Annual report pursuant to Section 13 and 15(d)

EQUITY

v2.4.0.8
EQUITY
 12 Months Ended
Dec. 31, 2013
Equity [Abstract]  
EQUITY
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
Issued shares of common stock reported on the Consolidated Balance Sheet include 2.2 million and 3.2 million, at December 31, 2013 and 2012, respectively, of unvested restricted stock awards that have not been included in the common shares issued reported on the Consolidated Statement of Changes In Equity. These shares will be reflected in the Consolidated Statement of Changes In Equity at the time of vesting.
During 2013, the Company issued 10.1 million shares of common stock primarily in connection with stock option exercises.
The above shares include 0.5 million shares of common stock that were issued in connection with the exercise of warrants to purchase the Company’s common stock. The transactions were cashless net exercises resulting in the Company repurchasing 0.4 million of the shares issued which have been recorded in treasury stock at a value of $6.9 million.
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—Certain Relationships and 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 an artist management business.
Common Stock Reserved for Future Issuance
Common stock of approximately 25.9 million shares as of December 31, 2013 is reserved for future issuances under the stock incentive plan (including 16.6 million options and 2.2 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 consolidated net income (loss) or comprehensive income (loss) as long as the subsidiary remains a controlled subsidiary. In 2013, the Company acquired the remaining equity interest in a company that owns The O2 Dublin and other smaller companies. In 2011, the Company acquired the remaining equity interests in Front Line 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,
 
2013
 
2012
 
2011
 
(in thousands)
Net loss attributable to common stockholders of Live Entertainment, Inc.
$
(43,378
)
 
$
(163,227
)
 
$
(83,016
)
Transfers from noncontrolling interest:
 
 
 
 
 
Changes in Live Nation Entertainment, Inc.’s additional paid-in capital for purchase of noncontrolling interests, net of transaction costs
(17,732
)
 
43

 
85,590

Change from net loss attributable to common stockholders of Live Nation Entertainment, Inc. and transfers from noncontrolling interests
$
(61,110
)
 
$
(163,184
)
 
$
2,574



Redeemable Noncontrolling Interests
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 June 2014 to December 2018. 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. As these put arrangements are not currently redeemable, the Company accretes up to 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. 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 amounts for these put arrangements are reflected in the Company’s balance sheets as redeemable noncontrolling interests outside of permanent equity. The increase during the current year is principally related to puts associated with 2013 acquisitions.
Accumulated Other Comprehensive Income (Loss)
The following table presents changes in the components of AOCI, net of taxes, for the years ended December 31, 2013, 2012 and 2011:
 
 
Gains and Losses on Cash Flow Hedges
 
Defined Benefit Pension Items
 
Foreign Currency Items
 
Total
 
 
(in thousands)
Balance at December 31, 2010
 
$
(272
)
 
$
(179
)
 
$
(21,793
)
 
$
(22,244
)
Other comprehensive loss before reclassifications
 
(159
)
 
(42
)
 
(13,929
)
 
(14,130
)
Net other comprehensive loss
 
(159
)
 
(42
)
 
(13,929
)
 
(14,130
)
Balance at December 31, 2011
 
(431
)
 
(221
)
 
(35,722
)
 
(36,374
)
Other comprehensive income (loss) before reclassifications
 
(148
)
 
(390
)
 
26,005

 
25,467

Amount reclassified from AOCI
 
(16
)
 
—

 
—

 
(16
)
Net other comprehensive income (loss)
 
(164
)
 
(390
)
 
26,005

 
25,451

Balance at December 31, 2012
 
(595
)
 
(611
)
 
(9,717
)
 
(10,923
)
Other comprehensive income before reclassifications
 
20

 
—

 
8,037

 
8,057

Amount reclassified from AOCI
 
496

 
—

 
—

 
496

Net other comprehensive income
 
516

 
—

 
8,037

 
8,553

Balance at December 31, 2013
 
$
(79
)
 
$
(611
)
 
$
(1,680
)
 
$
(2,370
)

The realized loss on cash flow hedges reclassified from AOCI consists of one interest rate swap agreement.
Earnings per Share
Basic net income (loss) per common share is computed by dividing the net income (loss) 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 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. For the years ended December 31, 2013, 2012 and 2011 there were no reconciling items to net loss attributable to common stockholders of Live Nation Entertainment, Inc. or 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 are anti-dilutive:
  
Year Ended December 31,
  
2013
 
2012
 
2011
 
(in thousands)
Options to purchase shares of common stock
16,628

 
24,722

 
21,429

Restricted stock awards and units—unvested
2,210

 
3,207

 
4,028

Warrants
—

 
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
26,943

 
36,534

 
34,062