SFX Entertainment Reports First Quarter Results and Provides Update on Marketing Partnerships and Recent Developments

  SFX Entertainment Reports First Quarter Results and Provides Update on
  Marketing Partnerships and Recent Developments

Business Wire

NEW YORK -- May 15, 2014

SFX Entertainment, Inc. (NASDAQ:SFXE) today reported financial results for the
three months ended March31, 2014.

Revenue for the three months ended March31, 2014 totaled $33.3 million.
Direct costs for the three months ended March31, 2014 totaled $22.8 million.
Net loss for the three month period was $63.6 million, or $(0.73) per share.

Pro Forma Revenue (a non-GAAP measure, see definition and reconciliation
below) for the three months ended March31, 2014 was $38.1 million, while Pro
Forma Adjusted EBITDA (a non-GAAP measure, see definition and reconciliation
below) was a loss of $(11.9) million. The Pro Forma Revenue and Pro Forma
Adjusted EBITDA loss reflect a combination of factors including: 1) costs
related to the addition of infrastructure and personnel to support our growing
live business segment, the development of our marketing partnerships, and the
establishment of the integrated marketing platform which were expensed during
the 2014 first quarter; 2) the first quarter is typically the year’s
seasonally slowest period for live events; and 3) certain events which
occurred in the 2013 first quarter did not recur in the 2014 first quarter as
they were rescheduled to later periods in 2014 or were discontinued as the
Company executes its strategy to focus on larger events and festivals.

First quarter pro forma festival attendance rose over 100% to approximately
175,000, as the Company held 9 festivals versus 4 in the comparable year-ago
period. Attendance at events other than festivals declined 28% to
approximately 260,000, reflecting the Company’s strategy to focus on larger
events and to host a fewer number of smaller events.

“Throughout the first quarter we made continued progress toward creating what
is now the largest global producer of world-class live events and leading
digital entertainment content focused exclusively on EMC,” commented Robert FX
Sillerman, Chairman and CEO of SFX. “While it is the seasonally slowest period
of the year, the first quarter served as a microcosm of our approach. Total
festival attendance more than doubled year over year, on a pro forma basis,
with half of the growth coming from new festivals, while repeat festivals saw
attendance growth of 9% year over year and revenue growth of approximately
10%. Our festivals will grow by approximately 30% in 2014 to more than 70,
compared to the 54 held in 2013. Much of this growth will be in North America,
as we bring highly popular festivals like Mysteryland to the U.S. for the
first time and bring Electric Zoo to Mexico. We are also introducing entirely
new festivals, such as Don’t Let Daddy Know in the Netherlands and the Hudson
Project in Saugerties, New York. Additionally, we see opportunities for
further festival schedule expansion in North America, South America and Asia
in 2015 and beyond.

“While we work to revolutionize EMC-focused live events, we are equally
focused on advancing our role as a marketing solutions channel for our talent
and artist pool and our brand partners. Our FX-1 platform is already making
considerable inroads towards becoming an integrated artist management, social
media positioning and digital technology platform. Establishing creative and
groundbreaking marketing and content partnerships that reach and resonate with
millennials is fundamental to our strategy to bring the EMC community together
with the world’s leading brands in a manner that drives unrivalled experiences
and outcomes for both. Last quarter, we announced that SFX had established
marketing partnership agreements with four world class brands, including
Anheuser Busch-InBev and Clear Channel. More recently, we added the Ultimate
DJ project with Simon Cowell’s Syco Entertainment, which includes a major
marketing relationship with T Mobile, the fastest growing U.S. wireless
company. The unique collaboration between T Mobile, Syco and SFX will bring to
life Ultimate DJ, an exciting new television program concept.

“Since the Syco/T Mobile announcement last month, we have significantly
expanded our relationship with T Mobile. We now have five major marketing
partners in place and are look forward to bringing, beginning in the second
quarter, a wide range of exciting experiences related to these partnerships to
fans all over the world. Our slate of completely new festival experiences
include the five Corona Sunset events created and curated by FX-1, and the
Don’t Let Daddy Know event created by us and our partners. In addition, SFX’s
Beatport -- the principal online resource for EMC DJs and a trusted
destination for the growing EMC community to discover and stream music, follow
DJs and keep abreast of news, information and events -- has partnered with
Clear Channel to launch a national DJ/Producer contest and a weekly Beatport
Countdown show and will also introduce an original live event series in the
fourth quarter.

“Together, these alliances highlight the value that sponsors and marketing
partners recognize in our brands, the growing momentum of the worldwide EMC
movement and the unique ways SFX can add value on behalf of our partners as
they seek to connect with our attractive millennial audience. We believe the
financial results for our first two quarters as a public company are not the
most relevant measures of our long-term prospects. Instead, the combination of
our growing festival and events schedule as well as the strong initial success
we are achieving with our marketing partnerships gives us confidence that by
managing the business for the long-term we will deliver enhanced value to our
shareholders.”

SFX Entertainment, Inc.                           
Live Event Metrics
                                                       
2014 Festivals by On-Sale Status
                                                       
Completed              14
On-Sale                32
Not Yet On-Sale        30         
Total Festivals        76
                                                       
                                                       
                                                       
2014 Festivals by Quarter and Location
                                                       
                       Total         North America     International
Q1                     9             3                 6
Q2                     15            6                 9
Q3                     30            13                17
Q4                     22          6               16
Total Festivals        76            28                48
                                                       

                                                              
SFX Entertainment, Inc.
Live Event Metrics
              
2014 Completed Festivals
                                                                   
Initial Show   Festival Name           City, State           Country
Date
                                                                   
                                                                   
1/10/2014        The Day After             Panama City             Panama
                 Festival
1/18/2014        WinterWorld               Wiesbaden               Germany
1/31/2014        Sensation Thailand        Bangkok                 Thailand
2/1/2014         Hard Bass                 Arnhem                  Netherlands
2/18/2014        Life in Color Costa       San Jose                Costa Rica
                 Rica
3/8/2014         Don't Let Daddy Know      Amsterdam               Netherlands
3/13/2014        Ultimate Music            South Padre Island,     USA
                 Experience                Texas
3/15/2014        Life in Color Chile       Santiago                Chile
3/22/2014        Knock Out!                Rotterdam               Holland
4/5/2014         Qapital                   Amsterdam               Netherlands
4/25/2014        Sensation Italy           Bologna                 Italy
4/26/2014        Kingsday festival         Eindhoven               Holland
4/30/2014        Mayday                    Dortmund                Germany
5/4/2014         Electric Zoo Mexico       Mexico City             Mexico
                 City
                                                                   
                                                                   
2014 On-Sale Festivals
                                                                   
Initial Show   Festival Name           City, State           Country
Date
5/17/2014        Life In Color Seattle     Seattle, WA             USA
5/23/2014        Mysteryland USA           Bethel Woods, NY        USA
5/24/2014        Sunset Music Festival     Tampa, FL               USA
5/25/2014        Rock in Rio Lisbon        Lisbon                  Portugal
6/7/2014         Sensation Russia          St. Petersburg          Russia
6/13/2014        Spring Awakening          Chicago, IL             USA
6/14/2014        Pussy Lounge @ the        Breda                   Netherlands
                 Park
6/21/2014        Life In Color New         East Rutherford, NJ     USA
                 Jersey
6/28/2014        Defqon1 Weekend           Biddinghuizen           Netherlands
                 Festival
7/4/2014         Life in Color Hidalgo     Hidalgo, TX             USA
7/5/2014         Sensation Amsterdam       Amsterdam               Netherlands
7/5/2014         Ruhr-in-Love              Oberhausen              Germany
7/11/2014        The Hudson Project        Saugerties, NY          USA
7/18/2014        Tomorrowland (2           Boom                    Belgium
                 weekends)
7/26/2014        Dominator                 Eersel                  Netherlands
7/26/2014        Welcome to the Future     Oostzaan                Netherlands
8/1/2014         Nature One                Kastellaun              Germany
8/8/2014         The Qontinet              Wachtebeke              Netherlands
8/15/2014        Summer Set                Somerset, WI            USA
8/16/2014        Decibel Outdoor           Tilburg                 Netherlands
8/23/2014        Mysteryland               Haarlemmermeer          Netherlands
                 Netherlands
8/29/2014        Electric Zoo New York     NY, NY                  USA
8/30/2014        Sun City Music            El Paso, TX             USA
                 Festival
9/13/2014        Q-Base                    Weeze                   Germany
9/26/2014        TomorrowWorld             Chattahoochee           USA
                                           Hills, GA
10/18/2014       AMF                       Amsterdam               Netherlands
10/31/2014       Sensation Dubai           Dubai                   UAE
11/29/2014       Stereosonic - Sydney      Sydney                  Australia
11/29/2014       Stereosonic - Perth       Perth                   Australia
12/5/2014        Stereosonic -             Adelaide                Australia
                 Adelaide
12/6/2014        Stereosonic -             Melbourne               Australia
                 Melbourne
12/6/2014        Stereosonic -             Brisbane                Australia
                 Brisbane
                                                                   

Conference Call

SFX Entertainment management will host a conference call to review the results
for the quarter on Thursday, May 15 at 10:00 a.m. Eastern Time. To access the
conference call, interested parties may dial 212/231-2911 (domestic and
international callers). Participants can also listen to a live webcast of the
call through the “Events” section of SFX’s website at
http://investor.sfxii.com/events-calendar. A webcast replay will be available
for 90 days following the live event at
http://investor.sfxii.com/events-calendar. Please call five minutes in advance
to ensure that you are connected. Questions and answers will be taken only
from participants on the conference call.

Definitions

The following definitions apply to these terms as used throughout this press
release:

  *Acquisition Group – means (i) the 40% equity interest of Rock World
    acquired by SFX in February 2014, (ii) the 50% equity interest of B2S
    acquired by SFX in February 2014, and (iii) React Presents, which was
    acquired by SFX in April 2014.
  *Adjusted EBITDA – represents net income (loss) before other income (loss),
    interest expense, income taxes, depreciation and amortization, non-cash
    equity-based compensation expense, and non-recurring items, including
    financing and other transaction costs.
  *Pro Forma Adjusted EBITDA – means the Adjusted EBITDA of SFX and the
    Acquisition Group.
  *Pro Forma Revenue – means the revenue of SFX and the Acquisition Group.

Non-GAAP Financial Measures

We prepare our financial statements in accordance with Generally Accepted
Accounting Principles (“GAAP”). Within this press release, we make reference
to Adjusted EBITDA, Pro Forma Adjusted EBITDA, and Pro Forma Revenue which are
non-GAAP financial measures. The Company includes these non-GAAP financial
measures because management believes they are useful to investors in that they
provide for greater transparency with respect to supplemental information used
by management in its financial and operational decision making.

Management uses Adjusted EBITDA to convey supplemental information to
investors regarding the Company’s performance excluding the impact of certain
non-cash charges, costs associated with our initial public offering and other
special items that can affect the comparability of results from quarter to
quarter. In particular, Adjusted EBITDA is a key measure used by our
management and board of directors to understand and evaluate our core
operating performance and trends, to prepare and approve our annual budget,
and to develop short- and long-term operational plans. Of note, the
elimination of certain expenses in calculating Adjusted EBITDA can provide a
useful measure for period-to-period comparisons of our core business. In
addition, the Company believes that Pro Forma Adjusted EBITDA and Pro Forma
Revenue present important information to investors regarding the current
business, prospects and financial condition of the Company that would not
otherwise be available.

Accordingly, the Company believes the presentation of these non-GAAP financial
measures, when used in conjunction with GAAP financial measures, is a useful
financial analysis tool that can assist investors in assessing the Company’s
operating performance and underlying prospects. This analysis should not be
considered in isolation or as a substitute for analysis of our results as
reported under GAAP. This analysis, as well as the other information in this
press release, should be read in conjunction with the Company’s financial
statements and footnotes contained in the documents that the Company files
with the U.S. Securities and Exchange Commission. The non-GAAP financial
measures used by the Company in this press release may be different from the
methods used by other companies. For more information on the Non-GAAP
financial measures, please see the Reconciliation of GAAP financial measures
to Non-GAAP financial measures table in the press release.

About SFX Entertainment

SFX Entertainment, Inc. is the largest global producer of live events and
digital entertainment content focused exclusively on electronic music culture
(EMC) and other world-class festivals. SFX's mission is to provide electronic
music fans with the best possible live experiences, music discovery, media and
digital connectivity. SFX was borne out of the technology revolution and
produces and promotes a growing portfolio of live events that includes leading
brands such as Tomorrowland, TomorrowWorld, Mysteryland, Sensation,
Stereosonic, Electric Zoo, Disco Donnie Presents, Life in Color, Rock in Rio,
Nature One, Mayday, Decibel, Q-Dance and React Presents, as well as the
innovative ticketing service Flavorus. SFX also operates Beatport, the
principal online resource for EMC DJs and a trusted destination for the
growing EMC community to discover and stream music, follow DJs and keep
abreast of news, information and events, in addition to offering year-round
entertainment to EMC fans around the globe through other digital assets.
Additionally, SFX manages FX1, an internal marketing solutions agency for
consumer brands targeting the millennial culture.

Forward Looking Statements

This press release contains forward-looking statements regarding our business
strategy and plans, which are subject to the safe harbor provisions of the
Private Securities Litigation Reform Act of 1995. These forward-looking
statements are only predictions and may differ materially from actual results
due to a variety of factors including: our ability to close the acquisition of
our planned acquisition targets; our ability to integrate the companies we
have acquired and plan to acquire in the future; our belief that the EMC
community will grow; our ability to increase the number of festivals and
events we produce and their attendance; our ability to pay our debts and meet
our liquidity needs; competition; our ability to manage growth and
geographically-dispersed operations; and our ability to grow our online
properties. We refer you to the documents we file from time to time with the
U.S. Securities and Exchange Commission, specifically the section titled “Item
1A. Risk Factors” of our most recent Annual Report filed on Form 10-K and
Quarterly Reports on Form 10-Q and our Current Reports on Form 8-K, which
contain and identify other important factors that could cause actual results
to differ materially from those contained in our projections or
forward-looking statements. In addition, any forward-looking statements
contained herein are based on assumptions that we believe to be reasonable as
of this date. We undertake no obligation to update these statements as a
result of new information or future events, except as required by law.

                                                
Summarized Statement of Operations of SFX Entertainment, Inc.
(unaudited, $ in thousands)

                                                  Three months ended March 31,
                                                  2014           2013
                                                                  
Revenue                                           $  33,326       $  10,153
Direct costs                                        22,824         7,601
Gross Profit                                         10,502          2,552
                                                                  
Selling, general and administrative expenses         36,616          14,246
Depreciation and amortization                       14,661         3,081
                                                                  
Operating loss                                       (40,775)        (14,775)
                                                                  
Interest expense                                     (6,599)         (3,911)
Other expense                                        (18,831)        (942)
Equity in loss of non-consolidated affiliates       (582)          -
Loss before income taxes                             (66,787)        (19,628)
Income tax benefit (expense)                       3,281          (572)
                                                                  
Consolidated net loss                                (63,506)        (20,200)
Less: Net loss attributable to non-controlling       65              (878)
interest
                                                                 
Net loss attributable to the Company              $  (63,571)     $  (19,322)
                                                                  


SFX Entertainment, Inc.
Summary Balance Sheet Data
(unaudited, $ in thousands)
                                                      
                                        March 31, 2014     December 31, 2013
                                                           
                                                           
Cash and cash equivalents               $    106,430       $     52,654
Total assets                                 694,709             579,142
                                                           
Long-term debt                               220,551             74,674
Total liabilities                            398,262             234,430
                                                           
Redeemable common stock                      15,930              60,580
Redeemable non-controlling interest          3,981               4,128
                                                           
Stockholders' equity                         276,536             280,004
                                                                 

                                           
Reconciliation of GAAP Revenue to Pro Forma Revenue and GAAP Net Loss to Pro
Forma Adjusted EBITDA
                                                   
                                                   Three months ended
                                                   March 31, 2014
Revenue
Revenue, as reported by SFX                        $          33,326
Revenue of Acquisitions ^(1)                                 4,749
Total – Pro Forma Revenue                          $          38,075
                                                   
                                                   
Pro Forma Adjusted EBITDA
Consolidated net loss, as reported                 $          (63,506)
by SFX
                                                   
Interest expense                                              6,599
Income tax (benefit)                                          (3,281)
Depreciation & amortization                                   14,661
Other expense ^(2)                                            18,356
Equity based compensation expense                             10,085
                                                   
Adjusted EBITDA of SFX                                        (17,086)
                                                   
EBITDA of Acquisitions ^(1)                                   1,238
                                                   
Adjustments ^(3)                                              3,969
                                                   
Total - Pro Forma Adjusted EBITDA                  $          (11,879)
                                                   

(1) Includes all companies in Acquisition Group for the periods prior to SFX
ownership. The figures presented were prepared by such Acquisition Group
companies and such companies were not under SFX control for 100% of the time
periods presented.

(2) Other expense represents the extinguishment of debt, gain on a sale of
assets, foreign currency gains and other miscellaneous non-recurring items.

(3) Adjustments include transaction costs and non-recurring expenses
(principally severance)

In the first quarter of 2014 the Company began performing services under
certain marketing partner agreements for which the Company has invoiced and
begun to receive payments. The Company will begin to recognize revenue in
upcoming quarters as services are delivered. The Company believes that the
magnitude of these marketing partnerships demonstrates its ability to deliver
significant marketing partnership revenue across the platform. Anticipating
marketing partner needs, the Company has made significant investments in its
sponsorship and marketing infrastructure.

Contact:

SFX Entertainment, Inc.
Richard Rosenstein, 646-561-6400
Chief Financial Officer
or
JCIR
Joseph Jaffoni, 212-835-8500
sfxe@jcir.com
or
DKC Public Relations
Ed Tagliaferri, 212-981-5182
edmund_tagliaferri@dkcnews.com
 
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