Annual report pursuant to Section 13 and 15(d)

STOCKHOLDERS' EQUITY

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STOCKHOLDERS' EQUITY
 12 Months Ended
Dec. 31, 2011
STOCKHOLDERS' EQUITY [Abstract]  
STOCKHOLDERS' EQUITY
NOTE 11-STOCKHOLDERS' EQUITY
 
Dividends
 
The Company presently 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 which 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
 
In February 2011, the Company issued 5.7 million shares of common stock in connection with the acquisition of the remaining interests in Front Line. See Note 3-Acquisitions for further discussion regarding this 2011 transaction.
 
In February and June 2011, the Company issued 1.8 million and 5.5 million shares, respectively, of common stock pursuant to a subscription agreement with Liberty Media. See Note 9-Related-Party Transactions for further discussion of the subscription agreement.
 
In May 2011, the Company issued 0.7 million shares of common stock in connection with the acquisition of the remaining interests in Vector.
 
Common Stock Reserved for Future Issuance
 
Common stock of approximately 36.9 million shares as of December 31, 2011 is reserved for future issuances under the stock incentive plan (including 21.4 million options, 3.3 million restricted stock awards and 0.7 million restricted stock units currently granted).
 
Redeemable Noncontrolling Interests
 
Due to pre-existing obligations acquired pursuant to the Merger, the Company was subject to fair value put arrangements, some of which were currently redeemable and some of which were not currently redeemable, with respect to the common securities that represent the noncontrolling interests of certain non-wholly-owned Ticketmaster subsidiaries. Certain of these put arrangements were exercisable at fair value by the counterparty outside of the control of the Company, but were settled either in cash or stock at the discretion of the Company and were therefore classified as mezzanine equity. Accordingly, to the extent the fair value of these redeemable interests exceeded the value determined by normal noncontrolling interests accounting, the value of such interests was adjusted to fair value with a corresponding adjustment to additional paid-in capital. For these redeemable interests, the redemption value was their estimated fair value which was based upon a discounted cash flow analysis using estimated cash flows. Changes to the estimated fair value were computed based upon the impact of changes in the projected cash flows each reporting period which took into account the current expectations regarding profitability and the timing of revenue-generating events and were discounted to a present day fair value. In instances where the put arrangements held by the noncontrolling interests were not currently redeemable, for increases in fair value, or reductions in fair value to the extent increases had been recognized previously, the Company accreted changes in fair value over the period from the date of issuance to the earliest redemption date of the individual securities. Accounting guidance prohibits the recognition of reductions in value below issuance date value, in this case the date of the Merger. In accordance with the FASB guidance for business combinations, the redeemable noncontrolling interests were recorded at their fair value as of the consummation of the Merger on January 25, 2010.
 
In the first quarter of 2011, the Company acquired all of the noncontrolling interests in Front Line, a Ticketmaster subsidiary, all of which were not currently redeemable. Specifically, the Company repurchased 27,821 shares of Front Line common stock and 3,402 vested options. These instruments had a combined carrying value of $82.4 million at December 31, 2010. As part of the same transaction, although classified in other long-term liabilities on the balance sheets, the Company also acquired 15,376 shares of participating restricted Front Line common shares not currently redeemable that had a carrying value of $24.0 million at December 31, 2010. See Note 3-Acquisitions for further discussion of this 2011 transaction.
 
The common stock of two subsidiaries of Front Line held by noncontrolling interests also included put arrangements. The put arrangements did not have a determinable redemption date, but were considered to be currently redeemable based on the terms of redemption. The stock held by the noncontrolling interests had an estimated redemption fair value and carrying value of $22.5 million as of December 31, 2010. In the second quarter of 2011, the Company acquired all of these remaining noncontrolling interests for $14.7 million in cash and newly issued shares of Live Nation's common stock. Amounts paid as part of this transaction were recorded to additional paid-in capital to the extent they were in excess of the amount on the balance sheets.
 
In the fourth quarter of 2011, the Company acquired a 50% controlling interest in BigChampagne and, as part of the transaction, the Company is now subject to fixed price put arrangements whereby the noncontrolling interest holders can require the Company to repurchase their shares of BigChampagne at two future specified time periods, one beginning in November 2012 and one beginning in December 2013.  The redemption amount is reflected in the Company's December 31, 2011 balance sheet as redeemable noncontrolling interests. As the amounts that will be paid at exercise are fixed in nature, the redemption amount does not change and, as such, there will be no changes recorded until the puts are exercised or expire.
 
Noncontrolling Interests
 
As of December 31, 2011, for the non-wholly-owned subsidiaries of the Company, where the common securities held by the noncontrolling interests do not include put arrangements exercisable outside of the control of the Company, such noncontrolling interests are recorded in stockholders' equity, separate from the Company's own 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 consolidated net income or comprehensive income. In 2011, the Company acquired the remaining equity interests in Front Line, Vector and other smaller companies. See Note 3-Acquisitions for further discussion regarding the Front Line acquisition. The following schedule reflects the change in ownership interests for these transactions.
 
   
Year Ended December 31,
  
   
2011
    
2010
    
2009
  
   
(in thousands)
  
Net loss attributable to Live Nation Entertainment, Inc.
   $ (83,016 )   $ (228,390 )   $ (60,179 )
Transfers (to) from noncontrolling interest:
                        
Increase in Live Nation Entertainment, Inc.'s paid in capital for purchase of noncontrolling interests, net of transaction costs
     85,590       3,573       -  
Net transfers from noncontrolling interest
     85,590       3,573       -  
Change from net loss attributable to Live Nation Entertainment, Inc.and transfers (to) from noncontrolling interest
   $ 2,574     $ (224,817 )   $ (60,179 )
 
Earnings per Share
 
Basic net income per common share is computed by dividing the net income applicable to common shares 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 2.875% convertible notes are considered in the calculation of diluted net income per common share, if dilutive.
 
The following table sets forth the computation of basic and diluted net loss from continuing operations per common share:
 
   
2011
    
2010
    
2009
  
   
(in thousands, except for per share data)
  
Net loss attributable to Live Nation Entertainment, Inc.
   $ (83,016 )   $ (228,390 )   $ (60,179 )
Less income (loss) from discontinued operations, net of tax
     -       (4,228 )     76,277  
Net loss from continuing operations attributable to common stockholders-basic and diluted
   $ (83,016 )   $ (224,162 )   $ (136,456 )
                         
Weighted average common shares-basic
     182,388       164,410       82,652  
Effect of dilutive securities:
                        
Stock options, restricted stock and warrants
     -       -       -  
2.875% convertible senior notes
     -       -       -  
Diluted weighted average common shares-diluted
     182,388       164,410       82,652  
                         
Basic and diluted loss from continuing operations per common share
   $ (0.46 )   $ (1.36 )   $ (1.65 )
 
The calculation of diluted net income (loss) per common share includes the effects of the assumed exercise of any outstanding stock options and warrants, the assumed vesting of shares of restricted stock awards and units and the assumed conversion of the 2.875% convertible senior notes where dilutive. The following table shows securities excluded from the calculation of diluted net income (loss) per common share because such securities are anti-dilutive:
 
   
2011
    
2010
    
2009
  
   
(in thousands)
  
Options to purchase shares of common stock
     21,429       20,464       7,099  
Restricted stock awards and units - unvested
     4,028       4,031       692  
Warrants
     500       500       500  
Conversion shares related to 2.875% convertible senior notes
     8,105       8,105       8,105  
Number of anti-dilutive potentially issuable shares excluded from diluted common shares outstanding
     34,062       33,100       16,396  
 
The increase in 2010 as compared to the prior year in the above table includes options and RSU awards added as part of the Merger that had been previously granted by Ticketmaster or IAC.