Quarterly report pursuant to Section 13 or 15(d)

LONG-LIVED ASSETS

v2.4.0.8
LONG-LIVED ASSETS
 6 Months Ended
Jun. 30, 2014
LONG-LIVED ASSETS [Abstract]  
LONG-LIVED ASSETS
LONG-LIVED ASSETS
Property, Plant and Equipment
In the fourth quarter of 2012, an amphitheater in New York that is operated by the Company sustained substantial damage during Hurricane Sandy. During the three and six months ended June 30, 2013, the Company received partial insurance recoveries and recorded gains of $9.4 million and $12.6 million, respectively, as a component of gain on disposal of operating assets in the Concerts segment representing the proceeds received in excess of the carrying value of the assets. The Company received the final insurance recovery in the second quarter of 2014 and recorded gains of $3.6 million and $3.2 million during the three and six months ended June 30, 2014, respectively, as a component of gain on disposal of operating assets in the Concerts segment.
Definite-lived Intangible Assets
The Company has definite-lived intangible assets which are amortized over the shorter of either the lives of the respective agreements or the period of time the assets are expected to contribute to the Company’s future cash flows. The amortization is recognized on either a straight-line or expected cash flows basis.
The following table presents the changes in the gross carrying amount and accumulated amortization of definite-lived intangible assets for the six months ended June 30, 2014:
 
Revenue-
generating
contracts
 
Client /
vendor
relationships
 
Non-compete
agreements
 
Venue
management
and
leaseholds
 
Technology
 
Trademarks
and
naming
rights
 
Other
 
Total
 
(in thousands)
Balance as of December 31, 2013:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Gross carrying amount
$
585,094

 
$
277,937

 
$
137,199

 
$
85,642

 
$
100,664

 
$
28,524

 
$
2,375

 
$
1,217,435

Accumulated amortization
(231,053
)
 
(81,809
)
 
(101,128
)
 
(43,687
)
 
(73,110
)
 
(9,092
)
 
(992
)
 
(540,871
)
Net
354,041

 
196,128

 
36,071

 
41,955

 
27,554

 
19,432

 
1,383

 
676,564

Gross carrying amount:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Acquisitions— current year
—

 
27,771

 
1,500

 
—

 
1,231

 
—

 
1,100

 
31,602

Acquisitions— prior year
(3,994
)
 
5,098

 
—

 
—

 
—

 
—

 
—

 
1,104

Foreign exchange
4,140

 
2,832

 
—

 
872

 
(591
)
 
146

 
—

 
7,399

Other (1)
(479
)
 
(800
)
 
(14,800
)
 
—

 
—

 
—

 
570

 
(15,509
)
Net change
(333
)
 
34,901

 
(13,300
)
 
872

 
640

 
146

 
1,670

 
24,596

Accumulated amortization:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Amortization
(24,466
)
 
(19,784
)
 
(7,044
)
 
(3,417
)
 
(10,996
)
 
(2,003
)
 
(189
)
 
(67,899
)
Foreign exchange
(1,316
)
 
(744
)
 
—

 
(311
)
 
95

 
4

 
—

 
(2,272
)
Other (1)
478

 
878

 
15,300

 
—

 
—

 
—

 
—

 
16,656

Net change
(25,304
)
 
(19,650
)
 
8,256

 
(3,728
)
 
(10,901
)
 
(1,999
)
 
(189
)
 
(53,515
)
Balance as of June 30, 2014:
 
 
 
 
 
 
 
 
 
 
 
 
Gross carrying amount
584,761

 
312,838

 
123,899

 
86,514

 
101,304

 
28,670

 
4,045

 
1,242,031

Accumulated amortization
(256,357
)
 
(101,459
)
 
(92,872
)
 
(47,415
)
 
(84,011
)
 
(11,091
)
 
(1,181
)
 
(594,386
)
Net
$
328,404

 
$
211,379

 
$
31,027

 
$
39,099

 
$
17,293

 
$
17,579

 
$
2,864

 
$
647,645

_________
(1) 
Other includes net downs of fully amortized assets and $0.6 million of reclassifications of certain assets from indefinite-lived intangible assets.
Included in the current year acquisitions amount above of $31.6 million are client/vendor relationships primarily associated with the acquisitions of two artist management businesses during the first half of 2014 that are located in California.
The 2014 additions to definite-lived intangible assets from acquisitions have weighted-average lives as follows:
  
Weighted-
Average
Life (years)
 
 
Client/vendor relationships
7
Non-compete agreements
3
Technology
3
Other
10
All categories
6

Amortization of definite-lived intangible assets for the three months ended June 30, 2014 and 2013 was $33.3 million and $43.3 million, respectively, and for the six months ended June 30, 2014 and 2013 was $67.9 million and $81.5 million, respectively. In addition, amortization related to nonrecoupable ticketing contract advances for the three months ended June 30, 2014 and 2013 was $11.6 million and $10.3 million, respectively, and for the six months ended June 30, 2014 and 2013 was $29.0 million and $23.9 million, respectively.
As acquisitions and dispositions occur in the future and the valuations of intangible assets for recent acquisitions are completed, amortization may vary. Therefore, the expense to date is not necessarily indicative of the expense expected for the full year.
Goodwill
The following table presents the changes in the carrying amount of goodwill in each of the Company’s reportable segments for the six months ended June 30, 2014:
 
Concerts
 
Ticketing
 
Artist
Nation
 
Sponsorship
&  Advertising
 
Total
 
(in thousands)
Balance as of December 31, 2013:
 
 
 
 
 
 
 
 
 
Goodwill (1)
$
505,472

 
$
642,249

 
$
278,923

 
$
310,241

 
$
1,736,885

Accumulated impairment losses (1)
(269,902
)
 
—

 
—

 
—

 
(269,902
)
                 Net
235,570

 
642,249

 
278,923

 
310,241

 
1,466,983

 
 
 
 
 
 
 
 
 
 
Acquisitions—current year
1,129

 
—

 
17,539

 
—

 
18,668

Acquisitions—prior year
(1,786
)
 
—

 
(927
)
 
5,426

 
2,713

Foreign exchange
8,895

 
(629
)
 
221

 
5,856

 
14,343

 
 
 
 
 
 
 
 
 
 
Balance as of June 30, 2014:
 
 
 
 
 
 
 
 
Goodwill
513,710

 
641,620

 
295,756

 
321,523

 
1,772,609

Accumulated impairment losses
(269,902
)
 
—

 
—

 
—

 
(269,902
)
                 Net
$
243,808

 
$
641,620

 
$
295,756

 
$
321,523

 
$
1,502,707


_________
(1) 
The previously reported total balance has been reduced by $13.0 million due to the net down of fully impaired goodwill related to the Company’s non-core events business which was sold in 2008.

Included in the current year acquisitions amount above of $18.7 million is goodwill primarily associated with the March 2014 acquisition of an artist management business located in California.
The Company is in the process of finalizing its acquisition accounting for recent acquisitions which could result in a change to the associated purchase price allocations, including goodwill and its allocation between segments.
Investments in Nonconsolidated Affiliates
The Company has investments in various affiliates which are not consolidated and are accounted for under the equity method of accounting. The Company records its investments in these entities in the balance sheet as investments in nonconsolidated affiliates reported as part of other long-term assets. The Company’s interests in these operations are recorded in the statement of operations as equity in earnings of nonconsolidated affiliates. For the six months ended June 30, 2014, the Company’s investment in Venta de Boletos por Computadora S.A. de C.V., a 33% owned ticketing distribution services company in Mexico, is considered significant on an individual basis and certain other investments are considered significant on an aggregate basis.
Summarized unaudited income statement information for the Company’s nonconsolidated affiliates noted above is as follows (at 100%):
 
 
Six Months Ended 
 June 30,
 
 
2014
 
2013
 
 
(in thousands)
Revenue
 
$
24,278

 
$
28,203

Operating income
 
$
9,912

 
$
14,956

Net income
 
$
8,044

 
$
11,894

Net income attributable to the common stockholders of the equity investee
 
$
8,010

 
$
11,863



Long-lived Asset Disposals
In May 2013, the Company completed the sale of a theatrical theater in New York.
The table below summarizes the asset and liability values for the six months ended June 30, 2013 for significant disposals and the resulting gain or loss recorded. There were no significant disposals of long-lived assets in the six months ended June 30, 2014.
Divested Asset
 
Segment
 
Gain
on Disposal of
Operating
Assets
 
Current
Assets
 
Noncurrent
Assets
 
Current
Liabilities
 
Noncurrent
Liabilities
 
 
(in thousands)
2013 Divestiture
 
 
 
 
 
 
 
 
 
 
 
 
New York theatrical theater
 
Concerts
 
$
(21,887
)
 
$
—

 
$
35,785

 
$
—

 
$
3,636