Annual report pursuant to Section 13 and 15(d)

EQUITY

v3.6.0.2
EQUITY
 12 Months Ended
Dec. 31, 2016
Equity [Abstract]  
EQUITY
EQUITY
Dividends
The Company currently intends to retain future earnings, if any, to finance the expansion of its business. Therefore, it does not expect to pay any cash dividends in the foreseeable future. Moreover, the terms of the Company’s senior secured credit facility limit the amount of funds that the Company will have available to declare and distribute as dividends on its common stock. Payment of future cash dividends, if any, will be at the discretion of the Company’s board of directors in accordance with applicable laws after taking into account various factors, including the financial condition, operating results, current and anticipated cash needs, plans for expansion and contractual restrictions with respect to the payment of dividends.
Common Stock
Issued shares of common stock reported on the balance sheets include 1.1 million and 0.9 million, at December 31, 2016 and 2015, respectively, of unvested restricted stock awards that have not been included in the common shares issued reported on the statements of changes in equity. These shares will be reflected in the statements of changes in equity at the time of vesting.
During 2016, 2015 and 2014, the Company issued 1.4 million, 1.6 million and 2.7 million shares, respectively, of common stock in connection with stock option exercises and vesting of restricted stock awards.
Common Stock Reserved for Future Issuance
Common stock of approximately 29.3 million shares as of December 31, 2016 is reserved for future issuances under the stock incentive plan (including 16.3 million options and 1.1 million restricted stock awards currently granted).
Noncontrolling Interests
Common securities held by the noncontrolling interests that do not include put arrangements exercisable outside of the control of the Company are recorded in equity, separate from the Company’s stockholders’ equity.
The purchase or sale of additional ownership in an already controlled subsidiary is recorded as an equity transaction with no gain or loss recognized in net income (loss) or comprehensive income (loss) as long as the subsidiary remains a controlled subsidiary. In 2016, the Company acquired all or additional equity interests in two artist management businesses located in the United States along with other smaller companies. In 2015, a subsidiary of the Company exchanged their equity interest in a ticketing business for a noncontrolling interest in the Company’s subsidiary that acquired the remaining equity interest of that ticketing business. In addition, the Company acquired the remaining equity interest in an artist management business in the United Kingdom. In 2014, in connection with the acquisition of an artist management business, the Company exchanged a noncontrolling interest in certain of its existing artist management businesses. In addition, the Company acquired the remaining equity interests in a festival promoter based in Ireland along with other smaller companies. The following schedule reflects the change in ownership interests for these transactions:
 
Year Ended December 31,
 
2016
 
2015
 
2014
 
(in thousands)
Net income (loss) attributable to common stockholders of Live Nation
$
2,942

 
$
(32,508
)
 
$
(90,807
)
Transfers of noncontrolling interest:
 
 
 
 
 
Changes in Live Nation’s additional paid-in capital for purchases of noncontrolling interests, net of transaction costs
(49,111
)
 
(6,555
)
 
(3,796
)
Changes in Live Nation’s additional paid-in capital for sales of noncontrolling interests, net of transaction costs
1,424

 
11,899

 
(11,748
)
Net transfers of noncontrolling interest
(47,687
)
 
5,344

 
(15,544
)
Change from net income (loss) attributable to common stockholders of Live Nation and net transfers of noncontrolling interests
$
(44,745
)
 
$
(27,164
)
 
$
(106,351
)


Redeemable Noncontrolling Interests
The Company is subject to put arrangements where the holders of the noncontrolling interests can require the Company to repurchase their shares at specified dates in the future or within specified periods in the future. Certain of these puts can be exercised earlier upon the occurrence of triggering events as specified in the agreements. The redemption amounts for these puts are either at a fixed amount, at fair value at the time of exercise or a variable amount based on a formula linked to earnings. In accordance with the FASB guidance for business combinations, the redeemable noncontrolling interests are recorded at their fair value at acquisition date. For puts not redeemable at fair value, when these put arrangements are not currently redeemable, the Company accretes up to the estimated redemption value over the period from the date of issuance to the earliest redemption date of the individual puts, with the offset recorded to additional paid-in capital. Decreases in accretion are only recognized to the extent that increases had been previously recognized. The estimated redemption values that are based on a formula linked to future earnings are computed using projected cash flows each reporting period which take into account the current expectations regarding profitability and the timing of revenue-generating events. The balances are reflected in the Company’s balance sheets as redeemable noncontrolling interests outside of permanent equity. The increase during the current year is primarily due to the acquisitions of controlling interests in festival and concert promoter businesses located in the United States and Australia.
The Company’s estimate of redemption amounts for puts that are redeemable at fixed or determinable prices on fixed or determinable dates for the years ended December 31, 2017, 2018, 2019, 2020 and 2021 are $3.5 million, $153.1 million, $59.6 million, $124.7 million and $48.9 million, respectively.
Accumulated Other Comprehensive Income (Loss)
The following table presents changes in the components of AOCI, net of taxes, for the years ended December 31, 2016, 2015 and 2014:
 
 
Gains and Losses on Cash Flow Hedges
 
Defined Benefit Pension Items
 
Foreign Currency Items
 
Total
 
 
(in thousands)
Balance at December 31, 2013
 
$
(79
)
 
$
(611
)
 
$
(1,680
)
 
$
(2,370
)
Other comprehensive income before reclassifications
 
(6
)
 
30

 
(67,724
)
 
(67,700
)
Amount reclassified from AOCI
 
60

 
—

 
—

 
60

Net other comprehensive income
 
54

 
30

 
(67,724
)
 
(67,640
)
Balance at December 31, 2014
 
(25
)
 
(581
)
 
(69,404
)
 
(70,010
)
Other comprehensive income (loss) before reclassifications
 
—

 
223

 
(41,895
)
 
(41,672
)
Amount reclassified from AOCI
 
25

 
—

 
—

 
25

Net other comprehensive income (loss)
 
25

 
223

 
(41,895
)
 
(41,647
)
Balance at December 31, 2015
 
—

 
(358
)
 
(111,299
)
 
(111,657
)
Other comprehensive income (loss) before reclassifications
 
—

 
(103
)
 
(64,947
)
 
(65,050
)
Amount reclassified from AOCI
 
—

 
—

 
—

 
—

Net other comprehensive income (loss)
 
—

 
(103
)
 
(64,947
)
 
(65,050
)
Balance at December 31, 2016
 
$
—

 
$
(461
)
 
$
(176,246
)
 
$
(176,707
)

The realized loss on cash flow hedges reclassified from AOCI consists of one interest rate swap agreement that expired on June 30, 2015.
Earnings per Share
Basic net income (loss) per common share is computed by dividing the net income (loss) available to common stockholders by the weighted average number of common shares outstanding during the period. Diluted net income per common share adjusts basic net income per common share for the effects of stock options, restricted stock and other potentially dilutive financial instruments only in the periods in which such effect is dilutive. The Company’s convertible senior notes are considered in the calculation of diluted net income per common share, if dilutive.
The calculation of diluted net income per common share includes the effects of the assumed exercise of any outstanding stock options, the assumed vesting of shares of restricted stock awards and the assumed conversion of the convertible senior notes where dilutive. For the years ended December 31, 2016, 2015 and 2014 there were no reconciling items to the weighted average common shares outstanding in the calculation of diluted net income per common share. The following table shows securities excluded from the calculation of diluted net income per common share because such securities were anti-dilutive:
  
 
Year Ended December 31,
  
 
2016
 
2015
 
2014
 
(in thousands)
Options to purchase shares of common stock
 
16,283

 
16,309

 
16,999

Restricted stock awards—unvested
 
1,080

 
861

 
1,171

Conversion shares related to convertible senior notes
 
7,930

 
7,930

 
7,930

Number of anti-dilutive potentially issuable shares excluded from diluted common shares outstanding
 
25,293

 
25,100

 
26,100