue
per Attendee
(Fan) $66.49 $76.54 (13.1%) $78.34 $78.14 0.3%
Sponsorship Data - Global Music and Ticketing Businesses
Number of
Sponsors -
as of period
end (est.) 840 927 (9.4%) 840 927 (9.4%)
Sponsorship
Revenue
Recognized $33.9 $29.8 13.8% $170.9 $164.0 4.2%
Average Revenue
per Sponsor
(rounded,
whole $) ** ** $203,000 $177,000 14.7%

** not meaningful

FINANCIAL HIGHLIGHTS - 4th QUARTER

Q4 2008 Q4 2007 Variance
$in millions
Revenue
North American
Music $452.1 $472.6 (4.3%)
International
Music 195.8 304.5 (35.7%)
Artist Nation 245.2 124.0 97.7%
Ticketing 2.6 2.3 13.0%
Other and
Eliminations 20.3 19.0 6.8%
$916.0 $922.4 (0.7%)

Adjusted Operating Margins
Income (Loss) Q4 2008 Q4 2007
North American
Music $15.1 $18.7 (19.3%) 3.3% 4.0%
International
Music 16.0 19.5 (17.9%) 8.2% 6.4%
Artist Nation 11.2 1.4 ** 4.6% 1.1%
Ticketing (7.7) (2.5) ** ** **
Other and
Eliminations 8.2 6.1 ** ** **
Corporate (14.4) (9.3) (54.7%)
$28.4 $33.9 (16.2%) 3.1% 3.7%
Operating Income
(Loss)
North American
Music $(210.5) $(10.0) ** ** (2.1%)
International
Music 6.2 13.0 (52.3%) 3.2% 4.3%
Artist Nation (88.0) (9.2) ** (35.9%) (7.4%)
Ticketing (11.2) (4.4) ** ** **
Other and
Eliminations 6.2 3.4 ** ** **
Corporate (19.8) (16.8) (17.9%)
$(317.1) $(24.0) ** ** (2.6%)

** not meaningful

NOTE: Certain reclassifications have been made to the 2007 results to conform to the 2008 presentation to report discontinued operations.

The highlights of our financial information for the fourth quarter of 2008 as compared to the fourth quarter of 2007 are as follows:

Revenue change - Total decrease of $6.4 million, primarily driven by:
-- $18.1 million - Acquisitions of Heineken Music Hall (Holland), DF
Concerts (Scotland), Luger and Moondog (Sweden) and the Main Square
Festival (France) in International Music.
-- ($126.8) million - Decrease in International Music driven by the
disposition of a portion of the Italy promotion business along with
reduced promotion activity in the United Kingdom, Belgium, Italy and
Spain primarily related to arena events.
-- $27.1 million - Acquisitions of Signatures and Anthill in Artist
Nation.
-- $94.1 million - Increase in Artist Nation revenue driven by the strong
results of Madonna's Sticky & Sweet tour in 2008.

Adjusted Operating Income (Loss) change - Total decrease of $5.5 million, primarily driven by:

-- ($4.2) million - Decrease in International Music due to show results
primarily in Belgium, Italy (partly due to the disposition discussed
above), Sweden and Spain.
-- $8.0 million - Increase in Artist Nation revenue driven by the strong
results of Madonna's Sticky & Sweet tour in 2008.
-- $2.5 million - Acquisitions of Heineken Music Hall (Holland), DF
Concerts (Scotland), Luger and Moondog (Sweden) and the Main Square
Festival (France) in International Music and Signatures and Anthill in
Artist Nation.
-- ($5.2) million - Decline in Ticketing primarily due to higher salary
costs, consulting fees and other expense related to building our
ticketing infrastructure.
-- ($5.1) million - Increased costs in Corporate driven by costs related
to employees and consulting costs.

Operating Income (Loss) change - Total decrease of $293.1 million, primarily driven by:

-- ($5.5) million - Overall decrease in Adjusted Operating Income noted
above.
-- ($269.9) million - Impairment of goodwill recorded in the fourth
quarter of 2008 of $189.2 million in North American Music and $80.7
million in Artist Nation driven by the company's market capitalization
at year-end compared to total asset value as required by accounting
literature.

FINANCIAL HIGHLIGHTS - YEAR ENDED DECEMBER 31

2008 2007 Variance
$in millions
Revenue
North American Music $2,236.0 $1,976.5 13.1%
International Music 1,182.6 1,078.7 9.6%
Artist Nation 664.2 573.5 15.8%
Ticketing 22.4 11.4 **
Other and Eliminations 61.6 115.4 **
$4,166.8 $3,755.5 11.0%

Adjusted Operating Income Margins
(Loss) 2008 2007
North American Music $126.3 $80.0 57.9% 5.6% 4.0%
International Music 88.7 78.4 13.1% 7.5% 7.3%
Artist Nation (2.0) 8.6 ** (0.3%) 1.5%
Ticketing (18.7) (5.9) ** ** **
Other and Eliminations 20.7 15.2 35.9% ** **
Corporate (45.2) (35.2) (28.4%)
$169.8 $141.1 20.3% 4.1% 3.8%
Operating Income (Loss)
North American Music $(145.9) $14.6 ** ** 0.7%
International Music 57.0 78.2 (27.1%) 4.8% 7.2%
Artist Nation (123.8) (14.1) ** ** **
Ticketing (25.9) (10.5) ** ** **
Other and Eliminations 12.4 (0.2) ** ** **
Corporate (58.0) (51.2) (13.3%)
$(284.2) $16.8 ** ** 0.4%
** not meaningful

NOTE: Certain reclassifications have been made to the 2007 results to conform to the 2008 presentation to report discontinued operations.

The highlights of our financial information for the year ended December 31, 2008 as compared to 2007 are as follows:

Revenue change - Total increase of $411.3 million, primarily driven by:
-- $168.3 million - Increase in North American Music primarily due to
increases in the number of events, ancillary revenue per attendee,
attendance and average ticket prices at our owned and/or operated
amphitheaters and third-party venues. 2008 included a strong line-up
of artists including Dave Matthews Band, Journey and Jimmy Buffett,
and strong results for arena tours such as Coldplay, Van Halen and the
Trans-Siberian Orchestra.
-- $91.2 million - Acquisition of HOB Canada in North American Music.
-- $106.9 million - Acquisitions of AMG, Heineken Music Hall, DF
Concerts, Luger and Moondog and the Main Square Festival in
International Music.
-- ($59.3) million - Decrease in Artist Nation, despite a strong fourth
quarter with the 2008 Madonna tour, based on the overall volume and
size of tours in 2008 as compared to 2007.
-- $150.0 million - Acquisitions of Signatures and Anthill in Artist
Nation.
-- ($54.1) million - Decline in other operations due to reduced
participation in theatrical productions in our United Kingdom theater
operations in 2008 and due to our sale in 2007 of a stage production
in North America.
-- $8.2 million - Foreign exchange movements, primarily in International
Music.

Adjusted Operating Income (Loss) change - Total increase of $28.7 million, primarily driven by:

-- $43.3 million - Increase in North American Music primarily due to cost
controls on talent buying and other variable expenses, overall
increases in ancillary revenue per attendee, higher ticket sales
through our internal ticketing operations, higher average ticket
prices, increased activity at our owned and/or operated amphitheaters
and strong arena tours.
-- $22.9 million - Acquisitions of HOB Canada in North American Music;
AMG, Heineken Music Hall, DF Concerts, Luger and Moondog and the Main
Square Festival in International Music; and Signatures and Anthill in
Artist Nation.
-- ($16.9) million - Decline in Artist Nation based on the overall volume
and size of tours in 2008 as compared to 2007.
-- ($12.8) million - Decline in Ticketing primarily due to higher salary
costs and other expenses related to building our ticketing
infrastructure.
-- ($10.0) million - Increased headcount, consulting fees and related
costs in Corporate.

Operating Income (Loss) change - Total decrease of $301.0 million, primarily driven by:

-- $28.7 million - Overall increase in Adjusted Operating Income noted
above.
-- ($269.9) million - Impairment of goodwill recorded in the fourth
quarter of 2008 of $189.2 million in North American Music and $80.7
million in Artist Nation driven by the company's market capitalization
at year-end as discussed above.
-- ($30.7) million - Increase in depreciation and amortization expense
primarily due to impairments recorded in 2008 of $12.1 million related
to three venues and an intangible asset in North American Music and
also due to the higher amortization of intangible assets related to
the AMG, DF Concerts and Signatures acquisitions and certain artist
rights agreements.
-- ($21.8) million - Decreased gain on the sale of operating assets
primarily due to gains recorded in 2007 on the sale of an
amphitheater, an office building, two music theaters, seven clubs and
two other non-core assets.

Other information
-- For the year ended December 31, 2008, our total capital expenditures
were $186.9 million, of which maintenance capital expenditures were
$25.0 million, down from $45.2 million in 2007. We also incurred
$161.9 million of capital expenditures for revenue generating projects
during 2008, primarily due to the development and renovation of
various venues including O2 Dublin arena (formerly The Point) in
Ireland, House of Blues in Houston and Boston, the Hollywood Palladium
and the AMG venue expansions in Sheffield and Leeds, as well as for
our ticketing roll-out.
-- As of December 31, 2008, our cash and cash equivalents were $199.7
million and our total long-term debt was $885.7 million, including
$122.0 million outstanding on our revolving credit facility. Free
cash as of December 31, 2008 was $32.2 million.

Conference Call:

The company will host a teleconference today, March 2, 2009, at 5:00 p.m. Eastern Time, which can be accessed by dialing 888-603-6873 (U.S.) or 973-321-1019 (Int'l) and referencing passcode 70943698. To access the call via webcast, please visit the Investor Relations section of the company's website at www.livenation.com/investors. Please visit the website approximately ten minutes prior to start time to ensure a connection. Additional statistical and financial information to be provided on the call, if any, will be posted supplementally under that same link. For those who are not available to listen to the live broadcast, a replay will be available shortly after the call on the Live Nation website through March 9, 2009.

About Live Nation:

Live Nation's mission is to maximize the live concert experience. Our core business is producing, marketing and selling live concerts for artists via our global concert pipe. Live Nation is the largest producer of live concerts in the world, annually producing over 22,000 concerts for 1,600 artists in 33 countries. During 2008, the company sold over 50 million concert tickets and drove over 70 million unique visitors to LiveNation.com. Live Nation is transforming the concert business by expanding its concert platform into ticketing and building the industry's first artist-to-fan vertically integrated concert platform. The company is headquartered in Los Angeles, California and is listed on the New York Stock Exchange, trading under the symbol LYV. For additional information about the company, please visit www.livenation.com/investors.

CONSOLIDATED STATEMENTS OF OPERATIONS
Year Ended December 31,
2008 2007 2006
(in thousands except share and per share data)

Revenue $4,166,838 $3,755,470 $3,294,471
Operating expenses:
Direct operating expenses 3,324,672 3,003,610 2,678,869
Selling, general and
administrative expenses 655,351 592,983 468,970
Depreciation and amortization 147,467 116,834 123,628
Goodwill impairment 269,902 - -
Loss (gain) on sale of
operating assets 1,108 (20,654) (9,987)
Corporate expenses 52,498 45,854 33,863
Operating income (loss) (284,160) 16,843 (872)
Interest expense 63,023 61,753 37,194
Interest income (10,192) (13,476) (11,025)
Equity in (earnings) losses of
nonconsolidated affiliates (2,264) 5,058 (1,716)
Minority interest expense 1,426 6,160 11,449
Other income-net (28) (147) (489)
Loss from continuing operations
before income taxes (336,125) (42,505) (36,285)
Income tax expense (benefit):
Current (24,057) 34,919 24,879
Deferred 8,132 7,649 10,334
Loss from continuing operations (320,200) (85,073) (71,498)
Income from discontinued
operations, net of tax 88,435 73,137 40,056
Net loss (231,765) (11,936) (31,442)
Other comprehensive income
(loss), net of tax:
Unrealized holding gain (loss)
on cash flow derivatives (9,094) (1,888) 104
Foreign currency translation
adjustments (48,277) 37,579 27,032
Comprehensive income (loss) $(289,136) $23,755 $(4,306)

Basic and diluted income (loss)
per common share:
Loss from continuing operations $(4.20) $(1.24) $(1.10)
Income from discontinued
operations 1.16 $1.07 $0.62
Net loss $(3.04) $(0.17) $(0.48)

Weighted average common shares
outstanding
Basic 76,228,275 68,440,582 64,853,243
Diluted 76,228,275 68,440,582 64,853,243

The numbers above may be adjusted for final tax entries to be included in the Company's Form 10-K to properly reflect taxes related to discontinued operations as opposed to continuing operations but net loss is not expected to be impacted significantly, if at all.

CONSOLIDATED BALANCE SHEETS
December 31,
2008 2007
(in thousands except share data)
ASSETS
CURRENT ASSETS
Cash and cash equivalents $199,660 $338,991
Accounts receivable, less allowance of
$10,376 in 2008 and $18,928 in 2007 217,286 264,316
Prepaid expenses 194,355 186,379
Other current assets 28,517 44,722
Total Current Assets 639,818 834,408

PROPERTY, PLANT AND EQUIPMENT
Land, buildings and improvements 990,433 1,018,079
Furniture and other equipment 260,524 236,320
Construction in progress 41,282 51,725
1,292,239 1,306,124
Less accumulated depreciation 404,504 391,079
887,735 915,045
INTANGIBLE ASSETS
Intangible assets-net 514,469 382,999
Goodwill 205,296 471,542
OTHER LONG-TERM ASSETS
Notes receivable, less allowance of $562 in
2008 and $745 in 2007 672 1,703
Investments in nonconsolidated affiliates 18,519 23,443
Other long-term assets 212,148 122,963
Total Assets $2,478,657 $2,752,103
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
Accounts payable $53,563 $79,273
Accrued expenses 378,992 511,636
Deferred revenue 225,664 259,868
Current portion of long-term debt 48,637 36,345
Other current liabilities 64,381 18,348
Total Current Liabilities 771,237 905,470

Long-term debt 837,076 786,261
Other long-term liabilities 146,360 91,465
Minority interest liability 61,722 61,841
Series A and Series B redeemable preferred
stock 40,000 40,000
Commitments and contingent liabilities

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; 78,528,724 and
74,893,005 shares issued and outstanding
in 2008 and 2007, respectively 785 749
Additional paid-in capital 993,005 940,848
Retained deficit (362,706) (130,941)
Cost of shares held in treasury (505,811
shares in 2008) (7,861) -
Accumulated other comprehensive income (961) 56,410
Total Stockholders' Equity 622,262 867,066
Total Liabilities and Stockholders'
Equity $2,478,657 $2,752,103

CONSOLIDATED STATEMENTS OF CASH FLOWS

Year Ended December 31,
2008 2007 2006
(in thousands)
Cash flows from operating
activities
Net loss $(231,765) $(11,936) $(31,442)
Reconciling items: 86,059 85,848 118,343
Depreciation
Amortization of intangibles 62,163 34,980 9,824
Goodwill impairment 282,939 - -
Impairment of other operational
assets 16,035 - -
Deferred income tax expense 8,132 7,649 10,334
Amortization of debt issuance
costs 3,964 2,095 736
Non-cash compensation expense 34,556 29,191 3,432
Gain on sale of operating
Assets (165,448) (51,226) (11,640)
Loss (gain) on sale of other
investments - (64) 1,659
Equity in earnings of
nonconsolidated affiliates (720) (4,806) (8,407)
Minority interest income 1,587 7,869 12,209
Changes in operating assets and
liabilities, net of effects of
acquisitions and dispositions:
Decrease (increase) in accounts
receivable 2,130 3,827 (55,504)
Increase in prepaid expenses (25,603) (51,554) (11,837)
Increase in other assets (107,376) (50,951) (1,762)
Increase (decrease) in
accounts payable, accrued
expenses and other
liabilities (48,473) 30,858 3,902
Increase (decrease) in
deferred revenue 28,984 18,030 (22,219)
Decrease in other-net - - -

Net cash provided by (used in)
operating activities (52,836) 49,810 17,628

Cash flows from investing
activities
Collection of notes receivable 334 1,910 4,427
Advances to notes receivable - (879) (2,420)
Distributions from nonconsolidated
affiliates 7,269 16,195 15,922
Investments made to
nonconsolidated affiliates (250) (5,261) (14,657)
Proceeds from disposal of other
investments - 3,616 1,743
Purchases of property, plant and
equipment (186,920) (116,849) (65,705)
Proceeds from disposal of
operating assets, net of cash
divested 198,665 132,106 36,292
Cash paid for acquisitions, net of
cash acquired (19,657) (124,285) (351,858)
Purchases of intangible assets (65,460) (47,568) (796)
Decrease (increase) in other-net (1,577) (44) 981

Net cash used in investing
activities (67,596) (141,059) (376,071)

Cash flows from financing
activities
Proceeds from long-term debt, net
of debt issuance costs 420,327 399,781 339,491
Payments on long-term debt (369,610) (285,635) (78,253)
Contributions from minority
interest partners 8,847 - 33,188
Distributions to minority interest
partners (3,042) (4,424) (1,415)
Proceeds from exercises of stock
options 636 466 -
Proceeds from sales of common
stock 5,454 - -
Payments for purchases of common
stock (28,628) - (24,717)

Net cash provided by financing
activities 33,984 110,188 268,294
Effect of exchange rate changes on
cash (52,883) 6,172 313
Net increase (decrease) in cash
and cash equivalents (139,331) 25,111 (89,836)
Cash and cash equivalents at
beginning of period 338,991 313,880 403,716

Cash and cash equivalents at end
of period $199,660 $338,991 $313,880

Forward-Looking Statements, Non-GAAP Financial Measures and Reconciliations:

Certain statements in this press release constitute "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995. Such forward-looking statements include, but are not limited to, statements regarding the potential health and growth of Live Nation's business; the company's concert and attendance counts; the company's ticketing platform and website traffic; and the company's anticipated achievement of its strategic objectives and the related benefits to its stockholders. Live Nation wishes to caution you that there are some known and unknown factors that could cause actual results to differ materially from any future results, performance or achievements expressed or implied by such forward-looking statements, including but not limited to operational challenges in achieving strategic objectives and executing on the company's plans, the risk that the company's markets do not evolve as anticipated, the potential impact of the current general economic slowdown and operational challenges associated with building out the company's ticketing operations.

Live Nation refers you to the documents it files from time to time with the U.S. Securities and Exchange Commission, or SEC, specifically the section titled "Item 1A. Risk Factors" of the company's most recent Annual Report filed on Form 10-K and Quarterly Reports on Form 10-Q and its Current Reports on Form 8-K, which contain and identify other important factors that could cause actual results to differ materially from those contained in the company's projections or forward-looking statements. You are cautioned not to place undue reliance on these forward-looking statements which speak only as of the date on which they are made. All subsequent written and oral forward-looking statements by or concerning Live Nation are expressly qualified in their entirety by the cautionary statements above. Live Nation does not undertake any obligation to publicly update or revise any forward-looking statements because of new information, future events or otherwise.

This press release contains certain non-GAAP financial measures as defined by SEC Regulation G. A reconciliation of each such measure to its most directly comparable GAAP financial measure, together with an explanation of why management believes that these non-GAAP financial measures provide useful information to investors, is provided below.

Adjusted Operating Income (Loss) is a non-GAAP financial measure that the company defines as operating income (loss) before depreciation and amortization (including impairments), loss (gain) on sale of operating assets and non-cash compensation expense. The company uses Adjusted Operating Income (Loss) to evaluate the performance of its operating segments. The company believes that information about Adjusted Operating Income (Loss) assists investors by allowing them to evaluate changes in the operating results of the company's 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. Adjusted Operating Income (Loss) is not calculated or presented in accordance with U.S. generally accepted accounting principles. A limitation of the use of Adjusted Operating Income (Loss) as a performance measure is that it does not reflect the periodic costs of certain capitalized tangible and intangible assets used in generating revenue in the company's business. Accordingly, Adjusted Operating Income (Loss) 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 U.S. GAAP. Furthermore, this measure may vary among other companies; thus, Adjusted Operating Income (Loss) as presented herein may not be comparable to similarly titled measures of other companies.

Free Cash Flow is a non-GAAP financial measure that the company defines as Adjusted Operating Income (Loss) less maintenance capital expenditures, less net interest expense, less cash taxes, less net distributions to minority interest partners plus distributions from investments in nonconsolidated affiliates net of contributions to investments in nonconsolidated affiliates. The company uses free cash flow, among other measures, to evaluate the ability of its operations to generate cash that is available for purposes other than maintenance capital expenditures. The company believes that information about free cash flow provides investors with an important perspective on the cash available to service debt and make acquisitions. Free cash flow is not calculated or presented in accordance with U.S. generally accepted accounting principles. A limitation of the use of free cash flow as a performance measure is that it does not necessarily represent funds available for operations and it is not necessarily a measure of our ability to fund our cash needs. Accordingly, free cash flow should be considered in addition to, and not as a substitute for, operating income (loss) and other measures of financial performance reported in accordance with U.S. GAAP. Furthermore, this measure may vary among other companies; thus, free cash flow as presented above may not be comparable to similarly titled measures of other companies.

Free Cash is a non-GAAP financial measure that the company defines as cash and cash equivalents less event-related deferred income, less accrued artist fees, less collections on behalf of others plus prepaids related to artist settlements/events. The company uses free cash as a proxy for how much cash it has available to, among other things, optionally repay debt balances, make acquisitions and finance new venue expenditures. Free cash is not calculated or presented in accordance with U.S. generally accepted accounting principles. A limitation of the use of free cash as a performance measure is that it does not necessarily represent funds available for operations and it is not necessarily a measure of our ability to fund our cash needs. Accordingly, free cash should be considered in addition to, and not as a substitute for, cash and cash equivalents and other measures of financial performance reported in accordance with U.S. GAAP. Furthermore, this measure may vary among other companies; thus, free cash as presented herein may not be comparable to similarly titled measures of other companies.

Reconciliations of Non-GAAP Measures to Their Most Directly Comparable GAAP Measures

Reconciliation of Adjusted Operating Income (Loss) to Operating Income (Loss) - Three and Twelve Months ended December 31

Loss
(gain)
Adjusted Non-cash on
operating compensa- sale of Depreciation Operating
income tion operating and Goodwill income
(loss) expense assets amortization Impairment (loss)

($in millions)
For the three months ended December 31, 2008
North American
Music $15.1 $9.2 $0.1 $27.1 $189.2 $(210.5)
International
Music 16.0 8.6 0.2 1.0 - 6.2
Artist Nation 11.2 2.2 0.7 15.6 80.7 (88.0)
Ticketing (7.7) 1.3 - 2.2 - (11.2)
Other and
Eliminations 8.2 0.2 0.2 1.6 - 6.2
Corporate (14.4) 3.5 0.7 1.2 - (19.8)
Total Live Nation $28.4 $25.0 $1.9 $48.7 $269.9 $(317.1)

For the three months ended December 31, 2007

North American
Music $18.7 $6.0 $0.1 $22.6 $- $(10.0)
International
Music 19.5 3.6 (0.2) 3.1 - 13.0
Artist Nation 1.4 1.2 - 9.4 - (9.2)
Ticketing (2.5) 0.8 - 1.1 - (4.4)
Other and
Eliminations 6.1 - 0.3 2.4 - 3.4
Corporate (9.3) 5.9 - 1.6 - (16.8)
Total Live Nation $33.9 $17.5 $0.2 $40.2 $- $(24.0)

For the year ended December 31, 2008

North American
Music $126.3 $11.7 $(0.5) $71.8 $189.2 $(145.9)
International
Music 88.7 9.4 0.2 22.1 - 57.0
Artist Nation (2.0) 4.4 0.6 36.1 80.7 (123.8)
Ticketing (18.7) 1.6 - 5.6 - (25.9)
Other and
Eliminations 20.7 0.2 0.1 8.0 - 12.4
Corporate (45.2) 8.2 0.7 3.9 - (58.0)
Total Live Nation $169.8 $35.5 $1.1 $147.5 $269.9 $(284.2)

For the year ended December 31, 2007

North American
Music $80.0 $9.2 $(6.7) $62.9 $- $14.6
International
Music 78.4 4.1 (18.8) 14.9 - 78.2
Artist Nation 8.6 2.9 - 19.8 - (14.1)
Ticketing (5.9) 1.3 - 3.3 - (10.5)
Other and
Eliminations 15.2 - 5.0 10.4 - (0.2)
Corporate (35.2) 10.7 (0.2) 5.5 - (51.2)
Total Live
Nation $141.1 $28.2 $(20.7) $116.8 $- $16.8

Reconciliation of Adjusted Operating Income (Loss) to Free Cash Flow - Fourth Quarter

Q4 2008 Q4 2007
($in millions)
Adjusted operating income $28.4 $33.9
Less: Interest expense-net (15.6) (13.8)
Cash Taxes 0.6 (12.5)
Maintenance capital
expenditures (3.3) (14.5)
Distributions to minority
interest partners (1.2) (1.1)
Distributions from
(contributions to) investments
in nonconsolidated affiliates 2.3 4.9

Free cash flow $11.2 $(3.1)

Reconciliation of Cash and Cash Equivalents to Free Cash as of December 31, 2008

($in millions) December 31,
2008
Cash and cash equivalents $199.7
Deferred income $(209.8)
Accrued artist fees $(10.8)
Collections on behalf of others $(56.9)
Prepaids related to artist
settlements/events $110.0
Free cash $32.2

Photo: http://www.newscom.com/cgi-bin/prnh/20081203/LAW048LOGO-b
http://photoarchive.ap.org/
PRN Photo Desk, photodesk@prnewswire.com
Source: Live Nation

CONTACT: media, John Vlautin, johnvlautin@livenation.com, or investors,
Linda Bandov, lindabandov@livenation.com, both of Live Nation, Inc.,
+1-310-867-7000; or Brad Edwards of Brainerd Communicators, Inc.,
+1-212-986-6667, edwards@braincomm.com, for Live Nation, Inc.

Web Site: http://www.livenation.com/

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Profile: intent