Annual report pursuant to Section 13 and 15(d)

STOCKHOLDERS' EQUITY

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STOCKHOLDERS' EQUITY
 12 Months Ended
Dec. 31, 2012
STOCKHOLDERS' EQUITY [Abstract]  
STOCKHOLDERS' EQUITY
 NOTE 10—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 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
 
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 8—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 35.9 million shares as of December 31, 2012 is reserved for future issuances under the stock incentive plan (including 24.7 million options and 3.2 million restricted stock awards currently granted).
 
Redeemable Noncontrolling Interests
 
For certain of its consolidated subsidiaries, the Company is subject to put arrangements arising from business combinations 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 exercise dates for these puts range from April 2013 to December 2018. The redemption amounts for these puts are either at a fixed amount, at fair value at the time of exercise or variable 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 the acquisition date. As these put arrangements are not currently redeemable, for increases in the estimated redemption value, or reductions in the estimated redemption value to the extent increases had been recognized previously, the Company accretes changes in the 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. Accounting guidance prohibits the recognition of reductions in value below issuance date value. Changes in 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. For redemption amounts that are fixed dollar amounts, if the initial fair value is the redemption amount, there are no changes recorded until the puts are exercised or expire. The redemption amounts for these put arrangements are reflected in the Company's balance sheets as redeemable noncontrolling interests outside of permanent equity and, at December 31, 2012 and December 31, 2011, were $42.1 million and $8.3 million, respectively. The increase during the current year is principally related to puts associated with the 2012 acquisitions.
 
Noncontrolling Interests
 
As of December 31, 2012, 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 ownership in an already controlled subsidiary, where the Company retains control after the transaction, 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,
  
   
2012
    
2011
    
2010
  
   
(in thousands)
  
Net loss attributable to common stockholders of Live Entertainment, Inc.
   $ (163,227 )   $ (83,016 )   $ (228,390 )
Transfers from noncontrolling interest:
                        
Changes in Live Nation Entertainment, Inc.'s additional paid-in capital for purchase of noncontrolling interests, net of transaction costs
     43       85,590       3,573  
Net transfers from noncontrolling interest
     43       85,590       3,573  
Change from net income (loss) attributable to common stockholders of Live
                        
Nation Entertainment, Inc. and transfers from noncontrolling interests
   $ (163,184 )   $ 2,574     $ (224,817 )
 
 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:
 
   
2012
    
2011
    
2010
  
   
(in thousands, except for per share data)
  
Net income (loss) attributable to common stockholders of Live Nation Entertainment, Inc.
   $ (163,227 )   $ (83,016 )   $ (228,390 )
Less loss from discontinued operations, net of tax
     -       -       (4,228 )
Net loss from continuing operations attributable to common stockholders of Live Nation Entertainment, Inc.—basic and diluted
   $ (163,227 )   $ (83,016 )   $ (224,162 )
Weighted average common shares—basic
     186,956       182,388       164,410  
Effect of dilutive securities:
                        
Stock options, restricted stock and warrants
     -       -       -  
2.875% convertible senior notes
     -       -       -  
Weighted average common shares—diluted
     186,956       182,388       164,410  
Basic and diluted loss from continuing operations per common share
   $ (0.87 )   $ (0.46 )   $ (1.36 )
 
The calculation of diluted net income 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 per common share because such securities are anti-dilutive:
 
   
2012
    
2011
    
2010
  
   
(in thousands)
  
Options to purchase shares of common stock
     24,722       21,429       20,464  
Restricted stock awards and units - unvested
     3,207       4,028       4,031  
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
     36,534       34,062       33,100