Annual report pursuant to Section 13 and 15(d)

EQUITY

v2.4.1.9
EQUITY
 12 Months Ended
Dec. 31, 2014
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 balance sheets include 1.2 million and 2.2 million, at December 31, 2014 and 2013, 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 2014 and 2013, the Company issued 2.7 million shares and 10.1 million shares, respectively, of common stock in connection with stock option exercises and vesting of restricted stock awards.
The above shares issued in 2013 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.
Common Stock Reserved for Future Issuance
Common stock of approximately 23.3 million shares as of December 31, 2014 is reserved for future issuances under the stock incentive plan (including 17.0 million options and 1.2 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 net income (loss) or comprehensive income (loss) as long as the subsidiary remains a controlled subsidiary. 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. In 2013, the Company acquired the remaining equity interests in a company that owns the 3Arena in Ireland along with other smaller companies. The following schedule reflects the change in ownership interests for these transactions:
 
Year Ended December 31,
 
2014
 
2013
 
2012
 
(in thousands)
Net loss attributable to common stockholders of Live Nation
$
(90,807
)
 
$
(43,378
)
 
$
(163,227
)
Transfers of noncontrolling interest:
 
 
 
 
 
Changes in Live Nation’s additional paid-in capital for purchase of noncontrolling interests, net of transaction costs
(3,796
)
 
(17,732
)
 
43

Changes in Live Nation’s additional paid-in capital for sale of noncontrolling interests, net of transaction costs
(11,748
)
 
—

 
—

Net transfers of noncontrolling interest
(15,544
)
 
(17,732
)
 
43

Change from net loss attributable to common stockholders of Live Nation and transfers from noncontrolling interests
$
(106,351
)
 
$
(61,110
)
 
$
(163,184
)


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 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 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 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 primarily due to the acquisition of a controlling interest in a festival and concert promoter located in the United States.
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, 2015, 2016, 2017, 2018 and 2019 are $14.6 million, $11.6 million, $9.2 million, $146.5 million and $8.1 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, 2014, 2013 and 2012:
 
 
Gains and Losses on Cash Flow Hedges
 
Defined Benefit Pension Items
 
Foreign Currency Items
 
Total
 
 
(in thousands)
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
)
Other comprehensive income (loss) before reclassifications
 
(6
)
 
30

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

 
—

 
—

 
60

Net other comprehensive income (loss)
 
54

 
30

 
(67,724
)
 
(67,640
)
Balance at December 31, 2014
 
$
(25
)
 
$
(581
)
 
$
(69,404
)
 
$
(70,010
)

The realized loss on cash flow hedges reclassified from AOCI consists of one interest rate swap agreement.
Earnings per Share
The following table sets forth the computation of basic and diluted net income (loss) per common share:
 
 
Year ended December 31,
 
 
2014
 
2013
 
2012
 
(in thousands except share and per share data)
Net loss attributable to common stockholders of Live Nation
 
$
(90,807
)
 
$
(43,378
)
 
$
(163,227
)
Accretion of redeemable noncontrolling interests
 
(5,660
)
 
(569
)
 
(801
)
Net loss available to common stockholders of Live Nation—basic and diluted
 
$
(96,467
)
 
$
(43,947
)
 
$
(164,028
)
 
 
 
 
 
 
 
Weighted average common shares—basic and diluted
 
198,874,019

 
193,885,066

 
186,955,748

 
 
 
 
 
 
 
Basic and diluted net loss available to common stockholders of Live Nation
 
$
(0.49
)
 
$
(0.23
)
 
$
(0.88
)

Basic net income (loss) per common share is computed by dividing the net income (loss) available 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 2.5% and 2.875% 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 and warrants, the assumed vesting of shares of restricted stock awards and units and the assumed conversion of the 2.5% and 2.875% convertible senior notes where dilutive. For the years ended December 31, 2014, 2013 and 2012 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,
  
2014
 
2013
 
2012
 
(in thousands)
Options to purchase shares of common stock
16,999

 
16,628

 
24,722

Restricted stock awards and units—unvested
1,171

 
2,210

 
3,207

Warrants
—

 
—

 
500

Conversion shares related to convertible senior notes
7,930

 
8,105

 
8,105

Number of anti-dilutive potentially issuable shares excluded from diluted common shares outstanding
26,100

 
26,943

 
36,534