Quarterly report pursuant to Section 13 or 15(d)

LONG-LIVED ASSETS

 v2.3.0.11
LONG-LIVED ASSETS
6 Months Ended
Jun. 30, 2011
Goodwill and Intangible Assets Disclosure [Abstract]  
LONG-LIVED ASSETS
NOTE 2-LONG-LIVED ASSETS
 
Definite-lived Intangible Assets
 
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 gross carrying amount and accumulated amortization of definite-lived intangible assets as of June 30, 2011 and December 31, 2010:
 
   
Balance
as of
December 31,
2010
   
Acquisitions
   
Divestitures
   
Amortization
Expense
   
Foreign
Currency
and
Other
   
Balance
as of
June 30,
2011
 
   
(in thousands)
 
Revenue-generating contracts:
                                   
Gross carrying amount
  $ 482,588     $ 34,919     $ (263 )   $ -     $ 24,898     $ 542,142  
Accumulated amortization
    (112,575 )     -       263       (29,392 )     (1,874 )     (143,578 )
Net
    370,013       34,919       -       (29,392 )     23,024       398,564  
Non-compete agreements:
                                               
Gross carrying amount
    175,740       (5,178 )     (100 )     -       361       170,823  
Accumulated amortization
    (68,833 )     -       61       (13,333 )     961       (81,144 )
Net
    106,907       (5,178 )     (39 )     (13,333 )     1,322       89,679  
Venue management and leaseholds:
                                               
Gross carrying amount
    115,225       3,828       -       -       437       119,490  
Accumulated amortization
    (30,878 )     -       -       (5,550 )     1,044       (35,384 )
Net
    84,347       3,828       -       (5,550 )     1,481       84,106  
Trademarks and naming rights:
                                               
Gross carrying amount
    23,998       91       -       -       489       24,578  
Accumulated amortization
    (9,522 )     -       -       (4,131 )     (263 )     (13,916 )
Net
    14,476       91       -       (4,131 )     226       10,662  
Client/vendor relationships:
                                               
Gross carrying amount
    365,344       (10,174 )     (4,299 )     -       (16,509 )     334,362  
Accumulated amortization
    (30,314 )     -       361       (19,317 )     1,347       (47,923 )
Net
    335,030       (10,174 )     (3,938 )     (19,317 )     (15,162 )     286,439  
Technology:
                                               
Gross carrying amount
    95,102       768       -       -       1,557       97,427  
Accumulated amortization
    (11,797 )     -       -       (9,519 )     (395 )     (21,711 )
Net
    83,305       768       -       (9,519 )     1,162       75,716  
Other:
                                               
Gross carrying amount
    6,429       12       -       -       28       6,469  
Accumulated amortization
    (3,239 )     -       -       (730 )     (11 )     (3,980 )
Net
    3,190       12       -       (730 )     17       2,489  
Total:
                                               
Gross carrying amount
    1,264,426       24,266       (4,662 )     -       11,261       1,295,291  
Accumulated amortization
    (267,158 )     -       685       (81,972 )     809       (347,636 )
Net
  $ 997,268     $ 24,266     $ (3,977 )   $ (81,972 )   $ 12,070     $ 947,655  
 
During 2011, the Company recorded definite-lived intangible assets totaling $24.3 million, primarily related to revenue-generating contracts. Additions primarily related to the January 2011 acquisition of TGLP, a primary ticketing business in the Washington D.C. metro area and the April 2011 acquisition of Serviticket, a Spanish ticketing company.
 
The 2011 additions to definite-lived intangible assets have weighted average lives as follows:
 
 
Weighted
Average
Life (years)
   
Revenue-generating contracts
9
Non-compete agreements
2
Venue management and leaseholds
6
Trademarks and naming rights
5
Technology
10
Other
1
Combined
9
 
During 2011, the Company recorded a divestiture of $4.4 million relating to the sale of an artist management company.
 
Amortization expense from definite-lived intangible assets for the three months ended June 30, 2011 and 2010 was $41.0 million and $31.0 million, respectively, and amortization expense for the six months ended June 30, 2011 and 2010 was $82.0 million and $61.5 million, respectively. The increase in amortization expense 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 in April 2010 and the acquisitions of Ticketnet and Serviticket.
 
For the three months ended June 30, 2011 and 2010, the Company recorded amortization expense related to nonrecoupable ticketing contract advances of $6.0 million and $3.6 million, respectively, and for the six months ended June 30, 2011 and 2010, recorded $13.5 million and $4.7 million, respectively.
 
As acquisitions and dispositions occur in the future and the valuation of intangible assets for recent acquisitions are completed, amortization expense may vary.
 
Goodwill
 
The following table presents the changes in the carrying amount of goodwill in each of the Company's segments for the six months ended June 30, 2011:
 
   
Concerts
   
Ticketing
   
Artist
Nation
   
eCommerce
   
Sponsorship
   
Other
   
Total
 
   
(in thousands)
 
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
    -       10,715       -       -       -       -       10,715  
Acquisitions - prior year
    2       3,612       (7,592 )     -       -       -       (3,978 )
Dispositions
    -       -       (147 )     -       -       -       (147 )
Foreign currency
    11,202       4,654       -       -       11,897       -       27,753  
Balance as of June 30, 2011:
                                                       
Goodwill
    386,691       576,837       260,253       214,927       91,953       13,037       1,543,698  
Accumulated impairment
                                                       
losses
    (269,902 )     -       -       -       -       (13,037 )     (282,939 )
Net
  $ 116,789     $ 576,837     $ 260,253     $ 214,927     $ 91,953     $ -     $ 1,260,759  
 
Included in the current year acquisitions above is $10.7 million related to the acquisition of Serviticket.
 
Included in the prior year acquisitions above are reductions primarily due to a tax valuation adjustment relating to the Merger offset by an addition of $3.6 million related to Ticketnet.
 
The Company is in the process of finalizing its acquisition accounting for recent acquisitions which could result in a change to the associated purchase price allocations, including goodwill.
 
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.
 
The table below summarizes the asset and liability values at the time of disposal and the resulting loss or gain recorded.
Divested Asset
 
Segment
 
Gain (Loss) on Sale
   
Current Assets
   
Noncurrent Assets
   
Current Liabilities
   
Noncurrent Liabilities
 
       
(in thousands)
 
2011 Divestitures
                                 
Selma amphitheather
 
Concerts
  $ 809     $ -     $ 3,194     $ -     $ -  
Artist management company
 
Artist Nation
  $ (1,241 )   $ (70 )   $ 4,140     $ 128     $ -  
2010 Divestitures
                                           
Paciolan
 
Ticketing
  $ (5,218 )   $ 8,357     $ 33,492     $ 7,595     $ 6,364  
 
Certain agreements relating to disposals of businesses provide for future contingent consideration based on the financial performance of the businesses sold. The Company will record additional amounts related to such contingent consideration, with a corresponding adjustment to gain (loss) on sale of operating assets, if and when it is determinable that the applicable financial performance targets will be met.  The aggregate of these contingent considerations, if performance targets are met, would not significantly impact the results of operations of the Company.  The last contingency period for which the Company has an outstanding contingent consideration is for the year ended December 31, 2013.