EX-99.1 4 h27202a4exv99w1.htm INFORMATION STATEMENT OF CCE SPINCO, INC. exv99w1
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EXHIBIT 99.1
Clear Channel Communications, Inc.
200 East Basse Road
San Antonio, Texas 78209
(CLEAR CHANNEL LOGO)
December      , 2005
Dear Clear Channel Communications, Inc. Stockholder:
      We are pleased to inform you that on December 2, 2005, the Board of Directors of Clear Channel Communications, Inc. approved the spin-off of CCE Spinco, Inc., a wholly-owned subsidiary of Clear Channel Communications, which we believe is one of the world’s largest diversified promoters and producers of, and venue operators for, live entertainment events.
      The spin-off of CCE Spinco will occur on December 21, 2005 by way of a pro rata dividend to Clear Channel Communications’ stockholders. Each Clear Channel Communications stockholder will be entitled to receive a dividend of one share of CCE Spinco common stock (and a related stock purchase right) for every eight shares of Clear Channel Communications common stock held at 5:00 p.m., New York City time, on December 14, 2005, which is the record date of the spin-off. The dividend will be paid in book-entry form, and physical stock certificates will be issued only upon request. No fractional shares of CCE Spinco common stock will be issued. If you would be entitled to a fractional share of CCE Spinco common stock in the distribution, you will receive its net cash value instead.
      Stockholder approval of the spin-off is not required, and you are not required to take any action to receive your CCE Spinco common stock.
      Following the spin-off, you will own shares in both Clear Channel Communications and CCE Spinco. Clear Channel Communications common stock will continue to trade on the New York Stock Exchange under the symbol “CCU.” CCE Spinco’s common stock has been approved for listing on the New York Stock Exchange under the symbol “LYV.”
      The enclosed information statement, which is being mailed to all Clear Channel Communications stockholders, describes the spin-off in detail and contains important information about CCE Spinco, including its financial statements.
      We look forward to your continued support as a stockholder in both Clear Channel Communications and CCE Spinco.
Sincerely,
                 
(L. LOWRY MAYS SIG)
    (MARK P. MAYS SIG)       (RANDALL T. MAYS SIG)  
L. Lowry Mays
  Mark P. Mays   Randall T. Mays
Chairman
  President and   Executive Vice President and
    Chief Executive Officer   Chief Financial Officer


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CCE Spinco, Inc.
9348 Civic Center Drive
Beverly Hills, California 90210
December      , 2005
Dear CCE Spinco, Inc. Stockholder:
      It is my pleasure to welcome you as a stockholder of our new company, CCE Spinco, Inc. We believe we are one of the world’s largest diversified promoters and producers of, and venue operators for, live entertainment events. For the year ended December 31, 2004, we promoted or produced over 28,500 events, including music concerts, theatrical shows, specialized motor sports and other events, with total attendance exceeding 61 million. In addition, we believe we operate one of the largest networks of venues used principally for music concerts and theatrical performances in the United States and Europe. As of September 30, 2005, we owned or operated 117 venues, consisting of 75 domestic and 42 international venues.
      As a separate publicly-traded company, CCE Spinco will continue to provide high-quality, customer-oriented live entertainment services to our clients. We plan to continue to focus our energies on producing and promoting compelling live entertainment events.
      Our common stock has been approved for listing on the New York Stock Exchange under the symbol “LYV” in connection with the spin-off. We expect the distribution will be completed on December 21, 2005 and that your new stock will begin trading on December 22, 2005.
      I invite you to learn more about CCE Spinco by reviewing the enclosed information statement. We look forward to our future as a separate publicly-traded company and to your support as a holder of CCE Spinco common stock.
  Sincerely,
 
  (RANDALL T. MAYS SIG)
 
  Randall T. Mays
  Chairman of the Board of Directors


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SUBJECT TO COMPLETION, DATED DECEMBER 8, 2005
INFORMATION STATEMENT
CCE Spinco, Inc.
Common Stock
(Par Value $0.01 per share)
      This information statement is being furnished in connection with the distribution of all the outstanding shares of CCE Spinco, Inc. common stock by Clear Channel Communications, Inc. to holders of its common stock.
      Shares of our common stock will be distributed to holders of Clear Channel Communications common stock of record as of 5:00 p.m., New York City time on December 14, 2005, which will be the record date. These stockholders will be entitled to receive one share of our common stock (and a related stock purchase right) for every eight shares of Clear Channel Communications common stock held on the record date. The distribution will be effective at 11:59 p.m., New York City time, on December 21, 2005. No fractional shares of our common stock will be issued. Any stockholder that would be entitled to fractional shares will receive net cash in lieu of such shares. The distribution is intended to be tax-free to Clear Channel Communications and its stockholders for U.S. federal income tax purposes, except for any cash received in lieu of fractional shares.
      No stockholder approval of the distribution is required or sought. We are not asking you for a proxy and you are requested not to send us a proxy. Clear Channel Communications stockholders will not be required to pay for the shares of our common stock to be received by them in the distribution, or to surrender or to exchange shares of Clear Channel Communications common stock in order to receive our common stock or to take any other action in connection with the distribution. There is no current trading market for our common stock. However, we expect that a limited market, commonly known as a “when-issued” trading market, for our common stock will develop on or shortly before the record date for the spin-off, and we expect “regular way” trading of our common stock will begin the first trading day after the spin-off. Our common stock has been approved for listing on the New York Stock Exchange under the symbol “LYV.”
       In reviewing this information statement, you should carefully consider the matters described under the caption “Risk Factors” beginning on page 20.
       Neither the Securities and Exchange Commission nor any state securities commission has approved or disapproved these securities or determined if this information statement is truthful or complete. Any representation to the contrary is a criminal offense.
      This information statement is not an offer to sell, or a solicitation of an offer to buy, any securities.
The date of this information statement is December      , 2005.
Clear Channel Communications first mailed this document to its stockholders on December      , 2005.


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(NORTH AMERICAN VENUES MAP)
* See inside back cover for a map of our international venues.


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INDUSTRY DATA
      This information statement includes industry data, forecasts and information that we have prepared based, in part, upon industry data, forecasts and information obtained from independent industry publications and surveys and other information available to us. Some data are also based on our good faith estimates, which are derived from management’s knowledge of the industry and independent sources. The primary sources for third-party industry data and forecasts were Nielsen Media Research, Inc., Pollstar, Inc., The League of American Theatres and Producers, Inc. and other industry reports and articles. These third-party publications and surveys generally state that they believe the information contained therein was obtained from sources they believe to be reliable, but that they can give no assurance as to the accuracy or completeness of included information. We have not independently verified any of the data from third-party sources nor have we ascertained the underlying economic assumptions relied upon therein. Similarly, we believe our internal research is reliable, but it has not been verified by any independent sources.


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SUMMARY
      This summary highlights information contained elsewhere in this information statement and provides an overview of our company and the material aspects of our spin-off from Clear Channel Communications, Inc. You should read this entire information statement carefully, especially the risk factors discussed beginning on page 20 and our combined historical and pro forma financial statements and notes to those statements appearing elsewhere in this information statement. References in this information statement to (i) “Clear Channel Entertainment,” “CCE Spinco,” “we,” “our” and “us” refer to CCE Spinco, Inc. and its consolidated subsidiaries and (ii) “Clear Channel Communications” refers to Clear Channel Communications, Inc. and its consolidated subsidiaries (other than us), unless the context otherwise requires.
      We describe in this information statement the businesses to be transferred to us by Clear Channel Communications in connection with the distribution as if the transferred businesses were our business for all historical periods described herein. However, we are a newly formed entity that has not conducted any operations prior to the distribution. References in this information statement to our historical assets, liabilities, products, businesses or activities of our business are generally intended to refer to the historical assets, liabilities, services, businesses or activities of the transferred businesses as the businesses were conducted as a part of Clear Channel Communications and its subsidiaries prior to the distribution. Following the distribution, we will be a separate publicly-traded company and Clear Channel Communications will have no continuing stock ownership in us. Our historical financial results as part of Clear Channel Communications contained herein may not reflect our financial results in the future as an independent company or what our financial results would have been had we been operated as a separate publicly-traded company during the periods presented.
CCE Spinco, Inc.
Our Business
      We believe we are one of the world’s largest diversified promoters and producers of, and venue operators for, live entertainment events. For the year ended December 31, 2004, we promoted or produced over 28,500 events, including music concerts, theatrical performances, specialized motor sports and other events, with total attendance exceeding 61 million. In addition, we believe we operate one of the largest networks of venues used principally for music concerts and theatrical performances in the United States and Europe. As of September 30, 2005, we owned or operated 117 venues, consisting of 75 domestic and 42 international venues. These venues include 39 amphitheaters, 58 theaters, 14 clubs, four arenas and two festival sites. In addition, through equity, booking or similar arrangements we have the right to book events at 33 additional venues. For the year ended December 31, 2004, we generated revenues of approximately $2.8 billion, net income of approximately $16.3 million, and operating income (loss) before depreciation, amortization, loss (gain) on sale of operating assets and non-cash compensation expense, or OIBDAN, of approximately $130.5 million. Please read “— Summary Historical and Pro Forma Financial and Other Data — Non-GAAP Financial Measures” for an explanation of OIBDAN and a reconciliation of OIBDAN to operating income. Approximately 90% of our total revenues for 2004 resulted from our promotion or production of music concerts and theatrical performances and from revenues related to our owned or operated venues.
Our Business Segments
      We operate in two reportable business segments: global music and global theater. In addition, we operate in the specialized motor sports, sport representation and other businesses, which are included under “other.”
      Global Music. Our global music business principally involves the promotion or production of live music shows and tours by music artists in our owned and operated venues and in rented third-party

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venues. For the year ended December 31, 2004, our global music business generated approximately $2.2 billion, or 78%, of our total revenues. We promoted or produced over 10,000 events in 2004, including tours for artists such as Madonna, Sting, Dave Matthews Band and Toby Keith. In addition, we produced several large festivals in Europe, including Rock Werchter in Belgium and the North Sea Jazz Festival in Holland. Part of our growth strategy is to expand our promotion and production of festivals, particularly in Europe. While our global music business operates year-round, we experience higher revenues during the second and third quarters due to the seasonal nature of our amphitheaters and international festivals, which are primarily used during or occur in May through September.
      Global Theater. Our global theater business promotes, which we commonly refer to as “presents,” and produces touring and other theatrical performances. Our touring theatrical performances consist primarily of revivals of previous commercial successes and new productions of theatrical performances playing on Broadway in New York City or the West End in London. For the year ended December 31, 2004, our global theater business generated approximately $314.0 million, or 11%, of our total revenues. In 2004, we presented or produced over 12,000 theatrical performances of productions such as The Producers, The Lion King, Mamma Mia! and Chicago. We pre-sell tickets for our touring shows through one of the largest subscription series in the United States and Canada in approximately 45 touring markets. While our global theater business operates year-round, we experience higher revenues during September through April, which coincides with the theatrical touring season.
      Other. We believe we are one of the largest promoters and producers of specialized motor sports events, primarily in North America. In 2004, we held over 600 events in stadiums, arenas and other venues, including monster truck shows, supercross races, motocross races, freestyle motocross events and motorcycle road racing. In addition, we own numerous trademarked properties, including monster trucks such as Grave Diggertm and Blue Thundertm, which generate additional licensing revenues. While our specialized motor sports business operates year-round, we experience higher revenues during January through March, which is the period when a larger number of specialized motor sports events occur.
      We also provide integrated sports marketing and management services, primarily for professional athletes. Our marketing and management services generally involve our negotiation of player contracts with professional sports teams and of endorsement contracts with major brands. As of September 30, 2005, we had approximately 600 clients, including Tracy McGrady (basketball), David Ortiz (baseball), Tom Lehman (golf), Andy Roddick (tennis), Roy E. Williams (football) and Steven Gerrard (soccer).
      We also promote and produce other live entertainment events, including family shows such as Dora the Explorer and Blue’s Clues, as well as museum and other exhibitions, such as Saint Peter and The Vatican: The Legacy of the Popes. In addition, we produce and distribute television shows and DVDs, including programs such as A&E Biographies: Rod Stewart and HBO Sports’ The Curse of the Bambino.
      For the year ended December 31, 2004, businesses included under “other” generated approximately $291.1 million, or 11%, of our total revenues.
Our Business Activities
      We principally act in the following capacities, performing one, some or all of these roles in connection with our events and tours:
      Promotion. As a promoter, we typically book performers, arrange performances and tours, secure venues, provide for third-party production services, sell tickets and advertise events to attract audiences. We earn revenues primarily from the sale of tickets and pay performers under one of several formulas, including a fixed guaranteed amount and/or a percentage of ticket sales. For each event, we either use a venue we own or operate, or rent a third-party venue. In our global theater business, we generally refer to promotion as “presentation.” Revenues related to promotion activities represent the majority of our combined revenues. These revenues are generally related to the volume of ticket sales and ticket prices. Event costs, included in divisional operating expenses, such as artist and production service expenses, are

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typically substantial in relation to the revenues they generate. As a result, significant increases or decreases in promotion revenue do not typically result in comparable changes to operating income.
      Production. As a producer, we generally develop event content, hire directors and artistic talent, develop sets and costumes, and coordinate the actual performances of the events. We produce tours on a global, national and regional basis. We generate revenues from fixed producer fees and by sharing in a percentage of event or tour profits primarily related to the sale of tickets, merchandise and event and tour sponsorships.
      Venue Operation. As a venue operator, we contract with promoters to rent our venues for events and provide related services such as concessions, merchandising, parking, security, ushering and ticket-taking. We generate revenues primarily from rental income, ticket service charges, premium seating and venue sponsorships, as well as sharing in percentages of concessions, merchandise and parking. Our outdoor entertainment venues are primarily used, and our international festivals occur, during May through September. As a result, we experience higher revenues during the second and third quarters. Revenues generated from venue operations, which are partially driven by attendance, typically have a higher margin than promotion or production revenues and therefore typically have a more direct relationship to operating income.
      Sponsorships and Advertising. We actively pursue the sale of national and local sponsorships and placement of advertising, including signage, promotional programs, naming of subscription series and tour sponsorships. Many of our venues also have name-in-title sponsorship programs. We believe national sponsorships allow us to maximize our network of venues and to arrange multi-venue branding opportunities for advertisers. Our national sponsorship programs have included companies such as American Express, Anheuser Busch and Coca-Cola. 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. Revenues generated from sponsorships and advertising typically have a higher margin than promotion or production revenues and therefore typically have a more direct relationship to operating income.
Our Strategy
      We are pursuing the following key strategies:
  •  We seek to maximize cash flow from operations through the ownership and operation of a leading distribution network of live entertainment venues.
 
  •  We seek to attract large audiences by securing, promoting and producing compelling live entertainment events in our own venues and third party venues.
 
  •  We seek to use our venues, live events and customers to develop and maintain relationships with our sponsorship and marketing partners, and sell an expanded line of products and services to our customers.
 
  •  We intend to selectively pursue investments and acquisitions that enhance our business where the returns and growth potential are consistent with our goal of increasing stockholder value.
Our Challenges
      We face a number of risks associated with our business and industry and must overcome a variety of challenges in implementing our operating strategy in order to be successful. For instance:
  •  We will have substantial indebtedness and lease obligations after the spin-off and will not be able to rely on Clear Channel Communications to fund our future capital requirements. Our total indebtedness for borrowed money will be approximately $367.6 million. Our substantial indebted-

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  ness could have adverse consequences on our business and results of operations. If our cash flow and capital resources are insufficient to service our debt, we may be forced to sell assets, seek additional equity or debt capital or restructure our debt and business.
 
  •  The live entertainment industry is highly competitive and the success of our events are primarily dependent on public taste and our ability to secure popular artists. Many events require substantial upfront costs before they generate any receipts and it is extremely difficult to predict if an event will be a success. To be successful, we must promote and present live entertainment events that generate significant receipts to offset fixed promotion and overhead costs.
 
  •  We have not operated as an independent company and have in the past relied on Clear Channel Communications for financing and other services. We may be unable to make the changes necessary to operate as an independent company or to obtain necessary financing and other services from unrelated third parties on reasonable terms or at all.
 
  •  We are subject to extensive governmental regulation. Regulations regarding permitting, health, safety, food and alcoholic beverage service, working conditions, the Americans with Disabilities Act, and taxes, among others, may restrict our live entertainment operations. From time to time, state and federal governmental bodies propose legislation that may introduce additional restrictions on us.
      For further discussion of these challenges and other risks that we face, see “Risk Factors” beginning on page 20.

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Questions and Answers about CCE Spinco and the Distribution
Why is Clear Channel Communications separating CCE Spinco and distributing its stock? The board of directors of Clear Channel Communications has determined that the separation of CCE Spinco from Clear Channel Communications is in the best interests of Clear Channel Communications, its stockholders and us, by providing each company with certain opportunities and benefits, such as:
 
• The separation will allow us and Clear Channel Communications to better attract, retain and motivate current and future employees through the use of equity-based compensation policies that more directly link employee compensation with our respective financial performances.
 
• The separation will permit the independent management of each of Clear Channel Communications and us to focus its attention and its company’s financial resources on its respective distinct business and business challenges and to lead each independent company to adopt strategies and pursue objectives that are appropriate to its respective business.
 
• Both we and Clear Channel Communications expect to have better access to the equity capital markets in connection with acquisitions and financings after the separation as our investors will not be forced to understand and make investment decisions with respect to Clear Channel Communications’ business and Clear Channel Communications’ investors will not be forced to understand and make investment decisions with respect to our business.
 
See “The Distribution.”
 
Why is the separation of the two companies structured as a spin-off? Clear Channel Communications believes that a tax-free distribution of shares in CCE Spinco offers Clear Channel Communications and its stockholders long-term value in a tax efficient way to separate the companies.
 
How will the separation and distribution work? The separation and distribution will be accomplished through a series of transactions in which substantially all of the assets and liabilities of Clear Channel Communications’ entertainment business comprised of global music, global theater, specialized motor sports and sport representation businesses will be transferred to us and all of the shares of our common stock will be distributed by Clear Channel Communications to its stockholders on a pro rata basis.
 
What do stockholders need to do to participate in the distribution? Nothing. You are not required to take any action to receive CCE Spinco common stock in the distribution, although we urge you to read this entire document carefully. You do not need to mail in Clear Channel Communications common stock certificates to receive CCE Spinco common stock. No stockholder approval of the distribution is required or sought. We are not asking you for a proxy and you are requested not to send us a proxy. You will not be required either to pay anything for the new shares or to surrender any shares of Clear Channel Communications common stock. If you own Clear Channel Communications common stock as of 5:00 p.m., New York City time, on the record date, a book-entry account statement reflecting your ownership of CCE Spinco shares will be mailed

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to you, or your brokerage account will be credited for the shares, on or about December 21, 2005. Following the distribution, stockholders whose shares are held in book-entry form may request that their shares of our common stock be transferred to a brokerage or other account at any time as well as delivery of physical stock certificates for their shares, in each case without charge.
 
When will the distribution occur? We expect that Clear Channel Communications will distribute the shares of our common stock on December 21, 2005 to holders of record of Clear Channel Communications common stock at 5:00 p.m., New York City time, on December 14, 2005, the record date.
 
Can Clear Channel Communications decide to cancel the distribution of the common stock even if all the conditions have been met? Yes. The distribution is conditioned upon satisfaction or waiver of certain conditions. See “The Distribution — Distribution Conditions and Termination.” Clear Channel Communications has the right to terminate the stock distribution, even if all of these conditions are met, if at any time Clear Channel Communications’ board of directors determines, in its sole discretion, that Clear Channel Communications and CCE Spinco are better served being a combined company, thereby making the distribution not in the best interest of Clear Channel Communications and its stockholders, or that market conditions are such that it is not advisable to spin-off the entertainment business.
 
Does CCE Spinco plan to pay dividends? No. We do not expect to pay any cash dividends in the foreseeable future. Moreover, we anticipate the terms of our credit agreement governing our senior secured credit facility and designations governing Holdco #2’s preferred stock will limit the amount of funds which 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. See “Dividend Policy” and “Description of Indebtedness.”
 
What are the U.S. federal income tax consequences of the distribution to Clear Channel Communications stockholders? The spin-off is conditioned upon Clear Channel Communications’ receipt of a private letter ruling from the IRS, which it has received, and the opinion of Skadden, Arps, Slate, Meagher & Flom LLP, in each case, to the effect that the spin-off will qualify as a tax-free distribution for U.S. federal income tax purposes under Sections 355 and 368(a)(1)(D) of the Internal Revenue Code of 1986, as amended (the “Code”). Assuming the spin-off so qualifies, for U.S. federal income tax purposes, no gain or loss will be recognized by you, and no amount will be included in your income, upon the receipt of shares of our common stock pursuant to the spin-off. You will generally recognize gain or loss with respect to cash received in lieu of a fractional share of our common stock. See “The Distribution — Material U.S. Federal Income Tax Consequences of the Distribution.”
 
What will the relationship between Clear Channel Communications and CCE Spinco be following the distribution? After the distribution, Clear Channel Communications will not own any shares of our common stock and we will not own any shares of Clear Channel Communications common stock. Three of our directors will also be directors of Clear Channel Communications, and our chairman will continue to serve as

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chief financial officer of Clear Channel Communications. In addition, in connection with the distribution, we and Clear Channel Communications are entering into a number of agreements that will govern our spin-off from Clear Channel Communications and our future relationship. We cannot assure you that these agreements will be on terms as favorable to us as agreements with other third parties. See “Our Relationship with Clear Channel Communications After the Distribution.” In addition, if Clear Channel Communications acquires knowledge of a potential transaction or matter which may be a corporate opportunity for both us and Clear Channel Communications, our certificate of incorporation provides that we will generally renounce our interest in the corporate opportunity. See “Description of Capital Stock — Provisions of our Amended and Restated Certificate of Incorporation Relating to Related-Party Transactions and Corporate Opportunities.”
 
What if I want to sell my Clear Channel Communications common stock or my CCE Spinco common stock? You should consult with your own financial advisors, such as your stockbroker, bank or tax advisor. Clear Channel Communications does not make any recommendations on the purchase, retention or sale of shares of Clear Channel Communications common stock or CCE Spinco common stock to be distributed.
 
If you do decide to sell any shares, you should make sure your stockbroker, bank or other nominee understands whether you want to sell your Clear Channel Communications common stock or your CCE Spinco common stock after it is distributed, or both.
 
Where will I be able to trade shares of CCE Spinco common stock? There is not currently a public market for our common stock. Our common stock has been approved for listing on the New York Stork Exchange, or NYSE, under the symbol “LYV.” We anticipate that trading in shares of our common stock will begin on a “when-issued” basis on or shortly before the record date and before the distribution date, and “regular way” trading will begin on the first trading day following the distribution date. If trading does begin on a “when-issued” basis, you may purchase or sell our common stock after that time, but your transaction will not settle until after the distribution date. On the first trading day following the distribution date, when-issued trading in respect of our common stock will end and regular way trading will begin. We cannot predict the trading prices for our common stock before or after the distribution date.
 
Will the number of Clear Channel Communications shares I own change as a result of the distribution? No. The number of shares of Clear Channel Communications common stock you own will not change as a result of the distribution.
 
What will happen to the listing of Clear Channel Communications common stock? Nothing. Clear Channel Communications common stock will continue to be traded on the NYSE under the symbol of “CCU.”
 
Will the distribution affect the market price of my Clear Channel Communications shares? Yes. As a result of the distribution, we expect the trading price of Clear Channel Communications shares immediately following the distribution to be lower than immediately prior to the distribution because the trading price should no longer reflect the value of the CCE Spinco businesses. Furthermore, until the market has fully analyzed the operations of Clear Channel

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Communications without these businesses, the price of Clear Channel Communications shares may fluctuate significantly. In addition, the combined trading prices of Clear Channel Communications common stock and CCE Spinco common stock after the distribution may be less than the trading price of Clear Channel Communications common stock prior to the distribution.
 
Are there risks to owning CCE Spinco common stock? Yes. Our business is subject both to general and specific business risks relating to our leverage, our business, our relationship with Clear Channel Communications and our being a separate publicly-traded company, as well as risks related to the nature of the spin-off transaction itself. These risks are described in the “Risk Factors” section of this information statement beginning on page 20. We encourage you to read that section carefully.
 
Where can Clear Channel Communications stockholders get more information? Before the distribution, if you have any questions relating to the distribution, you should contact:
 
Clear Channel Communications, Inc.
Investor Relations
P.O. Box 659512
San Antonio, Texas 78265-9512
Tel: (210) 822-2828
Fax: (210) 822-2299
www.clearchannel.com
 
After the distribution, if you have any questions relating to our common stock, you should contact:
 
CCE Spinco, Inc.
Investor Relations
c/o Brainerd Communicators, Inc.
521 5th Avenue
New York, New York 10175
Tel: (212) 986-6667
Fax: (212) 986-8302
 
Who will be the distribution agent, transfer agent and registrar for our common stock? The Bank of New York Company, Inc.
101 Barclay Street
New York, New York 10286
Toll-Free Shareholder Services Line: 1-800-524-4458
Email: shareowners@bankofny.com

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Summary of the Transactions
      The following is a brief summary of the terms of the distribution and other concurrent transactions:
Distributing company Clear Channel Communications, Inc. After the spin-off, Clear Channel Communications will not own any shares of our capital stock.
 
Distributed company CCE Spinco, Inc. is currently a wholly-owned subsidiary of Clear Channel Communications. After the spin-off, CCE Spinco will be a separate publicly-traded company. However, three of our directors will also be directors of Clear Channel Communications, and our chairman will continue to serve as chief financial officer of Clear Channel Communications.
 
Securities to be distributed Shares of CCE Spinco common stock, which will constitute all of the outstanding shares of our common stock immediately after the distribution.
 
Delivery of a share of our common stock in connection with the distribution also will constitute the delivery of the preferred stock purchase right associated with the share. The existence of the preferred stock purchase rights may deter a potential acquiror from making a hostile takeover proposal or a tender offer. For a more detailed discussion of these rights, see “Description of Our Capital Stock — The Rights Agreement.”
 
Distribution ratio Each holder of Clear Channel Communications common stock will be entitled to receive a dividend of one share of our common stock (and a related stock purchase right) for every eight shares of Clear Channel Communications common stock held on the record date. Cash will be distributed in lieu of fractional shares.
 
Fractional shares Fractional shares of our common stock will not be distributed. In lieu of fractional shares of our common stock, stockholders of Clear Channel Communications will receive cash. Fractional shares you would otherwise be entitled to receive will be aggregated and sold in the public market by the distribution agent, who will determine in its sole discretion the timing and terms of such sale. The aggregate net cash proceeds of these sales will be distributed ratably to those stockholders who would otherwise have received fractional shares of our common stock in accordance with their fractional share interests. If you own fewer than eight shares of Clear Channel Communications common stock on the record date, you will not receive any shares of our common stock in the distribution, but you will receive cash in lieu of a fractional share. The receipt of cash in lieu of fractional shares will generally be taxable to the recipient stockholders. For more information, see “The Distribution — Manner of Effecting the Distribution” and “The Distribution — Material U.S. Federal Income Tax Consequences of the Distribution.”
 
Record date The record date is December 14, 2005.
 
Distribution date 11:59 p.m., New York City time, on December 21, 2005.

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Incurrence of debt Prior to or concurrently with the completion of the distribution, one of our operating subsidiaries, Holdco #3, will enter into a $575.0 million senior secured credit facility consisting of:
 
• a $325.0 million 71/2-year term loan; and
 
• a $250.0 million 61/2-year revolving credit facility, of which up to $200.0 million will be available for the issuance of letters of credit and up to $100.0 million will be available for borrowings in foreign currencies.
 
Subject to then market pricing and maturity extending longer than that of the senior secured credit facility, we will be able to add additional term and revolving credit facilities in an aggregate amount not to exceed $250.0 million. We anticipate that the senior secured credit facility will be secured by a first priority lien on substantially all of our domestic assets (other than real property and deposits maintained by us in connection with promoting or producing live entertainment events) and a pledge of the capital stock of our domestic subsidiaries and a portion of the capital stock of certain of our foreign subsidiaries. Borrowings in foreign currencies by our foreign subsidiaries will, in addition, be secured by a first priority lien on substantially all of our foreign assets (other than real property and deposits maintained by us in connection with promoting or producing live entertainment events) and a pledge of the capital stock of all subsidiaries held by such borrowing subsidiary.
 
After giving effect to the borrowings under the senior secured credit facility, we expect to have approximately $367.6 million of indebtedness for borrowed money outstanding. We intend to use $200.0 million of borrowings under the term loan portion of our senior secured credit facility and the $20 million of proceeds from the issuance of the Series A redeemable preferred stock of Holdco #2 to repay a portion of the indebtedness we owe Clear Channel Communications. We intend to use the remaining $125.0 million of borrowings under the term loan portion of our senior secured credit facility for general corporate purposes, including working capital, potential acquisitions and stock repurchases. We expect that approximately $200.0 million of the revolving credit facility will remain available for working capital and general corporate purposes of Holdco #3 and its subsidiaries immediately following the completion of the distribution and after the transfer of approximately $50.0 million of letters of credit previously issued under Clear Channel Communications’ credit facilities on behalf of certain Holdco #3 subsidiaries. The issuance of letters of credit will reduce this availability by the notional amount of issued letters of credit. However, on or prior to the distribution date, we may draw advances under the senior secured credit facility for working capital and other general corporate purposes. See “Management’s Discussion and Analysis of Financial Condition and Results of Operations — Liquidity and Capital Resources” and “Description of Indebtedness.”

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The agreements governing the senior secured credit facility are subject to ongoing negotiation. We cannot be certain the terms described herein will not change or be supplemented. See “Description of Indebtedness.”
 
Preferred stock issuance Prior to the completion of the distribution, third-party investors unrelated to Clear Channel Communications will acquire all of the shares of Series A (voting) and Series B (non-voting) mandatorily redeemable preferred stock of Holdco #2, the parent company of Holdco #3, one of our operating subsidiaries, which operating subsidiary owns more than 95% of the gross value of our assets. The preferred stock will have an aggregate liquidation preference of $40 million plus accrued but unpaid dividends. We expect the Series A redeemable preferred stock will have a liquidation preference of $20 million plus accrued but unpaid dividends and will be issued to a third-party investor for $20 million. We anticipate the Series B redeemable preferred stock will have a liquidation preference of $20 million plus accrued but unpaid dividends and will be issued to Clear Channel Communications in connection with the Holdco #3 Exchange for no cash and immediately resold to a third-party purchaser for $20 million. See “Our Relationship with Clear Channel Communications After the Distribution — Tax Matters Agreement — Holdco #3 Loss.” We will not receive any of the proceeds from the sale of the Series B redeemable preferred stock sold by Clear Channel Communications. The issuance and sale of the Series A and Series B redeemable preferred stock together with the Holdco #3 Exchange are structured to raise desired financing and to facilitate the overall tax efficiency of the distribution.
 
The holders of Series A redeemable preferred stock will have the right to appoint one out of four members to Holdco #2’s board of directors and to otherwise control 25% of the voting power of all outstanding shares of Holdco #2. The Series B redeemable preferred stock will have no voting rights other than the right to vote as a class with the Series A redeemable preferred stock to elect one additional member to the board of directors of Holdco #2 in the event Holdco #2 breaches certain terms of the designations of the preferred stock. The holders of Holdco #2 preferred stock will not have the right to appoint or vote for any of our directors. Each of the Series A and Series B preferred stock is expected to pay an annual cash dividend of approximately 13% and will be mandatorily redeemable upon the six year anniversary of the date of issuance. Holdco #2 will be required to make an offer to purchase the Series A and Series B redeemable preferred stock at 101% of each series liquidation preference in the event of a change of control. We expect the Series A and Series B redeemable preferred stock will be subject to financial and other covenants substantially similar to the covenants applicable to our senior secured credit facility. If we default under any of the covenants applicable to our preferred stock, we will have to pay additional dividends. The terms of the preferred stock are subject to ongoing negotiation. We cannot be

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certain the terms described in this information statement will not change or be supplemented. See “Description of Subsidiary Preferred Stock” and “— Corporate Information and Structure” below.
 
Payment of intercompany note Prior to the completion of the distribution, Clear Channel Communications will contribute to our capital $508.0 million of the intercompany indebtedness owed by us. Prior to or concurrently with the completion of the distribution, we intend to use $200.0 million of the proceeds from borrowings from our term loan under our senior secured credit facility and the $20 million of proceeds from the issuance of the Series A redeemable preferred stock of Holdco #2 to repay the remaining portion of the intercompany note.
 
Tax consequences to stockholders The spin-off is conditioned upon Clear Channel Communications’ receipt of a private letter ruling from the IRS, which it has received, and the opinion of Skadden, Arps, Slate, Meagher & Flom LLP, in each case to the effect that the spin-off will qualify as a tax-free distribution for U.S. federal income tax purposes under Sections 355 and 368(a)(1)(D) of the Code. Assuming the spin-off so qualifies, for U.S. federal income tax purposes, no gain or loss will be recognized by, and no amount will be included in the income of, a holder of Clear Channel Communications common stock upon the receipt of shares of our common stock pursuant to the spin-off. A holder of Clear Channel Communications common stock will generally recognize gain or loss with respect to cash received in lieu of a fractional share of our common stock. See “The Distribution — Material U.S. Federal Income Tax Consequences of the Distribution” for a more detailed description of the U.S. federal income tax consequences of the spin-off.
 
Anti-takeover effects Some provisions of our amended and restated certificate of incorporation, our amended and restated bylaws, our rights plan and Delaware law may have the effect of making more difficult an acquisition of control of us in a transaction not approved by our board of directors. We also will indemnify Clear Channel Communications under the tax matters agreement we have entered into in connection with the distribution for the tax, if any, resulting from any acquisition or issuance of our stock that triggers the application of Section 355(e) of the Code, and this potential liability could discourage, delay or prevent a change of control. See “Our Relationship with Clear Channel Communications After the Distribution” and “Description of Our Capital Stock.”
Our Relationship with Clear Channel Communications
      Since August 2000, our predecessor companies have been wholly-owned by Clear Channel Communications, Inc. In connection with the distribution, we and Clear Channel Communications will be parties to a number of agreements that will govern our spin-off from Clear Channel Communications and

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our future relationship. These agreements will be entered into with Clear Channel Communications in the context of our relationship as a wholly-owned subsidiary of Clear Channel Communications. Accordingly, some of the terms and provisions of these agreements may be considered more or less favorable to us than terms and provisions we could have obtained in arm’s length negotiations with unaffiliated third parties.
      In anticipation of the spin-off, we believe we have developed and implemented systems and infrastructure to support our operation as a separate publicly-traded company. However, these newly developed systems and infrastructure may be inadequate and we may be required to develop or otherwise acquire other systems and infrastructure, which could reduce our profitability. In the past, Clear Channel Communications has generally provided capital for our general corporate purposes and has at times guaranteed some of our contractual obligations under contracts with some clients. We have also historically used cash from Clear Channel Communications to fund our operations. After the distribution, Clear Channel Communications will not provide funds to finance our operations or guarantee our contractual obligations. After the spin-off, we will initially have a nine member Board of Directors, and three of our directors will serve as directors of Clear Channel Communications, and our chairman will continue to serve as chief financial officer of Clear Channel Communications.
      For a description of certain provisions of our amended and restated certificate of incorporation concerning the allocation of business opportunities that may be suitable for both us and Clear Channel Communications, see “Description of Our Capital Stock.” This policy is not necessarily favorable to us.
      For a further discussion of the spin-off and our relationship with Clear Channel Communications and the related risks, see “Our Relationship with Clear Channel Communications After the Distribution” and “Risk Factors — Risk Factors Relating to Our Relationship with Clear Channel Communications.”
Corporate Information and Structure
      We were formed through acquisitions of various entertainment businesses and assets by our predecessors, and a number of our businesses have been operating in the live entertainment industry for more than 30 years. On August 1, 2000, Clear Channel Communications acquired our live entertainment business, which was initially formed in 1997. We were incorporated in our current form as a Delaware corporation on August 2, 2005 to own substantially all of the entertainment business of Clear Channel Communications, Inc. Our principal executive offices are located at 9348 Civic Center Drive, Beverly Hills, California 90210, and our telephone number is (310) 867-7000. Our international executive offices are located at 220 West 42nd Street, New York, New York 10036, and our telephone number at that location is (917) 421-4000. We maintain a Web site at www.ccespinco.com. Our Web site and the information contained on that site, or connected to that site, are not incorporated into this information statement. Various trademarks, copyrights, service marks, and other types of marks are used throughout this information statement, including the trademarks Grave Digger™ and Blue Thunder™, which are owned by us.

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      The following diagram depicts our corporate structure after giving effect to the distribution and the other concurrent transactions described in this information statement:
(DIAGRAM)
 
(1)  Holdco #1 owns certain theatrical property located in New York City, which represents less than 5% of the gross value of our assets.
 
(2)  Holdco #1 will own 100% of Holdco #2’s common stock, will control 75% of the voting power of all outstanding shares of Holdco #2 and, absent a breach by Holdco #2 of certain terms of the designations of the Holdco #2 preferred stock, will have the ability to elect three out of four members of Holdco #2’s board of directors.
 
(3)  The holders of Series A mandatorily redeemable preferred stock will have the right to appoint one out of four members to Holdco #2’s board of directors and to otherwise control 25% of the voting power of all outstanding shares of Holdco #2.
 
(4)  The Series B mandatorily redeemable preferred stock will have no voting rights other than the right to vote as a class with the Series A redeemable preferred stock to elect one additional member to the board of directors of Holdco #2 in the event Holdco #2 breaches certain terms of the designations of the preferred stock.
 
(5)  Holdco #3, together with its subsidiaries, represent more than 95% of the gross value of our assets.

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Summary Historical and Pro Forma Financial and Other Data
      The table below presents our summary historical financial information prepared on a combined basis and has been derived from our audited combined financial statements for the years ended December 31, 2002, December 31, 2003 and December 31, 2004, and our unaudited combined interim financial statements for the nine months ended September 30, 2004 and September 30, 2005, each of which is included elsewhere in this information statement. The unaudited combined interim financial statements have been prepared on a basis consistent with the audited combined financial statements and, in the opinion of management, include all adjustments, consisting only of normal recurring adjustments, necessary for a fair presentation of such data. The results for the nine months ended September 30, 2005 are not necessarily indicative of the results to be expected for the full year.
      The following table also presents our summary unaudited pro forma condensed combined financial information, which has been derived from our unaudited pro forma condensed combined financial information included elsewhere in this information statement.
      Our unaudited pro forma combined financial statements give pro forma effect to:
  •  the distribution of our common stock to the stockholders of Clear Channel Communications;
 
  •  the incurrence of debt and related debt issuance costs, comprised of a $325.0 million senior secured term loan under the $575.0 million senior secured credit facility to be entered into prior to or concurrently with the completion of the distribution;
 
  •  the issuance of mandatorily redeemable Series A preferred stock by Holdco #2 having a liquidation preference of $20 million to a third-party investor for $20 million;
 
  •  the issuance to Clear Channel Communications of mandatorily redeemable Series B preferred stock by Holdco #2 having a liquidation preference of $20 million in connection with the Holdco #3 Exchange, for which we will not receive any cash;
 
  •  the contribution by Clear Channel Communications to our capital of $508.0 million of the intercompany debt owed to Clear Channel Communications;
 
  •  the retention of $125.0 million of the proceeds from borrowings under the term loan portion of our senior secured credit facility to be used for general corporate purposes, including working capital, potential acquisitions and stock repurchases; and
 
  •  the use of $200.0 million from borrowings under the term loan portion of our senior secured credit facility and $20 million of proceeds from the sale of the Series A preferred stock offering to repay the remaining portion of intercompany debt owed to Clear Channel Communications.
      Each of the Series A and Series B preferred stock is expected to pay an annual cash dividend of approximately 13% and will be mandatory redeemable upon the six year anniversary of the date of issuance.
      The unaudited pro forma financial data presented as of the year ended December 31, 2004 and for the nine months ended September 30, 2005 are derived from our unaudited pro forma combined financial statements. The pro forma balance sheet assumes the items listed above occurred as of September 30, 2005. The unaudited pro forma income statement data for the year ended December 31, 2004, and the nine months ended September 30, 2005, assumes the items listed above occurred as of January 1, 2004. A more complete explanation can be found in our unaudited pro forma combined financial statements included elsewhere in this information statement.
      You should read the summary and unaudited pro forma combined financial information in conjunction with our audited and unaudited combined financial statements and the notes to the audited and unaudited combined financial statements. You should also read the sections “Selected Combined Financial Data,” “Unaudited Pro Forma Condensed Combined Financial Data” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations.” The summary historical and

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unaudited pro forma combined financial information is qualified by reference to these sections, the audited and unaudited combined financial statements and the notes to the audited and unaudited combined financial statements that are included elsewhere in this information statement.
      The historical financial and other data have been prepared on a combined basis from Clear Channel Communications’ consolidated financial statements using the historical results of operations and bases of the assets and liabilities of Clear Channel Communications businesses and give effect to allocations of expenses from Clear Channel Communications. The unaudited pro forma combined financial information is not indicative of our future performance or what our results of operations and financial position would have been if we had operated as a separate company during the periods presented or if the transactions reflected therein had actually occurred as of January 1, 2004 or September 30, 2005, as the case may be. The unaudited pro forma condensed combined statement of income does not reflect the complete impact of one-time and ongoing incremental costs required to operate as a separate company. Clear Channel Communications allocated to us $8.5 million in 2002, $9.2 million in 2003 and $9.8 million in 2004 of expenses incurred by it for providing us accounting, treasury, tax, legal, public affairs, executive oversight, human resources and other services. Through September 30, 2005, Clear Channel Communications allocated to us $6.9 million of expenses. By the end of 2005, we expect to have assumed responsibility for substantially all of these services and their related expenses. We currently believe the estimate for the costs of these services could be approximately $11.0 million to $13.0 million in 2006, our first full year as a separate publicly-traded company. However, the actual total costs of these services associated with our transition to, and operation as, a separate publicly-traded company could be significantly greater than our estimates.

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      The following table presents a non-GAAP financial measure, OIBDAN, which we use to evaluate segment and combined performance of our business. OIBDAN is not calculated or presented in accordance with U.S. generally accepted accounting principles, or GAAP. In Note 3 and “— Non-GAAP Financial Measure” below, we explain OIBDAN and reconcile it to operating income (loss), its most directly comparable financial measure calculated and presented in accordance with GAAP.
                                                           
    Year Ended December 31,   Nine Months Ended September 30,
         
    2002   2003   2004   Pro Forma   2004   2005   Pro Forma
(In thousands, except per share amounts)                            
                (unaudited)   (unaudited)   (unaudited)
Results of Operations Data:
                                                       
Revenue
  $ 2,473,319     $ 2,707,902     $ 2,806,128     $ 2,806,128     $ 2,261,879     $ 2,184,588     $ 2,184,588  
Operating Expenses:
                                                       
 
Divisional operating expenses
    2,302,707       2,506,635       2,645,293       2,645,293       2,107,785       2,050,631       2,050,631  
 
Depreciation and amortization
    64,836       63,436       64,095       64,095       47,499       46,392       46,392  
 
Loss (gain) on sale of operating assets
    (15,241 )     (978 )     6,371       6,371       7,400       (426 )     (426 )
 
Corporate expenses
    26,101       30,820       31,386       31,386       19,977       38,391       38,391  
                                           
Operating income
    94,916       107,989       58,983       58,983       79,218       49,600       49,600  
Interest expense
    3,998       2,788       3,119       31,199       2,198       2,671       23,731  
Intercompany interest expense
    58,608       41,415       42,355             32,550       35,719        
Equity in earnings (loss) of nonconsolidated affiliates
    (212 )     1,357       2,906       2,906       3,231       157       157  
Other income (expense) — net
    332       3,224       (1,690 )     (1,690 )     (1,437 )     (4,157 )     (4,157 )
                                           
Income before income taxes and cumulative effect of a change in accounting principle
    32,430       68,367       14,725       29,000       46,264       7,210       21,869  
Income tax benefit (expense):
                                                       
 
Current
    (40,102 )     68,272       55,946       50,236       42,633       11,975       6,111  
 
Deferred
    11,103       (79,607 )     (54,411 )     (54,411 )     (37,808 )     (14,859 )     (14,859 )
                                           
Income before cumulative effect of a change in accounting principle
    3,431       57,032       16,260     $ 24,825       51,089       4,326     $ 13,121  
                                           
Cumulative effect of a change in accounting principle, net of tax of $198,640(1)
    (3,932,007 )                                        
                                           
Net income (loss)
  $ (3,928,576 )   $ 57,032     $ 16,260             $ 51,089     $ 4,326          
                                           
Basic and diluted pro forma income before cumulative effect of a change in accounting principle per common share(2)
  $ 0.05     $ 0.84     $ 0.24     $ 0.37     $ 0.76     $ 0.06     $ 0.19  
                                           
Segment Data:
                                                       
Revenue:
                                                       
 
Global Music
  $ 1,821,215     $ 2,069,857     $ 2,201,007             $ 1,793,072     $ 1,708,369          
 
Global Theater
    296,460       318,219       313,974               222,871       233,265          
 
Other
    355,644       319,826       291,147               245,936       242,954          
                                           
 
Total revenue
  $ 2,473,319     $ 2,707,902     $ 2,806,128             $ 2,261,879     $ 2,184,588          
                                           
Operating income (loss):
                                                       
 
Global Music
  $ 97,731     $ 111,326     $ 85,457             $ 94,269     $ 85,604          
 
Global Theater
    30,352       22,714       20,996               12,973       2,742          
 
Other
    (1,342 )     10,156       (11,147 )             (4,281 )     2,923          
 
Corporate
    (31,825 )     (36,207 )     (36,323 )             (23,743 )     (41,669 )        
                                           
 
Total operating income
  $ 94,916     $ 107,989     $ 58,983             $ 79,218     $ 49,600          
                                           

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        Nine Months Ended
    Year Ended December 31,   September 30,
         
(In thousands)   2002   2003   2004   2004   2005
                     
                (unaudited)
Cash Flow Data:
                                       
Cash flows provided by (used in):
                                       
 
Operating activities
  $ 142,237     $ 138,713     $ 119,898     $ 88,557     $ 2,203  
 
Investing activities
  $ (31,329 )   $ (51,960 )   $ (84,076 )   $ (64,662 )   $ (72,603 )
 
Financing activities
  $ (112,281 )   $ (56,894 )   $ 23,254     $ 44,331     $ 156,618  
Capital expenditures
  $ 68,185     $ 69,936     $ 73,435     $ 56,516     $ 71,997  
Other Data:
                                       
OIBDAN:(3)
                                       
 
Global Music
  $ 127,881     $ 145,725     $ 119,062     $ 118,412     $ 112,935  
 
Global Theater
    41,489       35,899       35,647       23,929       14,133  
 
Other
    1,242       19,643       6,126       11,753       6,889  
 
Corporate
    (24,700 )     (29,518 )     (30,302 )     (19,216 )     (36,656 )
                               
 
Total OIBDAN(3)
  $ 145,912     $ 171,749     $ 130,533     $ 134,878     $ 97,301  
                               
                                         
    As of December 31,   As of September 30, 2005
         
    2002   2003   2004   Historical   Pro Forma
(in thousands)                    
                (unaudited)
Balance Sheet Data:
                                       
Cash and cash equivalents
  $ 104,897     $ 116,360     $ 179,137     $ 273,474     $ 398,474  
Current assets
    396,687       423,617       472,557       782,320       907,320  
Property, plant and equipment — net
    745,239       782,154       793,316       815,270       815,270  
Total assets
    1,518,644       1,495,715       1,478,706       1,892,233       2,019,733  
Current liabilities
    530,314       547,751       579,345       799,778       803,028  
Long-term debt, including current maturities
    622,831       617,838       650,675       768,079       367,584  
Total liabilities
    1,287,730       1,307,432       1,321,730       1,658,217       1,297,722  
Owner’s equity
    230,914       188,283       156,976       234,016       722,011  
Total liabilities and owner’s equity
    1,518,644       1,495,715       1,478,706       1,892,233       2,019,733  
 
(1)  Cumulative effect of change in accounting principle for the year ended December 31, 2002, related to impairment of goodwill recognized in accordance with the adoption of Statement of Financial Accounting Standards No. 142, “Goodwill and Other Intangible Assets.”
 
(2)  Basic and diluted income before cumulative effect of a change in accounting principle per share is calculated by dividing income before cumulative effect of a change in accounting principle by the weighted average number of common shares outstanding. The historic and pro forma basic and diluted income per share before cumulative effect of changes in accounting principles is based on 67,565,491 shares outstanding (based upon the number of outstanding shares of Clear Channel Communications’ common stock at November 4, 2005).
 
(3)  We evaluate segment and combined performance based on several factors, one of the primary measures of which is operating income (loss) before depreciation, amortization, loss (gain) on sale of operating assets and non-cash compensation expense, which we refer to as OIBDAN. See “— Non-GAAP Financial Measure” below, “Unaudited Pro Forma Condensed Combined Financial Data” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations — OIBDAN” elsewhere herein.
Non-GAAP Financial Measure
      In addition to operating income, we evaluate segment and combined performance based on other factors, one primary measure of which is operating income (loss) before depreciation, amortization, loss

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(gain) on sale of operating assets and non-cash compensation expense, which we refer to as OIBDAN. We use OIBDAN as a measure of the operational strengths and performance of our business and not as a measure of liquidity. However, a limitation of the use of OIBDAN as a performance measure is that it does not reflect the periodic costs of certain capitalized tangible and intangible assets used in generating revenues in our business. Accordingly, OIBDAN 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, OIBDAN as presented below may not be comparable to similarly titled measures of other companies.
      We believe OIBDAN is useful to investors and other external users of our financial statements in evaluating our operating performance because it helps investors more meaningfully evaluate and compare the results of our operations from period to period and with those of other companies in the entertainment industry (to the extent the same components of OIBDAN are used), in each case without regard to items such as non-cash depreciation and amortization and non-cash compensation expense, which can vary depending upon the accounting method used and the book value of assets.
      Our management uses OIBDAN (i) as a measure for planning and forecasting overall and individual expectations and for evaluating actual results against such expectations, (ii) as a basis for incentive bonuses paid to certain employees and (iii) in presentations to our board of directors to enable them to have the same consistent measurement basis of operating performance used by management.
      The following table presents a reconciliation of OIBDAN to operating income, which is a GAAP measure of our operating results:
                                           
        Nine Months Ended
    Year Ended December 31,   September 30,
         
    2002   2003   2004   2004   2005
(In thousands)                    
    Actual   Actual
         
        (unaudited)
Reconciliation of OIBDAN
to Operating Income:
                                       
 
OIBDAN
  $ 145,912     $ 171,749     $ 130,533     $ 134,878     $ 97,301  
 
Depreciation and amortization
    64,836       63,436       64,095       47,499       46,392  
 
Loss (gain) on sale of operating assets
    (15,241 )     (978 )     6,371       7,400       (426 )
 
Non-cash compensation expense*
    1,401       1,302       1,084       761       1,735  
                               
Operating income
  $ 94,916     $ 107,989     $ 58,983     $ 79,218     $ 49,600  
                               
 
Non-cash compensation expense, which is based on an allocation from Clear Channel Communications and is related to issuance of Clear Channel Communications stock awards, is included in corporate expenses in our statement of operations.

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RISK FACTORS
      You should carefully consider each of the following risks and all of the other information set forth in this information statement. The following risks relate principally to our leverage, our business, our relationship with Clear Channel Communications and our being a separate publicly-traded company, as well as risks related to the nature of the spin-off transaction itself. The risks and uncertainties described below are not the only ones facing our company. Additional risks and uncertainties not presently known to us or that we currently believe to be immaterial may also adversely affect our business. If any of the following 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.
Risks Associated with Our Leverage
Following the spin-off, we will have substantial debt, redeemable preferred stock and lease obligations that could restrict our operations and impair our financial condition.
      Historically, we have not had significant indebtedness for borrowed money, other than our intercompany promissory note to Clear Channel Communications. Following the spin-off, we will have substantial indebtedness, redeemable preferred stock and lease obligations. Giving effect to borrowings and advances anticipated to be made under the senior secured credit facility prior to or concurrently with the completion of the spin-off, our total indebtedness for borrowed money will be approximately $367.6 million, and such prospective indebtedness is currently rated B1 by Moody’s Investors Services, Inc. and B+ by Standards & Poor’s Ratings Services, a division of The McGraw-Hill Companies, Inc., which is currently below the ratings given to Clear Channel Communications’ senior debt by such ratings agencies. We expect that available borrowing capacity under the senior secured credit facility initially will be approximately $575.0 million, consisting of our $325.0 million term loan facility, all of which will be borrowed at closing, and our $250.0 million revolving credit facility, of which $200.0 million will be available for working capital and general corporate purposes immediately following its closing, with $200.0 million of such amount being available for letters of credit; outstanding letters of credit, of which approximately $50.0 million will be initially outstanding, will reduce borrowing availability under the revolving credit facility, and $100.0 million will be available for borrowings in foreign currencies. We may also incur additional substantial indebtedness in the future.
      Our substantial indebtedness could have adverse consequences, including:
  •  increasing our vulnerability to adverse economic, regulatory and industry conditions;
 
  •  limiting our ability to compete and our flexibility in planning for, or reacting to, changes in our business and the industry;
 
  •  limiting our ability to borrow additional funds; and
 
  •  requiring us to dedicate a substantial portion of our cash flow from operations to payments on our debt, thereby reducing funds available for working capital, capital expenditures, acquisitions and other purposes.
      In addition, our redeemable preferred stock bears an annual dividend rate of 13% and will be subject to financial and other covenants substantially similar to the covenants applicable to our senior secured credit facility. If we default under any of these covenants, we will have to pay additional dividends.
      In addition, as of September 30, 2005, we had approximately $760.5 million in operating lease agreements, of which approximately $55.3 million is due in 2006 and $50.7 million is due in 2007.
      If our cash flow and capital resources are insufficient to service our debt, redeemable preferred stock or lease obligations, we may be forced to sell assets, seek additional equity or debt capital or restructure our debt. However, these measures might be unsuccessful or inadequate in permitting us to meet scheduled debt, redeemable preferred stock or lease service obligations. We may be unable to restructure

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or refinance our obligations and obtain additional equity financing or sell assets on satisfactory terms or at all. As a result, the inability to meet our debt, redeemable preferred stock or lease obligations could cause us to default on those obligations. If we fail to meet any minimum financial requirements contained in instruments governing our debt, we would be in default under such instruments, which, in turn, could result in defaults under other debt instruments. In addition, if we default under any of the covenants applicable to our preferred stock, we will have to pay additional dividends. Any such defaults could materially impair our financial condition and liquidity. See “Management’s Discussion and Analysis of Financial Condition and Results of Operations — Liquidity and Capital Resources” for a discussion of our obligations following the spin-off.
To service our debt, lease and preferred stock obligations and to fund potential capital expenditures, we will require a significant amount of cash to meet our needs, which depends on many factors beyond our control.
      Our ability to service our debt, lease and preferred stock obligations and to fund potential capital expenditures for venue construction, expansion or renovation 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, including our senior secured credit facility, will also depend on our ability to generate cash in the future. This, to an extent, is 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. As of December 31, 2004, on a pro forma basis, approximately $4.5 million of total indebtedness (excluding interest) is due in 2005, $5.8 million is due in 2006 and 2007, $5.9 million is due in 2008 and 2009, and $330.6 million is due thereafter. See the pro forma table in “Management’s Discussion and Analysis of Financial Condition and Results of Operations — Contractual Obligations and Commitments — Firm Commitments.” If our future cash flow from operations and other capital resources are 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, including the notes, on or before maturity. We cannot assure you that we will be able to refinance any of our debt on a timely basis or on satisfactory terms, if at all. 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. See “Management’s Discussion and Analysis of Financial Condition and Results of Operations — Liquidity and Capital Resources.”
Our senior secured credit facility and the Holdco #2 preferred stock designations may restrict our ability to finance operations and capital needs and our operating flexibility.
      We anticipate that our senior secured credit facility and the Holdco #2 preferred stock designations may 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.

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      In addition, we anticipate that the senior secured credit facility and preferred stock designations will include additional restrictions, including requirements to maintain certain financial ratios. Our failure to comply with the terms and covenants in our indebtedness could lead to a default under the terms of those documents, which would entitle the lenders to accelerate the indebtedness and declare all amounts owed due and payable. If we default under any of the covenants applicable to our preferred stock, the holder of our preferred stock may be entitled to elect a director of Holdco #2, and we will have to pay additional dividends. The agreements governing our senior secured credit facility and the redeemable preferred stock of Holdco #2 are subject to ongoing negotiations. We cannot be certain the terms described herein will not change or be supplemented. See “Description of Indebtedness.”
We are a holding company and depend on our subsidiaries for repayment of our debt, which will be structurally subordinated to the liabilities of our subsidiaries.
      We conduct almost all of our business through subsidiaries of Holdco #3. As a result, our debt, the majority of which will be owed by Holdco #3, will be effectively subordinated to all existing and future liabilities (including trade payables) of such subsidiaries. As of September 30, 2005, we had current liabilities of $799.8 million and long-term liabilities, net of any debt to Clear Channel Communications, of $132.9 million. All of these liabilities are held by subsidiaries of Holdco #3 except for current liabilities of $5.7 million. Future acquisitions may be made through present or future subsidiaries; therefore, our cash flow from operations and consequent ability to service our debt, is, in part, dependent upon the earnings of our subsidiaries and the distribution (through dividends or otherwise) of those earnings to Holdco #3, or upon loans, advances or other payments of funds by those subsidiaries to Holdco #3. Moreover, the payment of dividends and the making of loans or advances to us by our subsidiaries are subject to various state laws and business considerations of the subsidiaries.
      Our subsidiaries will have no obligation, contingent or otherwise, to make any funds available to us or Holdco #3 for payment of the principal of or interest on our debt. To the extent our assets are or will be held by our subsidiaries, the claims of holders of our debt will, in effect, be subordinated to the claims of creditors, including trade creditors, of such subsidiaries. As of September 30, 2005, substantially all of our assets on a book value basis were held by operating subsidiaries and, for fiscal year ended December 31, 2004 and for the nine months ended September 30, 2005, substantially all of our revenues came from the operations of our subsidiaries. We anticipate that under the terms of instruments governing senior secured credit facility of Holdco #3, certain of its subsidiaries will be restricted in their ability to incur debt in the future. See “Description of Indebtedness.”
Risk Factors Relating to Our Business
Our live entertainment business is highly sensitive to public tastes and dependent on our ability to secure popular artists and other live entertainment events, and we may be unable to anticipate changes in consumer preferences, which may result in decreased demand for our services.
      Our ability to generate revenues from our entertainment operations is highly sensitive to rapidly changing public tastes and dependent on the availability of popular artists and events. Our success 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 live entertainment content, any unwillingness to tour or lack of availability of popular artists, touring theatrical performances, specialized motor sports talent and other performers could limit our ability to generate revenues. In addition, we typically book our live music tours one to four months in advance of the beginning of the tour and often agree to pay an artist a fixed guaranteed amount prior to our receiving any operating income. Therefore, if the public is not receptive to the tour or we or a performer 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 revenues earned, as well as foregone revenue we could have earned at booked venues. Furthermore, consumer preferences change from time to time, and

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our failure to anticipate, identify or react to these changes could result in reduced demand for our services, which would adversely affect our operating results and profitability.
We have incurred net losses and may experience future net losses; therefore, we may not sustain our profitability.
      Our operating results have been adversely affected by, among other things, a global economic slowdown, increased cost of entertainers and a decline in attendance at live entertainment events. We generated net income of approximately $4.3 million and $51.1 million for the nine months ended September 30, 2005 and 2004, respectively, and net income of approximately $16.3 million and $57.0 million for the years ended 2004 and 2003, respectively, and incurred a net loss of approximately $3.9 billion for the year ended 2002, primarily as a result of a $3.9 billion write-off of goodwill. Our net income would have been $24.8 million for 2004 and $13.1 million for the nine months ended September 30, 2005, on a pro forma basis after giving effect to the distribution and the concurrent transactions described in this information statement. We may face reduced demand for our live entertainment events and other factors that could adversely affect our results of operations in the future. We cannot predict whether we will achieve profitability in future periods.
      In the 2002 to 2004 period, our global music revenues increased from $1.8 billion to $2.2 billion although our operating income decreased from $97.7 million to $85.5 million. Our growth in revenues in global music during this period resulted primarily from increased ticket prices and acquisitions. During the same period, our global theater revenues increased from $296.5 million to $314.0 million while our operating income decreased from $30.4 million to $21.0 million. Our overall operating income decreased 45% from 2003 to 2004 due primarily to a decline in attendance and the number of our events, a loss on sale of operating assets in 2004, as well as other economic and geopolitical factors. In 2005, we instituted a ticket price and service charge reduction program. For the nine months ended September 30, 2005 and 2004, our global music revenues were $1.7 billion and $1.8 billion, respectively, and our operating income was $85.6 million and $94.3 million, respectively. For the nine months ended September 30, 2005 and 2004, our global theater revenues were $233.3 million and $222.9 million, respectively, and our operating income was $2.7 million and $13.0 million, respectively.
We have no operating history as a separate publicly-traded company and our historical and pro forma combined financial information are not necessarily representative of the results we would have achieved as a separate publicly-traded company and may not be a reliable indicator of our future results.
      We are being spun-off from Clear Channel Communications, our parent company, and, therefore, we have no operating history as a separate publicly-traded company. The historical and pro forma combined financial information included in this information statement does not reflect the financial condition, results of operations or cash flows we would have achieved as a separate publicly-traded company during the periods presented or those we will achieve in the future. This is primarily a result of the following factors:
  •  Our historical and pro forma combined financial results reflect allocations of corporate expenses from Clear Channel Communications. Those allocations are less than the comparable expenses we would have incurred had we operated as a separate publicly-traded company.
 
  •  Our working capital requirements and capital for our general corporate purposes, including acquisitions and capital expenditures, have historically been satisfied as part of the corporate-wide cash management policies of Clear Channel Communications. Subsequent to this distribution, Clear Channel Communications will not be providing us with funds to finance our working capital or other cash requirements. Without the opportunity to obtain financing from Clear Channel Communications, we may need to obtain additional financing from banks, or through public offerings or private placements of debt or equity securities, strategic relationships or other arrangements. We currently have a credit rating that is lower than Clear Channel Communications’ credit rating and, as a result, will incur debt on terms and at interest rates that will not be as favorable as those generally enjoyed by Clear Channel Communications.

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  •  Currently, our business is integrated with the other businesses of Clear Channel Communications. We share economies of scope and scale in costs, employees, vendor relationships and customer relationships. While we expect to enter into short-term transition agreements that will govern certain commercial and other relationships with Clear Channel Communications after the spin-off, those temporary arrangements may not capture the benefits our businesses have enjoyed as a result of common ownership prior to the spin-off. The loss of these benefits as a consequence of the spin-off could have an adverse effect on our business, results of operations and financial condition following the spin-off.
 
  •  Significant changes may occur in our cost structure, management, financing and business operations as a result of our operating as a company separate from Clear Channel Communications. These changes will result in increased costs associated with reduced economies of scale, stand-alone costs for services currently provided by Clear Channel Communications, the need for additional personnel to perform services currently provided by Clear Channel Communications and the legal, accounting, compliance and other costs associated with being a public company with equity securities listed on a national stock exchange. We will temporarily continue to use certain services of Clear Channel Communications under the transition services agreements and we may not be able to adequately replace the services that Clear Channel Communications provides us in a timely manner or on comparable terms.
Prior to the spin-off, we will not have been an independent company and we may be unable to make, on a timely or cost-effective basis, the changes necessary to operate as an independent company.
      Prior to the spin-off, our business was operated by Clear Channel Communications as part of its broader corporate organization, rather than as an independent company. Clear Channel Communications’ senior management oversaw the strategic direction of our businesses and Clear Channel Communications performed various corporate functions for us, including, but not limited to:
  •  selected human resources related functions;
 
  •  tax administration;
 
  •  selected legal functions (including compliance with the Sarbanes-Oxley Act of 2002), as well as external reporting;
 
  •  treasury administration, investor relations, internal audit and insurance functions; and
 
  •  selected information technology and telecommunications services.
      Following the spin-off, neither Clear Channel Communications nor any of its affiliates will have any obligation to provide these functions to us other than those services that will be provided by Clear Channel Communications pursuant to the transition services agreement between us and Clear Channel Communications. See “Our Relationship with Clear Channel Communications After the Distribution — Transition Services Agreement.” If, once our transition services agreement terminates, we do not have in place our own systems and business functions, we do not have agreements with other providers of these services or we are not able to make these changes cost effectively, we may not be able to operate our business effectively and our losses may increase. If Clear Channel Communications does not continue to perform effectively the services that are required under the transition services agreement, we may not be able to operate our business effectively after the spin-off.
      Our separation from Clear Channel Communications could also adversely affect our ability to attract and retain dedicated employees. We may be required to accept less favorable terms in contracts with entertainers, sponsors, professional athletes, performers and independent sales intermediaries, increase our fees, change long-term selling and marketing agreements and take other action to maintain our relationship with our sponsors, professional athletes, performers, independent sales intermediaries, entertainers, suppliers, customers and dedicated sales specialists, all of which could have an adverse effect on our financial condition and results of operations.

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Our operations are seasonal and our results of operations vary from quarter to quarter, so our financial performance in certain financial quarters may not be indicative of or comparable to our financial performance in subsequent financial quarters.
      We believe our financial results and cash needs will vary greatly from quarter to quarter depending on, among other things, the timing of tours and theatrical productions, tour cancellations, capital expenditures, seasonal and other fluctuations in our operating results, the timing of guaranteed payments and receipt of ticket sales, financing activities, acquisitions and investments and receivables management. Because our results may vary significantly from quarter to quarter, our financial results for one quarter cannot necessarily be compared to another quarter and may not be indicative of our future financial performance in subsequent quarters. Typically, our global music segment experiences its lowest financial performance in the first and fourth quarters of the calendar year as our outdoor venues are primarily used during May through September. Our global theater segment experiences its strongest demand in the first, second and fourth quarters of the calendar year as the theatrical touring season runs during September through April.
      The following table sets forth our operating income (loss) for the last seven fiscal quarters (in thousands):
         
    Operating
Fiscal Quarter   Income
     
March 31, 2004
  $ 293  
June 30, 2004
  $ 8,056  
September 30, 2004
  $ 70,869  
December 31, 2004
  $ (20,235 )
March 31, 2005
  $ (27,526 )
June 30, 2005
  $ 15,258  
September 30, 2005
  $ 61,868  
Our senior management team is new in their current positions, and there can be no assurance that it will be able to operate our business effectively.
      On August 18, 2005, Michael Rapino, who previously served as chief executive officer and president of Clear Channel Entertainment — Global Music, was appointed our new chief executive officer, and most members of our management team are new to their positions. Our success depends, in part, upon the contributions of our senior management and key employees, in particular, those that have long-standing relationships with popular music performers, agents and other influential persons in the entertainment industry, which we depend on to obtain bookings of popular performers and arrange tours. Therefore, losing the services of one or more members of our senior management or our key employees could adversely affect our business and results of operations. In late 2004 and 2005, we reorganized our management, and, as a result, the former chief executive officer, chief financial officer, general counsel and two co-heads of music are no longer with the company or have different responsibilities. If our new management team is not able to develop and implement an effective business strategy to optimize and grow our current business, our business and results of operations could be adversely affected.
We may be adversely affected by a general deterioration in economic conditions, which could affect consumer and corporate spending and, therefore, significantly adversely impact our operating results.
      A decline in attendance at live entertainment events has had an adverse effect on our revenues and operating income. In addition, during the most recent economic slowdown in the United States, many consumers reduced their discretionary spending and advertisers reduced their advertising expenditures. The impact of slowdowns on our business is difficult to predict, but they may result in reductions in ticket sales, sponsorship opportunities and our ability to generate revenues. The risks associated with our businesses become more acute in periods of a slowing economy or recession, which may be accompanied by a decrease in attendance at live entertainment events.

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      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 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 seats, sponsorship, advertising and hospitality spending, concession and souvenir 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 additional 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 economic conditions, thereby possibly impacting our operating results and growth.
Doing business in foreign countries creates certain risks not found in doing business in the United States.
      Doing business in foreign countries involves certain risks that may not exist when doing business in the United States. For the nine months ended September 30, 2005, and the year ended December 31, 2004, our international operations accounted for approximately 31% and 28%, respectively, of our revenues during those periods. The risks involved in foreign operations that could result in losses against which we are not insured include:
  •  exposure to local economic conditions;
 
  •  potential adverse changes in the diplomatic relations of foreign countries with the United States;
 
  •  hostility from local populations;
 
  •  restrictions on the withdrawal of foreign investment and earnings;
 
  •  government policies against businesses owned by foreigners;
 
  •  investment restrictions or requirements;
 
  •  expropriations of property;
 
  •  potential instability of foreign governments;
 
  •  risks of insurrections;
 
  •  risks of renegotiation or modification of existing agreements with governmental authorities;
 
  •  diminished ability to legally enforce our contractual rights in foreign countries;
 
  •  foreign exchange restrictions;
 
  •  withholding and other taxes on remittances and other payments by subsidiaries; and
 
  •  changes in foreign taxation structures.
      In addition, we may incur substantial tax liabilities if we repatriate any of the cash generated by our international operations back to the United States due to our current inability to recognize any foreign tax credits that would be associated with such repatriation. We are not currently in a position to recognize any tax assets in the United States that are the result of payments of income or withholding taxes in foreign jurisdictions.
Exchange rates may cause fluctuations in our results of operations that are not related to our operations.
      Because we own assets overseas and derive revenues 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 nine months ended September 30, 2005, and the year ended December 31, 2004, our international

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operations accounted for approximately 31% and 28%, respectively, of our revenues during those periods. Although we cannot predict the future relationship between the United States Dollar and the currencies used by our international businesses, principally the British Pound and the Euro, for the years ended December 31, 2004, 2003 and 2002 and the nine months ended September 30, 2005 and 2004, we experienced foreign exchange rate net gains of $6.3 million, $7.6 million, $3.7 million, $0.3 million and $4.1 million, respectively, for those periods, which had a positive effect on our OIBDAN. See “Management’s Discussion and Analysis of Financial Condition and Results of Operations — Quantitative and Qualitative Disclosure about Market Risk — Foreign Currency Risk.”
We may be unsuccessful in our future acquisition endeavors, if any, which may have an adverse effect on our business. Our compliance with antitrust, competition and other regulations may limit our operations and future acquisitions.
      Our future growth rate depends in part on our selective acquisition of additional businesses. We may be unable to identify suitable targets for acquisition or make acquisitions at favorable prices. If we identify a suitable acquisition candidate, our ability to successfully implement the acquisition would depend on a variety of factors, including our ability to obtain financing on acceptable terms and requisite government approvals.
      Acquisitions involve risks, 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; unknown risks; and the potential loss of key employees, customers and strategic partners of acquired companies. We may not successfully integrate any businesses or technologies we may acquire in the future and may not achieve anticipated revenue and cost benefits. Acquisitions may be expensive, time consuming and may strain our resources. Acquisitions may not be accretive to our earnings and may negatively impact our results of operations as a result of, among other things, the incurrence of debt, one-time write-offs of goodwill and amortization expenses of other intangible assets. In addition, future acquisitions that we may pursue could result in dilutive issuances of equity securities.
      We are also subject to laws and regulations, including those relating to antitrust, that could significantly affect our ability to expand our business through acquisitions. For example, the Federal Trade Commission and the Antitrust Division of the U.S. Department of Justice with respect to our domestic acquisitions, and the European Commission, the antitrust regulator of the European Union, with respect to our European acquisitions, have the authority to challenge our acquisitions on antitrust grounds before or after the acquisitions are completed. State agencies may also have standing to challenge these acquisitions under state or federal antitrust law. Comparable authorities in foreign countries also have the ability to challenge our foreign acquisitions. Our failure to comply with all applicable laws and regulations could result in, among other things, regulatory actions or legal proceedings against us, the imposition of fines, penalties or judgments against us or significant limitations on our activities. In addition, the regulatory environment in which we operate is subject to change. New or revised requirements imposed by governmental regulatory authorities could have adverse effects on us, including increased costs of compliance. We also may be adversely affected by changes in the interpretation or enforcement of existing laws and regulations by these governmental authorities.
      In addition, restrictions contained in the tax matters agreement and the credit agreement for the senior secured credit facility may restrict our ability to make acquisitions following the distribution.
There is the risk of personal injuries and accidents in connection with our live entertainment events, which could subject us to personal injury or other claims and increase our expenses, as well as reduce attendance at our live entertainment events, causing a decrease in our revenues.
      There are inherent risks involved with producing live entertainment events. As a result, personal injuries and accidents have, and may, occur from time to time, which could subject us to claims and

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liabilities for personal injuries. Incidents in connection with our live entertainment events at any of our venues or venues that we rent could also result in claims, reducing operating income or reducing attendance at our events, causing a decrease in our revenues. We are currently subject to wrongful death claims, as well as other litigation. While we maintain insurance polices 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 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.
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 the terrorist and related security incidents on and after September 11, 2001 in the United States, as well as the more recent terrorist attacks in Madrid, London and Amman. We have been covered by Clear Channel Communications’ insurance policies. Following the spin-off, we expect we may experience increased difficulty as an independent company obtaining high policy limits of coverage at reasonable costs, including coverage for acts of terrorism. We have a material investment in property and equipment at each of our venues, which are generally located near highly populated cities and which hold events typically attended by large numbers of fans. At September 30, 2005, we had property and equipment with a net book value of approximately $815.3 million.
      These operational, geographical and situational factors, among others, have resulted in, and may continue to result in, significant increases in insurance premium costs and difficulties obtaining sufficiently high policy limits with 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.
      We cannot guarantee that our insurance policy coverage limits, including insurance coverage for property, casualty, liability 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. When we are independent from Clear Channel Communications, we cannot guarantee that adequate coverage limits will be available, offered at reasonable costs, 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.
Costs associated with capital improvements could adversely affect our profitability.
      Growth or maintenance of our existing revenues depends in part on consistent investment in our venues. Therefore, we expect to continue to make substantial capital improvements in our venues to meet long-term increasing demand, to increase entertainment value and to increase revenues. We frequently have a number of significant capital projects under way. Numerous factors, many of which are beyond our control, may influence the ultimate costs and timing of various capital improvements at our venues, including:
  •  availability of financing on favorable terms;
 
  •  unforeseen changes in design;
 
  •  increases in the cost of construction materials and labor;
 
  •  additional land acquisition costs;
 
  •  fluctuations in foreign exchange rates;
 
  •  litigation, accidents or natural disasters affecting the construction site;

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  •  national or regional economic changes;
 
  •  environmental or hazardous conditions; and
 
  •  undetected soil or land conditions.
      The amount of capital expenditures can vary significantly from year to year. In addition, actual costs could vary materially from our estimates if the factors listed above and our assumptions about the quality of materials or workmanship required or the cost of financing such construction were to change. Construction is also subject to governmental permitting processes which, if changed, could materially affect the ultimate cost.
We are subject to extensive governmental regulation, and our failure to comply with these regulations could adversely affect our business, results of operations and financial condition.
      Our live entertainment venue operations are subject to federal, state and local laws, both domestically and internationally, governing matters such as construction, renovation and operation of our venues as well as:
  •  licensing and permitting;
 
  •  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 Americans with Disabilities Act of 1990;
 
  •  sales and other taxes and withholding of taxes;
 
  •  historic landmark rules; and
 
  •  environmental protection.
      While we believe that our venues are in material compliance with these laws, we cannot predict the extent to which any future laws or regulations will impact our operations. The regulations relating to our food and support service in our venues are many and complex. Although we generally contract with a third-party vendor for these services at our operated venues, we cannot assure you that we or our third-party vendors are in full compliance with all applicable laws and regulations at all times or that we or our third-party vendors will be able to comply with any future laws and regulations or that we will not be held liable for violations by third-party vendors. Furthermore, additional or amended regulations in this area may significantly increase the cost of compliance.
      We also serve alcoholic beverages at many of our venues during live entertainment events and 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 patron. Although we generally hire outside vendors to provide these services at our operated venues and regularly sponsor training programs designed to minimize the likelihood of such a situation, we cannot guarantee that intoxicated or minor patrons will not be served or that liability for their acts will not be imposed on us. There can be no assurance that additional regulation in this area would not limit our activities in the future or significantly increase the cost of regulatory compliance. We must also obtain and comply with the terms of licenses in order to sell alcoholic beverages in the states in which we serve alcoholic beverages.
      From time to time, state and federal 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 entertainment events for entertainment taxes and for incidents that occur at our events, particularly relating to drugs and alcohol.

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      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 our venues.
We face intense competition in the live entertainment industry, and we may not be able to maintain or increase our current revenues, which could adversely affect our financial performance.
      Our business segments are in highly competitive industries, and we may not be able to maintain or increase our current live entertainment revenues. We compete in the global music and global theater industries, and within such industries we compete with other venues to book performers, and, in the markets in which we promote musical concerts, we face competition from other promoters, as well as from certain performers who promote their own concerts. Our competitors also compete with us for key employees who have relationships with popular music artists that have a history of being able to book such artists for concerts and 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 entertainment 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. Other variables that could adversely affect our financial performance by, among other things, leading to decreases in overall revenues, the numbers of advertising customers, event attendance, ticket prices 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 performers, which we may be unwilling or unable to pass through to our customers;
 
  •  our competitors may offer more favorable terms than we do in order to obtain agreements for new venues;
 
  •  technological changes and innovations that we are unable to adopt or are late in adopting that offer more attractive entertainment alternatives than what we currently offer, which may lead to reduction in attendance at live events, a loss of ticket sales or to lower ticket prices;
 
  •  other entertainment options available to our audiences that we do not offer;
 
  •  unfavorable changes in labor conditions which may require us to spend more to retain and attract key employees; and
 
  •  unfavorable shifts in population and other demographics which may cause us to lose audiences as people migrate to markets where we have a smaller presence, or which may cause sponsors to be unwilling to pay for sponsorship and advertising opportunities if the general population shifts into a less desirable age or geographical demographic from an advertising perspective.
      We believe that barriers to entry into the live entertainment promotion business are low and that certain local promoters are increasingly expanding the geographic scope of their 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.
      The stagehands at some of our venues, and the actors, musicians and others involved in some of our business operations 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. 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

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as a result of labor disputes or difficulties and delays in the process of renegotiating our collective bargaining agreements. A work stoppage at one or more of our owned or operated venues or at our produced or presented events could have a material adverse effect on our business, results of operations and financial condition. We cannot predict the effect that new collective bargaining agreements will have on our expenses or that caps on agents’ fees will have on the revenues and operating income of our sports representation business.
We are dependent upon our ability to lease, acquire and develop live entertainment venues, and if we are unable to do so on acceptable terms, or at all, our results of operations could be adversely affected.
      We require access to venues to generate revenues from live entertainment events. For these events, we use venues that we own, but we also operate a number of our live entertainment venues under various agreements which include leases with third-parties or equity 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 entertainment 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 forgo 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 plan to continue to expand our operations through the development of live entertainment venues and the expansion of existing live entertainment venues, which poses a number of risks, including:
  •  construction of live entertainment venues may result in cost overruns, delays or unanticipated expenses;
 
  •  desirable sites for live entertainment venues may be unavailable or costly; and
 
  •  the attractiveness of our venue locations may deteriorate over time.
      Additionally, the market potential of live entertainment venues sites cannot be precisely determined, and our live entertainment venues may face competition in markets from unexpected sources. Newly constructed live entertainment venues may not perform up to our expectations. We face significant competition for potential live entertainment venue locations and for opportunities to acquire existing live entertainment venues. Because of this competition, we may be unable to add to the number of our live entertainment venues on terms we consider acceptable.
Our separation from Clear Channel Communications could adversely affect our business and profitability due to Clear Channel Communications’ strong brand and reputation. In addition, our new brand will not be immediately recognized, which will cause us to spend significant amounts of time and resources to build a brand identity.
      As a subsidiary of Clear Channel Communications, some of our businesses have marketed many of their products and services using the “Clear Channel” brand name and logo, and we believe our association with Clear Channel Communications has provided many benefits, including:
  •  an established brand associated with trust, integrity and longevity;
 
  •  perception of high-quality products and services;

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  •  preferred status among our customers, suppliers, sponsors, performers, independent sales intermediaries, entertainers and employees;
 
  •  a strong capital base and financial strength; and
 
  •  established relationships with U.S. federal and state and non-U.S. regulators.
      Our business will be conducted under our new brand name following completion of the distribution, which may not be immediately recognized by our customers and suppliers or by potential employees we are trying to recruit. In addition, Clear Channel Communications may engage in activities that overlap our business, such as its local radio stations continuing to promote concerts and other events that are similar to those customarily promoted by our entertainment business, which would increase the risks associated with our establishing a new strong brand in the live entertainment industry. We will need to expend significant time, effort and resources to establish our new brand name in the marketplace, particularly in our industry. We cannot guarantee that this effort will ultimately be successful. If our efforts to establish our new brand identity is unsuccessful, our business, financial condition and results of operations may suffer.
Our revenues depend on the promotional success of our marketing campaigns, and there can be no assurance that such advertising, promotional and other marketing campaigns will be successful or will generate revenues or profits.
      Similar to many companies, we spend significant amounts on advertising, promotional and other marketing campaigns for our live entertainment events and other business activities. Such marketing activities include, among others, promotion of ticket sales, premium seat sales, hospitality and other services for our events and venues and advertising associated with our wholesale and retail distribution of related souvenir merchandise and apparel. In the nine months ended September 30, 2005 and September 30, 2004, we spent approximately 5.4% and 6.4%, respectively, of our revenues on marketing, including advertising, and there can be no assurance that such advertising, promotional and other marketing campaigns will be successful or will generate revenues or profits.
Our sports representation business can be significantly adversely affected by factors beyond our control.
      The amount of endorsement and other revenues that our sports representation clients generate is a function of, among other things, our clients’ professional performances and public appeal. Factors beyond our control, such as injuries to such clients, declining skill, labor unrest or limits on agent fees by the sports leagues, among others, could have an adverse effect on the results of operations of our sports representation business. Representation agreements with clients vary by sport but generally are for a term of three years with automatic renewal options. A significant number of the representation agreements are terminable on 15 days’ notice, although we would continue to be entitled to certain of the revenue streams generated during the remaining term of such terminated agreements.
Poor weather adversely affects attendance at our live entertainment events, which could negatively impact our financial performance from period to period.
      We promote many live entertainment events. Weather conditions surrounding these events affect sales of tickets, concessions and souvenirs, among other things. Poor weather conditions can have a material effect on our results of operations particularly because we promote a finite number of events. Due to weather conditions, we may be required to reschedule an event to the next available day or a different venue, which would increase our costs for the event and could negatively impact the attendance at the event, and food, beverage and merchandise sales. Poor weather can affect current periods as well as successive events in future periods. If we are unable to reschedule events due to poor weather, we are forced to refund the tickets for those events.

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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 entertainment events, which may decrease our revenues or expose us to substantial liability. The terrorism and security incidents of September 11, 2001, military actions in Iraq, 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 September 11, 2001, some artists refused to travel or book tours, which adversely affected our music business, and many people did not travel to New York City, which caused us to experience lower attendance levels at our theatrical performances playing on Broadway in New York City and adversely affected our theatrical business. The occurrence of the recent terrorist attacks in London, England, also caused us to experience lower attendance levels at our theatrical performances playing on the West End in London. The occurrence or threat of future terrorist attacks, military actions by the United States, 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 generally, specifically the market for live entertainment.
Risk Factors Relating to Our Relationship with Clear Channel Communications
We will not be able to rely on Clear Channel Communications to fund our future capital requirements, and financing from other sources may not be available on favorable terms or at all.
      In the past, our capital requirements have been funded by Clear Channel Communications. However, following our separation, Clear Channel Communications will not provide funds to finance our working capital or other cash requirements. We believe our capital requirements will vary greatly from quarter to quarter depending on, among other things, capital expenditures, seasonal and other fluctuations in our operating results, financing activities, acquisitions and investments and receivables management. We believe that the amounts under our credit facility, along with our future cash flow from operations, will be sufficient to satisfy our working capital and capital expenditure requirements for the foreseeable future. However, we may require or choose to obtain additional debt or equity financing in order to finance acquisitions or other investments in our business. Future equity financings would be dilutive to the existing holders of our common stock. Future debt financings could involve restrictive covenants. We do not expect to be able to obtain financing with interest rates or debt ratings as favorable as those that Clear Channel Communications could obtain, and our current debt ratings are below those of Clear Channel Communications.
Conflicts of interest may arise between us and Clear Channel Communications that could be resolved in a manner unfavorable to us.
      Questions relating to conflicts of interest may arise between us and Clear Channel Communications in a number of areas relating to our past and ongoing relationships. After the spin-off, three of our directors will continue to serve as directors of Clear Channel Communications, and our chairman will continue to serve as chief financial officer and a director of Clear Channel Communications.
      Areas in which conflicts of interest between us and Clear Channel Communications could arise include, but are not limited to, the following:
  •  Cross Directorships, Officerships and Stock Ownership. Ownership interests of our directors or officers in the common stock of Clear Channel Communications or service as a director or officer of both us and Clear Channel Communications could create, or appear to create, potential control

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  issues or conflicts of interest when directors and officers are faced with decisions that could have different implications for the two companies. For example, these decisions could relate to:

  •  the nature, quality and cost of services rendered to us by Clear Channel Communications;
 
  •  competition for potential acquisition opportunities; or
 
  •  employee retention or recruiting.
  •  Our intercompany agreements were negotiated when we were a subsidiary of Clear Channel Communications. We have entered into agreements with Clear Channel Communications pursuant to which Clear Channel Communications will provide to us certain management, administrative, accounting, tax, legal and other services, for which we will reimburse Clear Channel Communications on a cost basis. In addition, we have entered into a number of intercompany agreements covering matters such as tax sharing and our responsibility for certain liabilities previously undertaken by Clear Channel Communications for certain of our businesses. The terms of these agreements were established while we were a wholly-owned subsidiary of Clear Channel Communications, and hence were not the result of arms’ length negotiations. In addition, conflicts could arise in the interpretation or any extension or renegotiation of the foregoing agreements after the spin-off. See “Our Relationship with Clear Channel Communications After the Distribution.”
 
  •  Intercompany Transactions. From time to time, Clear Channel Communications or its affiliates may enter into transactions with us or our subsidiaries or other affiliates. Although the terms of any such transactions will be established based upon negotiations between employees of the transacting companies and, when appropriate, subject to the approval of the independent directors on our board or a committee of disinterested directors, there can be no assurance that the terms of any such transactions will be as favorable to us or our subsidiaries or affiliates as would be the case where the parties were completely at arms’ length.
If Clear Channel Communications engages in the same type of business we conduct or takes advantage of business opportunities that might be attractive to us, our ability to successfully operate and expand our business may be hampered.
      Our amended and restated certificate of incorporation provides that, subject to any contractual provision to the contrary, Clear Channel Communications will have no obligation to refrain from:
  •  engaging in the same or similar business activities or lines of business as us; or
 
  •  doing business with any of our clients, customers or vendors.
      Clear Channel Communications’ radio business conducts concert events from time to time. In the event Clear Channel Communications expands its operations in this area, it may compete with us.
      In addition, the corporate opportunity policy set forth in our amended and restated certificate of incorporation addresses potential conflicts of interest for officers and directors of Clear Channel Communications who are also officers or directors of our company. The policy provides that if one of our directors or officers who is also a director or officer of Clear Channel Communications learns of a potential transaction or matter that may be a corporate opportunity for both us and Clear Channel Communications, we will have renounced our interest in the corporate opportunity unless that opportunity is expressly offered to that person in writing solely in his or her capacity as our director or officer. If one of our officers or directors, who also serves as a director or officer of Clear Channel Communications, learns of a potential transaction or matter that may be a corporate opportunity for both us and Clear Channel Communications, our amended and restated certificate of incorporation provides that the director or officer will have no duty to communicate or present that corporate opportunity to us and will not be liable to us or our stockholders for breach of fiduciary duty by reason of Clear Channel Communications’ actions with respect to that corporate opportunity. This policy could interfere with our ability to take advantage of certain corporate opportunities.

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      By becoming a stockholder in our company, you will be deemed to have notice of and have consented to these provisions of our amended and restated certificate of incorporation. The principles for resolving such potential conflicts of interest are described under “Description of Our Capital Stock — Provisions of Our Amended and Restated Certificate of Incorporation Relating to Related-Party Transactions and Corporate Opportunities.”
The spin-off could result in significant tax liability to our initial public stockholders.
      Clear Channel Communications has received a private letter ruling from the IRS substantially to the effect that the distribution of our common stock to its stockholders will qualify as a tax-free distribution for U.S. federal income tax purposes under Sections 355 and 368(a)(1)(D) of the Code. Although a private letter ruling from the IRS generally is binding on the IRS, if the factual representations or assumptions made in the letter ruling request are untrue or incomplete in any material respect, we will not be able to rely on the ruling.
      Furthermore, the IRS will not rule on whether a distribution satisfies certain requirements necessary to obtain tax-free treatment under Section 355 of the Code. Rather, the ruling is based upon representations by Clear Channel Communications that these conditions have been satisfied, and any inaccuracy in such representations could invalidate the ruling. Therefore, in addition to obtaining the ruling from the IRS, Clear Channel Communications has made it a condition to the spin-off that Clear Channel Communications obtain an opinion of Skadden, Arps, Slate, Meagher & Flom LLP that the distribution will qualify as a tax-free distribution for U.S. federal income tax purposes under Sections 355 and 368(a)(1)(D) of the Code. The opinion will rely on the ruling as to matters covered by the ruling. In addition, the opinion will be based on, among other things, certain assumptions and representations as to factual matters made by Clear Channel Communications and us, which if incorrect or inaccurate in any material respect would jeopardize the conclusions reached by counsel in its opinion. The opinion will not be binding on the IRS or the courts, and the IRS or the courts may not agree with the opinion.
      Notwithstanding receipt by Clear Channel Communications of the ruling and opinion of counsel, the IRS could assert that the distribution does not qualify for tax-free treatment for U.S. federal income tax purposes. If the IRS were successful in taking this position, our initial public stockholders could be subject to significant U.S. federal income tax liability. In general, our initial public stockholders could be subject to tax as if they had received a taxable distribution equal to the fair market value of our common stock that was distributed to them. For a more complete discussion of the U.S. federal income tax consequences of the distribution, see “The Distribution — Material U.S. Federal Income Tax Consequences of the Distribution.”
The spin-off could result in significant tax-related liabilities to us.
      As discussed above, notwithstanding receipt by Clear Channel Communications of the ruling and the opinion of counsel, the IRS could assert that the distribution does not qualify for tax-free treatment for U.S. federal income tax purposes. If the IRS were successful in taking this position, Clear Channel Communications could be subject to significant U.S. federal income tax liability. In general, Clear Channel Communications would be subject to tax as if it had sold the common stock of our company in a taxable sale for its fair market value. In addition, even if the distribution otherwise were to qualify under Section 355 of the Code, it may be taxable to Clear Channel Communications as if it had sold the common stock of our company in a taxable sale for its fair market value under Section 355(e) of the Code, if the distribution were later deemed to be part of a plan (or series of related transactions) pursuant to which one or more persons acquire directly or indirectly stock representing a 50% or greater interest in Clear Channel Communications or us. For this purpose, any acquisitions of Clear Channel Communications stock or of our stock within the period beginning two years before the distribution and ending two years after the distribution are presumed to be part of such a plan, although we or Clear Channel Communications may be able to rebut that presumption. For a more complete discussion of the U.S. federal income tax consequences of the distribution, see “The Distribution — Material U.S. Federal Income Tax Consequences of the Distribution.”

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      Although such corporate-level taxes, if any, resulting from a taxable distribution generally would be imposed on Clear Channel Communications, we have agreed in the tax matters agreement to indemnify Clear Channel Communications and its affiliates against tax-related liabilities, if any, caused by the failure of the spin-off to qualify as a tax-free transaction under Section 355 of the Code (including as a result of Section 355(e) of the Code) if the failure to so qualify is attributable to actions, events or transactions relating to our stock, assets or business, or a breach of the relevant representations or covenants made by us in the tax matters agreement. If the failure of the spin-off to qualify under Section 355 of the Code is for any reason for which neither we nor Clear Channel Communications is responsible, we and Clear Channel Communications have agreed in the tax matters agreement that we will each be responsible for 50% of the tax-related liabilities arising from the failure to so qualify. See “Our Relationship with Clear Channel Communications After the Distribution — Tax Matters Agreement” for a more detailed discussion of the tax matters agreement between Clear Channel Communications and us.
We could be liable for income taxes owed by Clear Channel Communications.
      Each member of the Clear Channel Communications consolidated group, which includes Clear Channel Communications, our company and Clear Channel Communications’ other subsidiaries, is jointly and severally liable for the U.S. federal income tax liability of each other member of the consolidated group. Consequently, we could be liable in the event any such liability is incurred, and not discharged, by any other member of the Clear Channel Communications consolidated group. Disputes or assessments could arise during future audits by the IRS in amounts that we cannot quantify. In addition, Clear Channel Communications expects to recognize a capital loss for U.S. federal income tax purposes (the “Holdco #3 Loss”) in connection with the distribution and the Holdco #3 Exchange. The amount of such loss is not determinable prior to the Holdco #3 Exchange since it will depend upon Clear Channel Communications’ tax basis in the stock of Holdco #3 under applicable income tax regulations as well as the fair market value of Holdco #3 stock, in each case, as of the time of the Holdco #3 Exchange. If Clear Channel Communications is unable to deduct such capital loss for U.S. federal income tax purposes as a result of any action we take following the spin-off or our breach of a relevant representation or covenant made by us in the tax matters agreement, we have agreed in the tax matters agreement to indemnify Clear Channel Communications for the lost tax benefits that Clear Channel Communications would have otherwise realized if it were able to deduct the Holdco #3 Loss. See “Our Relationship with Clear Channel Communications After the Distribution — Tax Matters Agreement.”
Risks Related to Our Common Stock and the Distribution
There is no existing market for our common stock and a trading market that will provide you with adequate liquidity may not develop for the common stock, and you could lose all or part of your investment.
      Prior to the distribution, there has been no public market for our common stock. However, our common stock has been approved for listing on the NYSE under the symbol “LYV.” We anticipate that trading will commence on a when-issued basis on or shortly before the record date. On the first trading day following the distribution date, when-issued trading in respect of the common stock will end and regular way trading will begin. We cannot predict the extent to which investor interest will lead to the development of an active and liquid trading market in our common stock on the NYSE or otherwise. If an active trading market does not develop, you may have difficulty selling any of your shares of common stock or receiving a price when you sell your shares of common stock that will be favorable.

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We cannot predict the prices at which our common stock may trade after the spin-off.
      The market price of our common stock may decline below the initial price on the distribution date. The market price of our common stock may fluctuate significantly due to a number of factors, some of which may be beyond our control, including:
  •  our business profile and market capitalization may not fit the investment objectives of Clear Channel Communications’ stockholders, causing them to sell our shares after the spin-off; this is particularly true of Clear Channel Communications stockholders who hold Clear Channel Communications stock based on its inclusion in the S&P 500 Index, as our common stock would not be eligible to be included in the S&P 500 Index;
 
  •  our quarterly or annual earnings, or those of other companies in our industry;
 
  •  actual or anticipated fluctuations in our operating results due to the seasonality of our business and other factors related to our business;
 
  •  our loss or inability to obtain significant popular artists or theatrical productions;
 
  •  changes in accounting standards, policies, guidance, interpretations or principles;
 
  •  announcements by us or our competitors of significant contracts or acquisitions;
 
  •  the failure of securities analysts to cover our common stock after the distribution or changes in financial estimates by analysts;
 
  •  changes in earnings estimates by securities analysts or our ability to meet those estimates;
 
  •  the operating and stock price performance of other comparable companies;
 
  •  overall market fluctuations; and
 
  •  general economic conditions.
      In particular, the realization of any of the risks described in these “Risk Factors” could have a significant and adverse impact on the market price of our common stock. In addition, the stock market in general has experienced extreme price and volume volatility that has often been unrelated to the operating performance of particular companies. This volatility has had a significant impact on the market price of securities issued by many companies, including companies in our industry. The changes frequently appear to occur without regard to the operating performance of these companies. The price of our common stock could fluctuate based upon factors that have little or nothing to do with our company, and these fluctuations could materially reduce our stock price.
The price of our common stock may fluctuate significantly, and you could lose all or part of the value of your common stock.
      In recent years, the stock market has experienced extreme price and volume fluctuations. This volatility has had a significant impact on the market price of securities issued by many companies, including companies in our industry. The changes frequently appear to occur without regard to the operating performance of these companies. The price of our common stock could fluctuate based upon factors that have little or nothing to do with our company, and these fluctuations could materially reduce our stock price.
      In the past, some companies that have had volatile market prices for their securities have been subject to securities class action suits filed against them. If a suit were to be filed against us, regardless of the outcome, it could result in substantial legal costs and a diversion of our management’s attention and resources. This could have a material adverse effect on our business, results of operations and financial condition.

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Substantial sales of our common stock following the distribution may have an adverse impact on the trading price of our common stock.
      Clear Channel Communications expects that under the United States federal securities laws, all of our shares of common stock may be resold immediately in the public market, except for shares held by our affiliates.
      Some of the Clear Channel Communications stockholders who receive our shares of common stock may decide that their investment objectives do not include ownership of shares in a small capitalization company, and may sell their shares of common stock following the distribution. In particular, certain Clear Channel Communications stockholders that are institutional investors have investment parameters that depend on their portfolio companies maintaining a minimum market capitalization that we may not achieve after the distribution or paying dividends, which we do not currently intend to do. We cannot predict whether stockholders will resell large numbers of our shares of common stock in the public market following the distribution or how quickly they may resell these shares. If our stockholders sell large numbers of our shares of common stock over a short period of time, or if investors anticipate large sales of our shares of common stock over a short period of time, this could adversely affect the trading price of our shares of common stock.
If we are not able to grow our business as planned, we may not be able to pay the annual dividend on the Holdco #2 preferred stock or redeem the Holdco #2 preferred stock, and our failure to make these payments could have a material adverse effect on our business and results of operations.
      In connection with our spin-off from Clear Channel Communications, third-party investors unrelated to Clear Channel Communications are expected to acquire all of the voting and non-voting preferred stock of Holdco #2, one of our subsidiaries. The preferred stock will have an aggregate liquidation preference of $40 million, plus accrued but unpaid dividends. We expect the voting and non-voting preferred stock will pay an annual dividend of approximately 13% and will be mandatorily redeemable six years after issuance. In addition, if we default under any of the covenants applicable to our preferred stock, we will have to pay additional dividends. The holders of Series A redeemable preferred stock will have the right to appoint one out of four members to Holdco #2’s board of directors and to otherwise control 25% of the voting power of all outstanding shares of Holdco #2. The Series B redeemable preferred stock will have no voting rights other than the right to vote as a class with the Series A redeemable preferred stock to elect one additional member to the board of directors of Holdco #2 in the event the subsidiary breaches certain terms of the designations of the preferred stock. Our ability to make scheduled payments of the dividend and redeem the preferred stock will depend on our ability to grow our business as planned and generate sufficient cash flow to make these payments, as well as our ability to dividend such funds to Holdco #2. If we fail to make these payments, such failure to pay could have a material adverse effect on our business and results of operation. In addition, the board of directors of Holdco #2 may owe conflicting fiduciary duties to the holders of the preferred stock and us, as the indirect sole common stockholder of Holdco #2.
We currently do not intend to pay dividends on our common stock.
      We do not expect to pay dividends on our common stock in the foreseeable future. In addition, the terms of the credit agreement governing our senior secured credit facility and the designations governing Holdco #2’s preferred stock will limit the amount of dividends we may pay on our common stock. Moreover, if we could pay dividends, we would first have to pay dividends on the Series A redeemable preferred stock and Series B redeemable preferred stock of Holdco #2 prior to the payment of dividends on our common stock. Accordingly, if you receive shares of our common stock in the spin-off, the price of our common stock must appreciate in order to realize a gain on your investment. This appreciation may not occur.

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Our corporate governance documents, rights agreement and Delaware law may delay or prevent an acquisition of us that stockholders may consider favorable, which could decrease the value of your shares.
      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 our board of directors. These provisions include restrictions on the ability of our stockholders to remove directors and supermajority voting requirements for stockholders to amend our organizational documents, a classified board of directors and limitations on action by our stockholders by written consent. Three of our initial nine directors will also be directors of Clear Channel Communications. In addition, our 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 acquiror. 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 our board of directors, these provisions apply even if the offer may be considered beneficial by some stockholders. See “Description of Our Capital Stock.”
      Our amended and restated certificate of incorporation provides that, subject to any written agreement to the contrary, which agreement does not currently exist, Clear Channel Communications will have no duty to refrain from engaging in the same or similar business activities or lines of business as us or doing business with any of our customers or vendors or employing or otherwise engaging or soliciting any of our officers, directors or employees. Our amended and restated certificate of incorporation provides that if Clear Channel Communications acquires knowledge of a potential transaction or matter which may be a corporate opportunity for both us and Clear Channel Communications, we will generally renounce our interest in the corporate opportunity. Our amended and restated certificate of incorporation renounces any interest or expectancy in such corporate opportunity that will belong to Clear Channel Communications. Clear Channel Communications will, to the fullest extent permitted by law, have satisfied its fiduciary duty with respect to such a corporate opportunity and will not be liable to us or our stockholders for breach of any fiduciary duty as our stockholder by reason of the fact that it acquires or seeks the corporate opportunity for itself, directs that corporate opportunity to another person or does not present that corporate opportunity to us. These provisions could make an acquisition of us less advantageous to a third-party.
      Our obligation to indemnify, under certain circumstances, Clear Channel Communications and its affiliates pursuant to the tax matters agreement against tax-related liabilities, if any, caused by the failure of the spin-off to qualify as a tax-free transaction under Section 355 of the Code (including as a result of Section 355(e) of the Code) could deter a change of control of us.
      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, without approval of our Board of Directors 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. See “Description of Our Capital Stock — The Rights Agreement.”
Increased costs associated with corporate governance compliance may significantly affect our results of operations.
      The Sarbanes-Oxley Act of 2002 and the Securities Exchange Act of 1934, as amended, will require changes in our corporate governance and securities disclosure and compliance practices, and will require a review of our internal control procedures. We expect these developments to increase our legal compliance and financial reporting costs. In addition, they could make it more difficult for us to attract and retain qualified members of our board of directors, or qualified executive officers. Finally, director and officer

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liability insurance for public companies like us has become more difficult and more expensive to obtain, and we may be required to accept reduced coverage or incur higher costs to obtain coverage than what we paid under Clear Channel Communications’ policies that is satisfactory to us and our officers or directors. We are presently evaluating and monitoring regulatory developments and cannot estimate the timing or magnitude or additional costs we may incur as a result.
      If, following the spin-off, we are unable to satisfy the requirements of Section 404 of the Sarbanes-Oxley Act of 2002, or our internal control over financial reporting is not effective, the reliability of our financial statements may be questioned and our stock price may suffer.
      Section 404 of the Sarbanes-Oxley Act of 2002 requires any company subject to the reporting requirements of the U.S. securities laws to do a comprehensive evaluation of its and its consolidated subsidiaries’ internal control over financial reporting. To comply with this statute, we will be required to document and test our internal control procedures; our management will be required to assess and issue a report concerning our internal control over financial reporting; and our independent auditors will be required to issue an opinion on management’s assessment of those matters. Our compliance with Section 404 of the Sarbanes-Oxley Act will first be tested in connection with the filing of our annual Report on Form 10-K for the fiscal year ending December 31, 2006. The rules governing the standards that must be met for management to assess our internal control over financial reporting are new and complex and require significant documentation, testing and possible remediation to meet the detailed standards under the rules. During the course of its testing, our management may identify material weaknesses or deficiencies which may not be remedied in time to meet the deadline imposed by the Sarbanes-Oxley Act. If our management cannot favorably assess the effectiveness of our internal control over financial reporting or our auditors identify material weaknesses in our internal control, investor confidence in our financial results may weaken, and our stock price may suffer.
SPECIAL NOTE ABOUT FORWARD-LOOKING STATEMENTS
      We have made forward-looking statements in this information statement, including the sections entitled “Summary,” “Risk Factors,” “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and “Business,” that are based on our management’s beliefs and assumptions and on information currently available to our management. Forward-looking statements include, but are not limited to, the information concerning our possible or assumed future results of operations, business strategies, financing plans, competitive position, potential growth opportunities, potential operating performance improvements, benefits resulting from our spin-off from Clear Channel Communications, the effects of competition and the effects of future legislation or regulations. Forward-looking statements include all statements that are not historical facts and can be identified by the use of forward-looking terminology such as the words “believe,” “expect,” “plan,” “intend,” “anticipate,” “estimate,” “predict,” “potential,” “continue,” “may,” “will,” “should” or the negative of these terms or similar expressions.
      Forward-looking statements involve risks, uncertainties and assumptions. Actual results may differ materially from those expressed in these forward-looking statements. The risk factors discussed in “Risk Factors” beginning on page 20 set forth many of the risks and uncertainties that may cause actual results to differ from those expressed in the forward looking statements. There may be other risks and uncertainties that could have a similar impact. Therefore, you should not put undue reliance on any forward-looking statements. We do not have any intention or obligation to update forward-looking statements after we distribute this information statement.

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THE DISTRIBUTION
Reasons for the Spin-Off
      In April 2005, Clear Channel Communications announced, among other things, that it had determined that the separation of CCE Spinco from Clear Channel Communications is in the best interests of Clear Channel Communications, its stockholders and us, by providing each company with certain opportunities and benefits, such as:
  •  The separation will allow us to develop incentive programs to better attract, retain and motivate current and future employees through the use of equity-based compensation policies that more directly link employee compensation with our financial performance. Similarly, the removal of our fundamentally different business from Clear Channel Communications will more closely correlate Clear Channel Communications’ equity-based compensation with Clear Channel Communications’ financial performance.
 
  •  The separation will permit the independent management of each of us and Clear Channel Communications to focus its attention and its company’s financial resources on its respective distinct business and business challenges and to lead each independent company to adopt strategies and pursue objectives that are appropriate to its respective business. This is of particular importance given the fundamental differences between our respective businesses: Clear Channel Communications’ other two synergistic businesses — radio broadcasting and outdoor advertising — typically generate high cash flows on a relatively stable basis and have low capital expenditure requirements while our business tends to be a more volatile, lower margin, capital intensive business.
 
  •  We anticipate that we may use our stock in the future in connection with acquisitions and financings. In this regard, we expect to have better access to the equity capital markets after the separation as our investors will not be forced to understand and make investment decisions with respect to Clear Channel Communications’ other two businesses that are fundamentally different from our business. At the same time, Clear Channel Communications, which also expects to use its stock in the future in connection with acquisitions and financings, will similarly benefit since its investors will not need to understand and make investment decisions with respect to our business.
      Clear Channel Communications announced a plan to strategically realign its businesses on April 29, 2005 through the initial public offering, or IPO, of 10% of the common stock of Clear Channel Outdoor and a 100% spin-off of CCE Spinco. The strategic plan also provided for a 50% increase to Clear Channel Communications’ regular dividend and the return of approximately $1.6 billion of capital to stockholders in the form of dividends, share repurchase or both. After evaluating various alternatives, the board of directors of Clear Channel Communications determined that this series of transactions represented the best course of action for stockholders. The timing of the transactions was undertaken simultaneously as part of the April 29th announcement to effect the required internal reorganizations and other activities in an efficient manner and, in part, to help fund the $1.6 billion return of capital to stockholders.
      The decision to sell 10% of Clear Channel Outdoor’s shares in an IPO was based on several factors, including the ability to establish a separately traded currency to highlight the value of the outdoor business and attract a stockholder base interested in this business while permitting Clear Channel Communications stockholders to benefit from the retained interest in the business. Clear Channel Communications believes that a tax-free distribution of shares in CCE Spinco offers Clear Channel Communications and its stockholders the greatest long-term value as described above and is the most tax efficient way to separate the companies. On November 11, 2005, Clear Channel Communications completed the IPO of 35,000,000 shares of Class A common stock of Clear Channel Outdoor at a price of $18.00 per share. Clear Channel Communications retained 315,000,000 shares of Class B common stock of Clear Channel Outdoor, each of which is entitled to 20 votes per share. After the IPO, Clear Channel Communications retained and owns 90% of the outstanding stock of Clear Channel Outdoor, representing 99.4% of its total voting power.

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The Separation of CCE Spinco from Clear Channel Communications
      We are currently a wholly-owned subsidiary of Clear Channel Communications. We were incorporated in Delaware on August 2, 2005, in preparation for our spin-off from Clear Channel Communications. Prior to the distribution, Clear Channel Communications will contribute or otherwise transfer to us generally all of the entertainment assets, and we will assume generally all of the liabilities, comprising the CCE Spinco business. We call this transfer of assets and assumption of liabilities the “separation.” We and Clear Channel Communications have agreed to transfer legal title to any remaining assets of the CCE Spinco business not transferred prior to the distribution, most of which are foreign assets and liabilities subject to regulatory and other delays, as soon as practicable. In the interim, we will operate and receive the economic benefits of (and bear the economic burdens of) these assets. These assets are not, individually or in the aggregate, material to our business. The information included in this information statement, including our combined financial statements, assumes the completion of all of these transfers.
Description of the Spin-Off
      Clear Channel Communications will effect the spin-off by distributing on a pro rata basis 100% of our outstanding common stock to Clear Channel Communications stockholders, which we refer to as the distribution, or the spin-off, on December 21, 2005, the distribution date. As a result of the distribution, each Clear Channel Communications stockholder will:
  •  receive one share of our common stock (and a related preferred stock purchase right) for every eight shares of Clear Channel Communications common stock it owns; and
 
  •  retain its shares in Clear Channel Communications.
Manner of Effecting the Distribution
      You will receive one share of our common stock (and a related preferred stock purchase right) for every eight shares of Clear Channel Communications common stock held on the record date. The shares of our common stock will be validly issued, fully paid and nonassessable.
      Clear Channel Communications stockholders will not be required to pay for shares of our common stock received in the distribution or to surrender or exchange shares of Clear Channel Communications common stock in order to receive our common stock or to take any other action in connection with the distribution. No vote of Clear Channel Communications stockholders is required or sought in connection with the distribution, and Clear Channel Communications stockholders have no appraisal rights in connection with the distribution.
      As part of the spin-off, we will be adopting a book-entry share transfer and registration system for our common stock. Instead of receiving physical share certificates, registered holders of eight or more shares of Clear Channel Communications common stock on the record date will have their shares of CCE Spinco common stock distributed on the date of the spin-off credited to book-entry accounts established for them by the distribution agent. The distribution agent will mail an account statement to each such registered holder stating the number of shares of our common stock credited to the holder’s account. After the spin-off, any holder may request:
  •  a transfer of all or a portion of their CCE Spinco shares to a brokerage or other account; and
 
  •  receipt of one or more physical share certificates representing their CCE Spinco shares.
      Registered holders of fewer than eight shares of Clear Channel Communications common stock, or any multiple thereof, on the record date, which would entitle them to receive less than one whole share of our common stock, will receive cash in lieu of fractional shares. Fractional shares of our common stock will not be issued to Clear Channel Communications stockholders as part of the distribution nor credited to book-entry accounts. Instead, the distribution agent will aggregate all of these fractional shares and sell them in the open market at then prevailing prices on behalf of these holders. These holders will receive

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cash payments in the amount of their proportionate share of the net sale proceeds from the sale of the aggregated fractional shares, based upon the average gross selling price per share of our common stock after making appropriate deductions for any required withholdings for U.S. federal income tax purposes. See “— Material U.S. Federal Income Tax Consequences of the Distribution” for a discussion of the U.S. federal income tax treatment of proceeds received from the sale of fractional shares. We will bear the cost of brokerage fees incurred in connection with these sales. The amount of these brokerage fees is not expected to be material to us. We anticipate that these sales will occur as soon after the date of the spin-off as practicable as determined by the distribution agent. None of Clear Channel Communications, CCE Spinco or the distribution agent will guarantee any minimum sale price for the fractional shares of CCE Spinco common stock. Neither we nor Clear Channel Communications will pay any interest on the proceeds from the sale of fractional shares. The distribution agent will have the sole discretion to select the broker-dealer(s) through which to sell the shares and to determine when, how and at what price to sell the shares. Further, neither the distribution agent nor the selected broker-dealer(s) will be our affiliates or affiliates of Clear Channel Communications.
      If you become a registered holder of our common stock in connection with the spin-off and you prefer to receive one or more physical share certificates representing your shareholding of our common stock, you will receive one or more certificates for all whole shares of CCE Spinco common stock and, if applicable, cash for any fractional interest. The distribution agent will mail you certificates representing your proportionate number of whole shares of our common stock as soon after the date of request as practicable.
      For those holders of Clear Channel Communications common stock who hold their shares through a broker, bank or other nominee, the distribution agent will credit the shares of our common stock to the accounts of those nominees who are registered holders, who, in turn, will credit their customers’ accounts with our common stock. We and Clear Channel Communications anticipate that brokers, banks and other nominees will generally credit their customers’ accounts with CCE Spinco common stock on or shortly after December 21, 2005.
      Delivery of a share of our common stock in connection with the distribution also will constitute the delivery of the preferred stock purchase right associated with the share. The existence of the preferred stock purchase rights may deter a potential acquirer from making a hostile takeover proposal or a tender offer. For a more detailed discussion of these rights, see “Description of Our Capital Stock — The Rights Agreement.”
Results of the Separation and the Distribution
      After the separation and distribution, we will be a separate publicly-traded company. Immediately following the distribution, we expect to have approximately 67,565,591 shares of our common stock outstanding, based on the distribution ratio described above and the number of outstanding shares of Clear Channel Communications common stock on November 4, 2005. The actual number of shares to be distributed will be determined on the record date and will reflect any exercise of Clear Channel Communications options between the date Clear Channel Communications’ board declares the dividend for the spin-off and the record date for the spin-off.
      We and Clear Channel Communications will be parties to a number of agreements that govern our spin-off from Clear Channel Communications and our future relationship. For a more detailed description of these agreements, see “Our Relationship with Clear Channel Communications After the Distribution.”
      The distribution will not affect the number of outstanding shares of Clear Channel Communications common stock or any rights of Clear Channel Communications stockholders.
Incurrence of Debt
      In the past, our capital requirements have been funded by Clear Channel Communications. However, following the spin-off, Clear Channel Communications will not provide funds to finance our working

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capital or other cash requirements. Therefore, we currently plan to enter into a senior secured credit facility with lenders to fund a portion of our working capital or other cash requirements after the spin-off. We also intend to issue Series A and Series B redeemable preferred stock of Holdco #2 as described below prior to or concurrently with the completion of the spin-off. We intend to use $200.0 million of borrowings under the term loan portion of our senior secured credit facility and the $20 million of proceeds from the issuance of the Series A redeemable preferred stock of Holdco #2 to repay a portion of the indebtedness we owe Clear Channel Communications. We intend to use the remaining $125.0 million of borrowings under the term loan portion of our senior secured credit facility for general corporate proposals, including working capital, potential acquisitions and stock repurchases.
      Senior Secured Credit Facility. Prior to or concurrently with the completion of the distribution, one of our operating subsidiaries, Holdco #3, which owns more than 95% of the gross value of our assets, will enter into a $575.0 million senior secured credit facility consisting of:
  •  a $325.0 million 71/2-year term loan; and
 
  •  a $250.0 million 61/2-year revolving credit facility, of which up to $200.0 million will be available for the issuance of letters of credit and up to $100.0 million will be available for borrowings in foreign currencies.
      Subject to then market pricing and maturity extending longer than that of the senior secured credit facility, we will be able to add additional term and revolving credit facilities in an aggregate amount not to exceed $250.0 million. We anticipate that the senior secured credit facility will be secured by a first priority lien on substantially all of our domestic assets (other than real property and deposits maintained by us in connection with promoting or producing live entertainment events) and a pledge of the capital stock of our domestic subsidiaries and a portion of the capital stock of certain of our foreign subsidiaries. Borrowings in foreign currencies by our foreign subsidiaries will, in addition, be secured by a first priority lien on substantially all of our foreign assets (other than real property and deposits maintained by us in connection with promoting or producing live entertainment events) and a pledge of the capital stock of all subsidiaries held by such borrowing subsidiary. We expect that approximately $200.0 million of the revolving credit facility will remain available for working capital and general corporate purposes of Holdco #3 and its subsidiaries immediately following the completion of the distribution, and after the transfer of approximately $50.0 million of letters of credit previously issued under Clear Channel Communications’ credit facilities on behalf of certain Holdco #3 subsidiaries. The issuance of letters of credit will reduce this availability by the notional amount of issued letters of credit. However, on or prior to the distribution date, we may draw advances under the senior secured credit facility for working capital and other general corporate purposes. See “Management’s Discussion and Analysis of Financial Condition and Results of Operations — Liquidity and Capital Resources” and “Description of Indebtedness” for more information.
      The agreements governing the senior secured credit facility are subject to ongoing negotiation. We cannot be certain the terms described herein will not change or be supplemented. See “Description of Indebtedness.”
Preferred Stock Issuance
      Prior to the completion of the distribution, third-party investors unrelated to Clear Channel Communications will acquire all of the shares of Series A (voting) and Series B (non-voting) mandatorily redeemable preferred stock of Holdco #2, the parent company of Holdco #3, one of our operating subsidiaries which owns more than 95% of the gross value of our assets. The preferred stock will have an aggregate liquidation preference of $40 million, plus accrued but unpaid dividends. We expect the Series A redeemable preferred stock will have a liquidation preference of $20 million, plus accrued but unpaid dividends and will be issued to a third-party investor for $20 million. We anticipate the Series B redeemable preferred stock will have a liquidation preference of $20 million, plus accrued but unpaid dividends and will be issued to Clear Channel Communications in connection with the Holdco #3 Exchange for no cash and immediately resold by Clear Channel Communications to a third-party

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purchaser for $20 million. See “Our Relationship with Clear Channel Communications After the Distribution — Tax Matters Agreement — Holdco #3 Loss.” We will not receive any of the proceeds from the sale of the Series B redeemable preferred stock sold by Clear Channel Communications. The issuance and sale of the Series A and Series B redeemable preferred stock together with the Holdco #3 Exchange are structured to raise desired financing and to facilitate the overall tax efficiency of the distribution.
      The holders of Series A redeemable preferred stock will have the right to appoint one out of four members to Holdco #2’s board of directors and to otherwise control 25% of the voting power of all outstanding shares of Holdco #2. The Series B redeemable preferred stock will have no voting rights other than the right to vote as a class with the Series A redeemable preferred stock to elect one additional member to the board of directors of Holdco #2 in the event Holdco #2 breaches certain terms of the designations of the preferred stock. The holders of Holdco #2 preferred stock will not have the right to appoint or vote for any of our directors. Each of the Series A and Series B preferred stock is expected to pay an annual cash dividend of approximately 13% and will be mandatorily redeemable upon the six year anniversary of the date of issuance. If we default under any of the covenants applicable to our preferred stock, we will have to pay additional dividends. Holdco #2 will be required to make an offer to purchase the Series A and Series B redeemable preferred stock at 101% of each series’ liquidation preference in the event of a change of control. We expect the Series A and Series B redeemable preferred stock will be subject to financial and other covenants substantially similar to the covenants contained in our senior secured credit facility. The terms of the preferred stock are subject to ongoing negotiation. We cannot be certain the terms described in this information statement will not change or be supplemented.
      We will use the $20 million from the issuance of the Series A preferred stock to repay a portion of our intercompany promissory note to Clear Channel Communications. The issuance of the Series B redeemable preferred stock to Clear Channel Communications will be part of the Holdco #3 Exchange, and the sale thereof to a third-party will raise $20 million for Clear Channel Communications, from which we will not receive any proceeds. We intend to use all proceeds from borrowings under the term loan portion of our senior secured credit facility and the $20 million of proceeds from the issuance of the Series A redeemable preferred stock of Holdco #2 to repay a portion of the intercompany note.
Material U.S. Federal Income Tax Consequences of the Distribution
      The following is a summary of certain material U.S. federal income tax consequences relating to our spin-off from Clear Channel Communications. This summary is based on the Code, the Treasury regulations promulgated thereunder, and interpretations of the Code and the Treasury regulations by the courts and the IRS, in effect as of the date hereof, and all of which are subject to change, possibly with retroactive effect. This summary does not discuss all the tax considerations that may be relevant to Clear Channel Communications stockholders in light of their particular circumstances, nor does it address the consequences to Clear Channel Communications stockholders subject to special treatment under the U.S. federal income tax laws (such as non-U.S. persons, insurance companies, dealers or brokers in securities or currencies, tax-exempt organizations, financial institutions, mutual funds, pass-through entities and investors in such entities, holders who hold their shares as a hedge or as part of a hedging, straddle, conversion, synthetic security, integrated investment or other risk-reduction transaction or who are subject to alternative minimum tax or holders who acquired their shares upon the exercise of employee stock options or otherwise as compensation). In addition, this summary does not address the U.S. federal income tax consequences to those Clear Channel Communications stockholders who do not hold their Clear Channel Communications common stock as a capital asset. Finally, this summary does not address any state, local or foreign tax consequences. CLEAR CHANNEL COMMUNICATIONS STOCKHOLDERS ARE URGED TO CONSULT THEIR OWN TAX ADVISORS CONCERNING THE U.S. FEDERAL, STATE AND LOCAL AND NON-U.S. TAX CONSEQUENCES OF THE SPIN-OFF TO THEM.

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      The spin-off is conditioned upon Clear Channel Communications’ receipt of a private letter ruling from the IRS, which it has received, and the opinion of Skadden, Arps, Slate, Meagher & Flom LLP, in each case, to the effect that the spin-off will qualify as a tax-free distribution for U.S. federal income tax purposes under Sections 355 and 368(a)(1)(D) of the Code. Assuming the spin-off so qualifies: (i) no gain or loss will be recognized by (and no amount will be included in the income of) Clear Channel Communications common stockholders upon their receipt of shares of CCE Spinco common stock in the spin-off; (ii) any cash received in lieu of fractional share interests in CCE Spinco will give rise to gain or loss equal to the difference between the amount of cash received and the tax basis allocable to the fractional share interests (determined as described below), and such gain or loss will be capital gain or loss if the Clear Channel Communications common stock on which the distribution is made is held as a capital asset on the date of the spin-off; (iii) the aggregate basis of the Clear Channel Communications common stock and the CCE Spinco common stock in the hands of each Clear Channel Communications common stockholder after the spin-off (including any fractional interests to which the stockholder would be entitled) will equal the aggregate basis of Clear Channel Communications common stock held by the stockholder immediately before the spin-off, allocated between the Clear Channel Communications common stock and the CCE Spinco common stock in proportion to the relative fair market value of each on the date of the spin-off; and (iv) the holding period of the CCE Spinco common stock received by each Clear Channel Communications common stockholder will include the holding period at the time of the spin-off for the Clear Channel Communications common stock on which the distribution is made, provided that the Clear Channel Communications common stock is held as a capital asset on the date of the spin-off.
      Although a private letter ruling from the IRS generally is binding on the IRS, if the factual representations or assumptions made in the letter ruling request are untrue or incomplete in any material respect, we will not be able to rely on the ruling. Furthermore, the IRS will not rule on whether a distribution satisfies certain requirements necessary to obtain tax-free treatment under Section 355 of the Code. Rather, the ruling will be based upon representations by Clear Channel Communications that these conditions have been satisfied, and any inaccuracy in such representations could invalidate the ruling. Therefore, in addition to obtaining the ruling from the IRS, Clear Channel Communications has made it a condition to the spin-off that Clear Channel Communications obtain an opinion of Skadden, Arps, Slate, Meagher & Flom LLP that the distribution will qualify as a tax-free distribution for U.S. federal income tax purposes under Sections 355 and 368(a)(1)(D) of the Code. The opinion will rely on the ruling as to matters covered by the ruling. In addition, the opinion will be based on, among other things, certain assumptions and representations as to factual matters made by Clear Channel Communications and us, which if incorrect or inaccurate in any material respect would jeopardize the conclusions reached by counsel in its opinion. The opinion will not be binding on the IRS or the courts, and the IRS or the courts may not agree with the opinion.
      Notwithstanding receipt by Clear Channel Communications of the ruling and opinion of counsel, the IRS could assert that the distribution does not qualify for tax-free treatment for U.S. federal income tax purposes. If the IRS were successful in taking this position, our initial public stockholders and Clear Channel Communications could be subject to significant U.S. federal income tax liability. In general, Clear Channel Communications would be subject to tax as if it had sold the common stock of our company in a taxable sale for its fair market value and our initial public stockholders would be subject to tax as if they had received a taxable distribution equal to the fair market value of our common stock that was distributed to them. In addition, even if the distribution otherwise were to qualify under Section 355 of the Code, it may be taxable to Clear Channel Communications (but not to Clear Channel Communications’ stockholders) under Section 355(e) of the Code, if the distribution were later deemed to be part of a plan (or series of related transactions) pursuant to which one or more persons acquire directly or indirectly stock representing a 50% or greater interest in Clear Channel Communications or us. For this purpose, any acquisitions of Clear Channel Communications stock or of our common stock within the period beginning two years before the distribution and ending two years after the distribution are presumed to be part of such a plan, although we or Clear Channel Communications may be able to rebut that presumption.
      Although the taxes, if any, resulting from a taxable distribution generally would be imposed on Clear Channel Communications and our initial public stockholders, we have agreed in the tax matters agreement

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to indemnify Clear Channel Communications and its affiliates against all tax-related liabilities, if any, caused by the failure of the spin-off to qualify as a tax-free transaction under Section 355 of the Code (including as a result of Section 355(e) of the Code) if the failure to so qualify is attributable to actions, events or transactions relating to our stock, assets or business, or a breach of the relevant representations or covenants made by us in the tax matters agreement. If the failure of the spin-off to qualify under Section 355 of the Code is for any reason for which neither we nor Clear Channel Communications is responsible, we and Clear Channel Communications have agreed in the tax matters agreement that we will each be responsible for 50% of the tax related liabilities arising from the failure to so qualify. See “Our Relationship with Clear Channel Communications After the Distribution — Tax Matters Agreement” for a more detailed discussion of the tax matters agreement between Clear Channel Communications and us.
      U.S. Treasury regulations require each stockholder that receives stock in a spin-off to attach to the stockholder’s U.S. federal income tax return for the year in which the spin-off occurs a detailed statement setting forth certain information relating to the tax-free nature of the spin-off. Shortly after the spin-off, Clear Channel Communications will provide stockholders who will receive CCE Spinco shares in the spin-off with the information necessary to comply with that requirement.
      YOU ARE URGED TO CONSULT YOUR OWN TAX ADVISORS CONCERNING THE U.S. FEDERAL, STATE AND LOCAL AND NON-U.S. TAX CONSEQUENCES OF THE SPIN-OFF TO YOU.
      For a description of the agreements under which we and Clear Channel Communications have provided for tax sharing and other tax matters, see “Our Relationship with Clear Channel Communications After the Distribution — Tax Matters Agreement.”
Market for Our Common Stock
      There is currently no public market for our common stock. A condition to the distribution is the listing on the New York Stock Exchange of our common stock. Our common stock has been approved for listing on the NYSE under the symbol “LYV.” We anticipate that trading of our common stock will commence trading on a when-issued basis on or shortly before the record date. “When-issued trading” refers to a sale or purchase made conditionally because the security has been authorized but not yet issued. On the first trading day following the distribution date, when-issued trading with respect to our common stock will end and regular way trading will begin. “Regular way trading” refers to trading after a security has been issued and typically involves a transaction that settles on the third full business day following the date of the transaction. We cannot predict what the trading prices for our common stock will be before or after the distribution date. In addition, we cannot predict any change that may occur in the trading price of Clear Channel Communications’ common stock as a result of the distribution.
      The shares of our common stock distributed to Clear Channel Communications stockholders will be freely transferable, except for shares received by persons that may have a special relationship or affiliation with us.
Pre-Distribution Transactions and Distribution Conditions
      We expect that the distribution will be effective on the distribution date, December 21, 2005, provided that, among other conditions and transactions described in this information statement:
  •  the SEC has declared effective our registration statement on Form 10, of which this information statement is a part, under the Securities Exchange Act of 1934, as amended, and no stop order relating to the registration statement is in effect;
 
  •  we and Clear Channel Communications have received all permits, registrations and consents required under the securities or blue sky laws of states or other political subdivisions of the United States or of foreign jurisdictions in connection with the distribution;
 
  •  Clear Channel Communications has received a private letter ruling from the IRS and the opinion of Skadden, Arps, Slate, Meagher & Flom LLP, in each case, to the effect that the spin-off will

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  qualify as a tax-free distribution for U.S. federal income tax purposes under Sections 355 and 368(a)(1)(D) of the Code;
 
  •  Clear Channel Communications has contributed $508.0 million of our outstanding intercompany note to Clear Channel Communications to our capital and we have repaid the remaining portion of the intercompany note to Clear Channel Communications, prior to or concurrently with the distribution date;
 
  •  no order, injunction or decree issued by any court of competent jurisdiction or other legal restraint or prohibition preventing consummation of the distribution or any of the transactions related thereto, including the transfers of assets and liabilities contemplated by the master separation and distribution agreement, is in effect;
 
  •  we and Clear Channel Communications have received an opinion that we will be solvent following the distribution and the concurrent transactions described herein;
 
  •  the Series A redeemable preferred stock and the Series B redeemable preferred stock described under “The Distribution — Preferred Stock Issuance” have been issued;
 
  •  we have entered into the senior secured credit facility described under “Description of Indebtedness;” and
 
  •  we have received any material government approvals and other consents necessary to consummate the distribution.

      The fulfillment of the foregoing transactions and conditions will not create any obligations on Clear Channel Communications’ part to effect the distribution, and Clear Channel Communications’ board of directors has reserved the right to amend, modify or abandon the distribution and the related transactions at any time prior to the distribution date. Clear Channel Communications’ board of directors may, in its sole discretion, also waive any of these conditions.
      In addition, Clear Channel Communications has the right not to complete the distribution if, at any time, Clear Channel Communications’ board of directors determines, in its sole discretion, that the distribution is not in the best interest of Clear Channel Communications or its stockholders, or that market conditions are such that it is not advisable to spin-off the entertainment business.
Reason for Furnishing this Information Statement
      This information statement is being furnished solely to provide information to Clear Channel Communications stockholders who will receive shares of CCE Spinco common stock in the distribution. It is not and is not to be construed as an inducement or encouragement to buy, hold or sell any of our securities. We believe that the information contained in this information statement is accurate as of the date set forth on the cover. Changes may occur after that date and neither Clear Channel Communications nor we undertake any obligation to update the information except in the normal course of our respective public disclosure obligations.
DIVIDEND POLICY
      We presently intend to retain future earnings, if any, to finance the expansion of our business. Therefore, we do not expect to pay any cash dividends in the foreseeable future. Moreover, the terms of our senior secured credit facility and the designations of Holdco #2’s preferred stock limit the amount of funds which 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.

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CAPITALIZATION
      The following table sets forth our capitalization (1) on an actual basis as of September 30, 2005 and (2) on pro forma basis as of September 30, 2005 as adjusted to give effect to:
  •  the distribution of our common stock to the stockholders of Clear Channel Communications;
 
  •  the incurrence of debt and related debt issuance costs, comprised of a $325.0 million senior secured term loan under the $575.0 million senior secured credit facility to be entered into prior to or concurrently with the completion of the distribution;
 
  •  the issuance of mandatorily redeemable Series A preferred stock by Holdco #2 having a liquidation preference of $20 million to a third-party investor for $20 million;
 
  •  the issuance to Clear Channel Communications of mandatorily redeemable Series B preferred stock by Holdco #2 having a liquidation preference of $20 million in connection with the Holdco #3 Exchange, for which we will not receive any cash;
 
  •  the contribution by Clear Channel Communications to our capital of $508.0 million of the intercompany debt owed to Clear Channel Communications;
 
  •  the retention of $125.0 million of the proceeds from borrowings under the term loan portion of our senior secured credit facility to be used for general corporate purposes, including working capital, potential acquisitions and stock repurchases; and
 
  •  the use of $200.0 million from borrowings under the term loan portion of our senior secured credit facility and $20 million of proceeds from the sale of the Series A preferred stock offering to repay the remaining portion of intercompany debt owed to Clear Channel Communications.
      Each of the Series A and Series B preferred stock is expected to pay an annual cash dividend of approximately 13% and will be mandatory redeemable upon the six year anniversary of the date of issuance.
      This table should be read in conjunction with “Selected Combined Financial Data,” “Unaudited Pro Forma Condensed Combined Financial Data,” “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and our combined financial statements and the notes to our combined financial statements included elsewhere in this information statement.
                     
    As of September 30, 2005
     
    Actual   As Adjusted
(In thousands)        
    (unaudited)
Cash and cash equivalents
  $ 273,474     $ 398,474  
             
Current portion of long-term debt
  $ 22,546     $ 25,796  
Long-term debt, net of current portion:
               
 
Debt with Clear Channel Communications
    725,495        
 
Senior secured credit facility
          321,750  
 
Other long-term debt
    20,038       20,038  
Mandatorily redeemable preferred stock(1):
               
 
Holdco #2 Series A preferred stock
          20,000  
 
Holdco #2 Series B preferred stock
          20,000  
             
   
Total long-term debt and mandatorily redeemable preferred stock
    745,533       381,788  
Total owner’s equity
    234,016       722,011  
             
Total capitalization
  $ 1,002,095     $ 1,129,595  
             
 
(1)  We classify the mandatorily redeemable preferred stock as other long-term obligations in accordance with Statement of Financial Accounting Standards No. 150 “Accounting for Certain Financial Instruments with Characteristics of both Liabilities and Equity.”

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UNAUDITED PRO FORMA CONDENSED COMBINED FINANCIAL DATA
      The following unaudited pro forma condensed combined financial information is derived from our audited combined financial statements for the year ended December 31, 2004 and our unaudited combined interim financial statements for the nine months ended September 30, 2005, each of which is included elsewhere in this information statement. The unaudited combined interim financial statements are derived from our unaudited accounting records for that period and have been prepared on a basis consistent with the audited combined financial statements and, in the opinion of management, include all adjustments, consisting only of normal recurring adjustments, necessary for a fair presentation of such data. The results for the nine months ended September 30, 2005 are not necessarily indicative of the results to be expected for the full year. The unaudited pro forma condensed combined financial information has been prepared to reflect adjustments to our historical financial information to give effect to the following transactions, each as described elsewhere in this information statement, as if those transactions had been completed at earlier dates:
  •  the distribution of our common stock to the stockholders of Clear Channel Communications;
 
  •  the incurrence of debt and related debt issuance costs, comprised of a $325.0 million senior secured term loan under the $575.0 million senior secured credit facility to be entered into prior to or concurrently with the completion of the distribution;
 
  •  the issuance of mandatorily redeemable Series A preferred stock by Holdco #2 having a liquidation preference of $20 million to a third-party investor for $20 million;
 
  •  the issuance to Clear Channel Communications of mandatorily redeemable Series B preferred stock by Holdco #2 having a liquidation preference of $20 million in connection with the Holdco #3 Exchange, for which we will not receive any cash;
 
  •  the contribution by Clear Channel Communications to our capital of $508.0 million of the intercompany debt owed to Clear Channel Communications;
 
  •  the retention of $125.0 million of the proceeds from borrowings under the term loan portion of our senior secured credit facility to be used for general corporate purposes, including working capital, potential acquisitions and stock repurchases; and
 
  •  the use of $200.0 million from borrowings under the term loan portion of our senior secured credit facility and $20 million of proceeds from the sale of the Series A preferred stock offering to repay the remaining portion of intercompany debt owed to Clear Channel Communications.
      Each of the Series A and Series B preferred stock is expected to pay an annual cash dividend of approximately 13% and will be mandatory redeemable upon the six year anniversary of the date of issuance.
      The unaudited pro forma condensed combined statements of income assume that these transactions occurred as of January 1, 2004 and the unaudited pro forma condensed combined balance sheet assumes that these transactions occurred as of September 30, 2005.
      You should read the unaudited pro forma condensed combined financial information in conjunction with our audited and unaudited combined financial statements and the notes to the audited and unaudited combined financial statements included elsewhere herein. You should also read the sections “Selected Combined Financial Data” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations.” The unaudited pro forma condensed combined financial information is qualified by reference to these sections, the audited and unaudited combined financial statements and the notes to the audited and unaudited combined financial statements, each of which is included elsewhere in this information statement.
      The historical financial and other data have been prepared on a combined basis from Clear Channel Communications’ consolidated financial statements using the historical results of operations and bases of the assets and liabilities of Clear Channel Communications businesses and give effect to allocations of expenses

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from Clear Channel Communications. The unaudited pro forma combined financial information is not indicative of our future performance or what our results of operations and financial position would have been if we had operated as a separate company during the periods presented or if the transactions reflected therein had actually occurred as of January 1, 2004 or September 30, 2005, as the case may be. The unaudited pro forma condensed combined statement of income does not reflect the complete impact of one-time and ongoing incremental costs required to operate as a separate publicly-traded company. Clear Channel Communications allocated to us $8.5 million in 2002, $9.2 million in 2003 and $9.8 million in 2004 of expenses incurred by it for providing us accounting, treasury, tax, legal, public affairs, executive oversight, human resources and other services. Through September 30, 2005, Clear Channel Communications allocated to us $6.9 million of expenses. By the end of 2005, we expect to have assumed responsibility for substantially all of these services and their related expenses. We currently believe the estimate for the costs of these services could be approximately $11.0 million to $13.0 million in 2006, our first full year as a separate publicly-traded company. However, the actual total costs of these services associated with our transition to, and operating as, a separate publicly-traded company could be significantly greater than our estimates.
Unaudited Pro Forma Condensed Combined Statements of Income
                                                   
    Year Ended December 31, 2004   Nine Months Ended September 30, 2005
         
    Historical   Adjustments   Pro Forma   Historical   Adjustments   Pro Forma
(In thousands, except per share amounts)                        
        (unaudited)   (unaudited)   (unaudited)   (unaudited)   (unaudited)
Statement of Operations Data:
                                               
Revenues
  $ 2,806,128     $     $ 2,806,128     $ 2,184,588     $     $ 2,184,588  
Operating Expenses:
                                               
 
Divisional operating expenses
    2,645,293             2,645,293       2,050,631             2,050,631  
 
Depreciation and amortization
    64,095             64,095       46,392             46,392  
 
Loss (gain) on sale of operating assets
    6,371             6,371       (426 )           (426 )
 
Corporate expenses
    31,386             31,386       38,391             38,391  
                                     
Operating income
    58,983             58,983       49,600             49,600  
Interest expense
    3,119       28,080 (b)     31,199       2,671       21,060 (b)     23,731  
Intercompany interest expense
    42,355       (42,355 )(c)           35,719       (35,719 )(c)      
Equity in earnings of nonconsolidated affiliates
    2,906             2,906       157             157  
Other income (expense) — net
    (1,690 )           (1,690 )     (4,157 )           (4,157 )
                                     
Income before income taxes
    14,725       14,275       29,000       7,210       14,659       21,869  
Income tax benefit (expense):
                                               
 
Current
    55,946       (5,710 )(d)     50,236       11,975       (5,864 )(d)     6,111  
 
Deferred
    (54,411 )           (54,411 )     (14,859 )           (14,859 )
                                     
Net income
  $ 16,260     $ 8,565     $ 24,825     $ 4,326     $ 8,795     $ 13,121  
                                     
Basic and diluted pro forma net income per common share(a)
  $ 0.24             $ 0.37     $ 0.06             $ 0.19  
                                     
Notes to Unaudited Pro Forma Condensed Combined Statements of Income
(a) Basic and diluted net income per share is calculated by dividing net income available to common stockholders by 67,565,491 shares (based upon the number of outstanding shares of Clear Channel Communications’ common stock at November 4, 2005).
 
(b) Includes estimated interest expense of $2.6 million and $2.6 million related to dividends associated with the Series A and Series B Preferred Stock, respectively. Also includes estimated annual interest

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expense of $22.9 million related to $325.0 million of indebtedness that we expect to incur prior to or concurrently with the completion of the distribution, at an estimated annual interest rate of 7.04%, which is based upon the current 12-month LIBOR plus 2.25. Several factors could change the annual interest rate, including but not limited to a change in our credit rating or a change in the reference rates used under the credit facilities. A 25 basis point change to the annual interest rate would change our annual interest expense by $0.8 million. We may incur additional interest expense if we draw down under the $250.0 million revolving credit that we expect to enter into prior to or concurrently with the completion of the distribution.
 
(c) Represents the elimination of intercompany interest expense incurred pursuant to intercompany indebtedness between Clear Channel Communications and us.
 
(d) Represents estimated tax (expense) benefit related to the estimated interest expense adjustments discussed in notes (b) and (c) above at our combined statutory tax rate of 40% for the year ended December 31, 2004 and for the nine months ended September 30, 2005.

Unaudited Pro Forma Condensed Combined Balance Sheet
                             
    As of September 30, 2005
     
    Historical   Adjustments   Pro Forma
(In thousands)            
    (unaudited)   (unaudited)   (unaudited)
Assets
Current Assets:
                       
 
Cash and cash equivalents
  $ 273,474     $ 125,000 (a)   $ 398,474  
 
Accounts receivable, net
    241,936             241,936  
 
Prepaid expenses
    218,293             218,293  
 
Other current assets
    48,617             48,617  
                   
   
Total Current Assets
    782,320       125,000       907,320  
Property, plant & equipment, net
    815,270             815,270  
Intangible Assets:
                       
 
Definite-lived intangibles, net
    12,787             12,787  
 
Goodwill
    143,170             143,170  
Other Assets:
                       
 
Notes receivable
    6,436             6,436  
 
Investments in, and advances to, nonconsolidated affiliates
    25,281             25,281  
 
Deferred tax asset
    87,069             87,069  
 
Other assets
    19,900       2,500 (b)     22,400  
                   
   
Total Assets
  $ 1,892,233     $ 127,500     $ 2,019,733  
                   

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    As of September 30, 2005
     
(In thousands)   Historical   Adjustments   Pro Forma
             
    (unaudited)   (unaudited)   (unaudited)
 
Liabilities and Owner’s Equity
Current Liabilities:
                       
 
Accounts payable
  $ 67,125     $     $ 67,125  
 
Deferred income
    240,753             240,753  
 
Accrued expenses
    469,354             469,354  
 
Current portion of long-term debt
    22,546       3,250 (c)     25,796  
                   
   
Total Current Liabilities
    799,778       3,250       803,028  
Long-term debt
    20,038       321,750 (c)     341,788  
Debt with Clear Channel Communications
    725,495       (725,495 )(d)      
Other long-term liabilities
    84,399             84,399  
 
Holdco #2 Series A and Series B Preferred Stock
          40,000 (e)     40,000  
Minority interest
    28,507             28,507  
Owner’s Equity:
                       
 
Common Stock
          676 (f)     676  
 
Additional paid-in capital
          4,896,622 (g)     4,896,622  
 
Owner’s net investment
    4,409,303       (4,409,303 )(h)      
 
Retained deficit
    (4,183,529 )           (4,183,529 )
 
Accumulated other comprehensive income
    8,242             8,242  
                   
   
Total Owner’s Equity
    234,016       487,995       722,011  
                   
   
Total Liabilities and Owner’s Equity
  $ 1,892,233     $ 127,500     $ 2,019,733  
                   
Notes to Unaudited Pro Forma Condensed Combined Balance Sheet as of September 30, 2005
(a) Represents $125.0 million of the net proceeds from borrowings under the term loan portion of our senior secured credit facility that will be retained as cash to be used for general corporate purposes, including working capital, potential acquisitions and stock repurchases.
 
(b) We expect to record approximately $2.5 million in debt issuance costs in connection with the incurrence of the debt described in note (c) below.
 
(c) Prior to or concurrently with the completion of the distribution, we intend to incur $325.0 million in long-term indebtedness, of which $3.3 million represents the current portion. We may incur additional indebtedness if we draw down under the $250.0 million revolving credit facility that we expect to enter into prior to or concurrently with the completion of the distribution.
 
(d) Our debt with Clear Channel Communications will be paid or otherwise contributed to our capital concurrently with or prior to the distribution.
 
(e) Represents the redemption value of the 200,000 shares of Series A and the 200,000 shares of Series B preferred stock issued by Holdco #2.
 
(f) Represents the par value of 67,565,491 shares of our common stock (based on the number of outstanding shares of Clear Channel Communications common stock outstanding at November 4, 2005).
 
(g) Represents (i) the reclassification of “owner’s net investment” into “Additional paid-in capital,” (ii) the portion of our debt with Clear Channel Communications that was contributed to our capital, and (iii) the balancing entry to set up the par value of our common stock.
 
(h) Represents a reclassification into additional paid-in capital.

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SELECTED COMBINED FINANCIAL DATA
      The historical financial and other data have been prepared on a combined basis from Clear Channel Communications consolidated financial statements using the historical results of operations and bases of the assets and liabilities of Clear Channel Communications’ businesses and give effect to allocations of expenses from Clear Channel Communications. The historical combined statement of income data set forth below does not reflect changes that will occur in the operations and funding of our company as a result of our spin-off from Clear Channel Communications. The historical combined balance sheet data set forth below reflect the assets and liabilities that were or are expected to be transferred to our company in accordance with the master agreement.
      The selected combined financial data should be read in conjunction with, and are qualified by reference to, “Unaudited Pro Forma Condensed Combined Financial Data,” “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and the historical audited and interim unaudited financial statements and the accompanying notes thereto of us and our consolidated subsidiaries included elsewhere in this information statement. The combined statements of operations set forth below for the period from August 1, 2000 through December 31, 2000 and the year ended December 31, 2001 and the combined balance sheet data as of December 31, 2000 and 2001 are derived from our unaudited financial statements. The combined balance sheet data for the year ended December 31, 2002 is derived from our audited financial statements. The combined statements of operations and cash flow data for each of the three years in the period ended December 31, 2004, and the combined balance sheet data for each of the periods as of December 31, 2003 and 2004, are derived from the audited combined financial statements included elsewhere in this information statement, and should be read in conjunction with those combined financial statements and the accompanying notes. The combined statement of operations and cash flow data set forth below for the nine months ended September 30, 2005 and 2004, and the consolidated balance sheet data for the nine months ended September 30, 2005, are derived from the unaudited consolidated financial statements included elsewhere in this information statement. In management’s opinion, these unaudited combined financial statements have been prepared on substantially the same basis as the audited financial statements and include all adjustments, consisting only of normal recurring adjustments, necessary for a fair presentation of the financial data for the periods presented. The results of operations for the interim period are not necessarily indicative of the operating results for the entire year or any future period.
      We have not presented cash flow data for the five months ended December 31, 2000 because this was our first partial year of operations as a subsidiary of Clear Channel Communications and this period is not comparable to the annual periods presented. We also have not presented cash flow data for the year ended December 31, 2001 because we believe it is not comparable to the three subsequent years, which are presented, because 2001 was the first full year after the acquisition of our business by Clear Channel Communications and during 2002, 2003 and 2004 Clear Channel Communications significantly expanded our operations. Therefore, the cash flow statements for these periods are not otherwise available and we believe that the cost associated with creating the cash flow statement for these periods would outweigh the benefits that the data would provide to our stockholders.
      The financial information presented below may not reflect what our results of operations, financial position and cash flows would have been had we operated as a separate, stand-alone entity during the periods presented or what our results of operations, financial position and cash flows will be in the future.

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      The following table presents a non-GAAP financial measure, OIBDAN, which we use to evaluate segment and consolidated performance of our business. OIBDAN is not calculated or presented in accordance with U.S. generally accepted accounting principles, or GAAP. In Note 4 and “— Non-GAAP Financial Measure” below, we explain OIBDAN and reconcile it to operating income (loss), its most directly comparable financial measure calculated and presented in accordance with GAAP.
                                                           
    Five Months       Nine Months Ended
    Ended   Year Ended December 31,   September 30,
    December 31,        
(In thousands, except per share amounts)   2000(1)   2001   2002   2003   2004   2004   2005
                             
    (unaudited)   (unaudited)               (unaudited)
Results of Operations Data:
                                                       
Revenue
  $ 984,048     $ 2,543,668     $ 2,473,319     $ 2,707,902     $ 2,806,128     $ 2,261,879     $ 2,184,588  
Operating Expenses:
                                                       
 
Divisional operating expenses
    904,442       2,386,504       2,302,707       2,506,635       2,645,293       2,107,785       2,050,631  
 
Depreciation and amortization
    118,040       299,343       64,836       63,436       64,095       47,499       46,392  
 
Loss (gain) on sale of operating assets
    (369 )     (1,278 )     (15,241 )     (978 )     6,371       7,400       (426 )
 
Corporate expenses
    14,422       49,294       26,101       30,820       31,386       19,977       38,391  
                                           
Operating income (loss)
    (52,487 )     (190,195 )     94,916       107,989       58,983       79,218       49,600  
Interest expense
    17,758       9,476       3,998       2,788       3,119       2,198       2,671  
Intercompany interest expense
    17,643       65,501       58,608       41,415       42,355       32,550       35,719  
Equity in earnings (loss) of nonconsolidated affiliates
    1,958       6,690       (212 )     1,357       2,906       3,231       157  
Other income (expense) — net
    1,985       3,213       332       3,224       (1,690 )     (1,437 )     (4,157 )
                                           
Income (loss) before income taxes and cumulative effect of a change in accounting principle
    (83,945 )     (255,269 )     32,430       68,367       14,725       46,264       7,210  
Income tax benefit (expense):
                                                       
 
Current
    213,056       44,112       (40,102 )     68,272       55,946       42,633       11,975  
 
Deferred
    (206,942 )     (43,581 )     11,103       (79,607 )     (54,411 )     (37,808 )     (14,859 )
                                           
Income (loss) before cumulative effect of a change in accounting principle
    (77,831 )     (254,738 )     3,431       57,032       16,260       51,089       4,326  
Cumulative effect of a change in accounting principle, net of tax of $198,640(2)
                (3,932,007 )                        
                                           
Net income (loss)
  $ (77,831 )   $ (254,738 )   $ (3,928,576 )   $ 57,032     $ 16,260     $ 51,089     $ 4,326  
                                           
Basic and diluted pro forma income (loss) before cumulative effect of a change in accounting principle per common share(3)
  $ (1.15 )   $ (3.77 )   $ 0.05     $ 0.84     $ 0.24     $ 0.76     $ 0.06  
                                           
Segment Data:
                                                       
Revenue:
                                                       
 
Global Music
  $ 695,162     $ 1,847,731     $ 1,821,215     $ 2,069,857     $ 2,201,007     $ 1,793,072     $ 1,708,369  
 
Global Theater
    137,547       316,159       296,460       318,219       313,974       222,871       233,265  
 
Other
    151,339       379,778       355,644       319,826       291,147       245,936       242,954  
                                           
 
Total Revenue
  $ 984,048     $ 2,543,668     $ 2,473,319     $ 2,707,902     $ 2,806,128     $ 2,261,879     $ 2,184,588  
                                           

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    Five Months       Nine Months Ended
    Ended   Year Ended December 31,   September 30,
    December 31,        
    2000(1)   2001   2002   2003   2004   2004   2005
(In thousands)                            
    (unaudited)   (unaudited)                
                        (unaudited)
Operating income (loss):
                                                       
 
Global Music
  $ (26,407 )   $ (102,037 )   $ 97,731     $ 111,326     $ 85,457     $ 94,269     $ 85,604  
 
Global Theater
    (11,879 )     (26,155 )     30,352       22,714       20,996       12,973       2,742  
 
Other
    3,804       (4,817 )     (1,342 )     10,156       (11,147 )     (4,281 )     2,923  
 
Corporate
    (18,005 )     (57,186 )     (31,825 )     (36,207 )     (36,323 )     (23,743 )     (41,669 )
                                           
 
Total operating income (loss)
  $ (52,487 )   $ (190,195 )   $ 94,916     $ 107,989     $ 58,983     $ 79,218     $ 49,600  
                                           
Cash Flow Data:
                                                       
Cash flows provided by (used in):
                                                       
 
Operating activities
                  $ 142,237     $ 138,713     $ 119,898     $ 88,557     $ 2,203  
 
Investing activities
                  $ (31,329 )   $ (51,960 )   $ (84,076 )   $ (64,662 )   $ (72,603 )
 
Financing activities
                  $ (112,281 )   $ (56,894 )   $ 23,254     $ 44,331     $ 156,618  
Capital expenditures
                  $ 68,185     $ 69,936     $ 73,435     $ 56,516     $ 71,997  
Other Data:
                                                       
OIBDAN(4)
                                                       
 
Global Music
  $ 57,124     $ 108,765     $ 127,881     $ 145,725     $ 119,062     $ 118,412     $ 112,935  
 
Global Theater
    12,060       36,648       41,489       35,899       35,647       23,929       14,133  
 
Other
    10,422       11,751       1,242       19,643       6,126       11,753       6,889  
 
Corporate
    (14,422 )     (45,343 )     (24,700 )     (29,518 )     (30,302 )     (19,216 )     (36,656 )
                                           
 
Total OIBDAN(4)
  $ 65,184     $ 111,821     $ 145,912     $ 171,749     $ 130,533     $ 134,878     $ 97,301  
                                           
                                                 
    As of December 31,   As of
        September 30,
    2000   2001   2002   2003   2004   2005
                         
    (Unaudited)   (Unaudited)               (Unaudited)
Balance Sheet Data:
                                               
Total assets
  $ 5,188,500     $ 5,391,088     $ 1,518,644     $ 1,495,715     $ 1,478,706     $ 1,892,233  
Long-term debt, including current maturities
  $ 829,649     $ 1,112,842     $ 622,831     $ 617,838     $ 650,675     $ 768,079  
Owner’s equity
  $ 3,768,934     $ 3,701,975     $ 230,914     $ 188,283     $ 156,976     $ 234,016  
 
(1)  Represents our operations commencing on August 1, 2000 (when Clear Channel Communications acquired our live entertainment business) to December 31, 2000.
 
(2)  Cumulative effect of change in accounting principle for the year ended December 31, 2002, related to impairment of goodwill recognized in accordance with the adoption of Statement of Financial Accounting Standards No. 142, “Goodwill and Other Intangible Assets.”
 
(3)  Basic and diluted income (loss) before cumulative effect of a change in accounting principle per share is calculated by dividing income (loss) before cumulative effect of a change in accounting principle by the weighted average number of common shares outstanding. The historic basic and diluted income (loss) before cumulative effect of changes in accounting principles is based on shares outstanding and the pro forma basic and diluted income (loss) before cumulative effect of changes in accounting principles is based on 67,565,491 shares outstanding (based on the number of outstanding shares of Clear Channel Communications’ common stock at November 4, 2005.)
 
(4)  We evaluate segment and consolidated performance based on several factors, one of the primary measures of which is operating income (loss) before depreciation, amortization, loss (gain) on sale of operating assets and non-cash compensation expense, which we refer to as OIBDAN. See “— Non-GAAP Financial Measure” below, “Unaudited Pro Forma Condensed Combined Financial Data” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations — OIBDAN”.

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Non-GAAP Financial Measure
      In addition to operating income, we evaluate segment and combined performance based on other factors, one primary measure of which is operating income (loss) before depreciation, amortization, loss (gain) on sale of operating assets and non-cash compensation expense, which we refer to as OIBDAN. We use OIBDAN as a measure of the operational strengths and performance of our business and not as a measure of liquidity. However, a limitation of the use of OIBDAN as a performance measure is that it does not reflect the periodic costs of certain capitalized tangible and intangible assets used in generating revenues in our business. Accordingly, OIBDAN 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, OIBDAN as presented below may not be comparable to similarly titled measures of other companies.
      We believe OIBDAN is useful to investors and other external users of our financial statements in evaluating our operating performance because it helps investors more meaningfully evaluate and compare the results of our operations from period to period and with those of other companies in the entertainment industry (to the extent the same components of OIBDAN are used), in each case without regard to items such as non-cash depreciation and amortization and non-cash compensation expense, which can vary depending upon the accounting method used and the book value of assets.
      Our management uses OIBDAN (i) as a measure for planning and forecasting overall and individual expectations and for evaluating actual results against such expectations, (ii) as a basis for incentive bonuses paid to certain employees and (iii) in presentations to our board of directors to enable them to have the same consistent measurement basis of operating performance used by management.
      The following table presents a reconciliation of OIBDAN to operating income, which is a GAAP measure of our operating results:
                                                           
    Five Months       Nine Months Ended
    Ended   Year Ended December 31,   September 30,
    December 31,        
    2000(1)   2001   2002   2003   2004   2004   2005
(In thousands)                            
    (unaudited)   (unaudited)               (unaudited)
Reconciliation of OIBDAN to Operating Income (loss):
                                                       
 
OIBDAN
  $ 65,184     $ 111,821     $ 145,912     $ 171,749     $ 130,533     $ 134,878     $ 97,301  
 
Depreciation and amortization
    118,040       299,343       64,836       63,436       64,095       47,499       46,392  
 
Loss (gain) on sale of operating assets
    (369 )     (1,278 )     (15,241 )     (978 )     6,371       7,400       (426 )
 
Non-cash compensation expense*
          3,951       1,401       1,302       1,084       761       1,735  
                                           
Operating income (loss)
  $ (52,487 )   $ (190,195 )   $ 94,916     $ 107,989     $ 58,983     $ 79,218     $ 49,600  
                                           
 
Non-cash compensation expense, which is based on an allocation from Clear Channel Communications and is related to issuance of Clear Channel Communications stock awards, is included in corporate expenses in our statement of operations.

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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 and unaudited combined financial statements and notes to the financial statements included elsewhere in this information statement. 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 in the sections of this information statement entitled “Risk Factors,” “Special Note About Forward-Looking Statements” and other sections in this information statement.
Overview
      On April 29, 2005, Clear Channel Communications announced its intention to separate its entertainment business into a separate publicly-traded company. We were incorporated in Delaware on August 2, 2005 to effect the separation, and currently are a wholly owned subsidiary of Clear Channel Communications. We will have no material assets or activities as a separate corporate entity until the contribution to us by Clear Channel Communications, prior to the completion of the spin-off, of the business described in this information statement. Clear Channel Communications conducted such business through various subsidiaries, principally representing the entertainment segment. Clear Channel Communications will distribute all of our common stock to the stockholders of Clear Channel Communications.
Basis of Presentation
      The combined financial statements are comprised of entities included in the consolidated financial statements and accounting records of Clear Channel Communications, principally representing the live entertainment segment, using the historical results of operations and the historical basis of assets and liabilities of our business. The combined statements of operations include expense allocations for certain corporate functions historically provided to us by Clear Channel Communications, including general corporate expenses, employee benefits and incentives, and interest expense. These allocations were made on a specifically identifiable basis or using the relative percentages, as compared to Clear Channel Communications’ other businesses, of net sales, payroll, fixed assets, inventory and other assets, headcount or other reasonable methods. We and Clear Channel Communications consider these allocations to be a reasonable reflection of the utilization of services provided. We expect that our expenses as a separate publicly-traded company may be significantly higher than the amounts reflected in the combined statements of operations.
      We will incur increased costs as a result of becoming an independent publicly traded company, primarily from audit fees paid to our independent public accounting firm, Public Company Accounting Oversight Board fees, the hiring of additional staff to fulfill reporting requirements of a public company, NYSE listing fees, legal fees and stockholder communications fees. We will bear the costs of certain services currently provided to us by Clear Channel Communications. We believe cash flow from operations will be sufficient to fund these additional corporate expenses.
      We do not anticipate that increased costs solely from becoming an independent publicly traded company will have an adverse effect on our growth rates in the future because we will be substantially the same entity as the entertainment segment of Clear Channel Communications. Our success will continue to be highly dependent on the overall health of the local and national economies in which we operate and the availability of affordable and desirable content. We anticipate that being an independent publicly traded company will (1) provide a stock-based currency that could potentially be used for incentive programs to better attract, retain and motivate current and future employees through the use of equity-based compensation policies that more directly link employee compensation with our financial performance, (2) permit our management to focus its attention and our financial resources on our distinct business and

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business challenges and to lead us to adopt strategies and pursue objectives that are appropriate to our respective business and (3) allow us to have better access to the capital markets in connection with acquisitions and financings after the separation as our investors will not be forced to understand and make investment decisions with respect to Clear Channel Communications’ business.
      We believe the assumptions underlying the combined financial statements are reasonable. However, the combined financial statements included herein may not necessarily reflect our results of operations, financial position and cash flows in the future or what our results of operations, financial position and cash flows would have been had we been a separate, stand-alone company during the periods presented.
Introduction
      Management’s discussion and analysis, or MD&A, of our results of operations and financial condition is provided as a supplement to the audited annual financial statements and unaudited interim financial statements and footnotes thereto included elsewhere herein to help provide an understanding of our financial condition, changes in financial condition and results of our operations. The information included in MD&A should be read in conjunction with the annual and interim financial statements. MD&A is organized as follows:
  •  Business overview. This section provides a general description of our business, as well as other matters that we believe are important in understanding our results of operations and financial condition and in anticipating future trends.
 
  •  Combined results of operations. This section provides an analysis of our results of operations for the nine months ended September 30, 2005 and 2004, and the years ended December 31, 2004, 2003 and 2002. Our discussion is presented on both a combined and segment basis. Our reportable operating segments are global music, global theater and other. Approximately 70% of our revenue is derived in North America, with the remainder being derived internationally, primarily in the United Kingdom, Sweden and Holland. We manage our operating segments primarily on their operating income (loss) before depreciation, amortization, loss (gain) on sale of assets and non-cash compensation expense, which we refer to as OIBDAN. Since a significant portion of our business is conducted in foreign markets, principally Europe, management looks at the operating results from our foreign operations on a constant dollar basis, which allows for comparison of operations independent of foreign exchange movements. Corporate expenses, interest expense, equity in earnings (loss) of nonconsolidated affiliates, other income (expense) — net, income taxes and cumulative effect of change in accounting principle are managed on a total company basis and are, therefore, included only in our discussion of combined results.
        In addition to operating income, we evaluate segment and combined performance based on other factors, one primary measure of which is operating income (loss) before depreciation, amortization, loss (gain) on sale of assets and non-cash compensation expense, which we refer to as OIBDAN. While we use OIBDAN as a measure of the operational strengths and performance of our business, we do not use it as a measure of liquidity. However, a limitation of the use of OIBDAN as a performance measure is that it does not reflect the periodic costs of certain capitalized tangible and intangible assets used in generating revenues in our business. Accordingly, OIBDAN should be considered in addition to, 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, OIBDAN as presented below may not be comparable to similarly titled measures of other companies.
 
        We believe OIBDAN is useful to an investor in evaluating our operating performance because it helps investors more meaningfully evaluate and compare the results of our operations from period to period without regard to items such as non-cash depreciation and amortization and non-cash compensation expense, which can vary depending upon the accounting method used and the book value of assets. This measure also excludes loss (gain) on sale of assets, which we exclude when measuring segment performance.

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        Our management uses OIBDAN (i) as a measure for planning and forecasting overall and individual expectations and for evaluating actual results against such expectations, (ii) as a basis for incentive bonuses paid to certain employees and (iii) in presentations to our board of directors to enable them to have the same consistent measurement basis of operating performance used by management.
  •  Liquidity and capital resources. This section provides a discussion of our financial condition as of December 31, 2004 and September 30, 2005, as well as an analysis of our cash flows for the nine months ended September 30, 2005 and 2004 and the years ended December 31, 2004 and 2003. The discussion of our financial condition and liquidity includes summaries of (i) our primary sources of liquidity and (ii) our outstanding debt and commitments (both firm and contingent) that existed at December 31, 2004 and on a pro forma basis to reflect the term loans under our new senior secured credit facility and Holdco #2’s issuance of mandatorily redeemable preferred stock.
 
  •  Seasonality. This section discusses the seasonal performance of our global music, global theater and other segments. Because of the seasonality of our business, the results for the nine months ended September 30 are not necessarily indicative of full-year performance.
 
  •  Market risk management. This section discusses how we manage exposure to potential losses arising from adverse changes in foreign currency exchange and interest rates.
 
  •  Recent accounting pronouncements and critical accounting policies. This section discusses accounting policies considered to be important to our financial condition and results of operations, which require significant judgment and estimates on the part of management in their application. In addition, all of our significant accounting policies, including our critical accounting policies, are summarized in Note A to our combined financial statements included elsewhere in this information statement.
Business Overview
      We believe we are one of the world’s largest diversified promoters and producers of, and venue operators for, live entertainment events. For the year ended December 31, 2004, we promoted or produced over 28,500 events, including music concerts, theatrical performances, specialized motor sports and other events, with total attendance exceeding 61 million. In addition, we believe we operate one of the largest networks of venues used principally for music concerts and theatrical performances in the United States and Europe. As of September 30, 2005, we owned or operated 117 venues, consisting of 75 domestic and 42 international venues. These venues include 39 amphitheaters, 58 theaters, 14 clubs, four arenas and two festival sites. In addition, through equity, booking or similar arrangements we have the right to book events at 33 additional venues. Approximately 90% of our total revenues for 2004 resulted from our promotion or production of music concerts and theatrical performances and from revenues related to our owned or operated venues.
Our Business Segments
      We operate in two reportable business segments: global music and global theater. In addition, we operate in the specialized motor sports, sport representation and other businesses, which are included under “other.”
      Global Music. Our global music business principally involves the promotion or production of live music shows and tours by music artists in our owned and operated venues and in rented third-party venues. For the year ended December 31, 2004, our global music business generated approximately $2.2 billion, or 78%, of our total revenues. We promoted or produced over 10,000 events in 2004, including tours for artists such as Madonna, Sting, Dave Matthews Band and Toby Keith. In addition, we produced several large festivals in Europe, including Rock Werchter in Belgium and the North Sea Jazz Festival in Holland. Part of our growth strategy is to expand our promotion and production of festivals, particularly in

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Europe. While our global music business operates year-round, we experience higher revenues during the second and third quarters due to the seasonal nature of our amphitheaters and international festivals, which are primarily used during or occur in May through September.
      Global Theater. Our global theater business presents and produces touring and other theatrical performances. Our touring theatrical performances consist primarily of revivals of previous commercial successes and new productions of theatrical performances playing on Broadway in New York City or the West End in London. For the year ended December 31, 2004, our global theater business generated approximately $314.0 million, or 11%, of our total revenues. In 2004, we presented or produced over 12,000 theatrical performances of productions such as The Producers, The Lion King, Mamma Mia! and Chicago. We pre-sell tickets for our touring shows through one of the largest subscription series in the United States and Canada in approximately 45 touring markets. While our global theater business operates year-round, we experience higher revenues during September through April, which coincides with the theatrical touring season.
      Other. We believe we are one of the largest promoters and producers of specialized motor sports events, primarily in North America. In 2004, we held over 600 events in stadiums, arenas and other venues, including monster truck shows, supercross races, motocross races, freestyle motocross events and motorcycle road racing. In addition, we own numerous trademarked properties, including monster trucks such as Grave Diggertm and Blue Thundertm, which generate additional licensing revenues. While our specialized motor sports business operates year-round, we experience higher revenues during January through March, which is the period when a larger number of specialized motor sports events occur.
      We also provide integrated sports marketing and management services, primarily for professional athletes. Our marketing and management services generally involve our negotiation of player contracts with professional sports teams and of endorsement contracts with major brands. As of September 30, 2005, we had approximately 600 clients, including Tracy McGrady (basketball), David Ortiz (baseball), Tom Lehman (golf), Andy Roddick (tennis), Roy E. Williams (football) and Steven Gerrard (soccer).
      We also promote and produce other live entertainment events, including family shows, such as Dora the Explorer and Blue’s Clues, as well as museum and other exhibitions, such as Saint Peter and The Vatican: The Legacy of the Popes. In addition, we produce and distribute television shows and DVDs, including programs such as A&E Biographies: Rod Stewart and HBO Sports’ The Curse of the Bambino.
      For the year ended December 31, 2004, businesses included under “other” generated approximately $291.1 million, or 11%, of our total revenues.
Our Business Activities
      We principally act in the following capacities, performing one, some or all of these roles in connection with our events and tours:
      Promotion. As a promoter, we typically book performers, arrange performances and tours, secure venues, provide for third-party production services, sell tickets and advertise events to attract audiences. We earn revenues primarily from the sale of tickets and pay performers under one of several formulas, including a fixed guaranteed amount and/or a percentage of ticket sales. For each event, we either use a venue we own or operate, or rent a third-party venue. In our global theater business, we generally refer to promotion as presentation. Revenues related to promotion activities represent the majority of our combined revenues. These revenues are generally related to the volume of ticket sales and ticket prices. Event costs, included in divisional operating expenses, such as artist and production service expenses, are typically substantial in relation to the revenues. As a result, significant increases or decreases in promotion revenue do not typically result in comparable changes to operating income.
      Production. As a producer, we generally develop event content, hire directors and artistic talent, develop sets and costumes, and coordinate the actual performances of the events. We produce tours on a global, national and regional basis. We generate revenues from fixed producer fees and by sharing in a percentage of event or tour profits primarily related to the sale of tickets, merchandise and event and tour

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sponsorships. These production revenues are generally related to the size and profitability of the production. Production costs, included in divisional operating expenses, are typically substantial in relation to the revenues. As a result, significant increases or decreases in production revenue do not typically result in comparable changes to operating income.
      Venue Operation. As a venue operator, we contract with promoters to rent our venues for events and provide related services such as concessions, merchandising, parking, security, ushering and ticket-taking. We generate revenues primarily from rental income, ticket service charges, premium seating and venue sponsorships, as well as sharing in percentages of concessions, merchandise and parking. Our outdoor entertainment venues are primarily used, and our international festivals occur, during May through September. As a result, we experience higher revenues during the second and third quarters. Revenues generated from venue operations, which are partially driven by attendance, typically have a significantly higher margin than promotion or production revenues and therefore typically have a more direct relationship to operating income.
      Sponsorships and Advertising. We actively pursue the sale of national and local sponsorships and placement of advertising, including signage, promotional programs, naming of subscription series and tour sponsorships. Many of our venues also have name-in-title sponsorship programs. We believe national sponsorships allow us to maximize our network of venues and to arrange multi-venue branding opportunities for advertisers. Our national sponsorship programs have included companies such as American Express, Anheuser Busch and Coca-Cola. 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. Revenues generated from sponsorships and advertising typically have a significantly higher margin than promotion or production revenues and therefore typically have a more direct relationship to operating income.

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Combined Results of Operations
                                           
    Nine Months Ended    
    September 30,   Year Ended December 31,
         
(In thousands)   2005   2004   2004   2003   2002
                     
    (unaudited)            
Revenue
  $ 2,184,588     $ 2,261,879     $ 2,806,128     $ 2,707,902     $ 2,473,319  
Operating expenses:
                                       
 
Divisional operating expenses
    2,050,631       2,107,785       2,645,293       2,506,635       2,302,707  
 
Depreciation and amortization
    46,392       47,499       64,095       63,436       64,836  
 
Loss (gain) on sale of operating assets
    (426 )     7,400       6,371       (978 )     (15,241 )
 
Corporate expenses
    38,391       19,977       31,386       30,820       26,101  
                               
Operating income
    49,600       79,218       58,983       107,989       94,916  
Interest expense
    2,671       2,198       3,119       2,788       3,998  
Intercompany interest expense
    35,719       32,550       42,355       41,415       58,608  
Equity in earnings (loss) of nonconsolidated affiliates
    157       3,231       2,906       1,357       (212 )
Other income (expense) — net
    (4,157 )     (1,437 )     (1,690 )     3,224       332  
                               
Income before income taxes and cumulative effect of a change in accounting principle
    7,210       46,264       14,725       68,367       32,430  
Income tax (expense) benefit:
                                       
 
Current
    11,975       42,633       55,946       68,272       (40,102 )
 
Deferred
    (14,859 )     (37,808 )     (54,411 )     (79,607 )     11,103  
                               
Income before cumulative effect of a change in accounting principle
    4,326       51,089       16,260       57,032       3,431  
Cumulative effect of a change in accounting principle, net of tax of, $198,640
                            (3,932,007 )
                               
Net income (loss)
  $ 4,326     $ 51,089     $ 16,260     $ 57,032     $ (3,928,576 )
                               
                                           
    Nine Months Ended    
    September 30,   Year Ended December 31,
         
    2005   2004   2004   2003   2002
(In thousands)                    
    (unaudited)            
Cash provided by (used in):
                                       
 
Operating activities
  $ 2,203     $ 88,557     $ 119,898     $ 138,713     $ 142,237  
 
Investing activities
  $ (72,603 )   $ (64,662 )   $ (84,076 )   $ (51,960 )   $ (31,329 )
 
Financing activities
  $ 156,618     $ 44,331     $ 23,254     $ (56,894 )   $ (112,281 )
OIBDAN Reconciliation to Operating Income
                                         
    Nine Months Ended    
    September 30,   Year Ended December 31,
         
(In thousands)   2005   2004   2004   2003   2002
                     
    (unaudited)            
Operating income
  $ 49,600     $ 79,218     $ 58,983     $ 107,989     $ 94,916  
Depreciation and amortization
    46,392       47,499       64,095       63,436       64,836  
Loss (gain) on sale of operating assets
    (426 )     7,400       6,371       (978 )     (15,241 )
Non-cash compensation expense*
    1,735       761       1,084       1,302       1,401  
                               
OIBDAN
  $ 97,301     $ 134,878     $ 130,533     $ 171,749     $ 145,912  
                               
 
Non-cash compensation expense, which is based on an allocation from Clear Channel Communications and is related to issuance of Clear Channel Communications stock awards, is included in corporate expenses in our statement of operations.

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Revenue
      Our combined revenue decreased $77.3 million, or 3%, during the nine months ended September 30, 2005 as compared to the same period in 2004 primarily due to a decrease in our global music and other operations of $84.7 million and $3.0 million, respectively. These decreases were partially offset by a $10.4 million increase in global theater revenue. Included in the nine months ended September 30, 2005 is approximately $11.2 million from increases in foreign exchange rates as compared to the same period of 2004.
      Our combined revenue increased $98.2 million, or 4%, in fiscal year 2004 as compared to fiscal year 2003 due to an increase in global music revenue of $131.2 million. Partially offsetting this increase were declines in revenue from our other operations and global theater of $28.7 million and $4.2 million, respectively. Included in the fiscal year 2004 results is approximately $74.3 million, or 76% of the total increase in combined revenues, from increases in foreign exchange rates as compared to the same period of 2003.
      Our combined revenue increased $234.6 million, or 10%, during fiscal year 2003 as compared to fiscal year 2002 due to an increase in global music and global theater revenue of $248.6 million and $21.8 million, respectively. Partially offsetting these increases was a decline in revenue for other operations of $35.8 million. Included in the fiscal year 2003 results is approximately $88.9 million, or 38% of the total increase in combined revenues, from increases in foreign exchange rates as compared to the same period of 2002.
Divisional Operating Expenses
      Our combined divisional operating expenses decreased $57.2 million, or 3%, during the nine months ended September 30, 2005 as compared to the same period in 2004 due to a decrease in our global music segment of $79.2 million. Partially offsetting this decrease were increases in global theater and other operations of $20.2 million and $1.9 million, respectively. Divisional operating expenses for 2005 include $8.4 million in expenses related to a reorganization and reductions in personnel. This reorganization and recording of additional expenses not yet incurred related to the reorganization are expected to be complete by year end. Included in the nine months ended September 30, 2005 results is approximately $10.9 million from increases in foreign exchange rates as compared to the same period of 2004.
      Our combined divisional operating expenses increased $138.7 million, or 6%, in fiscal year 2004 as compared to fiscal year 2003 due to a $157.8 million increase in global music divisional operating expenses, partially offset by a decrease in divisional operating expenses from our other operations and global theater of $15.2 million and $4.0 million, respectively. Included in the fiscal year 2004 results is approximately $68.0 million from increases in foreign exchange rates as compared to the same period of 2003.
      Our combined divisional operating expenses increased $203.9 million, or 9%, in fiscal year 2003 as compared to fiscal year 2002 due to an increase in our global music and global theater divisional operating expenses of $230.8 million and $27.3 million, respectively. Partially offsetting these increases was a $54.2 million decline in divisional operating expenses for other operations. Included in the fiscal year 2003 results is approximately $81.3 million from increases in foreign exchange rates as compared to the same period of 2002.
Loss (Gain) on sale of operating assets
      Our gain on sale of operating assets increased $7.8 million during the nine months ended September 30, 2005 as compared to the same period in 2004 due primarily to the divestiture of our international leisure center operations during the second quarter of 2004.
      Our loss on sale of operating assets increased $7.3 million during 2004 as compared to 2003 primarily due to the sale of our international leisure center operations during the second quarter of 2004.

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      Our gain on sale of operating assets decreased $14.3 million during 2003 as compared to 2002 primarily due to the sale of our international cinema and bingo operations during 2002.
Corporate Expenses
      Corporate expenses increased $18.4 million, or 92%, during the nine months ended September 30, 2005 as compared to the nine months ended September 30, 2004 as the result of a $12.5 million increase in litigation contingencies and expenses as well as $3.7 million related to severance payments during 2005. Additional litigation contingencies and expenses are reflected in divisional operating expenses within our other operations.
      Corporate expenses increased $0.6 million, or 2%, in the fiscal year ended 2004 as compared to 2003, primarily due to increases in litigation and rent expenses, partially offset by declines in performance-based bonus expense for the period.
      Corporate expenses increased $4.7 million, or 18%, in the fiscal year ended 2003 as compared to 2002 primarily due to a $4.1 million royalty fee that Clear Channel Communications began charging on January 1, 2003.
OIBDAN
      Our combined OIBDAN decreased $37.6 million, or 28%, during the nine months ended September 30, 2005 as compared to the same period in 2004. Global music OIBDAN decreased $5.5 million primarily as a result of a reduction in the number of domestic events, attendance and ticket prices. Global theater OIBDAN decreased $9.8 million during this period primarily due to a reduction in the investment value of several domestic productions. During the nine months ended September 30, 2005, we experienced an increase of approximately $37.1 million related to litigation reserves and expenses, as well as severance and other costs related to our reorganization, which contributed to the OIBDAN decline as compared to the same period of 2004. For 2005 we estimate that we will incur severance expenses of approximately $14.0 million, approximately $6.1 million of which is included above, and approximately $7.9 million will be incurred in the fourth quarter, which we expect to result in savings of approximately $20.0 million in employee expenses during 2006. This forecast reflects our judgment as of the date of the information statement of conditions we believe will exist and the course of action we expect to take in the fourth quarter of 2005; however, we can give no assurance that we will be able to achieve cost savings of $20.0 million in 2006.
      Our combined OIBDAN decreased $41.2 million, or 24%, in fiscal year 2004 as compared to fiscal year 2003 primarily due to a decrease in global music of $26.7 million. This decrease resulted primarily from higher talent costs in relation to related revenues as well as a reduction in the number of domestic amphitheater events and attendance. In addition, other operations decreased $13.5 million during the period principally as a result of a $3.5 million increase in litigation reserves and expenses, and $2.4 million related to the divestiture of a television production business during 2003.
      Our combined OIBDAN increased $25.8 million, or 18%, in fiscal year 2003 as compared to fiscal year 2002 due to an increase in other operations and global music of $18.4 million and $17.8 million, respectively. The increase in other operations is largely due to a $6.9 million increase in television production results and an $8.3 million increase in sponsorship income. The global music increase in OIBDAN is primarily due to an increase in attendance as well as an increase in sponsorship and premium seat revenues.
Intercompany Interest Expense
      The increases and decreases in intercompany interest expense are directly related to the respective increase or decrease in average debt outstanding as the rate charged remained relatively consistent throughout the periods.

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      Our weighted average cost of debt during all periods was 7.0%. Our intercompany debt balances owed to Clear Channel Communications as of September 30, 2005 and December 31, 2004 and 2003 were:
                     
        As of December 31,
    As of    
    September 30, 2005   2004   2003
             
(In millions)   (unaudited)        
    $725.5   $ 628.9     $ 595.2  
Equity in Earnings (Loss) of Nonconsolidated Affiliates
      Equity in earnings (loss) of nonconsolidated affiliates decreased $3.1 million during the nine months ended September 30, 2005 as compared to the nine months ended September 30, 2004 primarily as a result of impairments and losses in several of our nonconsolidated other operations affiliates during 2005.
      For the fiscal year ended 2004 as compared to fiscal 2003, equity in earnings of nonconsolidated affiliates increased $1.5 million primarily as a result of no impairments and fewer losses during 2004 in our nonconsolidated other operations affiliates as compared to the same period of 2003.
      For the fiscal year ended 2003 as compared to 2002, equity in earnings of nonconsolidated affiliates increased $1.6 million primarily due to an increase in earnings from our nonconsolidated global theater affiliates.
Other Income (Expense) — Net
      The principal components of other income (expense) — net, for the applicable periods, were:
                                         
    Nine Months            
    Ended    
    September 30,   Year Ended December 31,
         
(In millions)   2005   2004   2004   2003   2002
                     
    (unaudited)            
Interest income
  $ 1.5     $ 1.5     $ 3.2     $ 6.9     $ 2.1  
Minority interest expense
    (5.5 )     (2.7 )     (3.3 )     (3.3 )     (3.8 )
Other, net
    (0.2 )     (0.2 )     (1.6 )     (0.4 )     2.0  
                               
Other income (expense) — net
  $ (4.2 )   $ (1.4 )   $ (1.7 )   $ 3.2     $ 0.3  
                               
Income Taxes
      Current tax benefit for the nine months ended September 30, 2005 decreased $30.7 million as compared to the nine months ended September 30, 2004. For the nine months ended September 30, 2005, the recorded current tax benefit was reduced due to an increase in litigation reserve and expenses, which is not deductible for tax purposes until the related amounts are paid. In addition, the current tax benefit for the nine months ended September 30, 2004 was increased by taxable losses associated with the disposition of certain assets and higher tax depreciation related to favorable bonus depreciation rules in place during 2004.
      Deferred tax expense for the nine months ended September 30, 2005 decreased $22.9 million as compared to the nine months ended September 30, 2004. This decrease is primarily related to the increase in litigation reserve and expenses recorded during the current period that are not deductible for tax purposes. As a result, a deferred tax benefit was recorded for this item. In addition, deferred tax expense for the nine months ended September 30, 2004 includes amounts associated with the disposition of certain non-core business operations.
      Current tax benefit decreased $12.3 million in 2004 as compared to 2003. As a result of the favorable resolution of certain tax contingencies, current tax benefit for the year ended December 31, 2004 was reduced approximately $11.0 million. The decrease in deferred tax expense of $25.2 million for the year ended December 31, 2004 as compared to December 31, 2003 was due primarily to additional depreciation

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expense deductions taken for tax purposes associated with a change in our tax lives of certain assets. The additional depreciation expense resulted in an increase in deferred tax expense in 2003.
      Current tax benefit increased $108.4 million and deferred tax expense increased $90.7 million in 2003 as compared to 2002. In 2002, approximately $313.0 million of taxable income was recognized that had been deferred in a prior year. As such, current tax expense for the year ended December 31, 2002 increased approximately $123.6 million. In addition, as the deferred tax liability was reversed, a deferred tax benefit of approximately $123.6 million was recorded for the year ended December 31, 2002. These amounts were offset by the utilization of net operating losses of approximately $59.8 million that decreased current tax expense and increased deferred tax expense for the year ended December 31, 2002.
Cumulative Effect of a Change in Accounting Principle
      The loss recorded as a cumulative effect of a change in accounting principle during 2002 relates to our adoption of Financial Accounting Standards No. 142, Goodwill and Other Intangible Assets, on January 1, 2002. Statement No. 142 required that we test goodwill and indefinite-lived intangibles for impairment using a fair value approach. As a result of the goodwill test, we recorded a non-cash impairment charge, net of tax, of approximately $3.9 billion. The non-cash impairment of our goodwill was generally caused by unfavorable economic conditions which persisted in the entertainment industry throughout 2001. This weakness contributed to our customers reducing the number of dollars they spent on live entertainment events. These conditions adversely impacted the cash flow projections used to determine the fair value of our goodwill at January 1, 2002, and resulted in the non-cash impairment charge of a portion of our goodwill.
Global Music Results of Operations
      Our global music operating results were as follows:
                                         
    Nine Months Ended    
    September 30,   Year Ended December 31,
         
(In thousands)   2005   2004   2004   2003   2002
                     
    (unaudited)            
Revenue
  $ 1,708,369     $ 1,793,072     $ 2,201,007     $ 2,069,857     $ 1,821,215  
Divisional operating expenses
    1,595,434       1,674,660       2,081,945       1,924,132       1,693,334  
Depreciation and amortization
    27,363       27,064       37,043       35,262       35,285  
Loss (gain) on sale of operating assets
    (32 )     (2,921 )     (3,438 )     (863 )     (5,135 )
                               
Operating income
  $ 85,604     $ 94,269     $ 85,457     $ 111,326     $ 97,731  
                               
Nine Months Ended September 30, 2005 to Nine Months Ended September 30, 2004
      Global music revenue decreased $84.7 million, or 5%, during the nine months ended September 30, 2005 as compared to the nine months ended September 30, 2004. Included in the nine months ended September 30, 2005 results is approximately $8.7 million of foreign exchange rate increases. These foreign exchange rate increases were offset by a $182.2 million decrease in our domestic music operations. The decline in our domestic music revenue was primarily the result of a reduction in the number of domestic events, which reduced attendance, and lower ticket prices. The reduction in ticket prices was partially a result of a ticket charge reduction program aimed at improving the value proposition of our concert tickets to the consumer. Pollstar reported that through September 2005, total industry sales volume decreased approximately 11% compared to the same period in 2004. We believe the decline in events is in part due to a reduction in the number of artists currently interested in touring, and the decline in ticket prices is in part the result of efforts being made by artists and promoters to make the concert experience more affordable to the customer.

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      Our domestic music revenue decline was partially offset by a $97.5 million increase in international revenues for the nine months ended September 30, 2005 as compared to the same period of 2004. This increase is primarily due to the acquisition of international promotion companies during the second half of 2004, the acquisition of a festival promoter and venue operator in 2005, an increase in promotion revenue related to shows with higher ticket prices and an increase in the attendance at our international festivals.
      Global music divisional operating expenses decreased $79.2 million, or 5%, during the nine months ended September 30, 2005 as compared to the nine months ended September 30, 2004 primarily due to the decrease in domestic music events. The decrease in domestic divisional operating expenses of $164.0 million was partially offset by a $84.8 million increase in international divisional expenses related to the acquisition of international promotion companies during the second half of 2004, the acquisition of a festival promoter and venue operator in 2005, and an increase in promotion activity, as well as an increase in foreign exchange rates of $8.7 million during the period.
Fiscal Year 2004 Compared to Fiscal Year 2003
      Global music revenue increased $131.2 million, or 6%, during 2004 as compared to 2003. Approximately $57.6 million, or 44% of the increase, was attributable to foreign exchange rate increases. The increase was also driven by an increased number of events and attendance in our international operations. Significant acts for 2004 included Madonna and the Italian tour of Vasco Rossi. In addition, revenue from global music sponsorships and premium seat sales increased in 2004 by $15.9 million, or 12%, over 2003. We had fewer domestic amphitheater events in 2004 as compared to 2003 primarily due to an unusually high number of show cancellations in 2004 as compared to 2003. Attendance for 2004 in our owned and operated amphitheaters was lower than 2003, partially due to these cancellations. In general, the domestic music industry suffered a setback in 2004 and according to Pollstar experienced a decline of approximately 3%, as compared to 2003, in the number of tickets sold for the top 100 tours.
      Global music divisional operating expenses increased $157.8 million, or 8%, during 2004 as compared to 2003. Approximately $53.3 million, or 34% of the increase, was attributable to foreign exchange rate increases. The increase also relates to variable promotion, production and venue costs associated with the number and type of events in 2004 as compared to 2003. In addition, domestic music experienced higher talent and production costs primarily due to higher artist guarantees without a proportional increase in revenue. Domestic music also completed a restructuring of operations in the fourth quarter of 2004, resulting in a staff reduction and an increase in severance costs.
      Depreciation and amortization increased by $1.8 million, or 5%, in 2004 as compared to 2003 primarily due to the completion of new venues placed in service in late 2003 and in 2004.
Fiscal Year 2003 Compared to Fiscal Year 2002
      Global music revenue increased $248.6 million, or 14%, during 2003 as compared to 2002. Approximately $74.6 million, or 30% of the increase, was attributable to foreign exchange rate increases. The increase was also driven by an increased number of events and attendance in our international promotions as well as an increase in the attendance at our international festivals. Significant acts in Europe during 2003 included the Rolling Stones and the Italian tours of Ramazotti and Vasco Rossi. Although domestically we had fewer amphitheater events in 2003 as compared to 2002, we experienced an increase in overall attendance, sponsorship and premium seat revenue. In addition, we had more domestic stadium events in 2003 as compared to 2002, including Bruce Springsteen and Bon Jovi.
      Global music divisional operating expenses increased $230.8 million, or 14%, during 2003 as compared to 2002. Approximately $68.6 million, or 30% of the increase, was attributable to foreign exchange rate increases. The remaining increase primarily relates to variable promotion and production costs associated with the increased number of our international events in 2003 as compared to 2002.

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Global Theater Results of Operations
      Our global theater operating results were as follows:
                                         
    Nine Months Ended    
    September 30,   Year Ended December 31,
         
    2005   2004   2004   2003   2002
(In thousands)                    
    (unaudited)            
Revenue
  $ 233,265     $ 222,871     $ 313,974     $ 318,219     $ 296,460  
Divisional operating expenses
    219,132       198,942       278,327       282,320       254,971  
Depreciation and amortization
    11,389       11,014       14,709       13,161       11,133  
Loss (gain) on sale of operating assets
    2       (58 )     (58 )     24       4  
                               
Operating income
  $ 2,742     $ 12,973     $ 20,996     $ 22,714     $ 30,352  
                               
Nine Months Ended September 30, 2005 to Nine Months Ended September 30, 2004
      Global theater revenue increased $10.4 million, or 5%, during the nine months ended September 30, 2005 as compared to the nine months ended September 30, 2004. Approximately $1.3 million, or 13% of the increase, was attributable to foreign exchange rate increases. Additional domestic event dates, the opening of our renovated Boston Opera House in the third quarter of 2004, and a greater number of international productions, including Starlight Express and Chicago, were primarily responsible for the increase. Operationally, global theater expanded its venue network during the nine months ended September 30, 2005 with the acquisition of four theaters in Spain.
      Global theater divisional operating expenses grew $20.2 million, or 10%, during the nine months ended September 30, 2005 as compared to the nine months ended September 30, 2004. Approximately $1.1 million, or 5% of the increase, was attributable to foreign exchange rate increases. The remaining increase primarily relates to additional domestic event dates, the opening of our renovated Boston Opera House in the third quarter of 2004, and the greater number of international productions.
Fiscal Year 2004 Compared to Fiscal Year 2003
      Global theater revenues decreased $4.2 million, or 1%, during 2004 as compared to 2003 primarily due to fewer domestic event dates and the replacement of a number of significant international production investments in 2003 with smaller interests in international productions in 2004 where we receive only investment earnings rather than consolidated production results. These declines were partially offset by an increase in foreign exchange rates of approximately $10.4 million in 2004 as compared to 2003, as well as the positive impact to revenues associated with our opening of the renovated France-Merrick Center for Performing Arts and the Boston Opera House during 2004.
      Global theater divisional operating expenses declined $4.0 million, or 1%, during 2004 as compared to 2003 primarily due to a decrease in global theater revenues during 2004 as compared to 2003. Included in this variance are foreign exchange rate increases of approximately $8.9 million.
      Global theater depreciation and amortization expense increased $1.5 million, or 12%, during 2004 as compared to 2003 primarily due to foreign exchange rate increases of $1.0 million and the completion and opening of the Boston Opera House during 2004.
Fiscal Year 2003 Compared to Fiscal Year 2002
      Global theater revenues increased $21.8 million, or 7%, during 2003 as compared to 2002. Approximately $8.6 million, or 39% of the increase, was attributable to foreign exchange rate increases. The remaining increase primarily relates to an increase in the number of domestic event dates, which included tours of The Lion King, The Producers and Mamma Mia!, as well as Cats in the United Kingdom, in 2003 as compared to 2002.

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      Global theater divisional operating expenses increased $27.3 million, or 11%, during 2003 as compared to 2002. Approximately $7.0 million, or 26% of the increase, was attributable to foreign exchange rate increases. The remaining increase primarily relates to an increase in the number of domestic event dates. Operating expenses increased greater than revenues principally due to reduced show profitability and a high number of show cancellations resulting from severe weather in some areas.
      Global theater depreciation and amortization expense increased $2.0 million, or 18%, during 2003 as compared to 2002 primarily due to foreign exchange rate increases of $0.7 million and capital improvements to existing venues.
Other Results of Operations
      Our other operating results were as follows:
                                         
    Nine Months Ended    
    September 30,   Year Ended December 31,
         
(In thousands)   2005   2004   2004   2003   2002
                     
    (unaudited)            
Revenue
  $ 242,954     $ 245,936     $ 291,147     $ 319,826     $ 355,644  
Divisional operating expenses
    236,065       234,183       285,021       300,183       354,402  
Depreciation and amortization
    4,362       5,655       7,406       9,626       12,694  
Loss (gain) on sale of operating assets
    (396 )     10,379       9,867       (139 )     (10,110 )
                               
Operating income (loss)
  $ 2,923     $ (4,281 )   $ (11,147 )   $ 10,156     $ (1,342 )
                               
Nine Months Ended September 30, 2005 to Nine Months Ended September 30, 2004
      Other revenues decreased $3.0 million, or 1%, during the nine months ended September 30, 2005 as compared to the nine months ended September 30, 2004. Foreign exchange rate increases of approximately $1.2 million were offset by decreases related to the sale of the international leisure center business during the second quarter of 2004 as well as the popular Titanic: The Artifact Exhibit completing its run during the second quarter of 2004. These revenue decreases were partially offset by revenue growth from Dora the Explorer as compared to the same period last year and Blue’s Clues, which did not tour in 2004. Growth in the revenue from our specialized motor sports events resulted from a slight increase in attendance and ticket prices. Also, our sports representation business increased during the nine months ended September 30, 2005 as compared to the same period in 2004 primarily from improved hospitality and sponsorship revenue.
      Other divisional operating expenses increased $1.9 million, or 1%, during the nine months ended September 30, 2005 as compared to the nine months ended September 30, 2004. Foreign exchange rate increases of approximately $1.1 million were offset by decreases related to the sale of the international leisure center business during the second quarter of 2004 as well as the popular Titanic: The Artifact Exhibit completing its run during the second quarter of 2004. These expense decreases were partially offset by expense increases related to the growth in our specialized motor sports events, family shows and sports representation businesses as well as a $12.5 million increase in litigation contingencies and expenses during the nine months ended September 30, 2005 as compared to the same period in 2004. Additional litigation contingencies and expenses are reflected in corporate expenses.
      Other divisional depreciation and amortization expense decreased $1.3 million, or 23%, for the nine months ended September 30, 2005 as compared to the nine months ended September 30, 2004 primarily as a result of the sale of the international leisure center business during the second quarter of 2004.

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      Other gain on sale of operating assets increased $10.8 million during the nine months ended September 30, 2005 as compared to the same period in 2004 due primarily to the divestiture of our international leisure center operations during the second quarter of 2004.
Fiscal Year 2004 Compared to Fiscal Year 2003
      Other revenues decreased $28.7 million, or 9%, during 2004 as compared to 2003. Foreign exchange rate increases of approximately $6.3 million were offset by decreases relating to the divestiture of certain non-core businesses, including our international leisure center business, during the second quarter of 2004 and a television production business during 2003. In addition, our exhibitions group experienced a reduction in revenues as the popular Titanic: The Artifact Exhibit completed its run during the second quarter of 2004 after a full year of operations in 2003. These revenue declines were partially offset by an increase in the amount of sponsorship sales during 2004.
      Other divisional operating expenses decreased $15.2 million, or 5%, during 2004 as compared to 2003. Foreign exchange rate increases of approximately $5.8 million were offset by decreases relating to the non-core divestitures and conclusion of Titanic: The Artifact Exhibit as mentioned above.
      Other divisional depreciation and amortization expense decreased $2.2 million, or 23%, during 2004 as compared to 2003 primarily due to the divestiture of our international leisure center operations during the second quarter of 2004.
      Other loss on sale of operating assets increased $10.0 million during 2004 as compared to 2003 primarily due to the sale of our international leisure center operations during the second quarter of 2004.
Fiscal Year 2003 Compared to Fiscal Year 2002
      Other revenues decreased $35.8 million, or 10%, during 2003 as compared to 2002. Foreign exchange rate increases of approximately $5.7 million were offset by decreases relating to several factors. We saw a reduction in results from our family shows as 2002 included a strong tour of Dora the Explorer and there were no similar sized productions in 2003. Also, we divested certain non-core businesses during 2003, including our international cinema and bingo business, and two companies involved in television production and music research. In addition, a reduction in certain creative marketing operations was partially offset by an increase in the amount of sponsorship sales during 2003.
      Other divisional operating expenses decreased $54.2 million, or 15%, during 2003 as compared to 2002. Foreign exchange rate increases of approximately $5.7 million were offset by decreases relating to family show results and the divestitures mentioned above.
      Other divisional depreciation and amortization expense decreased $3.1 million, or 24%, during 2003 as compared to 2002 primarily due to divestiture of our international cinema and bingo operations during 2003 as well as certain other assets becoming fully depreciated.
      Other gain on sale of operating assets decreased $10.0 million during 2003 as compared to 2002 primarily due to the sale of our international cinema and bingo operations during 2002.

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Reconciliation of Segment Operating Income (Loss)
                                         
    Nine Months Ended    
    September 30,   Year Ended December 31,
         
    2005   2004   2004   2003   2002
(In thousands)                    
    (unaudited)            
Global Music
  $ 85,604     $ 94,269     $ 85,457     $ 111,326     $ 97,731  
Global Theater
    2,742       12,973       20,996       22,714       30,352  
Other
    2,923       (4,281 )     (11,147 )     10,156       (1,342 )
Corporate
    (41,669 )     (23,743 )     (36,323 )     (36,207 )     (31,825 )
                               
Combined operating income
  $ 49,600     $ 79,218     $ 58,983     $ 107,989     $ 94,916  
                               
Liquidity and Capital Resources
      Historically, we have operated with a sweep account that allows excess operating cash generated by our domestic operations to be transferred to Clear Channel Communications, generally on a daily basis. Our excess operating cash generated from our international business is also transferred to Clear Channel Communications but not as frequently. Thus, our “Cash and cash equivalents” balances maintained on our combined balance sheets primarily reflects our cash held by our international businesses and our domestic cash that is not swept. Repatriation of some of these funds could be subject to delay and could have potential tax consequences, principally with respect to withholding taxes paid in foreign jurisdictions which do not give rise to a tax benefit in the United States due to our current inability to recognize the related deferred tax assets.
      Our working capital requirements and capital for our general corporate purposes, including acquisitions and capital expenditures, have historically been satisfied as part of the corporate-wide cash management policies of Clear Channel Communications. Our cash needs have historically been funded primarily through an intercompany promissory note with Clear Channel Communications. Subsequent to this distribution, Clear Channel Communications will not be providing us with funds to finance our working capital or other cash requirements. Without the opportunity to obtain financing from Clear Channel Communications, we may in the future need to obtain additional financing from banks, or through public offerings or private placements of debt or equity securities, strategic relationships or other arrangements. We will have a credit rating that is lower than Clear Channel Communications’ credit rating and, as a result, will incur debt on terms and at interest rates that will not be as favorable as those generally enjoyed by Clear Channel Communications. We believe that we will be able to meet our cash requirements in 2005 and for at least the succeeding year after the distribution through cash generated from operations and, to the extent necessary, from borrowings under our planned senior secured credit facility described below.
      Our historical balance sheet reflects cash and cash equivalents of $179.1 million and short-term and long-term debt of $650.7 million at December 31, 2004, and cash and cash equivalents of $116.4 million and debt of $617.8 million at December 31, 2003. In connection with this spin-off, Clear Channel Communications will contribute $508.0 million of intercompany debt to our capital, and we expect to incur $367.6 million in indebtedness through a $325.0 million senior secured term loan and we expect Holdco #2 to issue shares of Series A redeemable preferred stock having a liquidation preference of $20 million and Series B redeemable preferred stock having a liquidation preference of $20 million. $200.0 million of the proceeds of the term loan and $20 million of the proceeds from the sale of the Series A preferred stock will be used to repay the remaining portion of our intercompany promissory note to Clear Channel Communications. The Series B preferred stock will be issued to Clear Channel Communications for no cash and immediately resold to a third-party purchaser. There will be no outstanding debt between Clear Channel Communications and us immediately following the spin-off. We also anticipate entering into a revolving credit facility under the senior secured bank facility that will remain available for working capital and general corporate purposes. We intend to use the remaining

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$125.0 million of borrowings under the term loan portion of our senior secured credit facility for general corporate proposals, including working capital, potential acquisitions and stock repurchases.
      We currently plan to enter into a senior secured credit facility with lenders as described below. Prior to or concurrently with the completion of the distribution, one of our operating subsidiaries, Holdco #3, which owns more than 95% of the gross value of our assets, will enter into a $575.0 million senior secured credit facility consisting of:
  •  a $325.0 million 71/2-year term loan; and
 
  •  a $250.0 million 61/2-year revolving credit facility, of which up to $200.0 million will be available for the issuance of letters of credit and up to $100.0 million will be available for borrowings in foreign currencies.
      Subject to then market pricing and maturity extending longer than that of the senior secured credit facility, we will be able to add additional term and revolving credit facilities in an aggregate amount not to exceed $250.0 million. We anticipate that the senior secured credit facility will be secured by a first priority lien on substantially all of our domestic assets (other than real property and deposits maintained by us in connection with promoting or producing live entertainment events) and a pledge of the capital stock of our domestic subsidiaries and a portion of the capital stock of certain of our foreign subsidiaries. Borrowings in foreign currencies by our foreign subsidiaries will, in addition, be secured by a first priority lien on substantially all of our foreign assets (other than real property and deposits maintained by us in connection with promoting or producing live entertainment events) and a pledge of the capital stock of all subsidiaries held by such borrowing subsidiary. We further anticipate that the senior secured credit facility will place certain restrictions on the ability to, among other things, incur debt, create liens, make investments, pay dividends, sell assets, undertake transactions with affiliates, and enter into unrelated lines of business.
      After giving effect to the term loan, we expect to have approximately $367.6 million of indebtedness for borrowed money outstanding, and such prospective indebtedness is currently rated B1 by Moody’s Investors Services, Inc. and B+ by Standards & Poor’s Ratings Services, a division of The McGraw-Hill Companies, Inc., which is currently below the ratings given to Clear Channel Communications’ senior debt by such ratings agencies. We intend to use $200.0 million of borrowings under the term loan portion of our senior secured credit facility and the $20 million of proceeds from the issuance of the Series A redeemable preferred stock of Holdco #2 to repay a portion of the indebtedness we owe Clear Channel Communications. We intend to use the remaining $125.0 million of borrowings under the term loan portion of our senior secured credit facility for general corporate purposes, including working capital, potential acquisitions and stock repurchases. We expect that approximately $200.0 million of the revolving credit facility will remain available for working capital and general corporate purposes of Holdco #3 and its subsidiaries immediately following the completion of the distribution, and after the transfer of approximately $50.0 million of letters of credit previously issued under Clear Channel Communications’ credit facilities on behalf of certain Holdco #3 subsidiaries. The issuance of letters of credit will reduce this availability by the notional amount of issued letters of credit. However, on or prior to the distribution date, we may draw advances under the senior secured credit facility for working capital and other general corporate purposes.
      The agreements governing the senior secured credit facility are subject to ongoing negotiation. We cannot be certain the terms described herein will not change or be supplemented. See “Description of Indebtedness.”
      Following the distribution, we currently anticipate that our primary sources of liquidity will be the cash flow generated from our operations, availability under the revolving credit facility and available cash and cash equivalents. These sources of liquidity are needed to fund our new debt service requirements, pay the annual dividend on Holdco #2’s preferred stock, working capital requirements and capital expenditure requirements. As further described below, our ability to obtain funds from our subsidiaries may be restricted by the terms of the senior secured credit facility, the Holdco #2 preferred stock, and applicable

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state law. If cash flow generated from our operations is less than we expect, we may need to incur additional debt.
      We may need to incur additional debt or issue equity to make strategic acquisitions or investments. We can not assure that such financing will be available to us on acceptable terms or that such financing will be available at all. Our ability to issue additional equity may be constrained because our issuance of additional stock may cause the distribution to be taxable under section 355(e) of the Code, and, under the tax matters agreement, we would be required to indemnify Clear Channel Communications against the tax, if any. We may make significant acquisitions in the near term, subject to limitations imposed by our financing documents, market conditions and the tax matters agreement.
      Our intra-year cash fluctuations are impacted by the seasonality of our various businesses. Examples of seasonal effects include our global music business, which reports the majority of its revenues in the second and third quarters, while our global theater business reports the majority of its revenues in the first, second and fourth quarters of the year. Cash inflows and outflows depend on the timing of event-related payments and generally occur prior to the event. See “— Seasonality.” 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. We expect cash flows from operations and borrowings under our planned senior secured credit facility to satisfy working capital, capital expenditure and debt service requirements in 2005, and for at least the succeeding year after the distribution.
Capital Expenditures
      Venue operations is a capital intensive business, requiring consistent investment in our existing venues in order to address audience and artist expectations, technological industry advances and various federal and state regulations.
      We categorize capital outlays into maintenance expenditures and new venue expenditures. Maintenance expenditures are associated with the upkeep of existing venues and, to a lesser extent, capital expenditures related to information systems and administrative offices. New venue expenditures relate to either the construction of new venues or major renovations to existing buildings that are being added to our venue network. Capital expenditures typically increase during periods when venues are not in operation.
      Our capital expenditures have consisted of the following:
                                         
    Nine Months            
    Ended    
    September 30,   Year Ended December 31,
         
(In millions)   2005   2004   2004   2003   2002
                     
Maintenance expenditures
  $ 44.1     $ 17.3     $ 31.4     $ 34.2     $ 58.4  
New venue expenditures
    27.9       39.2       42.0       35.7       9.8  
                               
Total capital expenditures
  $ 72.0     $ 56.5     $ 73.4     $ 69.9     $ 68.2  
                               
      Maintenance expenditures for the nine months ended September 30, 2005 increased $26.8 million over the same period in 2004 largely due to increased expenditures made to improve the audience experience at our owned and operated amphitheaters. We do not expect this higher level of maintenance expenditures to occur at the same level in future periods.
      Our primary short-term liquidity needs are to fund general working capital requirements and maintenance expenditures while our long-term liquidity needs are primarily associated with new venue expenditures. Our primary sources of funds for our short-term liquidity needs will be cash flows from operations and borrowings under our credit facility, while our long-term sources of funds will be from cash from operations, long-term bank borrowings and other debt or equity financing.

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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 the venues used in our entertainment 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 noncancelable contracts related to our operations such as artist guarantee contracts, employment contracts and theatrical production payments. 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, 2004 and thus do not represent all expected expenditures for those periods.
      The scheduled maturities of our long-term debt outstanding, future minimum rental commitments under noncancelable lease agreements, minimum payments under other noncancelable contracts and capital expenditures commitments as of December 31, 2004 are as follows:
                                         
    Payments Due by Period
     
(In thousands)   Total   2005   2006 — 2007   2008 — 2009   2010 and thereafter
                     
Long-term debt obligations, including current maturities
  $ 650,675     $ 1,214     $ 2,597     $ 2,613     $ 644,251  
Estimated interest payments(1)
    296,132       44,293       98,104       112,320       41,415  
Non-cancelable operating lease obligations
    755,196       51,485       94,097       77,057       532,557  
Non-cancelable contracts
    251,191       171,288       46,553       18,067       15,283  
Capital expenditures
    30,601       13,601       17,000              
Other long-term liabilities(2)
                                       
                               
Total
  $ 1,983,795     $ 281,881     $ 258,351     $ 210,057     $ 1,233,506  
                               
 
(1)  Based on accrued interest expense calculated on the outstanding balance of the debt with Clear Channel Communications at December 31, 2004.
 
(2)  Assumes liabilities consist of $70.8 million of tax contingencies and $18.2 million of various other obligations. All of our other long-term liabilities do not have contractual maturities and, therefore, we can not predict when, or if, they will become due.
      On a pro forma basis, after giving effect to the term loan under our senior secured credit facility in connection with the spin-off and the issuance of the preferred stock by Holdco #2 and the application of the

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proceeds therefrom to repay certain long-term debt as if such transactions had occurred at December 31, 2004, our contractual obligations consisted of the following:
                                         
    Payments Due by Period (Pro Forma)
     
(In thousands)   Total   2005   2006 — 2007   2008 — 2009   2010 and thereafter
                     
Long-term debt obligations, including current maturities
  $ 346,778     $ 4,464     $ 5,847     $ 5,863     $ 330,604  
Preferred stock
    40,000                         40,000  
Estimated interest payments(1)
    202,800       28,080       56,160       56,160       62,400  
Non-cancelable operating lease obligations
    755,196       51,485       94,097       77,057       532,557  
Non-cancelable contracts
    251,191       171,288       46,553       18,067       15,283  
Capital expenditures
    30,601       13,601       17,000              
Other long-term liabilities(2)
                                       
                               
Total
  $ 1,626,566     $ 268,918     $ 219,657     $ 157,147     $ 980,844  
                               
 
(1)  Includes dividends on the Series A and Series B preferred stock.
 
(2)  Assumes liabilities consist of $70.8 million of tax contingencies and $18.2 million of various other obligations. All of our other long-term liabilities do not have contractual maturities and, therefore, we can not predict when, or if, they will become due.
Cash Flows
                                         
    Nine Months Ended    
    September 30,   Year Ended December 31,
         
    2005   2004   2004   2003   2002
(In thousands)                    
    (unaudited)            
Cash provided by (used in):
                                       
Operating activities
  $ 2,203     $ 88,557     $ 119,898     $ 138,713     $ 142,237  
Investing activities
  $ (72,603 )   $ (64,662 )   $ (84,076 )   $ (51,960 )   $ (31,329 )
Financing activities
  $ 156,618     $ 44,331     $ 23,254     $ (56,894 )   $ (112,281 )
Operating Activities
Nine Months Ended September 30, 2005 Compared to Nine Months Ended September 30, 2004
      Cash provided by operations was $2.2 million for the nine months ended September 30, 2005, compared to cash provided by operations of $88.6 million for the nine months ended September 30, 2004. The $86.4 million decrease in cash provided by operations resulted from a decrease in net income, changes in the event related operating accounts which are dependent on the number and size of events on-going at period end. We had prepaid more expenses in 2005, including artist deposits, and accrued more expenses, based on the size and timing of the upcoming tours.
Year Ended December 31, 2004 Compared to Year Ended December 31, 2003
      Cash provided by operations was $119.9 million for the year ended December 31, 2004 as compared to cash provided by operations of $138.7 million for the year ended December 31, 2003. The $18.8 million decrease in cash provided by operations resulted primarily from a decrease in net income.

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Year Ended December 31, 2003 Compared to Year Ended December 31, 2002
      Cash provided by operations was $138.7 million for the year ended December 31, 2003 as compared to cash provided by operations of $142.2 million for the year ended December 31, 2002. The $3.5 million decrease in cash provided by operations primarily resulted from an increase in income before the cumulative effect of a change in accounting principle of $53.6 million offset by changes in working capital items.
Investing Activities
Nine Months Ended September 30, 2005 Compared to Nine Months Ended September 30, 2004
      Cash used in investing activities was $72.6 million for the nine months ended September 30, 2005, compared to cash used in investing activities of $64.7 million for the nine months ended September 30, 2004. The $7.9 million increase in cash used in investing activities was primarily due to an increase in capital expenditures of $15.5 million, partially offset by less acquisition related payments in 2005.
Year Ended December 31, 2004 Compared to Year Ended December 31, 2003
      Cash used in investing activities was $84.1 million for the year ended December 31, 2004, compared to cash used in investing activities of $52.0 million for the year ended December 31, 2003. The $32.1 million increase in cash used in investing activities was primarily due to more acquisition-related payments in 2004 and the collection of a note receivable in 2003.
Year Ended December 31, 2003 Compared to Year Ended December 31, 2002
      Cash used in investing activities was $52.0 million for the year ended December 31, 2003, compared to cash used in investing activities of $31.3 million for the year ended December 31, 2002. The $20.7 million increase in cash used in investing activities was primarily due to fewer asset disposal-related proceeds in 2003.
Financing Activities
      Historically, we have funded our cash needs through an intercompany promissory note with Clear Channel Communications. The intercompany promissory note functions as part of a sweep account that allows excess operating cash generated by our domestic operations to be transferred to Clear Channel Communications, generally on a daily basis. As we have cash needs, these are funded from Clear Channel Communications through this account.
      Following the distribution, we expect to fund our cash needs through cash from operations, borrowings under our revolving credit facility and available cash and cash equivalents.
Nine Months Ended September 30, 2005 Compared to Nine Months Ended September 30, 2004
      Cash provided by financing activities was $156.6 million for the nine months ended September 30, 2005, compared to cash provided by financing activities of $44.3 million for the nine months ended September 30, 2004. The $112.3 million increase in cash provided by financing activities is a result of more cash being provided by Clear Channel Communications for 2005, primarily due to reduced cash from operations for the same period as discussed above.
Year Ended December 31, 2004 Compared to Year Ended December 31, 2003
      Cash provided by financing activities was $23.3 million for the year ended December 31, 2004, compared to cash used in financing activities of $56.9 million for the year ended December 31, 2003. The $80.2 million increase in cash provided by financing activities is a result of more cash being provided by Clear Channel Communications for 2004, primarily due to higher cash used in investing activities in 2004 from more acquisition payments. This is also due to more cash generated from operations in our

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international businesses during 2004 which does not sweep to Clear Channel Communications as often as our domestic operations.
Year Ended December 31, 2003 Compared to Year Ended December 31, 2002
      Cash used in financing activities was $56.9 million for the year ended December 31, 2003, compared to cash used in financing activities of $112.3 million for the year ended December 31, 2002. The $55.4 million decrease in cash used in financing activities is a result of fewer payments made on the debt with Clear Channel Communications for 2003.
Seasonality
      For financial statement purposes, our global music segment typically experiences higher operating income in the second and third quarters as our outdoor venues and international festivals are primarily used or occur during May through September. Our global theater segment typically experiences its higher operating income during the first, second and fourth quarters of the calendar year as the theatrical touring season typically runs from September through April.
      Cash flows from global music and global theater typically have a slightly different seasonality as advance payments are often made for artist performance fees and theatrical production costs in advance of the date the related event tickets go on sale. Once tickets for an event go on sale, we begin to receive payments from ticket sales, still 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 “Risk Factors — Our operations are seasonal and our results of operations vary from quarter to quarter, so our financial performance in certain financial quarters may not be indicative of or comparable to our financial performance in subsequent financial quarters.”
Quantitative and Qualitative Disclosure about 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, except in the hyper-inflationary countries in which we operate. 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. Our foreign operations reported operating income of $49.8 million for the nine months ended September 30, 2005. We estimate that a 10% change in the value of the United States dollar relative to foreign currencies would change our net income for the nine months ended September 30, 2005 by $4.9 million. As of September 30, 2005, our primary foreign exchange exposure included the Euro, British Pound, Swedish Kroner and Canadian Dollar.
      This analysis does not consider the implication such currency fluctuations could have on the overall economic activity that could exist in such an environment in the United States or the foreign countries or on the results of operations of these foreign entities.
Interest Rate Risk
      Our market risk is also affected by changes in interest rates. We had $768.1 million total debt outstanding as of September 30, 2005, of which $0.2 million was variable rate debt.
      Based on the amount of our floating-rate debt as of September 30, 2005, each 25 basis point increase or decrease in interest rates would not increase or decrease our annual interest expense and cash outlay by a significant amount. This potential increase or decrease is based on the simplified assumption that the

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level of floating-rate debt remains constant with an immediate across-the-board increase or decrease as of September 30, 2005 with no subsequent change in rates for the remainder of the period.
      After our spin-off from Clear Channel Communications, we may use interest rate swaps and other derivative instruments and an increased proportion of fixed rate borrowings to reduce our exposure to market risk from changes in interest rates. The principal objective of such contracts is to minimize the risks and/or costs associated with our variable rate debt. We do not intend to hold or issue interest rate swaps for trading purposes.
Recent Accounting Pronouncements
      In December 2004, the Financial Accounting Standards Board (“FASB”) issued Financial Accounting Standard No. 153, Exchanges of Nonmonetary Assets, an amendment of APB Opinion No. 29 (“Statement 153”). Statement 153 eliminates the APB Opinion No. 29 exception for nonmonetary exchanges of similar productive assets and replaces it with an exception for exchanges of nonmonetary assets that do not have commercial substance. Statement 153 is effective for financial statements for fiscal years beginning after June 15, 2005. Earlier application is permitted for nonmonetary asset exchanges occurring in fiscal periods beginning after the date of issuance. The provisions of Statement 153 should be applied prospectively. We expect to adopt Statement 153 for its fiscal year beginning January 1, 2006 and management does not believe that adoption will materially impact our financial position or results of operations.
      In December 2004, the FASB issued Staff Position 109-2, Accounting and Disclosure Guidance for the Foreign Repatriation Provision within the American Jobs Creation Act of 2004 (“FSP 109-2”). FSP 109-2 allows an enterprise additional time beyond the financial reporting period in which the Act was enacted to evaluate the effects of the Act on its plans for repatriation of unremitted earnings for purposes of applying Financial Accounting Standard No. 109, Accounting for Income Taxes, (“Statement 109”). FSP 109-2 clarifies that an enterprise is required to apply the provisions of Statement 109 in the period, or periods, it decides on its plan(s) for reinvestment or repatriation of its unremitted foreign earnings. FSP 109-2 requires disclosure if an enterprise is unable to reasonably estimate, at the time of issuance of its financial statements, the related range of income tax effects for the potential range of foreign earnings that it may repatriate and requires an enterprise to recognize income tax expense (benefit) if an enterprise decides to repatriate a portion of unremitted earnings under the repatriation provision while it is continuing to evaluate the effects of the repatriation provision for the remaining portion of the unremitted foreign earnings. FSP 109-2 is effective upon issuance. We currently have the ability and intent to reinvest any undistributed earnings of its foreign subsidiaries. Any impact from this legislation has not been reflected in the amounts shown since we are reinvested for the foreseeable future.
      On December 16, 2004, the FASB issued Statement of Financial Accounting Standards No. 123 (revised 2004), Share-Based Payment (“Statement 123(R)”), which is a revision of Statement of Financial Accounting Standards No. 123, Accounting for Stock-Based Compensation (“Statement 123”). Statement 123(R) supersedes Accounting Principles Board (“APB”) Opinion No. 25, Accounting for Stock Issued to Employees (“APB 25”), and amends Statement No. 95, Statement of Cash Flows. Generally, the approach in Statement 123(R) is similar to the approach described in Statement 123. However, Statement 123(R) requires all share-based payments to employees, including grants of employee stock options, to be recognized in the income statement based on their fair values. Pro forma disclosure is no longer an alternative. Statement 123(R) is effective for financial statements for the first interim or annual period beginning after June 15, 2005. Early adoption is permitted in periods in which financial statements have not yet been issued. In April 2005, the SEC issued a press release announcing that it would provide for phased-in implementation guidance for Statement 123(R). The SEC would require that registrants that are not small business issuers adopt Statement 123(R)’s fair value method of accounting for share-based payments to employees no later than the beginning of the first fiscal year beginning after June 15, 2005. We intend to adopt Statement 123(R) on January 1, 2006.
      As permitted by Statement 123, we currently account for share-based payments to employees using APB 25 intrinsic value method and, as such, generally recognize no compensation cost for employee stock

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options. Accordingly, the adoption of Statement 123(R)’s fair value method will have a significant impact on our results of operations, although it will have no impact on our overall financial position. We are unable to quantify the impact of adoption of Statement 123(R) at this time because it will depend on levels of share-based payments granted in the future. However, had we adopted Statement 123(R) in prior periods, the impact of that standard would have approximated the impact of Statement 123 as described in the disclosure of pro forma net income and earnings per share in Note A of the Notes to Combined Financial Statements included elsewhere herein. Statement 123(R) also requires the benefits of tax deductions in excess of recognized compensation cost to be reported as a financing cash flow. This requirement will increase net financing cash flows in periods after adoption. We cannot estimate what those amounts will be in the future because they depend on, among other things, when employees exercise stock options.
      In March 2005, the Securities and Exchange Commission (“SEC”) issued Staff Accounting Bulletin No. 107 Share-Based Payment (“SAB 107”). SAB 107 expresses the SEC staff’s views regarding the interaction between Statement 123(R) and certain SEC rules and regulations and provides the staff’s views regarding the valuation of share-based payment arrangements for public companies. In particular, SAB 107 provides guidance related to share-based payment transactions with nonemployees, the transition from nonpublic to public entity status, valuation methods (including assumptions such as expected volatility and expected term), the accounting for certain redeemable financial instruments issued under share-based payment arrangements, the classification of compensation expense, non-GAAP financial measures, first time adoption of Statement 123(R) in an interim period, capitalization of compensation cost related to share-based payment arrangements, the accounting for income tax effects of share-based payment arrangements upon adoption of Statement 123(R) and the modification of employee share options prior to adoption of Statement 123(R). The Company is unable to quantify the impact of adopting SAB 107 and Statement 123(R) at this time because it will depend on levels of share-based payments granted in the future. Additionally, the Company is still evaluating the assumptions it will use upon adoption.
      In April 2005, the SEC issued a press release announcing that it would provide for phased-in implementation guidance for Statement 123(R). The SEC would require that registrants that are not small business issuers adopt Statement 123(R)’s fair value method of accounting for share-based payments to employees no later than the beginning of the first fiscal year beginning after June 15, 2005. The Company intends to adopt Statement 123(R) on January 1, 2006.
      In June 2005, the Emerging Issues Task Force (“EITF”) issued EITF 05-6, Determining the Amortization Period of Leasehold Improvements (“EITF 05-6”). EITF 05-6 requires that assets recognized under capital leases generally be amortized in a manner consistent with the lessee’s normal depreciation policy except that the amortization period is limited to the lease term (which includes renewal periods that are reasonably assured). EITF 05-6 also addresses the determination of the amortization period for leasehold improvements that are purchased subsequent to the inception of the lease. Leasehold improvements acquired in a business combination or purchased subsequent to the inception of the lease should be amortized over the lesser of the useful life of the asset or the lease term that includes reasonably assured lease renewals as determined on the date of the acquisition of the leasehold improvement. We adopted EITF 05-6 on July 1, 2005 which did not materially impact our financial position or results of operations.
      In October 2005, the FASB issued Staff Position 13-1 (“FSP 13-1”). FSP 13-1 requires rental costs associated with ground or building operating leases that are incurred during a construction period be recognized as rental expense. The guidance in FSP 13-1 shall be applied to the first reporting period beginning after December 15, 2005. We will adopt FSP 13-1 January 1, 2006 and do not anticipate adoption to materially impact our financial position or results of operations.
Critical Accounting Policies
      The preparation of our financial statements in conformity with Generally Accepted Accounting Principles requires management to make estimates, judgments and assumptions that affect the reported

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amounts of assets and liabilities, disclosure of contingent assets and liabilities at the date of the financial statements and the reported amount of 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 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. Our significant accounting policies are discussed in Note A, Summary of Significant Accounting Policies, of the Notes to Combined Financial Statements included elsewhere herein. 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.
Allowance for Doubtful Accounts
      We evaluate the collectibility of our accounts receivable based on a combination of factors. In circumstances where we are aware of a specific customer’s inability to meet its financial obligations, we record a specific reserve to reduce the amounts recorded to what we believe will be collected. For all other customers, we recognize reserves for bad debt based on historical experience of bad debts as a percentage of revenues for each business unit, adjusted for relative improvements or deteriorations in the agings and changes in current economic conditions.
      If our agings were to improve or deteriorate resulting in a 10% change in our allowance, it is estimated that our bad debt expense for the nine months ended September 30, 2005 would have changed by $1.1 million and our net income for the same period would have changed by $0.7 million.
Long-Lived Assets
      Long-lived assets, such as property, plant and equipment, are reviewed for impairment when events and circumstances indicate that depreciable and amortizable long-lived assets might be impaired and the undiscounted cash flows estimated to be generated by those assets are less than the carrying amount of those assets. When specific assets are determined to be unrecoverable, the cost basis of the asset is reduced to reflect the current fair market value.
      We use various assumptions in determining the current fair market value of these assets, including future expected cash flows and discount rates, as well as future salvage values. Our impairment loss calculations require management 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
      Goodwill represents the excess of the purchase price over the fair value of identifiable net assets acquired in business combinations. We review goodwill for potential impairment annually using the income approach to determine the fair value of our reporting units. The fair value of our reporting units is used to apply value to the net assets of each reporting unit. To the extent that the carrying amount of net assets would exceed the fair value, an impairment charge may be required to be recorded.
      The income approach we use for valuing goodwill involves estimating future cash flows expected to be generated from the related assets, discounted to their present value using a risk-adjusted discount rate. Terminal values are also estimated and discounted to their present value.

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      As a result of adopting Statement 142 on January 1, 2002, we recorded a non-cash, net of tax, goodwill impairment charge of approximately $3.9 billion. As required by Statement 142, a subsequent impairment test was performed at October 1, 2002, which resulted in no additional impairment charge. The non-cash impairment of our goodwill was generally caused by unfavorable economic conditions, which persisted throughout 2001. These conditions adversely impacted the cash flow projections used to determine the fair value of each reporting unit at January 1, 2002, which resulted in the non-cash impairment charge of a portion of our goodwill. We may incur impairment charges in future periods under Statement 142 to the extent we do not achieve our expected cash flow growth rates, and to the extent that market values decrease and long-term interest rates increase.
Barter Transactions
      Barter transactions represent the exchange of display space or tickets for advertising, merchandise or services. These transactions are generally recorded at the fair market value of the display space or tickets relinquished or the fair value of the advertising, merchandise or services received. Revenue is recognized on barter and trade transactions when the advertisements are displayed or the event occurs for which the tickets are exchanged. Expenses are recorded when the advertising, merchandise or service is received or when the event occurs. Barter and trade revenues for the years ended December 31, 2004, 2003 and 2002, were approximately $45.1 million, $33.4 million and $22.5 million, respectively, and are included in total revenues. Barter and trade expenses for the years ended December 31, 2004, 2003 and 2002, were approximately $44.5 million, $32.7 million and $17.7 million, respectively, and are included in divisional operating expenses. These transactions relate to each of our segments and generally occur relatively evenly throughout the year.

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INDUSTRY OVERVIEW
Live Music Industry
      The live music industry includes concert promotion and production, set design, venue operation and concession operation. Our main competitors in the North American live music industry include Anschutz Entertainment Group, which operates under a number of different names, House of Blues Entertainment, Inc., and SMG Entertainment, Inc. We also compete with numerous smaller national and regional companies in the United States and Europe.
      According to Pollstar, from 1994 to 2004, gross concert revenues increased from $1.4 billion to $2.8 billion, a compounded annual growth rate of approximately 7%. In the 2002 to 2004 period, our global music revenues, comprised of gross concert revenues, increased from $1.8 billion to $2.2 billion, a compounded annual growth rate of 10%. We believe this growth was primarily due to increasing ticket prices and the continued willingness of top-grossing acts such as Madonna, The Rolling Stones and U2 to continue touring. According to Pollstar, while industry revenues increased from 2003 to 2004, ticket sales for the top 100 tours (representing approximately 70% of total domestic concert ticket revenues) declined by more than 2%. During the same period, our arena attendance actually increased approximately 24%. However, the attendance at our owned and operated amphitheaters declined by approximately 20% as a result of fewer events. The average attendance at these amphitheater events was slightly higher in 2004. While we believe the decrease in ticket sales was partially due to the unexpected cancellations of several high-profile tours, our surveys also have indicated that customers reacted to average ticket prices that had increased more than 28% from 2000 to 2004. Lower recorded music sales by popular artists may have also influenced this decline.
      Typically, to initiate live entertainment events or tours, booking agents directly contract with performers to represent them for defined periods. Booking agents then contact promoters, who will contract with booking agents or directly with performers to arrange events. Booking agents generally receive fixed or percentage fees from performers for their services. Promoters earn revenues primarily from the sale of tickets, as well as percentages of revenues from concessions, and pay performers under one of several different formulas, which may include fixed guarantees, percentages of ticket sales or the greater of guaranteed amounts or profit sharing payments based on gross ticket revenues. In addition, promoters may also reimburse performers 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 lessen their losses.
      For musical tours, one to four months typically elapse between booking performers and the first performances. Promoters, in conjunction with performers, managers and agents, set ticket prices and advertise events to cover expenses. Promoters market events, sell tickets, rent or otherwise provide venues (if not provided by booking agents) and arrange for local production services, such as stages and sets.
      Venue operators typically contract with promoters to rent their venues for specific events on specific dates. Venue operators provide services such as concessions, parking, security, ushering and ticket-taking, and receive some or all of the revenues from concessions, merchandise, sponsorships, parking and premium seats. For the events they host, venue operators typically receive fixed fees or percentages of ticket sales, as well as percentages of total concession sales from the vendors and percentages of total merchandise sales from the merchandisers.
      Industry participants, including ourselves, often perform one or more of the booking, promotion and venue operation functions.
Theatrical Industry
      The theatrical industry includes groups engaged in promoting, which is generally referred to in the theater industry as “presenting,” and producing live theatrical presentations, as well as operating venues. Our main North American competitors in the theatrical industry include Nederlander Producing Company

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of America, Mirvish Productions, The Shubert Organization, The Walt Disney Company and Jujamcyn Theaters, as well as smaller regional players. In Europe, our competitors include Cameron Mackintosh, Really Useful Theater Group and Ambassadors Theatre Group, as well as smaller regional players.
      According to data based on ticket sales of members of The League of American Theatres and Producers, Inc., or the League, as reported by such members to the League and disclosed on the League’s website, gross ticket sales for the North American theatrical industry of touring Broadway theatrical performances has increased from $705 million during the 1993-1994 season to $714 million during the 2003-2004 season, a compounded annual growth rate of 1%, although in some years during this period ticket sales decreased, with a low of $541 million in 2000. In the 2002 to 2004 period, our global theater revenues increased from $296.5 million to $314.0 million, a compounded annual growth rate of 3%.
      Live theater consists mainly of productions of existing musicals and dramatic works and the development of new works. While musicals require greater investments of time and capital than dramatic productions, they are more likely to become touring theatrical shows. For existing musicals, 12 to 24 months typically elapse between producers’ acquisitions of theatrical stage rights and the first performances. During this time the producers assemble touring companies and ready the shows for tours. In comparison, dramatic productions typically have smaller production budgets, shorter pre-production periods, lower operating costs and tend to occupy smaller theaters for shorter runs as compared to musicals.
      Producers of touring theatrical shows first acquire the rights to works from their owners, who typically receive royalty payments in return. Producers then assemble casts, hire directors and arrange for the design and construction of sets and costumes. Producers also arrange transportation and schedule shows with local presenters. Local presenters, who generally operate or have relationships with venues, provide all local services such as selling tickets, hiring local personnel, buying advertising and paying fixed guarantees to producers. Presenters then have the right to recover the guarantees plus their local costs from ticket revenues. Presenters and producers share any remaining ticket revenues. North American venues often sell tickets for touring theatrical performances through “subscription series,” which are pre-sold season tickets for a defined number of shows in given venues.
      In order to secure exclusive touring rights, investors may take equity positions in Broadway or West End shows. Touring rights are generally granted to investors for three to four years. After investors have received complete return of their investments, net profits are generally split between the limited partners and producers.
Other
Specialized Motor Sports
      The specialized motor sports industry includes promoters and producers of specialized motor sports events as well as venue operators. Typical events include motorcycle road racing, supercross racing, monster truck shows, freestyle motocross events and other similar events. Our main competitors in the specialized motor sports industry are primarily smaller regional promoters. On a broader level, we compete against other outdoor motor sports such as the National Association for Stock Car Auto Racing, or NASCAR, and the Indy Racing League, or IRL, in the United States.
      In general, most suitable markets where we operate host one to four motor sports events each year, with larger markets hosting more performances. Venue operators of stadiums and arenas typically work with producers and promoters to schedule individual events or full seasons of events. Corporate sponsorships and television exposure are important financial components that contribute to the success of a single event or seasons of events.

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      Specialized motor sports events make up a growing segment of the live entertainment industry. This growth has resulted from additional demand in existing markets and new demand in markets where arenas and stadiums have been built. The increasing popularity of specialized motor sports over the last several years has coincided with the increased popularity of other professional motor sports events, such as professional auto racing, including NASCAR and IRL. A number of events are also broadcast domestically and internationally.
Sports Representation
      The sports representation industry generally encompasses the negotiation of player contracts and the creation and evaluation of endorsement, promotional and other business opportunities for clients. Sports agents may also provide ancillary services, such as financial advisory or management services to their clients. Our primary competition in the sports representation industry are other sports representation agencies such as International Management Group, or IMG, Octagon Worldwide, and Gaylord Sports Management, as well as regional agencies and individual agents.

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BUSINESS
Our Company
      We believe we are one of the world’s largest diversified promoters and producers of, and venue operators for, live entertainment events. For the year ended December 31, 2004, we promoted or produced over 28,500 events, including music concerts, theatrical performances, specialized motor sports and other events, with total attendance exceeding 61 million. In addition, we believe we operate one of the largest networks of venues used principally for music concerts and theatrical performances in the United States and Europe. As of September 30, 2005, we owned or operated 117 venues, consisting of 75 domestic and 42 international venues. These venues include 39 amphitheaters, 58 theaters, 14 clubs, four arenas and two festival sites. In addition, through equity, booking or similar arrangements we have the right to book events at 33 additional venues. For the year ended December 31, 2004, we generated revenues of approximately $2.8 billion, net income of approximately $16.3 million, and operating income (loss) before depreciation, amortization, loss (gain) on sale of operating assets and non-cash compensation expense, or OIBDAN, of approximately $130.5 million. Please read “Selected Combined Financial Data — Non-GAAP Financial Measure” for an explanation of OIBDAN and a reconciliation of OIBDAN to operating income. Approximately 90% of our total revenues for 2004 resulted from our promotion or production of music concerts and theatrical performances and from revenues related to our owned or operated venues.
      In addition, we believe we are a leading integrated sports marketing and management company specializing in the representation of sports athletes.
Our History
      We were formed through acquisitions of various entertainment businesses and assets by our predecessors, and a number of our businesses have been operating in the live entertainment industry for more than 30 years. On August 1, 2000, Clear Channel Communications acquired our live entertainment business, which was initially formed in 1997. We were incorporated in our current form as a Delaware corporation on August 2, 2005 to own substantially all of the entertainment business of Clear Channel Communications, Inc.
Our Business
      We operate in two reportable business segments: global music and global theater. In addition, we operate in the specialized motor sports, sport representation and other businesses, which are included under “other.”
      Global Music. Our global music business principally involves the promotion or production of live music shows and tours by music artists in our owned and operated venues and in rented third-party venues. For the year ended December 31, 2004, our global music business generated approximately $2.2 billion, or 78%, of our total revenues. We promoted or produced over 10,000 events in 2004, including tours for artists such as Madonna, Sting, Dave Matthews Band and Toby Keith. In addition, we produced several large festivals in Europe, including Rock Werchter in Belgium and the North Sea Jazz Festival in Holland. Part of our growth strategy is to expand our promotion and production of festivals, particularly in Europe. While our global music business operates year-round, we experience higher revenues during the second and third quarters due to the seasonal nature of our amphitheaters and international festivals, which are primarily used during or occur in May through September.
      Global Theater. Our global theater business presents and produces touring and other theatrical performances. Our touring theatrical performances consist primarily of revivals of previous commercial successes and new productions of theatrical performances playing on Broadway in New York City or the West End in London. For the year ended December 31, 2004, our global theater business generated approximately $314.0 million, or 11%, of our total revenues. In 2004, we presented or produced over 12,000 theatrical performances of productions such as The Producers, The Lion King, Mamma Mia! and Chicago. We pre-sell tickets for our touring shows through one of the largest subscription series in the

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United States and Canada in approximately 45 touring markets. While our global theater business operates year-round, we experience higher revenues during September through April, which coincides with the theatrical touring season.
      Other. We believe we are one of the largest promoters and producers of specialized motor sports events, primarily in North America. In 2004, we held over 600 events in stadiums, arenas and other venues including monster truck shows, supercross races, motocross races, freestyle motocross events, motorcycle road racing and dirt track motorcycle racing. In addition, we own numerous trademarked properties, including monster trucks such as Grave Diggertm and Blue Thundertm, which generate additional licensing revenues. While our specialized motor sports business operates year-round, we experience higher revenues during January through March, which is the period when a larger number of specialized motor sports events occur.
      We also provide integrated sports marketing and management services, primarily for professional athletes. Our marketing and management services generally involve our negotiation of player contracts with professional sports teams and of endorsement contracts with major brands. As of September 30, 2005, we had approximately 600 clients, including Tracy McGrady (basketball), David Ortiz (baseball), Tom Lehman (golf), Andy Roddick (tennis), Roy E. Williams (football) and Steven Gerrard (soccer).
      We also promote and produce other live entertainment events, including family shows, such as Dora the Explorer and Blue’s Clues, as well as museum and other exhibitions, such as Saint Peter and The Vatican: The Legacy of the Popes. In addition, we produce and distribute television shows and DVDs, including programs such as A&E Biographies: Rod Stewart and HBO Sports’ The Curse of the Bambino.
      For the year ended December 31, 2004, businesses included under “other” generated approximately $291.1 million, or 11%, of our total revenues.
Our Business Activities
      We principally act in the following capacities, performing one, some or all of these roles in connection with our events and tours:
      Promotion. As a promoter, we typically book performers, arrange performances and tours, secure venues, provide for third-party production services, sell tickets and advertise events to attract audiences. We earn revenues primarily from the sale of tickets and pay performers under one of several formulas, including a fixed guaranteed amount and/or a percentage of ticket sales. For each event, we either use a venue we own or operate, or rent a third-party venue. In our global theater business, we generally refer to promotion as presentation. Revenues related to promotion activities represent the majority of our combined revenues. These revenues are generally related to the volume of ticket sales and ticket prices. Event costs, included in divisional operating expenses, such as artist and production service expenses are typically substantial in relation to the revenues. As a result, significant increases or decreases in promotion revenue do not typically result in comparable changes to operating income.
      Production. As a producer, we generally develop event content, hire directors and artistic talent, develop sets and costumes, and coordinate the actual performances of the events. We produce tours on a global, national and regional basis. We generate revenues from fixed production fees and by sharing in a percentage of event or tour profits primarily related to the sale of tickets, merchandise and event and tour sponsorships. These production revenues are generally related to the size and profitability of the production. Production costs, included in divisional operating expenses, are typically substantial in relation to the revenues. As a result, significant increases or decreases in production revenue do not typically result in comparable changes to operating income.
      Venue Operation. As a venue operator, we contract with promoters to rent our venues for events and provide related services such as concessions, merchandising, parking, security, ushering and ticket-taking. We generate revenues primarily from rental income, ticket service charges, premium seating and venue sponsorships, as well as sharing in percentages of concessions, merchandise and parking. Our outdoor entertainment venues are primarily used, and our international festivals occur, during May through

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September. As a result, we experience higher revenues during the second and third quarters. Revenues generated from venue operations typically have a higher margin than promotion or production revenues and therefore typically have a more direct relationship to operating income.
      Sponsorships and Advertising. We actively pursue the sale of national and local sponsorships and placement of advertising, including signage, promotional programs, naming of subscription series and tour sponsorships. Many of our venues also have name-in-title sponsorship programs. We believe national sponsorships allow us to maximize our network of venues and to arrange multi-venue branding opportunities for advertisers. Our national sponsorship programs have included companies such as American Express, Anheuser Busch and Coca-Cola. 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. Revenues generated from sponsorships and advertising typically have a higher margin than promotion or production revenues and therefore typically have a more direct relationship to operating income.
Global Music
      We believe we are one of the largest live music promoters, producers and venue operators in North America and Europe. Within our global music segment, we are engaged in promoting and presenting music events and tours, owning and operating concert venues, and selling sponsorships and advertising. Our global music business principally involves the promotion and production of live music performances and tours by music artists in venues owned and operated by us and in third-party venues rented by us. For the year ended December 31, 2004, our global music business generated approximately $2.2 billion, or 78%, of our total revenues. We promoted or produced over 10,000 events in 2004, including tours for artists such as Madonna, Sting, Dave Matthews Band and Toby Keith. In addition, we produce several large festivals in Europe, including Rock Werchter in Belgium and the North Sea Jazz Festival in Holland. We primarily promote concerts performed by newer performers having widespread popularity, such as Coldplay and Beyoncé, as well as more established performers having relatively long-standing and more stable bases of popularity, such as U2, The Rolling Stones and Jimmy Buffett. While our global music business operates year-round, we experience higher revenues during the second and third quarters due to the seasonal nature of our amphitheaters and international festivals, which are primarily used during or occur in May through September.
      Below is a ranking of the top 10 tours in 2004 (based on gross revenues) that we promoted and/or produced:
             
    Rank   Artist    
             
    1   Madonna    
    2   Bette Midler    
    3   Sting    
    4   Dave Matthews Band    
    5   Toby Keith    
    6   Cher    
    7   Jimmy Buffett    
    8   Josh Groban    
    9   Linkin Park    
    10   Aerosmith    
      The musical venues we operate consist primarily of amphitheaters and music theaters. We typically receive higher music profits from events in venues we own due to our ability to share in a greater percentage of revenues received from concession and merchandise sales as well as the opportunity to sell sponsorships for venue naming rights and other display advertising.
      In the live music industry, concert venues 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,

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  they are not specifically designed for live music. At September 30, 2005, we did not own or lease any stadiums, although on occasion we may rent them for certain music events.
 
  •  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. At September 30, 2005, we owned 14 and leased 25 amphitheaters.
 
  •  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 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. At September 30, 2005, we owned one and leased two arenas.
 
  •  Theaters — Theaters are indoor venues that are built specifically for musical and theatrical events, but in some cases with minimal aesthetic and acoustic consideration. These venues typically have less than 5,000 seats. Because of their small size, they do not offer as much economic upside, but they also represent less risk to concert promoters because they have lower fixed costs associated with hosting a concert and also may provide a more appropriately sized venue for developing artists. At September 30, 2005, we owned six and leased 17 theaters.
 
  •  Clubs — Clubs are indoor venues that are built specifically for musical events, but in some cases with minimal aesthetic and acoustic consideration. These venues typically have less than 1,000 seats and often without full fixed seating. Because of their small size, they do not offer as much economic upside, but they also represent less of a risk to a concert promoter because they have lower fixed costs associated with hosting a concert and also may provide a more appropriate size venue for developing artists. At September 30, 2005, we owned three and leased ten clubs.

      We own or operate the following domestic and international music venues:
                                         
    DMA®   Type of Venue
    Region    
City, State   Rank*   Amphitheater   Theater   Club   Festival Site
                     
New York, NY
    1                                
Monmouth, NJ
    1                                
Nassau, NY
    1                              
Los Angeles, CA
    2       (2)                      
Chicago, IL
    3       (2)                        
Philadelphia, PA
    4                            
Boston, MA
    5       (2)                      
San Francisco, CA
    6             (2)              
Washington, DC
    8                                
Atlanta, GA
    9                            
Detroit, MI
    10                              
Houston, TX
    11                                
Seattle, WA
    12                                
Tampa, FL
    13                                
Phoenix, AZ
    15                                
Cleveland, OH
    16                              
Denver, CO
    18                                
San Jose, CA
    19                                
Sacramento, CA
    19                              

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    DMA®   Type of Venue
    Region    
City, State   Rank*   Amphitheater   Theater   Club   Festival Site
                     
St. Louis, MO
    21                                
Pittsburgh, PA
    22       (2)                        
Baltimore, MD
    23                                
Indianapolis, IN
    25                              
Hartford, CT
    27                                
New Haven, CT
    27                                
Charlotte, NC
    28                                
Raleigh-Durham, NC
    29                                
Nashville, TN
    30                                
Kansas City, MO
    31                              
Milwaukee, WI
    32                                
Cincinnati, OH
    33                            
Columbus, OH
    34                                
San Antonio, TX
    37                                
West Palm Beach, FL
    39                                
Birmingham, AL
    40                                
Virginia Beach, VA
    41                                
Buffalo, NY
    46                                
Albuquerque, NM
    47                                
Wilkes-Barre, PA
    53                                
Albany, NY
    55                                
Wheeling, WV
    152                              
 
* DMA® region refers to a U.S. designated market area as of January 1, 2005. At that date, there were 210 DMA®’s. DMA® is a registered trademark of Nielsen Media Research, Inc.
•  Bullet represents one venue by type, unless otherwise noted.
                                 
    Type of Venue
     
City, Country   Arena   Theater   Club   Festival Site
                 
Cardiff, Wales
                             
Dublin, Ireland
                             
London, England
           
(4)    
(6)        
Manchester, England
                             
Reading, England
                             
Sheffield, England
                             
Southampton, England
                             
Stockholm, Sweden
                             
 
•  Bullet represents one venue by type, unless otherwise noted.
Global Theater
      We believe we are one of the largest presenters and producers of touring theatrical performances in the United States and the United Kingdom. Within our theater segment, we are engaged in presentation and the production of touring and other theatrical performances, owning and operating theatrical venues and selling sponsorships and advertising.

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      For the year ended December 31, 2004, our global theater business accounted for approximately $314.0 million, or approximately 11% of our total revenues. We presented or produced over 12,000 performances in 2004, including tours of shows such as The Producers, The Lion King, Mamma Mia! and Chicago. Touring theatrical performances consist primarily of revivals of previous commercial successes or new productions of theatrical performances currently playing on Broadway in New York City or the West End in London.
      We pre-sell tickets for our touring and other theatrical performances through one of the largest subscription series in the United States and Canada (with 287,000 subscribers in the 2004-2005 season). We present these subscription series in approximately 45 touring markets in North America, including Atlanta, Georgia; Boston, Massachusetts; Chicago, Illinois; Houston, Texas; Nashville, Tennessee and Seattle, Washington.
      We invest in the production of touring and other theatrical performances. Touring theatrical performances consist primarily of revivals of previous commercial successes or new productions of theatrical performances currently playing on Broadway in New York City or the West End in London. Frequently, we invest in shows or productions to obtain touring rights and favorable scheduling to distribute them across our presentation network.
      In 2004, productions in which we had investments included The Producers, Chicago, 700 Sundays (The Comedy of Billy Crystal), Grease and Fosse.
      We derive revenues from our theater and venue operations primarily from rental income, presenting engagements, sponsorships, concessions and merchandise. For each theatrical event we host, we typically receive a fixed fee for use of the venue, as well as fees representing a percentage of total concession sales from the vendors and total merchandise sales from the performer or tour producer. For each non-theatrical event we host, we may also present or co-present to increase our product mix and income. As a theater owner, we typically receive 100% of sponsorship revenues and a portion of ticketing surcharges.
      Theaters are generally indoor venues that are built specifically for musical and theatrical events, with substantial aesthetic and acoustic consideration. These venues typically have less than 4,000 seats. Additionally, given their size, they are able to host events aimed at niche audiences. At September 30, 2005, we owned 13 and leased 22 theaters in our theater segment. The theater segment also leases one club. Of these venues, 12 theatrical venues are in North America and 24 are international venues used primarily for theatrical presentations in the United Kingdom.
North American Theater Venues:
                 
    DMA®    
    Region   Number of
Location   Rank*   Theaters
         
New York, NY
    1        
Chicago, IL
    3        
Philadelphia, PA
    4        
Boston, MA
    5       (4)
Washington, DC
    8        
Baltimore, MD
    23        
Louisville, KY
    50        
Toronto, Canada
    n/a       (2)
 
  * DMA® region refers to a U.S. designated market area as of January 1, 2005. At that date, there were 210 DMA®s. DMA® is a registered trademark of Nielsen Media Research, Inc.
 
  Bullet represents one venue by type, unless otherwise noted.

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International Theater Venues:
                 
    Number of   Number of
Location   Theaters   Clubs
         
Ashton-Under-Lyne, England
             
Barcelona, Spain
             
Birmingham, England
             
Bristol, England
             
Edinburgh, Scotland
             
Felixtowe, England
             
Folkstone, England
             
Grimsby, England
             
Hastings, England
             
Hayes, England
             
Liverpool, England
             
London, England
    (2)        
Madrid, Spain
    (3)        
Manchester, England
    (2)        
Oxford, England
           
Southport, England
             
Sunderland, England
             
Torbay, England
             
York, England
             
 
Bullet represents one venue by type, unless otherwise noted.
Other
      Specialized Motor Sports. We believe we are one of the largest producers and promoters of specialized motor sports events in North America, and, in 2004, held our first four events in Europe. These events are primarily held in stadiums and arenas and include monster truck shows, supercross races, motocross races, freestyle motocross events, motorcycle road racing and dirt track motorcycle racing. Other events included in this division are thrill acts and other motor sports concepts and events. Our specialized motor sports activities consist principally of the promotion and production of specialized motor sports, which generate revenues primarily from ticket sales and sponsorships, as well as merchandising and video rights.
      Our specialized motor sports division produced and promoted over 600 specialized events in 2004, including supercross events and the U.S. Hot Rod Association® Monster Jam® Tour. In 2004, our specialized motor sports division had over 4 million spectators at its various events and properties. We own the rights to many specialized motor sports properties, including Grave Diggertm which we believe is one of the most popular monster trucks on the monster truck circuit, and we generate revenues from sponsorship, licensing and merchandising related to these properties. In addition, we provided approximately 200 hours of televised programming related to motor sports in 2004. While our specialized motor sports business operates year-round, we experience higher revenues during January through March, which is the period when a large number of specialized motor sports events occur.
      Sports Representation. We believe we are a leading full-service talent management and marketing agency that represents clients in Major League Baseball, the National Basketball Association, the National Football League, the Professional Golf Association, the Association of Tennis Professionals, the Women’s Tennis Association, the Premier League, Major League Soccer and Olympic competitors. We believe we are able to achieve and maintain our status as one of the premier sports management companies by combining and drawing upon the vast experience and expertise of our agents, who are among the leaders in

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their respective industries. Within our sports representation business, we are engaged in talent representation, financial advisory services, consulting services, marketing and client endorsements and sponsorship sales.
      Our sports representation business specializes in the negotiation of professional sports contracts and endorsement contracts for clients. Our clients have endorsed numerous products, both domestically and internationally, for many high profile companies. The amount of endorsement and other revenues that our clients generate is a function of, among other things, the clients’ professional performances and public appeal.
      The term of client representation agreements vary by sport, but on average are for a period of three years with automatic renewal options. In addition, we are generally entitled to the revenue streams generated during the remaining term of any contract we negotiate even if our representation agreement expires or is terminated. The sports representation business primarily earns revenue ratably over the year or contract life.
      As of September 30, 2005, we had approximately 600 clients, including Tracy McGrady (basketball), David Ortiz (baseball), Tom Lehman (golf), Andy Roddick (tennis), Roy E. Williams (football) and Steven Gerrard (soccer).
      Other live entertainment events. We also promote and produce other live entertainment events, including family shows, such as Dora the Explorer and Blue’s Clues, as well as museum and other exhibitions, such as Saint Peter and The Vatican: The Legacy of the Popes. In addition, we produce and distribute television shows and DVDs, including programs such as A&E Biographies: Rod Stewart and HBO Sports’ The Curse of the Bambino.
      For the year ended December 31, 2004, our businesses included under “Other” represented approximately $291.1 million, or 11%, of our total revenues.
Our Strategy
      Our goal is to increase stockholder value by maximizing our cash flow from operations. To accomplish this goal, we are pursuing the following key strategies:
  •  Maximize efficiencies of owning and operating a leading distribution network of live entertainment venues. We seek to increase the utilization of our owned or operated venues in order to increase attendance and revenue streams associated with live entertainment events.
 
  •  Secure, promote and produce compelling live entertainment events. We seek to attract large audiences by securing compelling live entertainment events. We believe we have an established reputation for high standards of performance and extensive knowledge of the live entertainment industry. We use our industry relationships and experience to attract popular established artists and events, while also using our local presence to identify and develop new artists and events. We also make selective investments in content, such as Broadway and West End theatrical performances, to secure touring or other distribution rights.
 
  •  Use venues, live events and customers to develop and maintain relationships with sponsorship and marketing partners. We seek to use our live events and captive audience to provide differentiated marketing solutions to advertisers. We believe our extensive geographic network of events and venues and a wide range of audience demographics allow us to provide both broad and targeted advertising opportunities. In addition, we seek to sell directly to our customers an expanded line of products and services such as premium seat packages and merchandise related to live entertainment events.
 
  •  Selectively pursue investment and acquisition opportunities. We intend to pursue investments and acquisitions that enhance our business and where the returns and growth potential are consistent with our long-term goal of increasing stockholder value. We believe that significant opportunities exist both in the U.S. and foreign markets, and that such expansion will create additional outlets

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  and cross-over opportunities for performers and events between these markets. However, our ability to make acquisitions in the near term may be constrained by the limitations imposed by our financing documents, market conditions and the tax matters agreement.

Competition
      Competition in the live entertainment industry is intense. We compete primarily on the basis of our ability to deliver quality entertainment products and enhanced fan experiences from music concerts, touring theatrical performances and specialized motor sports events, including:
  •  quality of service delivered to our clients;
 
  •  track record in promoting and producing live entertainment events and tours both in the U.S. and internationally;
 
  •  track record in negotiating favorable terms of professional sports contracts and endorsement contracts for clients;
 
  •  scope and effectiveness of our expertise of marketing and sponsorship programs; and
 
  •  financial stability.
      Although we believe that our entertainment 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 after the spin-off, especially those with significantly greater brand recognition, financial, marketing, service, support, technical and other resources.
      Global Music. In the markets in which we promote musical concerts, we face competition from promoters, as well as from certain artists that promote their own concerts. 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. In markets where we own or operate a venue, we compete with other venues to serve artists likely to perform in that general region. In markets where we do not own or operate venues, we compete with other venues for popular tours. Consequently, touring artists have significant alternatives to our venues in scheduling tours.
      Our main competitors in the North American live music industry include AEG Live and House of Blues Entertainment, in addition to numerous smaller regional companies in the U.S. and Europe. Also, Clear Channel Communications’ radio business conducts concert events from time to time and such events may compete with us. Some of our competitors in the live music industry have a stronger presence in certain markets, and have access to other sports and entertainment assets, as well as greater financial resources and brand recognition, which may enable them to gain a greater competitive advantage in relation to us following the spin-off.
      Global Theater. We compete with other presenters to obtain presentation arrangements with venues and performing arts organizations in various markets, including markets with more than one venue suitable for presenting a touring or other theatrical show. We compete with other New York and London-based production companies for the rights to produce particular shows. As a producer of Broadway and London shows, we compete with producers of other theatrical performances for box office sales, talent and theater space. As the producer of a touring show, we compete with producers of other touring or other theatrical performances to book the production in desirable presentation markets.
      Our main competitors in the global theatrical industry include Nederlander Producing Company of America, Mirvish Productions, The Shubert Organization, The Walt Disney Company and Jujamcyn Theaters. Some of our competitors in the theatrical industry operate more theaters and have more Broadway show interests than we do in New York City, from which most North American theatrical touring productions originate. In addition, these competitors may have significantly greater brand recognition and greater financial and other resources than we will following the spin-off, which could enable them to strengthen their competitive positions against us.

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      Other. Our main competitors in the specialized motor sports industry are primarily smaller regional promoters. On a broader level, we compete against other outdoor motor sports such as NASCAR and IRL in the U.S. Some of our competitors in the specialized motor sports industry, such as NASCAR, enjoy stronger brand recognition and larger revenues in the motor sports industry than we do and, following the spin-off, may have greater financial and other resources enabling them to gain a greater competitive advantage in relation to us.
      Our primary competition in sports representation includes numerous agencies such as IMG, Octagon and Gaylord, as well as regional agencies and individual agents. Some of our competitors in the sports representation industry have stronger international presence than we do in the sports representation business, as well as larger television sports programming and distribution capabilities.
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 as well as:
  •  licensing and permitting;
 
  •  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 Americans with Disabilities Act of 1990;
 
  •  sales and other taxes and withholding of taxes;
 
  •  historic landmark rules; and
 
  •  environmental protection.
      We believe that our venues are in material compliance with these laws. The regulations relating to our food and support service in our venues are many and complex. A variety of regulations at various governmental levels relating to the handling, preparation and serving of food (including in some cases requirements relating to the temperature 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 patron. Although we generally hire outside vendors to provide these services at our operated venues and regularly sponsor training programs designed to minimize the likelihood of such a situation, we cannot guarantee that intoxicated or minor patrons will not be served or that liability for their acts will not be imposed on us.
      We are also required to comply with The Americans with Disabilities Act of 1990, or the ADA, and certain state statutes and local ordinances, among other things, require that places of public accommodation, including both existing and newly constructed theaters, be accessible to customers with disabilities. The ADA requires that theaters be constructed to permit persons with disabilities full use of a live entertainment venue. The ADA may also require that certain modifications be made to existing theaters in order to make them accessible to patrons and employees who are disabled. In order to comply with the ADA, we may face substantial capital expenditures in the future.
      From time to time, state and federal governmental bodies have proposed legislation that could have an affect on our business. For example, some legislatures have proposed laws in the past that would impose strict liability on us and other promoters and producers of live entertainment events for incidents that occur at our events.

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      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 our venues.
Properties and Facilities
      We own or operate or lease 75 venues and 46 facilities throughout North America and 42 venues and 22 facilities internationally, as of September 30, 2005. 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. Our corporate headquarters for our domestic operations is located in Beverly Hills, California and includes a substantial portion of our executive and operations management staff; the headquarters of our international operations is in New York, New York.
      Our leases are for varying terms ranging from monthly to yearly. These leases can be for terms of three to ten years for our office leases and 15 to 25 years for our venue leases, and many provide for 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.
Employees
      At September 30, 2005, we had approximately 3,300 full-time employees, including 2,000 domestic and 1,300 international employees, of which approximately 3,200 were employed in our operations departments and approximately 100 were employed in our corporate area. We expect to hire additional employees in our corporate area as we transition to providing services that were previously provided to us by Clear Channel Communications. However, due to the current reorganization, we expect to reduce total head count by approximately 300 by the end of 2005.
      Our staffing needs vary significantly throughout the year. Therefore, we also, from time to time, employ part-time or seasonal employees. At September 30, 2005, we employed approximately 11,300 seasonal part-time employees and during peak seasonal periods, particularly in the summer months, we have employed as many 15,900 part-time employees. The stagehands at some of our venues, and the actors, musicians and others involved in some of our business operations 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 negotiate new collective bargaining agreements 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. A work stoppage at one or more of our owned or operated venues or at our produced or presented events could have a material adverse effect on our business, results of operations and financial condition. We cannot predict the effect that new collective bargaining agreements will have on our expenses or that caps on agents’ fees will have on the revenues and operating income of our sports representation business.
Legal Proceedings
      At the United States House Judiciary Committee hearing on July 24, 2003, an Assistant United States Attorney General announced that the Department of Justice, or DOJ, is pursuing an antitrust inquiry concerning whether Clear Channel Communications, or Clear Channel, and its subsidiaries, including us, have tied radio airplay or the use of certain concert venues to the use of our concert promotion services, in violation of antitrust laws. We are cooperating with DOJ requests.
      We initiated a lawsuit in July 2003 in the State Court of Santa Clara County, California against the City of Mountain View and Shoreline Regional Park Community, seeking declaratory judgment, specific

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performance and injunctive relief and remedies for breach of contract, inverse condemnation and indemnification as a result of the defendants’ failure to provide parking lots and calculate rent payments in accordance with our lease agreement with the defendants. The defendants in that suit have counterclaimed against us seeking accounting and declaratory judgment and alleging theft, conversion, false claims, breach of contract, and racketeering relating to our payments under the lease agreement. An accounting firm engaged by the city issued a report dated August 30, 2005, in which the firm asserted that we owe the defendants $3,627,658, excluding interest, for rent payments for the period 1999-2004. On September 2, 2005, the defendants issued a Notice of Default and Demand for Cure to us, demanding the payment of these amounts and certain other non-monetary demands. The defendants agreed to accept bond in lieu of cash for satisfaction of its demand, which bond we filed with the court on October 11, 2005 as a cure under protest, pending the outcome of the litigation. Trial has been set for February 2006.
      We are among the defendants in a lawsuit filed September 3, 2002 by JamSports in the United States Federal District Court for the Northern District of Illinois. The plaintiff alleged that we violated federal antitrust laws and wrongfully interfered with plaintiff’s business and contractual rights. On March 21, 2005, the jury rendered its verdict finding that we had not violated the antitrust laws, but had tortiously interfered with a contract which the plaintiff had entered into with co-defendant AMA Pro Racing and with the plaintiff’s prospective economic advantage. In connection with the findings regarding tortious interference, the jury awarded to the plaintiff approximately $17.0 million in lost profits and $73.0 million in punitive damages. In April, 2005, we filed a Renewed Motion for Judgment as a Matter of Law and Motion For a New Trial, to seek a judgment notwithstanding the verdict or a new trial from the U.S. District Court that tried the case. On August 15, 2005, the District Court granted that motion in part, granting judgment in favor of the Clear Channel defendants on the plaintiff’s claim for tortious interference with prospective economic advantage and granting the Clear Channel defendants a new trial with respect to the issue of damages on the plaintiff’s claim for tortious interference with contract. On November 30, 2005, the District Court granted plaintiff’s Motion to Reconsider the August 15 ruling and ordered a new trial on the tortious interference with prospective economic advantage claim. The District Court has set a new date for this trial, on February 6, 2006. We are vigorously defending this remaining claim.
      We are a defendant in a lawsuit filed by Melinda Heerwagen on June 13, 2002 in the U.S. District Court for the Southern District of New York. The plaintiff, on behalf of a putative class consisting of certain concert ticket purchasers, alleges that anti-competitive practices for concert promotion services by us nationwide caused artificially high ticket prices. On August 11, 2003, the Court ruled in our favor, denying the plaintiff’s class certification motion. The plaintiff has appealed this decision to the U.S. Court of Appeals for the Second Circuit, and oral argument was held on November 3, 2004. A decision has not yet been issued.
      We are aware of putative class actions filed by different named plaintiffs in U.S. District Court in Philadelphia, Miami, Los Angeles and Chicago: Cooperberg v. Clear Channel Communications, Inc., et al., Civ. No. 2:05-cv-04492 (E.D. Pa.), Diaz v. Clear Channel Communications, Inc., et al., Civ. No. 05-cv-22413 (S.D. Fla.), Thompson v. Clear Channel Communications, Inc., Civ. No. 2:05-cv-6704 (C.D. Cal.), and Bhatia v. Clear Channel Communications, Inc., et al., Civ. No. 1:05-cv-05612 (N.D. Ill.). The claims made in these actions are substantially similar to the claims made in the Heerwagen action, except that the geographic markets alleged are local in nature and the members of the putative classes are limited to individuals who purchased tickets to concerts in the relevant geographic markets alleged. Clear Channel has been served in two of these actions. We are seeking an extension of the answer dates until after the Court of Appeals rules.
      We are among the defendants in a lawsuit by Keith Beccia on July 10, 2002 and pending in the Morris County Superior Court in New Jersey. Plaintiff alleges tortious interference with a contract, plus claims for breach of contract, breach of covenant of good faith and fair dealing and unfair competition, and interference with prospective economic advantage. On November 17, 2003, plaintiff filed a statement of damages asserting that his estimated compensatory damages are $3.94 million exclusive of losses for salary increases, value of benefits, and lost profits associated with the contract at issue. Plaintiff is also

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seeking unliquidated punitive damages. A trial date has been set for February 6, 2006, and we intend to vigorously defend all claims.
      We are a defendant in an arbitration proceeding brought by Eric Nederlander and Louis Raizin before the American Arbitration Association, New York, New York in March 2004 in which the claimants allege that they are entitled to certain earn-out payments pursuant to a purchase agreement in connection with the construction and operation of an amphitheater owned by us. Claimants have not provided an estimate of the value of their damages. We have counterclaimed, alleging breach of contract and bad faith. The parties have conducted settlement negotiations and such negotiations are expected to continue.
      NETworks Presentations, LLC, a joint venture between us and Gentry & Associates, Inc., is among the defendants in a lawsuit filed in the U.S. District Court for the Central District of California on September 22, 2005 by Clifford Kellas. The plaintiff claims that he was subject to sexual harassment, gender discrimination and unlawful retaliation in violation of Title VII of the 1964 Civil Rights Act. He seeks $5 million in general damages and $5 million in punitive damages plus legal costs and prejudgment interest. No trial has yet been set, and we intend to vigorously defend all claims.
      From time to time, we are involved in other legal proceedings arising in the ordinary course of our business, including proceedings and claims based upon violations of antitrust laws and tortious interference, which could cause us to incur significant expenses. We also have been the subject of personal injury and wrongful death claims relating to accidents at our venues in connection with our operations. Under our agreements with Clear Channel Communications, we have assumed and will indemnify Clear Channel Communications for liabilities related to our business.

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MANAGEMENT
Executive Officers, Directors, and Significant Employees
      Set forth below are the names and ages and current positions of our executive officers, current and proposed directors and significant employees as of the distribution date. Immediately prior to the distribution, we expect to appoint Henry Cisneros, Jeffrey T. Hinson, Connie McCombs McNab, John N. Simons, Jr., Timothy P. Sullivan and Michael Rapino as additional directors to our board of directors. Each director will serve for a term expiring at the annual meeting of stockholders in the year indicated below. See “— Composition of the Board of Directors” below.
                     
            Term as
Name   Age   Position   Director
             
Henry Cisneros
    57     Proposed Director     Expires 2009  
Jeffrey T. Hinson
    50     Proposed Director     Expires 2008  
L. Lowry Mays
    70     Director     Expires 2007  
Mark P. Mays
    42     Vice Chairman of the Board of Directors     Expires 2008  
Randall T. Mays
    40     Chairman of the Board of Directors     Expires 2009  
Connie McCombs McNab
    50     Proposed Director     Expires 2009  
John N. Simons, Jr. 
    45     Proposed Director     Expires 2007  
Timothy P. Sullivan
    42     Proposed Director     Expires 2008  
Michael Rapino
    40     Chief Executive Officer and Proposed Director     Expires 2007  
Alan Ridgeway
    38     Chief Financial Officer        
Bruce Eskowitz
    47     President — Global Venues/ Sponsorship        
Arthur Fogel
    51     Chairman — Global Music        
Thomas O. Johansson
    57     Chairman — International Music        
David I. Lane
    44     Chairman — Global Theatre and Chief Executive Officer — European Theatre        
Carl B. Pernow
    44     President — International Music        
Charles S. Walker
    34     President — North American Live Music        
Steve K. Winton
    44     Chief Executive Officer — North American Theater        
      In late 2004 and 2005, we reorganized our entertainment management, and the former chief executive officer, chief financial officer, general counsel and two co-heads of music are no longer with the company or have different responsibilities.
      Henry Cisneros has been nominated to serve on our board of directors. Mr. Cisneros has been the Chairman of American CityVista and City View since August 2000. From January 1997 to August 2000, Mr. Cisneros was the President of Univision Communications. Prior thereto, Mr. Cisneros served as the secretary of the U.S. Department of Housing and Urban Development and was a four-term Mayor of San Antonio, Texas.
      Jeffrey T. Hinson has been nominated to serve on our board of directors. Since July 2005, he has been a consultant to Univision Communications Inc., a Spanish language media company in the United States, which consulting arrangement is expected to end in December 2005. Mr. Hinson served as Executive Vice President and Chief Financial Officer of Univision Communications from March 2004 to June 2005. He served as Senior Vice President and Chief Financial Officer of Univision Radio, the radio division of Univision Communications, from September 2003 to March 2004. From 1997 to 2003, Mr. Hinson served as Senior Vice President and Chief Financial Officer of Hispanic Broadcasting Corporation, which was acquired by Univision Communications in 2003 and became the radio division of Univision Communications.

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      L. Lowry Mays has served as a member of our board of directors since our formation. Mr. Mays is the Chairman of the Board of Clear Channel Communications, Inc., which he founded in 1972, and prior to October 2004 he was that company’s Chief Executive Officer. Mr. Mays has been a member of Clear Channel Communications’ board of directors since its inception, and has served on the board of Clear Channel Outdoor Holdings, Inc. since 1997. Mr. Mays is the father of Mark P. Mays and Randall T. Mays, both of whom are members of our board of directors.
      Mark P. Mays is Vice Chairman of our board of directors and has served as a member of the board since our formation. Mr. Mark Mays is President and Chief Executive Officer of Clear Channel Communications and has served on the board of directors of Clear Channel Communications since May 1998. Prior thereto, he served as the Interim Chief Executive Officer and President and Chief Operating Officer of Clear Channel Communications from May 2004 to October 2004 and as the President and Chief Operating Officer of Clear Channel Communications for the remainder of the relevant five-year period. Since 1997, Mr. Mays has served on the board of Clear Channel Outdoor Holdings, Inc. Mr. Mark Mays is the son of L. Lowry Mays, Clear Channel Communications’ Chairman and one of our board members, and the brother of Randall T. Mays, Clear Channel Communications’ Executive Vice President and Chief Financial Officer and one member of our board of directors. Mr. Mark Mays is also a member of the board of directors of Clear Media Limited.
      Randall T. Mays is Chairman of our board of directors and during August 2005 he served as our Interim Chief Executive Officer. He also serves as the Executive Vice President and Chief Financial Officer of Clear Channel Communications. He has served as a member of our board of directors since our formation, has served on the board of directors of Clear Channel Communications since April 1999, and has served on the board of Clear Channel Outdoor Holdings, Inc. since 1997. Mr. Randall Mays is the son of L. Lowry Mays, Clear Channel Communications, Inc.’s Chairman and one of our board members, and the brother of Mark P. Mays, Clear Channel Communications’ President and Chief Executive Officer; and Vice Chairman of our board of directors.
      Connie McCombs McNab has been nominated to serve on our board of directors. Mrs. McNab served as Chair of the Board of Trustees for Saint Luke’s Episcopal School from 2000 to 2002 and has served as a Board member for Saint Luke’s Episcopal School since 1997. She has served as a Board member of Saint Mary’s Hall since 2001 and has served on the Board of the McNay Art Institute since 2004. Mrs. McNab is the daughter of B. J. McCombs, the co-founder of Clear Channel Communications, and serves as an officer on the McCombs Foundation.
      John N. Simons, Jr. has been nominated to serve on our board of directors. From 2002 to 2005, he served as President and Chief Executive Officer of Swift & Company. Mr. Simons served as President and Chief Operating Officer of ConAgra Red Meats, Inc. from 1999 to 2002.
      Timothy P. Sullivan has been nominated to serve on our board of directors. Mr. Sullivan has been the Chief Executive Officer of My Family.com, Inc. since September 2005 and is the Chief Executive Officer of Group Publisher, Inc., a company he founded in July 2005. From February 2001 to September 2004, Mr. Sullivan was the Chief Executive Officer of Match.com. Prior to joining Match.com, Sullivan served as vice president of e-commerce for Ticketmaster’s predecessor, Ticketmaster Online-Citysearch, Inc.
      Michael Rapino is our Chief Executive Officer and has served in this capacity with Clear Channel Entertainment since August 2005. He has also been nominated to serve on our board of directors. From August 2004 to August 2005, Mr. Rapino was CEO and President of our Global Music division. From July 2003 to July 2004, Mr. Rapino served as CEO and President of our International Music division. From July 2001 to 2003, Mr. Rapino served as CEO of our European Music division. Prior to July 2001, Mr. Rapino was an executive in our marketing services group.
      Alan Ridgeway is our Chief Financial Officer and has served in this capacity with Clear Channel Entertainment since September 2005. Prior to that, Mr. Ridgeway served as President of our European Music division. From October 2003 to 2004, Mr. Ridgeway was Chief Operating Officer of the European Music division. Mr. Ridgeway served as Chief Financial Officer for the European Music division from

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January 2002 to October 2003. For the balance of the relevant period, he was Finance Director for Hertz Rent-A-Car’s French operation.
      Bruce Eskowitz is the President of our Global Venues/ Sponsorship division and has served in this capacity with Clear Channel Entertainment since 2005. Prior to that, he served as President and Chief Executive Officer of our Properties division from 2004 to 2005. Prior to 2004 and for the remainder of the relevant period, Mr. Eskowitz was President of our National Sales and Marketing division.
      Arthur Fogel is the Chairman of our Global Music division and has served in this capacity with Clear Channel Entertainment since 2005. Prior to that, Mr. Fogel served as President of our Music Touring division since 1999.
      Thomas O. Johansson is the Chairman of our International Music division and has served in this capacity with Clear Channel Entertainment since September 2004. Prior to that, Mr. Johansson served as the Chief Executive Officer of our subsidiary Ema Telstar Group, a company he founded in April 1969 and which we acquired in 1999.
      David I. Lane is the Chairman of our Global Theatre division and Chief Executive Officer of our European Theatre division and has served in these capacities with Clear Channel Entertainment since 2005 and 2001, respectively. Prior to 2001, he served as Managing Director of our UK Theatre division.
      Carl B. Pernow is the President of our International Music division and has served in this capacity with Clear Channel Entertainment since September 2005. From 2004 to September 2005 he served as the Chief Financial Officer for our European Music division. From 1995 to 2004, he served as the Chief Financial Officer for our EMA Telstar Group, Nordic division, which the company acquired in 1999.
      Charles S. Walker is the President of our North American Live Music division and has served in this capacity with Clear Channel Entertainment since 2005. Prior to that, Mr. Walker served as the Chief Operating Officer for our North American Live Music division. From 2000 to 2002, 2002 to 2003, and 2003 to 2004 he served as a Senior Vice President of the Southwest, Northeast and West regions of Clear Channel Entertainment’s North American Live Music division, respectively, and in 2000 he was a General Manager in our North American Live Music division. For the balance of the relevant period, Mr. Walker served in various capacities with our PACE Concerts division.
      Steven K. Winton is the Chief Executive Officer of our North American Theater division and has served in this capacity with Clear Channel Entertainment since May 2005. Prior to that, from January through March, 2005, Mr. Winton was President and COO of the Naples Philharmonic Center in Naples Florida. In 2004, Mr. Winton served as the President of our North American Theater division. Prior to that, Mr. Winton was the Chief Operating Officer of our European Theater division from 2002 to 2003. For the balance of the relevant period, Mr. Winton was an Executive Vice President of our European Theatre division.
Composition of the Board of Directors
      Prior to the completion of the distribution, we intend to restructure our board of directors. Our board of directors will consist of nine directors. We intend to appoint six additional directors immediately prior to the completion of the distribution, each of whom has consented to so serve. We anticipate that Henry Cisneros, Jeffrey T. Hinson, Connie McCombs McNab, John N. Simons, Jr. and Timothy P. Sullivan will be independent as determined by our board of directors under the applicable securities law requirements and listing standards.
      Concurrent with the completion of the spin-off, our directors will be divided into three classes serving staggered three year terms. At each annual meeting of our stockholders, directors will be elected to succeed the class of directors whose terms have expired. Class I directors’ terms will expire at the 2007 annual meeting of our stockholders, Class II directors’ terms will expire at the 2008 annual meeting of our stockholders and Class III directors’ terms will expire at the 2009 annual meeting of our stockholders, and L. Lowry Mays, John N. Simons, Jr. and Michael Rapino initially will be our Class I directors, Jeffrey T.

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Hinson, Mark P. Mays and Timothy P. Sullivan initially will be our Class II directors and Henry Cisneros, Connie McCombs McNab and Randall T. Mays will initially be our Class III directors. Our classified board of directors could have the effect of increasing the length of time necessary to change the composition of a majority of our board. Generally, at least two annual meetings of stockholders will be necessary for stockholders to effect a change in a majority of the members of the board of directors.
Committees of the Board of Directors after Distribution
      The standing committees of our board of directors will be an audit committee, nominating and governance committee and compensation committee, each of which is described below.
Audit Committee
      The three independent (as defined in the NYSE listing standards) audit committee members will be Jeffrey T. Hinson, who will serve as the chairman, John N. Simons, Jr. and Timothy P. Sullivan. We anticipate that Mr. Simons will be designated by our board of directors as the audit committee financial expert (as defined in the applicable regulations of the Securities and Exchange Commission). The audit committee will operate under a written charter adopted by the board of directors which reflects standards set forth in SEC regulations and NYSE rules. The composition and responsibilities of the audit committee and the attributes of its members, as reflected in the charter, are intended to be in accordance with applicable requirements for corporate audit committees. The charter will be reviewed, and amended if necessary, on an annual basis. The full text of the audit committee’s charter can be found on our website at www.ccespinco.com or may be obtained upon request from our Secretary.
      As set forth in more detail in the charter, the audit committee’s purpose is to assist the board of directors in its general oversight of CCE Spinco’s financial reporting, internal control and audit functions. Clear Channel Communications’ internal audit department will document, test and evaluate our internal control over financial reporting in response to the requirements set forth in Section 404 of the Sarbanes-Oxley Act of 2002 and related regulations. The responsibilities of the audit committee will include:
  •  recommending the hiring or termination of the independent registered public accounting firm and approving any non-audit work performed by such firm;
 
  •  approving the overall scope of the audit;
 
  •  assisting our board of directors in monitoring the integrity of our financial statements, the independent registered public accounting firm’s qualifications and independence, the performance of the independent registered public accounting firm and our internal audit function and our compliance with legal and regulatory requirements;
 
  •  annually reviewing our independent registered public accounting firm’s report describing the independent registered public accounting firm’s internal quality control procedures, any material issues raised by the most recent internal quality control review, or peer review, of the firm;
 
  •  discussing the annual audited financial and quarterly statements with our management and the independent registered public accounting firm;
 
  •  discussing earnings press releases, as well as financial information and earnings guidance provided to analysts and rating agencies;
 
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