Live Nation Entertainment Annual report pursuant to Section 13 and 15(d)

Annual report pursuant to Section 13 and 15(d)

LONG-LIVED ASSETS

LONG-LIVED ASSETS

12 Months Ended

Dec. 31, 2011

LONG-LIVED ASSETS [Abstract]

LONG-LIVED ASSETS

NOTE 2-LONG-LIVED ASSETS

Property, Plant and Equipment

The Company tests for possible impairment of property, plant and equipment whenever events or circumstances change, such as a significant reduction in operating cash flow or a dramatic change in the manner that the asset is intended to be used indicate that the carrying amount of the asset may not be recoverable.

During 2011, 2010 and 2009, the Company reviewed the carrying value of certain property, plant and equipment that management determined would, more likely than not, be disposed of before the end of their previously estimated useful lives or had an indicator that future operating cash flows may not support their carrying value. It was determined that these assets were impaired since the estimated undiscounted cash flows associated with the respective asset were less than its carrying value. For the years ended December 31, 2011, 2010 and 2009, the Company recorded an impairment charge of $10.0 million, $16.4 million and $9.6 million, respectively, as a component of depreciation and amortization. The 2011 impairment charge related to two amphitheaters, a music theater and a club in the Concerts segment. The 2010 impairment charge was primarily related to a House of Blues club in the Concerts segment and a theatrical theater in other operations. The 2009 impairment charge was related to two music theaters, two clubs and a theater development project in the Concerts segment. See Note 7-Fair Value Measurements for further discussion of the inputs used to determine the fair value.

Also during 2010, the Company recorded $4.5 million for acceleration of depreciation expense related to a change in estimate for the CTS ticketing platform assets that are no longer in use.

Definite-lived Intangibles

The Company has definite-lived intangible assets which are amortized over the shorter of either the respective lives of the 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 units of production basis. The following table presents the changes in the gross carrying amount and accumulated amortization of definite-lived intangible assets for the years ended December 31, 2011 and 2010:

	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, 2009:
Gross carrying amount	$	285,145		$	19,275		$	132,912		$	112,044		$	-		$	21,925		$	7,537		$	578,838
Accumulated amortization		(52,576	)		(3,930	)		(45,568	)		(23,354	)		-			(8,525	)		(2,244	)		(136,197	)
Net		232,569			15,345			87,344			88,690			-			13,400			5,293			442,641

Gross carrying amount
Acquisitions		217,827			351,060			43,861			4,872			96,096			6,493			8			720,217
Divestitures		-			-			-			-			-			(360	)		-			(360	)
Foreign currency and other (1)		(20,384	)		(4,991	)		(1,033	)		(1,691	)		(994	)		(4,060	)		(1,116	)		(34,269	)
		197,443			346,069			42,828			3,181			95,102			2,073			(1,108	)		685,588

Accumulated amortization:
Amortization Expense		(76,607	)		(30,451	)		(24,258	)		(8,224	)		(11,796	)		(4,649	)		(5,964	)		(161,949	)
Foreign currency and other (1)		16,608			4,067			993			700			(1	)		3,652			4,969			30,988
		(59,999	)		(26,384	)		(23,265	)		(7,524	)		(11,797	)		(997	)		(995	)		(130,961	)

Balance as of December 31, 2010:
Gross carrying amount		482,588			365,344			175,740			115,225			95,102			23,998			6,429			1,264,426
Accumulated amortization		(112,575	)		(30,314	)		(68,833	)		(30,878	)		(11,797	)		(9,522	)		(3,239	)		(267,158	)
Net		370,013			335,030			106,907			84,347			83,305			14,476			3,190			997,268

Gross carrying amount
Acquisitions		51,477			(5,538	)		(3,768	)		3,828			8,814			2,578			13			57,404
Divestitures		-			(4,299	)		(100	)		-			-			-			-			(4,399	)
Foreign currency and other (1)		8,361			(24,932	)		(107	)		(2,281	)		(579	)		(2,059	)		(16	)		(21,613	)
		59,838			(34,769	)		(3,975	)		1,547			8,235			519			(3	)		31,392

Accumulated amortization:
Amortization Expense		(64,497	)		(45,178	)		(25,558	)		(10,379	)		(20,127	)		(8,525	)		(953	)		(175,217	)
Divestitures		-			361			61			-			-			-			-			422
Foreign currency and other (1)		6,183			8,583			866			2,240			112			1,845			18			19,847
		(58,314	)		(36,234	)		(24,631	)		(8,139	)		(20,015	)		(6,680	)		(935	)		(154,948	)

Balance as of December 31, 2011:
Gross carrying amount		542,426			330,575			171,765			116,772			103,337			24,517			6,426			1,295,818
Accumulated amortization		(170,889	)		(66,548	)		(93,464	)		(39,017	)		(31,812	)		(16,202	)		(4,174	)		(422,106	)
Net	$	371,537		$	264,027		$	78,301		$	77,755		$	71,525		$	8,315		$	2,252		$	873,712

(1)	Other includes reclassifications between categories of definite-lived intangible assets resulting from the finalization of valuations and netdowns of fully amortized or impaired assets.

During 2011, the Company recorded definite-lived intangible assets totaling $57.4 million, primarily related to revenue-generating contracts and technology. Additions primarily related to the January 2011 acquisition of TGLP, a primary ticketing business in the Washington D.C. metro area, the April 2011 acquisition of Serviticket, a Spanish ticketing company, the October 2011 acquisition of LN-HS Concerts, a promoter in Southern California and the December 2011 acquisition of BigChampagne, a developer of technologies for collecting, analyzing and distributing media metrics. In addition, the definite-lived intangibles were impacted by approximately $4.6 million of decreases from foreign exchange rate changes.

During 2010, the Company recorded definite-lived intangible assets totaling $720.2 million, primarily related to revenue-generating contracts, client/vendor relationships, non-compete agreements, technology and trademarks and naming rights of which $585.0 million resulted from the Merger (see Note 3-Acquisitions for further discussion of the Merger). The remainder relates to additions in client/vendor relationships, non-compete agreements and venue management and leaseholds resulting from the April 2010 acquisition of the remaining 49% interest in, and control of, LN-Haymon, a promotion company in the United States, and additions in client/vendor relationships, non-compete agreements and technology from the November 2010 acquisition of Ticketnet, a ticketing company in France. In addition, the definite-lived intangibles were impacted by approximately $8.3 million of decreases from foreign exchange rate changes.

The 2011 and 2010 additions to definite-lived intangible assets have weighted average lives as follows:

	Weighted Average Life (years)
	2011	2010

Revenue-generating contracts	10	9
Client/vendor relationships	8	9
Non-compete agreements	3	4
Venue management and leaseholds	6	13
Technology	6	8
Trademarks and naming rights	5	7

All categories	9	9

During 2011, the Company recorded a divestiture of $4.4 million primarily relating to the sale of an artist management company.

The Company tests for possible impairment of definite-lived intangible assets whenever events or circumstances change, such as a significant reduction in operating cash flow or a dramatic change in the manner in which the asset is intended to be used which may indicate that the carrying amount of the asset may not be recoverable. During 2011, 2010 and 2009, the Company reviewed the carrying value of certain definite-lived intangible assets that management determined would not be renewed or that had an indicator that future operating cash flows may not support their carrying value. It was determined that those assets were impaired since the estimated undiscounted cash flows associated with those assets were less than their carrying value. For the years ended December 31, 2011, 2010 and 2009, the Company recorded an impairment charge related to definite-lived intangible assets of $14.1 million, $17.2 million and $0.9 million, respectively, as a component of depreciation and amortization. The 2011 impairment charge related to intangible assets for client/vendor relationships, revenue-generating contracts and venue management and leaseholds in the Concerts segment. The 2010 impairment charge was primarily related to intangible assets for revenue-generating contracts and trademarks and naming rights in the Concerts segment. The 2009 impairment charge was related to intangible assets for venue management and leaseholds in the Concerts segment. See Note 7-Fair Value Measurements for further discussion of the inputs used to determine the fair value.

Due to a change in estimate in certain revenue-generating contracts, the Company recorded $5.9 million of additional amortization expense during 2009.

Total amortization expense from definite-lived intangible assets for the years ended December 31, 2011, 2010 and 2009 was $175.2 million, $151.9 million and $64.6 million, respectively. The increase in amortization expense for the year ended December 31, 2011 as compared to the prior year is primarily driven by the additional definite-lived intangible assets obtained in the Merger, the acquisition of the remaining 49% interest in, and control of, LN-Haymon, the acquisitions of Ticketnet and Serviticket and the impairments discussed above. Also adding to the increase in amortization expense for the year ended December 31, 2011 as compared to the prior year was a $6.1 million reduction to amortization expense in 2010 related to a non-cash gain on the settlement of a pre-existing relationship with LN-Haymon.

The increase in amortization expense for the year ended December 31, 2010 as compared to the prior year is primarily driven by additional definite-lived intangibles obtained in the Merger.

The following table presents the Company's estimate of amortization expense for each of the five succeeding fiscal years for definite-lived intangible assets that exist at December 31, 2011:

	(in thousands)
2012	$	138,183
2013	$	139,587
2014	$	121,549
2015	$	116,734
2016	$	101,970

As acquisitions and dispositions occur in the future and the valuation of intangible assets for recent acquisitions are completed, amortization expense may vary.

Indefinite-lived Intangibles

The Company has indefinite-lived intangible assets which consist primarily of the intangible value related to trade names. These indefinite-lived intangible assets had a carrying value of $377.2 million and $375.2 million as of December 31, 2011 and 2010, respectively.

The Company tests for possible impairment of indefinite-lived intangible assets on at least an annual basis. During 2010, the Company determined that certain indefinite-lived intangible assets were impaired since the estimated fair value associated with those assets was less than its carrying value. For the year ended December 31, 2010, the Company recorded an impairment related to indefinite-lived intangible assets of $10.0 million, which is included in depreciation and amortization expense in the Ticketing segment. See Note 7-Fair Value Measurements for further discussion of the inputs used to determine the fair value. There was no impairment charge recorded for the years ended December 31, 2011 or 2009.

Goodwill

The following table presents the changes in the carrying amount of goodwill in each of the Company's reportable segments for the years ended December 31, 2011 and 2010:

	Concerts			Ticketing			Artist Nation			eCommerce		Sponsorship			Other			Total

Balance as of December 31, 2009:
Goodwill	$	388,631		$	-		$	-		$	-	$	85,943		$	13,037		$	487,611
Accumulated impairment
losses		(269,902	)		-			-			-		-			(13,037	)		(282,939	)
Net		118,729			-			-			-		85,943			-			204,672

Acquisitions - current year		-			559,479			267,742			214,927		-			-			1,042,148
Acquisitions - prior year		173			-			250			-		125			-			548
Dispositions		(5,011	)		-			-			-		-			-			(5,011	)
Foreign currency		(8,306	)		(1,623	)		-			-		(6,012	)		-			(15,941	)
Balance as of December 31, 2010:
Goodwill		375,487			557,856			267,992			214,927		80,056			13,037			1,509,355
Accumulated impairment
losses		(269,902	)		-			-			-		-			(13,037	)		(282,939	)
Net		105,585			557,856			267,992			214,927		80,056			-			1,226,416

Acquisitions - current year		15,040			17,955			1,836			9,635		-			-			44,466
Acquisitions - prior year		2			2,956			(7,523	)		-		-			-			(4,565	)
Dispositions		-			-			(147	)		-		-			-			(147	)
Foreign currency		(3,341	)		(1,636	)		-			-		(3,549	)		-			(8,526	)
Balance as of December 31, 2011:
Goodwill		387,188			577,131			262,158			224,562		76,507			13,037			1,540,583
Accumulated impairment
losses		(269,902	)		-			-			-		-			(13,037	)		(282,939	)
Net	$	117,286		$	577,131		$	262,158		$	224,562	$	76,507		$	-		$	1,257,644

Included in the current year acquisitions amount above for 2011 is $44.5 million primarily related to the acquisitions of Serviticket, LN-HS Concerts and BigChampagne.

Included in the prior year acquisitions amount of $4.6 million above for 2011 are reductions primarily due to a tax valuation adjustment relating to the Merger and finalization of the valuation for the Gellman Management LLC acquisition offset by the addition of goodwill related to the finalization of the valuation for the Ticketnet acquisition.

Included in the current year acquisitions amount above for 2010 is $1.0 billion of goodwill primarily related to the Merger and the acquisition of Ticketnet. See Note 3-Acquisitions for further discussion of the Merger.

Included in the dispositions amount above for 2010 is $5.0 million related to the sale of a music theater in Sweden.

Of the total amount of goodwill recognized in connection with 2011 acquisitions, none is expected to be deductible for tax purposes.

The Company reviews for possible impairment of goodwill annually. There was no impairment charge recorded for the years ended December 31, 2011 and 2010.

The Company is in the process of finalizing its acquisition accounting for recent acquisitions which could result in a change to the relevant purchase price allocations including goodwill.

Other Operating Assets

The Company makes investments in various operating assets, including artist rights agreements and rights related to assets for DVD production and distribution. These assets are reviewed for impairment or collectability whenever events or changes in circumstances indicate that the carrying amount of the asset may not be recoverable. During 2010 and 2009, it was determined that the recoverability of certain artist advances and other operating assets was uncertain since the estimated future undiscounted operating cash flows associated with those assets were less than their carrying value. For the year ended December 31, 2010, the Company recorded an impairment charge in direct operating expenses of $13.4 million in its Concerts segment related to these advances. For the year ended December 31, 2009, the Company recorded an impairment charge of $1.9 million in direct operating expenses in its Concerts segment related to these other operating assets. See Note 7-Fair Value Measurements for further discussion of the inputs used to determine fair value. There was no impairment charge recorded for the year ended December 31, 2011.

Long-Lived Asset Disposals

In January 2011, the Company sold its 50% controlling interest in an artist management company. In May 2011, the Company completed the sale of the Selma amphitheater in San Antonio.

In connection with the Merger, the Company reached an agreement with the DOJ that Ticketmaster would divest its Paciolan ticketing business and, in March 2010, the Company completed this sale to Comcast-Spectacor, L.P. In December 2010, the Company also sold Cirkus, a music theater in Sweden, and an indoor Latin/salsa event in the Netherlands.

In September 2009, the Company sold the Boston Opera House, a non-core operational asset, along with rights under a theater management agreement and a leasehold interest in a club, all located in Boston. The Company impaired these assets during the first and second quarters of 2009, as discussed above in Property, Plant and Equipment. Also in 2009, the Company sold its 20% equity interest in Marek Lieberberg Konzertagentur (“MLK”), a German music company involved in the promotion of live entertainment events.

The table below summarizes the asset and liability values at the time of disposal and the resulting gain or loss recorded.

Divested Asset	Segment	Gain (Loss) on Sale			Current Assets			Noncurrent Assets		Current Liabilities		Noncurrent Liabilities
		(in thousands)
2011 Divestiture
Selma amphitheater	Concerts	$	798		$	-		$	3,206	$	-	$	-
Artist management company	Artist Nation	$	(1,264	)	$	3		$	4,153	$	119	$	-
2010 Divestiture
Paciolan	Ticketing	$	(5,218	)	$	8,357		$	33,492	$	7,595	$	6,364
Cirkus	Concerts	$	3,094		$	(1,258	)	$	15,502	$	3,847	$	-
Latin/salsa event	Concerts	$	(67	)	$	408		$	8	$	348	$	-
2009 Divestiture
Boston venues	Concerts	$	60		$	127		$	22,422	$	1,232	$	-
MLK	Concerts	$	1,564		$	-		$	7,419	$	-	$	-