Item 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

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Item 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

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Report of Independent Registered Public Accounting Firm

The Board of Directors and Stockholders of Live Nation Entertainment, Inc.

We have audited the accompanying consolidated balance sheets of Live Nation Entertainment, Inc. as of December 31, 2012 and 2011, and the related consolidated statements of operations, comprehensive loss, changes in stockholders’ equity, and cash flows for each of the three years in the period ended December 31, 2012. Our audits also included the financial statement schedule listed in the index at Item 15(a)2. These financial statements and schedule are the responsibility of the Company’s management. Our responsibility is to express an opinion on these financial statements and schedule based on our audits.

We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the financial statements referred to above present fairly, in all material respects, the consolidated financial position of Live Nation Entertainment, Inc. at December 31, 2012 and 2011, and the consolidated results of its operations and its cash flows for each of the three years in the period ended December 31, 2012, in conformity with U.S. generally accepted accounting principles. Also in our opinion, the related financial statement schedule, when considered in relation to the basic financial statements taken as a whole, presents fairly in all material respects the information set forth therein.

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States), Live Nation Entertainment, Inc.’s internal control over financial reporting as of December 31, 2012, based on criteria established in Internal Control-Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission and our report dated February 26, 2013 expressed an unqualified opinion thereon.

/s/ Ernst & Young LLP

Los Angeles, California

February 26, 2013

LIVE NATION ENTERTAINMENT, INC.

CONSOLIDATED BALANCE SHEETS


	December 31,
	2012			2011
	(in thousands except share data)
ASSETS
Current assets
Cash and cash equivalents	$	1,001,055		$	844,253
Accounts receivable, less allowance of $19,794 and $16,986 in 2012 and 2011, respectively		415,790			389,346
Prepaid expenses		359,936			316,491
Other current assets		36,031			26,700

Total current assets		1,812,812			1,576,790

Property, plant and equipment
Land, buildings and improvements		852,175			851,812
Computer equipment and capitalized software		338,919			261,475
Furniture and other equipment		200,743			172,250
Construction in progress		56,822			60,652

		1,448,659			1,346,189
Less accumulated depreciation		726,873			626,053

		721,786			720,136
Intangible assets
Definite-lived intangible assets, net		724,463			873,712
Indefinite-lived intangible assets		377,463			377,160
Goodwill		1,357,827			1,257,644
Investments in nonconsolidated affiliates		46,160			55,796
Other long-term assets		250,295			216,106

Total assets	$	5,290,806		$	5,077,344


LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities
Accounts payable, client accounts	$	557,953		$	473,956
Accounts payable		102,718			87,627
Accrued expenses		626,723			579,566
Deferred revenue		402,002			273,536
Current portion of long-term debt		62,050			52,632
Other current liabilities		16,726			25,236

Total current liabilities		1,768,172			1,492,553

Long-term debt, net		1,677,955			1,652,629
Long-term deferred income taxes		199,596			186,298
Other long-term liabilities		94,409			120,693
Commitments and contingent liabilities

Redeemable noncontrolling interests		42,100			8,277

Stockholders’ equity
Preferred stock—Series A Junior Participating, $.01 par value; 20,000,000 shares authorized; no shares issued and outstanding		-			-
Preferred stock, $.01 par value; 30,000,000 shares authorized; no shares issued and outstanding		-			-
Common stock, $.01 par value; 450,000,000 shares authorized; 190,853,380 and 189,536,279 shares issued and outstanding in 2012 and 2011, respectively		1,877			1,868
Additional paid-in capital		2,272,882			2,243,587
Accumulated deficit		(908,418	)		(745,191	)
Cost of shares held in treasury (578,570 shares in 2011)		-			(2,787	)
Accumulated other comprehensive loss		(10,923	)		(36,374	)

Total Live Nation Entertainment, Inc. stockholders’ equity		1,355,418			1,461,103
Noncontrolling interests		153,156			155,791

Total stockholders’ equity		1,508,574			1,616,894


Total liabilities and stockholders’ equity	$	5,290,806		$	5,077,344

See Notes to Consolidated Financial Statements

LIVE NATION ENTERTAINMENT, INC.

CONSOLIDATED STATEMENTS OF OPERATIONS


	Year Ended December 31,
	2012			2011			2010
	(in thousands except share and per share data)

Revenue	$	5,819,047		$	5,383,998		$	5,063,748
Operating expenses:
Direct operating expenses		4,151,277			3,789,488			3,658,310
Selling, general and administrative expenses		1,143,632			1,111,969			1,014,491
Depreciation and amortization		429,557			343,018			321,666
Loss (gain) on sale of operating assets		(514	)		978			374
Corporate expenses		113,364			112,157			110,252
Acquisition transaction expenses		3,370			8,051			22,355

Operating income (loss)		(21,639	)		18,337			(63,700	)

Interest expense		123,740			120,414			116,527
Loss (gain) on extinguishment of debt		(460	)		-			21,315
Interest income		(4,170	)		(4,215	)		(3,771	)
Equity in earnings of nonconsolidated affiliates		(9,921	)		(7,742	)		(4,928	)
Other expense (income), net		1,333			6,507			(4,189	)

Loss from continuing operations before income taxes		(132,161	)		(96,627	)		(188,654	)
Income tax expense (benefit)		29,736			(26,224	)		15,154

Loss from continuing operations		(161,897	)		(70,403	)		(203,808	)
Loss from discontinued operations, net of tax		-			-			(4,228	)

Net loss		(161,897	)		(70,403	)		(208,036	)
Net income attributable to noncontrolling interests		1,330			12,613			20,354

Net loss attributable to common stockholders of Live Nation Entertainment, Inc.	$	(163,227	)	$	(83,016	)	$	(228,390	)


Basic and diluted net loss per common share attributable to common stockholders of Live Nation Entertainment, Inc.:
Loss from continuing operations	$	(0.87	)	$	(0.46	)	$	(1.36	)
Loss from discontinued operations		-			-			(0.03	)

Net loss attributable to common stockholders of Live Nation Entertainment, Inc.	$	(0.87	)	$	(0.46	)	$	(1.39	)


Weighted average common shares outstanding:
Basic and diluted		186,955,748			182,388,070			164,410,167

See Notes to Consolidated Financial Statements

LIVE NATION ENTERTAINMENT, INC.

CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS


	Year Ended December 31,
	2012			2011			2010
	(in thousands)

Net loss	$	(161,897	)	$	(70,403	)	$	(208,036	)
Other comprehensive income (loss), net of tax:
Realized loss on cash flow hedges		-			-			6,920
Unrealized loss on cash flow hedges		(164	)		(159	)		(218	)
Change in funded status of defined benefit pension plan		(390	)		(42	)		(179	)
Foreign currency translation adjustments		26,005			(13,929	)		(32,966	)

Comprehensive loss		(136,446	)		(84,533	)		(234,479	)
Comprehensive income attributable to noncontrolling interests		1,330			12,613			20,354

Comprehensive loss attributable to common stockholders of Live Nation Entertainment, Inc.	$	(137,776	)	$	(97,146	)	$	(254,833	)

See Notes to Consolidated Financial Statements

LIVE NATION ENTERTAINMENT, INC.

CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY


	Live Nation Entertainment, Inc. Stockholders’ Equity
	Redeemable Noncontrolling Interests			Common Shares Issued		Common Stock		Additional Paid-In Capital			Accumulated Deficit			Cost of Shares Held in Treasury			Accumulated Other Comprehensive Income (Loss)			Noncontrolling Interests			Total
	(in thousands)			(in thousands, except share data)
Balances at December 31, 2009	$	-			86,016,572	$	860	$	1,090,572		$	(433,785	)	$	(9,529	)	$	4,199		$	73,124		$	725,441
Non-cash and stock-based compensation		19			701,372		7		49,696			-			624			-			-			50,327
Exercise of stock options		-			1,063,536		11		5,847			-			2,782			-			-			8,640
Acquisitions		98,474			84,612,350		846		920,643			-			1			-			60,206			981,696
Acquisitions of noncontrolling interests		-			-		-		3,573			-			-			-			(10,116	)		(6,543	)
Sales of noncontrolling interests		-			-		-		(120	)		-			-			-			-			(120	)
Redeemable noncontrolling interests fair value adjustments		17,687			-		-		(17,687	)		-			-			-			-			(17,687	)
Cash dividends, net of tax		(7,754	)		-		-		709			-			-			-			(7,201	)		(6,492	)
Comprehensive income (loss):
Net income (loss)		(885	)		-		-		-			(228,390	)		-			-			21,239			(207,151	)
Realized loss on cash flow hedges		-			-		-		-			-			-			6,920			-			6,920
Unrealized loss on cash flow hedges		-			-		-		-			-			-			(218	)		-			(218	)
Change in funded status of defined benefit pension plan		-			-		-		-			-			-			(179	)		-			(179	)
Currency translation adjustment		-			-		-		-			-			-			(32,966	)		-			(32,966	)

Balances at December 31, 2010	$	107,541			172,393,830	$	1,724	$	2,053,233		$	(662,175	)	$	(6,122	)	$	(22,244	)	$	137,252		$	1,501,668

Non-cash and stock-based compensation		-			193,661		2		27,861			-			3,323			-			-			31,186
Exercise of stock options		-			525,313		5		2,688			-			12			-			-			2,705
Sale of common shares		-			7,300,000		73		76,419			-			-			-			-			76,492
Acquisitions		8,268			6,377,144		64		-			-			-			-			4,614			4,678
Acquisitions of noncontrolling interests		(98,067	)		-		-		85,590			-			-			-			9,294			94,884
Sales of noncontrolling interests		-			-		-		-			-			-			-			(3,139	)		(3,139	)
Redeemable noncontrolling interests fair value adjustments		1,937			-		-		(1,937	)		-			-			-			-			(1,937	)
Noncontrolling interests contributions		-			-		-		-			-			-			-			3,539			3,539
Cash dividends, net of tax		(5,570	)		-		-		-			-			-			-			(13,347	)		(13,347	)
Other		(710	)		-		-		(267	)		-			-			-			(157	)		(424	)
Comprehensive income (loss):
Net income (loss)		(5,122	)		-		-		-			(83,016	)		-			-			17,735			(65,281	)
Realized loss on cash flow hedges		-			-		-		-			-			-			-			-			-
Unrealized loss on cash flow hedges		-			-		-		-			-			-			(159	)		-			(159	)
Change in funded status of defined benefit pension plan		-			-		-		-			-			-			(42	)		-			(42	)
Currency translation adjustment		-			-		-		-			-			-			(13,929	)		-			(13,929	)

Balances at December 31, 2011	$	8,277			186,789,948	$	1,868	$	2,243,587		$	(745,191	)	$	(2,787	)	$	(36,374	)	$	155,791		$	1,616,894


	Live Nation Entertainment, Inc. Stockholders’ Equity
	Redeemable Noncontrolling Interests			Common Shares Issued		Common Stock		Additional Paid-In Capital			Accumulated Deficit			Cost of Shares Held in Treasury		Accumulated Other Comprehensive Income (Loss)			Noncontrolling Interests			Total
	(in thousands)			(in thousands, except share data)
Non-cash and stock-based compensation		-			601,594		6		28,913			-			2,787		-			-			31,706
Exercise of stock options		-			259,799		3		1,140			-			-		-			-			1,143
Acquisitions		37,866			-		-		-			-			-		-			15,540			15,540
Acquisitions of noncontrolling interests		-			-		-		43			-			-		-			(279	)		(236	)
Redeemable noncontrolling interests fair value adjustments		801			-		-		(801	)		-			-		-			-			(801	)
Noncontrolling interests contributions		-			-		-		-			-			-		-			825			825
Cash dividends, net of tax		-			-		-		-			-			-		-			(20,079	)		(20,079	)
Exercise of put option		(4,000	)		-		-		-			-			-		-			-			-
Other		682			-		-		-			-			-		-			(1,498	)		(1,498	)
Comprehensive income (loss):
Net income (loss)		(1,526	)		-		-		-			(163,227	)		-		-			2,856			(160,371	)
Unrealized loss on cash flow hedges		-			-		-		-			-			-		(164	)		-			(164	)
Change in funded status of defined benefit pension plan		-			-		-		-			-			-		(390	)		-			(390	)
Currency translation adjustment		-			-		-		-			-			-		26,005			-			26,005

Balances at December 31, 2012	$	42,100			187,651,341	$	1,877	$	2,272,882		$	(908,418	)	$	-	$	(10,923	)	$	153,156		$	1,508,574

See Notes to Consolidated Financial Statements

LIVE NATION ENTERTAINMENT, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS


	Year Ended December 31,
	2012			2011			2010
				(in thousands)
CASH FLOWS FROM OPERATING ACTIVITIES
Net loss	$	(161,897	)	$	(70,403	)	$	(208,036	)
Reconciling items:
Depreciation		124,593			129,177			135,573
Amortization		304,964			213,841			186,093
Impairment of operational assets		-			-			13,373
Deferred income tax benefit		(10,957	)		(45,603	)		(25,021	)
Amortization of debt issuance costs and discount/premium, net		16,696			13,059			11,437
Provision for uncollectible accounts receivable and advances		8,787			9,272			6,606
Non-cash (gain) loss on extinguishment of debt		(460	)		-			8,272
Non-cash compensation expense		37,063			50,045			52,395
Unrealized changes in fair value of contingent consideration		(894	)		(11,691	)		3,171
Loss (gain) on sale of operating assets		(514	)		978			4,602
Equity in earnings of nonconsolidated affiliates		(9,921	)		(7,742	)		(4,928	)
Other, net		1,642			2,481			-
Changes in operating assets and liabilities, net of effects of acquisitions and dispositions:
Increase in accounts receivable		(20,319	)		(79,807	)		(4,581	)
Decrease (increase) in prepaid expenses		(69,175	)		73,314			(22,570	)
Increase in other assets		(41,707	)		(83,928	)		(41,686	)
Increase in accounts payable, accrued expenses and other liabilities		64,437			6,817			386
Increase (decrease) in deferred revenue		124,760			(64,105	)		43,432

Net cash provided by operating activities		367,098			135,705			158,518

CASH FLOWS FROM INVESTING ACTIVITIES
Distributions from nonconsolidated affiliates		9,241			9,273			5,863
Investments made in nonconsolidated affiliates		(3,788	)		(15,770	)		(3,458	)
Purchases of property, plant and equipment		(123,811	)		(107,500	)		(75,578	)
Proceeds from disposal of operating assets, net of cash divested		8,293			7,391			35,756
Cash paid for acquisitions, net of cash acquired		(75,641	)		(39,465	)		491,531
Purchases of intangible assets		(14,562	)		(2,591	)		(1,790	)
Decrease (increase) in other, net		(3,523	)		(3,355	)		663

Net cash provided by (used in) investing activities		(203,791	)		(152,017	)		452,987

CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from long-term debt, net of debt issuance costs		538,124			(669	)		1,352,856
Payments on long-term debt		(525,060	)		(31,338	)		(1,233,020	)
Redemption of preferred stock		-			-			(40,000	)
Contributions from noncontrolling interests		825			711			429
Distributions to noncontrolling interests		(20,079	)		(20,863	)		(14,955	)
Purchases and sales of noncontrolling interests, net		(4,259	)		(47,610	)		(6,670	)
Proceeds from exercise of stock options		1,143			2,705			8,640
Proceeds from sale of common stock		-			76,492			-
Equity issuance costs		-			-			(357	)
Payments for purchases of common stock		-			-			(1,567	)
Payments for deferred and contingent consideration		(10,585	)		(23,807	)		(16,270	)

Net cash provided by (used in) financing activities		(19,891	)		(44,379	)		49,086
Effect of exchange rate changes on cash and cash equivalents		13,386			12,186			(4,788	)

Net increase (decrease) in cash and cash equivalents		156,802			(48,505	)		655,803
Cash and cash equivalents at beginning of period		844,253			892,758			236,955

Cash and cash equivalents at end of period	$	1,001,055		$	844,253		$	892,758


SUPPLEMENTAL DISCLOSURE
Cash paid during the year for:
Interest	$	107,975		$	107,288		$	89,876
Income taxes, net of refunds	$	(2,238	)	$	37,746		$	50,579

See Notes to Consolidated Financial Statements

LIVE NATION ENTERTAINMENT, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 1—THE COMPANY AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

History

Live Nation was incorporated in Delaware on August 2, 2005 in preparation for the contribution and transfer by Clear Channel of substantially all of its entertainment assets and liabilities to the Company. The Company completed the Separation on December 21, 2005 and became a publicly traded company on the New York Stock Exchange trading under the symbol “LYV.” Prior to the Separation, Live Nation was a wholly-owned subsidiary of Clear Channel.

On January 25, 2010, the Company merged with Ticketmaster. Effective on the date of the Merger, Ticketmaster became a wholly-owned subsidiary of Live Nation and Live Nation, Inc. changed its name to Live Nation Entertainment, Inc. Ticketmaster’s results of operations are included in the Company’s consolidated financial statements beginning January 26, 2010. See Note 3—Acquisitions for prior year pro forma information regarding the impacts of the Merger.

Seasonality

Due to the seasonal nature of shows at outdoor amphitheaters and festivals, which primarily occur May through September, the Company experiences higher revenue for the Concerts segment during the second and third quarters. The Artist Nation segment’s revenue is impacted, to a large degree, by the touring schedules of the artists it represents. Generally, the Company experiences higher revenue in this segment during the second and third quarters as the period from May through September tends to be a popular time for touring events. The Ticketing segment’s sales are impacted by fluctuations in the availability of events for sale to the public, which vary depending upon scheduling by its clients. The Company’s seasonality also results in higher balances in cash and cash equivalents, accounts receivable, prepaid expenses, accrued expenses and deferred revenue at different times in the year.

Basis of Presentation and Principles of Consolidation

The Company’s consolidated financial statements include all accounts of the Company, its majority owned and controlled subsidiaries and variable interest entities for which the Company is the primary beneficiary.

The Company consolidates entities in which the Company owns more than 50% of the voting common stock and controls operations and also variable interest entities for which the Company is the primary beneficiary. Investments in nonconsolidated affiliates in which the Company owns more than 20% of the voting common stock or otherwise exercises significant influence over operating and financial policies but not control of the nonconsolidated affiliate are accounted for using the equity method of accounting. Investments in nonconsolidated affiliates in which the Company owns less than 20% of the voting common stock are accounted for using the cost method of accounting. Intercompany accounts among the consolidated businesses have been eliminated in consolidation. Net income (loss) attributable to noncontrolling interests is reflected in the statements of operations for consolidated affiliates.

All cash flow activity reflected on the consolidated statements of cash flows for the Company is presented net of any non-cash transactions so the amounts reflected may be different than amounts shown in other places in the Company’s financial statements that are not just related to cash flow amounts. For example, the purchases of property, plant and equipment reflected on the consolidated statements of cash flows reflects the amount of cash paid during the year for these purchases and does not include the impact of the changes in accrued liabilities related to capital expenditures during the year. In addition, the consolidated statements of cash flows for all years presented include all cash flow activity for the Company, including line item details of any applicable activity in businesses that were sold and are now reflected as discontinued operations on the statements of operations.

Cash and Cash Equivalents

Cash and cash equivalents include all highly liquid investments with an original maturity of three months or less. The Company’s cash and cash equivalents consist primarily of domestic and foreign bank accounts as well as money market accounts. To reduce its credit risk, the Company monitors the credit standing of the financial institutions that hold the Company’s cash and cash equivalents. These balances are stated at cost, which approximates fair value.

Included in the December 31, 2012 and 2011 cash and cash equivalents balance is $441.6 million and $373.9 million, respectively, of funds representing amounts equal to the face value of tickets sold on behalf of clients and the clients’ share of convenience and order processing charges (“client funds”). The Company does not utilize client funds for its own financing or investing activities as the amounts are payable to clients and these amounts due are included in accounts payable, client accounts.

The Company’s available cash and cash equivalents are held in accounts managed by third-party financial institutions and consist of cash in operating accounts and invested cash. Cash held in operating accounts in many cases exceeds the Federal Deposit Insurance Corporation insurance limits. The invested cash is held in interest-bearing funds in bank deposits and money market funds.

While the Company monitors cash and cash equivalents balances in its operating accounts on a regular basis and adjusts the balances as appropriate, these balances could be impacted in the future if the underlying financial institutions fail. To date, the Company has experienced no loss or lack of access to its cash or cash equivalents; however, the Company can provide no assurances that access to its cash and cash equivalents will not be impacted in the future by adverse conditions in the financial markets.

Allowance for Doubtful Accounts

The Company evaluates the collectability of its accounts receivable based on a combination of factors. Generally, it records specific reserves to reduce the amounts recorded to what it believes will be collected when a customer’s account ages beyond typical collection patterns, or the Company becomes aware of a customer’s inability to meet its financial obligations.

The Company believes that the credit risk with respect to trade receivables is limited due to the large number and the geographic diversification of its customers.

Prepaid Expenses

The majority of the Company’s prepaid expenses relate to event expenses including show advances and deposits and other costs directly related to future concert events. For advances that are expected to be recouped over a period of more than 12 months, the long-term portion of the advance is classified as other long-term assets. These prepaid costs are charged to operations upon completion of the related events.

Ticketing Contract Advances

Ticketing contract advances, which can be either recoupable or non-recoupable, represent amounts paid in advance to the Company’s clients pursuant to ticketing agreements. Recoupable ticketing contract advances are generally recoupable against future royalties earned by the clients, based on the contract terms, over the life of the contract. Non-recoupable ticketing contract advances, excluding those amounts paid to support clients’ advertising costs, are fixed additional incentives occasionally paid by the Company to secure exclusive rights with certain clients and are normally amortized over the life of the contract on a straight-line basis. Amortization of these non-recoupable ticketing contract advances is included in depreciation and amortization in the statements of operations. For the years ended December 31, 2012, 2011 and 2010, the Company amortized $48.1 million, $38.6 million and $24.1 million, respectively, related to non-recoupable ticketing contract advances.

Business Combinations

The Company accounts for its business combinations under the acquisition method of accounting. Identifiable assets acquired, liabilities assumed and any noncontrolling interest in the acquiree are recognized and measured as of the acquisition date at fair value. Additionally, any contingent consideration is recorded at fair value on the acquisition date and classified as a liability. Goodwill is recognized to the extent by which the aggregate of the acquisition-date fair value of the consideration transferred and any noncontrolling interests in the acquiree exceeds the recognized basis of the identifiable assets acquired, net of assumed liabilities. Determining the fair value of assets acquired, liabilities assumed and noncontrolling interests requires management’s judgment and often involves the use of significant estimates and assumptions, including assumptions with respect to future cash flows, discount rates and asset lives among other items.

Property, Plant and Equipment

Property, plant and equipment are stated at cost or fair value at date of acquisition. Depreciation, which is recorded for both owned assets and assets under capital leases, is computed using the straight-line method over their estimated useful lives, which are as follows:

Buildings and improvements — 10 to 50 years

Computer equipment and capitalized software — 3 to 10 years

Furniture and other equipment — 3 to 10 years

Leasehold improvements are depreciated over the shorter of the economic life or associated lease term assuming the Company exercises renewal periods, if appropriate. Expenditures for maintenance and repairs are charged to operations as incurred, whereas expenditures for renewal and improvements are capitalized.

The Company tests for possible impairment of property, plant, and equipment whenever events or circumstances change, such as a significant reduction in operating cash flow or a dramatic change in the manner that the asset is intended to be used which may indicate that the carrying amount of the asset may not be recoverable. If indicators exist, the Company compares the estimated undiscounted future cash flows related to the asset to the carrying value of the asset. If the carrying value is greater than the estimated undiscounted future cash flow amount, an impairment charge is recorded based on the difference between the fair value and the carrying value. Any such impairment charge is recorded in depreciation and amortization expense in the statement of operations. The impairment loss calculations require management to apply judgment in estimating future cash flows and the discount rates that reflect the risk inherent in future cash flows.

Intangible Assets

The Company classifies intangible assets as definite-lived and indefinite-lived. Definite-lived intangibles primarily include revenue-generating contracts, client/vendor relationships, non-compete agreements, venue management and leasehold agreements, technology and trademarks and naming rights, all of which are amortized either pro-rata over the respective lives of the agreements, typically three to twenty years, or on a basis more representative of the time pattern over which the benefit is derived. The Company periodically reviews the appropriateness of the amortization periods related to its definite-lived intangible assets. These assets are stated at cost or fair value. Indefinite-lived intangibles primarily include trade names. The excess cost over fair value of net assets acquired is classified as goodwill. Goodwill and indefinite-lived intangibles are not subject to amortization, but are reviewed for impairment at least annually.

The Company tests for possible impairment of indefinite-lived intangible assets at least annually. Depending on facts and circumstances, qualitative factors may first be assessed to determine whether the existence of events and circumstances indicate that it is more likely than not that an indefinite-lived intangible asset is impaired. If it is concluded that it is more likely than not impaired, then the Company performs a quantitative impairment test by comparing the fair value with the carrying amount. If the qualitative assessment is not performed first, the Company performs only this quantitative test. When specific assets are determined to be impaired, the cost basis of the asset is reduced to reflect the current fair value. Any such impairment charge would be recorded in depreciation and amortization in the statement of operations.

The impairment loss calculations require management to apply judgment in estimating future cash flows and the discount rates that reflect the risk inherent in future cash flows.

Goodwill

The Company reviews goodwill for impairment at least annually, as of October 1, using a three-step process. The first step is a qualitative evaluation as to whether it is more likely than not that the fair value of any of the Company’s reporting units is less than its carrying value using an assessment of relevant events and circumstances. Examples of such events and circumstances include financial performance, industry and market conditions, macroeconomic conditions, reporting unit-specific events, historical results of goodwill impairment testing and the timing of the last performance of a quantitative assessment. If any reporting units are concluded to be more likely than not impaired, a second step is performed for that reporting unit. This second step, used to quantitatively screen for potential impairment, compares the fair value of the reporting unit’s goodwill with its carrying amount, including goodwill. The third step, employed for any reporting unit that fails the second step, is used to measure the amount of any potential impairment and compares the implied fair value of the reporting unit with the carrying amount of goodwill. If a reporting unit’s carrying value is negative, the Company does not follow this three-step process. In this case, a qualitative evaluation is performed to determine whether it is more likely than not that the reporting unit’s goodwill is impaired. If it is, the third step discussed above is performed to measure the amount of any potential impairment.

The second and third steps that the Company uses to evaluate goodwill for impairment involve the determination of the fair value of the Company’s reporting units. Inherent in such fair value determinations are certain judgments and estimates relating to future cash flows, including the Company’s interpretation of current economic indicators and market valuations, and assumptions about the Company’s strategic plans with regard to its operations. Due to the uncertainties associated with such estimates, actual results could differ from such estimates.

In developing fair values for its reporting units, the Company may employ a market multiple or a discounted cash flow methodology, or a combination thereof. The market multiple methodology compares the Company to similar companies on the basis of risk characteristics to determine its risk profile relative to the comparable companies as a group. This analysis generally focuses on quantitative considerations, which include financial performance and other quantifiable data, and qualitative considerations, which include any factors which are expected to impact future financial performance. The most significant assumptions affecting the market multiple methodology are the market multiples used and control premium. A control premium represents the value an investor would pay above noncontrolling interest transaction prices in order to obtain a controlling interest in the respective company.

The discounted cash flow methodology establishes fair value by estimating the present value of the projected future cash flows to be generated from the reporting unit. The discount rate applied to the projected future cash flows to arrive at the present value is intended to reflect all risks of ownership and the associated risks of realizing the stream of projected future cash flows. The discounted cash flow methodology uses the Company’s projections of financial performance. The most significant assumptions used in the discounted cash flow methodology are the discount rate, attrition rate and expected future revenue and operating margins, which vary among reporting units.

The Company also tests goodwill for impairment in interim periods if an event occurs or circumstances change that would more likely than not reduce the fair value of a reporting unit below its carrying amount.

Nonconsolidated Affiliates

In general, nonconsolidated investments in which the Company owns more than 20% of the common stock or otherwise exercises significant influence over the affiliate are accounted for under the equity method. The Company recognizes gains or losses upon the issuance of securities by any of its equity method investees. The Company reviews the value of equity method investments and records impairment charges in the statement of operations for any decline in value that is determined to be other-than-temporary.

Accounts Payable, Client Accounts

Accounts payable, client accounts consists of contractual amounts due to ticketing clients which includes the face value of tickets sold and the clients’ share of convenience and order processing charges.

Income Taxes

The Company accounts for income taxes using the liability method in accordance with the FASB guidance for income taxes. Under this method, deferred tax assets and liabilities are determined based on differences between financial reporting bases and tax bases of assets and liabilities and are measured using the enacted tax rates expected to apply to taxable income in the periods in which the deferred tax asset or liability is expected to be realized or settled. Deferred tax assets are reduced by valuation allowances if the Company believes it is more likely than not that some portion of or the entire asset will not be realized. As all earnings from the Company’s continuing foreign operations are permanently reinvested and not distributed, the Company’s income tax provision does not include additional United States taxes on those foreign operations. It is not practical to determine the amount of federal and state income taxes, if any, that might become due in the event that the earnings were distributed.

The FASB guidance for income taxes prescribes a recognition threshold and a measurement attribute for the financial statement recognition and measurement of tax positions taken or expected to be taken in a tax return. For those benefits to be recognized, a tax position must be more likely than not to be sustained upon examination by taxing authorities. The amount recognized is measured as the largest amount of benefit that is more likely than not to be realized upon ultimate settlement.

The Company has established a policy of including interest related to tax loss contingencies in income tax expense (benefit).

Revenue Recognition

Revenue from the promotion and production of an event is recognized after the performance occurs upon settlement of the event. Revenue related to larger global tours is recognized after the performance occurs; however, any profits related to these tours, primarily related to music tour production and tour management services, is recognized after minimum revenue guarantee thresholds, if any, have been achieved. Revenue collected in advance of the event is recorded as deferred revenue until the event occurs. Revenue collected from sponsorships and other revenue, which is not related to any single event, is classified as deferred revenue and generally amortized over the operating season or the term of the contract. Membership revenue is recognized on a straight-line basis over the term of the membership.

Revenue from the Company’s ticketing operations primarily consists of convenience and order processing fees charged at the time a ticket for an event is sold and is recorded on a net basis (net of the face value of the ticket). For tickets sold for events at the Company’s owned and/or operated venues in the United States, and where the Company controls the tickets internationally, this revenue is recognized after the performance occurs upon settlement of the event. Revenue for the associated ticket fees collected in advance of the event is recorded as deferred revenue until the event occurs. These fees are shared between the Company’s Ticketing segment and the Concerts segment. For tickets sold for events at third-party venues, the revenue is recognized at the time of the sale and is recorded by the Company’s Ticketing segment.

For multiple element contracts, the Company allocates consideration to the multiple elements based on the relative selling price of each separate element which are determined using vendor specific objective evidence, third-party evidence or the Company’s best estimate in order to assign relative fair values.

The Company accounts for taxes that are externally imposed on revenue producing transactions on a net basis, as a reduction of revenue.

Gross versus Net Revenue Recognition

The Company reports revenue on a gross or net basis based on management’s assessment of whether the Company acts as a principal or agent in the transaction. To the extent the Company acts as the principal, revenue is reported on a gross basis. The determination of whether the Company acts as a principal or an agent in a transaction is based on an evaluation of whether the Company has the substantial risks and rewards of ownership under the terms of an arrangement. The Ticketing segment’s revenue, which primarily consists of convenience charges and order processing fees from its ticketing operations, is recorded net of the face value of the ticket as the Company generally acts as an agent in these transactions.

Foreign Currency

Results of operations for foreign subsidiaries and foreign equity investees are translated into United States dollars using the average exchange rates during the year. The assets and liabilities of those subsidiaries and investees are translated into United States dollars using the exchange rates at the balance sheet date. The related translation adjustments are recorded in a separate component of stockholders’ equity in accumulated OCI. Cumulative translation adjustments included in accumulated OCI were $(9.7) million and $(35.7) million as of December 31, 2012 and 2011, respectively. Foreign currency transaction gains and losses are included in the statements of operations. For the years ended December 31, 2012 and 2010, the Company recorded net foreign currency transaction gains of $1.4 million and $2.8 million, respectively. For the year ended December 31, 2011, the Company recorded net foreign currency transaction losses of $5.1 million. The Company does not have operations in highly inflationary countries.

Advertising Expense

The Company records advertising expense as it is incurred on an annual basis. Advertising expenses of $208.0 million, $200.5 million and $206.6 million for the years ended December 31, 2012, 2011 and 2010, respectively, were recorded as a component of direct operating expenses. Advertising expenses of $21.6 million, $18.0 million and $14.6 million for the years ended December 31, 2012, 2011 and 2010, respectively, were recorded as a component of selling, general and administrative expenses.

Direct Operating Expenses

Direct operating expenses include artist fees, show related marketing and advertising expenses, royalties paid to clients for a share of convenience and order processing fees, rent expense for events in third-party venues, credit card fees, telecommunications and data communication costs associated with the Company’s call centers, commissions paid on tickets distributed through independent sales outlets away from the box office, and salaries and wages related to seasonal employees at the Company’s venues along with other costs, including ticket stock and shipping. These costs are primarily variable in nature.

Selling, General and Administrative Expenses

Selling, general and administrative expenses include salaries and wages related to full-time employees, fixed rent, legal expenses and consulting along with other costs.

Depreciation and Amortization

The Company’s depreciation and amortization is presented as a separate line item in the statements of operations. There is no depreciation or amortization included in direct operating expenses or selling, general and administrative expenses.

Non-cash and Stock-based Compensation

The Company follows the fair value recognition provisions in the FASB guidance for stock compensation. Stock-based compensation expense recognized during the year includes compensation expense for all share-based payments based on the grant date fair value estimated in accordance with the provisions in this guidance.

The fair value for options in Live Nation stock is estimated on the date of grant using the Black-Scholes option-pricing model. The fair value of the options is amortized to expense on a straight-line basis over the options’ vesting period. Expected volatilities established prior to 2011 were based on similar companies’ implied volatilities of traded options and historical volatilities since the Company’s common stock did not have sufficient trading history to reasonably predict its own volatility. Starting in 2011, the Company uses an expected volatility based on an even weighting of its own traded options and historical volatility. The Company uses the simplified method for estimating the expected life within the valuation model which is the period of time that options granted are expected to be outstanding. The Company uses the simplified method as it does not believe its historical experience provides a reasonable basis with which to estimate the expected term due to the impact of a number of divestitures after the Separation, the varying vesting terms of awards issued since the Separation and the impact from the type and amount of awards converted pursuant to the Merger. The risk-free rate for periods within the expected life of the option is based on the United States Treasury note rate.

The fair value of restricted stock and restricted stock units is amortized to expense on a straight-line basis over the vesting period.

Acquisition Transaction Expenses

Acquisition transaction expenses consist of direct costs related to business combinations, such as legal and accounting transaction charges related to reviewing and closing an acquisition and also other legal costs directly tied to the transaction. These expenses also reflect changes in the fair value of accrued acquisition-related contingent consideration arrangements. The Company records transaction costs incurred in connection with the purchase or sale of a noncontrolling interest in a subsidiary, when control is maintained, as a deduction from equity in additional paid-in capital.

Use of Estimates

The preparation of financial statements in conformity with GAAP requires management to make estimates, judgments, and assumptions that affect the amounts reported in the financial statements and accompanying notes including, but not limited to, legal, tax and insurance accruals, acquisition accounting and impairments. The Company bases its estimates on historical experience and on various other assumptions that are believed to be reasonable under the circumstances. Actual results could differ from those estimates.

Reclassifications

Certain reclassifications have been made to the 2011 consolidated financial statements to conform to the 2012 presentation. The Company has reclassified $35.4 million for the year ended December 31, 2011 in the results of operations for its reportable segments as an increase to revenue and direct operating expenses in the Ticketing segment with corresponding increases to Eliminations in order to properly break out intersegment revenues. There is no impact to the consolidated financial statements. Additionally, as of December 31, 2011, the Company reclassified $10.4 million from other long-term assets to long-term debt to properly reflect the debt discount related to the May 2010 senior secured credit facility.

Recent Accounting Pronouncements

Recently Adopted Pronouncements

In May 2011, the FASB issued guidance that improves comparability of fair value measurements presented and disclosed in financial statements. This guidance clarifies the application of existing fair value measurement requirements including (1) the application of the highest and best use and valuation premise concepts, (2) measuring the fair value of an instrument classified in a reporting entity’s stockholders’ equity, and (3) quantitative information required for fair value measurements categorized within Level 3. It also requires additional disclosure for Level 3 measurements regarding the sensitivity of the fair value to changes in unobservable inputs and any interrelationships between those inputs. The Company adopted this guidance on January 1, 2012 and the adoption of this guidance did not have a material effect on its financial position or results of operations.

In July 2012, the FASB issued guidance which gives companies the option to perform a qualitative assessment to determine whether it is more likely than not that an indefinite-lived intangible asset is impaired, and in some cases, bypass the two-step impairment test. This guidance is effective for annual and interim indefinite-lived intangible asset impairment tests performed for fiscal years beginning after September 15, 2012. Early adoption of the new guidance is permitted. The Company adopted this guidance on October 1, 2012.

Recently Issued Pronouncements

In February 2013, the FASB issued guidance which requires companies to disclose additional information about reclassification adjustments, including (1) changes in accumulated other comprehensive income balances by component and (2) significant items reclassified out of accumulated other comprehensive income. The new disclosure requirements are to be applied prospectively and are effective for interim and annual periods beginning after December 15, 2012. The Company will adopt this guidance on January 1, 2013 and the adoption of this standard will not have a material effect on its financial position or results of operations.

NOTE 2—LONG-LIVED ASSETS

Property, Plant and Equipment

The Company tests for possible impairment of property, plant and equipment whenever events or circumstances change, such as a significant reduction in operating cash flow or a dramatic change in the manner that the asset is intended to be used indicate that the carrying amount of the asset may not be recoverable.

During each year presented, the Company reviewed the carrying value of certain property, plant and equipment that management determined would, more likely than not, be disposed of before the end of their previously estimated useful lives or had an indicator that future operating cash flows may not support their carrying value. It was determined that certain assets were impaired since the estimated undiscounted cash flows associated with the respective asset were less than its carrying value. For the years ended December 31, 2012, 2011 and 2010, the Company recorded an impairment charge of $4.3 million, $10.0 million and $16.4 million, respectively, as a component of depreciation and amortization. The 2012 impairment charge was primarily related to certain leasehold improvements and office furniture and equipment in the Artist Nation segment, an amphitheater in the Concerts segment and a theatrical theater in other operations. The 2011 impairment charge related to two amphitheaters, a music theater and a club in the Concerts segment. The 2010 impairment charge was primarily related to a House of Blues club in the Concerts segment and a theatrical theater in other operations. See Note 6—Fair Value Measurements for further discussion of the inputs used to determine the fair value.

Also during 2010, the Company recorded $4.5 million for acceleration of depreciation expense related to a change in estimate for the CTS ticketing platform assets that are no longer in use.

Definite-lived Intangibles

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 changes in the gross carrying amount and accumulated amortization of definite-lived intangible assets for the years ended December 31, 2012 and 2011:


	Revenue- generating contracts			Client / vendor relationships			Non-compete agreements			Venue management and leaseholds			Technology			Trademarks and naming rights			Other			Total
	(in thousands)
Balance as of December 31, 2010:
Gross carrying amount	$	482,588		$	365,344		$	175,740		$	115,225		$	95,102		$	23,998		$	6,429		$	1,264,426
Accumulated amortization		(112,575	)		(30,314	)		(68,833	)		(30,878	)		(11,797	)		(9,522	)		(3,239	)		(267,158	)

Net		370,013			335,030			106,907			84,347			83,305			14,476			3,190			997,268


Gross carrying amount:
Acquisitions		51,477			(5,538	)		(3,768	)		3,828			8,814			2,578			13			57,404
Divestitures		-			(4,299	)		(100	)		-			-			-			-			(4,399	)
Foreign exchange		(3,033	)		(92	)		(107	)		(419	)		(579	)		(319	)		(8	)		(4,557	)
Other (1)		11,394			(24,840	)		-			(1,862	)		-			(1,740	)		(8	)		(17,056	)

		59,838			(34,769	)		(3,975	)		1,547			8,235			519			(3	)		31,392


Accumulated amortization:
Amortization expense		(64,497	)		(45,178	)		(25,558	)		(10,379	)		(20,127	)		(8,525	)		(953	)		(175,217	)
Divestitures		-			361			61			-			-			-			-			422
Foreign exchange		1,815			2			116			210			112			104			16			2,375
Other (1)		4,368			8,581			750			2,030			-			1,741			2			17,472

		(58,314	)		(36,234	)		(24,631	)		(8,139	)		(20,015	)		(6,680	)		(935	)		(154,948	)


Balance as of December 31, 2011:
Gross carrying amount		542,426			330,575			171,765			116,772			103,337			24,517			6,426			1,295,818
Accumulated amortization		(170,889	)		(66,548	)		(93,464	)		(39,017	)		(31,812	)		(16,202	)		(4,174	)		(422,106	)

Net		371,537			264,027			78,301			77,755			71,525			8,315			2,252			873,712

Gross carrying amount:
Acquisitions		23,428			72,856			3,000			-			(2,336	)		5,764			-			102,712
Foreign exchange		5,443			(428	)		98			1,487			423			498			26			7,547
Other (1)		(56,226	)		(141,348	)		(6,445	)		-			-			(12,356	)		-			(216,375	)

		(27,355	)		(68,920	)		(3,347	)		1,487			(1,913	)		(6,094	)		26			(106,116	)


Accumulated amortization:
Amortization expense		(80,220	)		(114,611	)		(25,276	)		(12,482	)		(21,244	)		(2,620	)		(459	)		(256,912	)
Foreign exchange		(2,748	)		4			(77	)		(392	)		(239	)		(211	)		(17	)		(3,680	)
Other (1)		56,308			141,348			7,448			-			-			12,355			-			217,459

		(26,660	)		26,741			(17,905	)		(12,874	)		(21,483	)		9,524			(476	)		(43,133	)


Balance as of December 31, 2012:
Gross carrying amount		515,071			261,655			168,418			118,259			101,424			18,423			6,452			1,189,702
Accumulated amortization		(197,549	)		(39,807	)		(111,369	)		(51,891	)		(53,295	)		(6,678	)		(4,650	)		(465,239	)

Net	$	317,522		$	221,848		$	57,049		$	66,368		$	48,129		$	11,745		$	1,802		$	724,463

(1)	Other includes reclassifications between categories of definite-lived intangible assets resulting from the finalization of valuations and netdowns of fully amortized or impaired assets.

During 2012, the Company recorded definite-lived intangible assets totaling $102.7 million, primarily related to client/vendor relationships and revenue-generating contracts associated with the April 2012 acquisition of Coppel, a concert promotion business in Australia and New Zealand, the May 2012 acquisition of Cream, an electronic dance music festival promoter based in the United Kingdom and the purchase of rights to a festival held in Europe.

During 2011, the Company recorded definite-lived intangible assets totaling $57.4 million, primarily related to revenue-generating contracts and technology. Additions primarily related to the January 2011 acquisition of TGLP, a primary ticketing business in the Washington D.C. metro area, the April 2011 acquisition of Serviticket, a Spanish ticketing company, the October 2011 acquisition of LN-HS Concerts, a promoter in Southern California and the December 2011 acquisition of BigChampagne, a developer of technologies for collecting, analyzing and distributing media metrics.

The 2012 and 2011 additions to definite-lived intangible assets have weighted average lives as follows:


	Weighted Average Life (years)
	2012		2011

Revenue-generating contracts		11		10
Client/vendor relationships		9		8
Non-compete agreements		3		3
Venue management and leaseholds		-		6
Technology		6		5
Trademarks and naming rights		10		-

All categories		9		9

During 2011, the Company recorded a divestiture of $4.4 million primarily relating to the sale of an artist management company.

The Company tests for possible impairment of definite-lived intangible assets whenever events or circumstances change, such as a significant reduction in operating cash flow or a dramatic change in the manner in which the asset is intended to be used which may indicate that the carrying amount of the asset may not be recoverable. During all years presented, the Company reviewed the carrying value of certain definite-lived intangible assets that management determined would not be renewed or that had an indicator that future operating cash flows may not support their carrying value. It was determined that certain assets were impaired since the estimated undiscounted cash flows associated with those assets were less than their carrying value. For the years ended December 31, 2012, 2011 and 2010, the Company recorded an impairment charge related to definite-lived intangible assets of $89.6 million, $14.1 million and $17.2 million, respectively, as a component of depreciation and amortization. The 2012 impairment charge primarily related to client/vendor relationship intangible assets in the Artist Nation segment and revenue-generating contracts and client/vendor relationships in the Concerts segment. The 2011 impairment charge related to intangible assets for client/vendor relationships, revenue-generating contracts and venue management and leaseholds in the Concerts segment. The 2010 impairment charge was primarily related to intangible assets for revenue-generating contracts and trademarks and naming rights in the Concerts segment. See Note 6—Fair Value Measurements for further discussion of these impairments and the inputs used to determine the fair value.

Total amortization expense from definite-lived intangible assets for the years ended December 31, 2012, 2011 and 2010 was $256.9 million, $175.2 million and $151.9 million, respectively. The increase in amortization expense for the year ended December 31, 2012 as compared to the prior year is primarily driven by amortization related to the impairment of intangible assets for client/vendor relationships and revenue-generating contracts, additional definite-lived intangibles acquired in the acquisitions noted above and $3.7 million related to the acceleration of amortization expense resulting from a change in the estimated useful life of a venue management and leaseholds intangible in the Concerts segment. The increase in amortization expense for the year ended December 31, 2011 as compared to the prior year 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 and the acquisitions of Ticketnet and Serviticket. Also adding to the increase in amortization expense for the year ended December 31, 2011 as compared to the prior year was a $6.1 million reduction to amortization expense in 2010 related to a non-cash gain on the settlement of a pre-existing relationship with LN-Haymon.

The following table presents the Company’s estimate of amortization expense for each of the five succeeding fiscal years for definite-lived intangible assets that exist at December 31, 2012:


	(in thousands)
2013	$	135,355
2014	$	136,949
2015	$	99,967
2016	$	89,968
2017	$	92,440

As acquisitions and dispositions occur in the future and the valuations of intangible assets for recent acquisitions are completed, amortization expense may vary.

Indefinite-lived Intangibles

The Company has indefinite-lived intangible assets which consist primarily of the intangible value related to trade names. These indefinite-lived intangible assets had a carrying value of $377.5 million and $377.2 million as of December 31, 2012 and 2011, respectively.

The Company tests for possible impairment of indefinite-lived intangible assets on at least an annual basis. During 2010, the Company determined that certain indefinite-lived intangible assets were impaired since the estimated fair value associated with those assets was less than its carrying value. For the year ended December 31, 2010, the Company recorded an impairment related to indefinite-lived intangible assets of $10.0 million, which is included in depreciation and amortization in the Ticketing segment. See Note 6—Fair Value Measurements for further discussion of the inputs used to determine the fair value. There were no impairment charges recorded for the years ended December 31, 2012 and 2011.

Goodwill

The following table presents the changes in the carrying amount of goodwill in each of the Company’s reportable segments for the years ended December 31, 2012 and 2011:


	Concerts			Ticketing			Artist Nation			eCommerce			Sponsorship & Advertising			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


Recast balances (1):
Fair value approach		-			47,086			-			(214,927	)		167,841			-			-

Recast Balance as of January 1, 2011:
Goodwill		375,487			604,942			267,992			-			247,897			13,037			1,509,355
Accumulated impairment losses		(269,902	)		-			-			-			-			(13,037	)		(282,939	)

Net		105,585			604,942			267,992			-			247,897			-			1,226,416

Acquisitions - current year		15,040			27,590			1,836			-			-			-			44,466
Acquisitions - prior year		2			2,956			(7,523	)		-			-			-			(4,565	)
Dispositions		-			-			(147	)		-			-			-			(147	)
Foreign exchange		(3,341	)		(1,636	)		-			-			(3,549	)		-			(8,526	)


Balance as of December 31, 2011:
Goodwill		387,188			633,852			262,158			-			244,348			13,037			1,540,583
Accumulated impairment losses		(269,902	)		-			-			-			-			(13,037	)		(282,939	)

Net		117,286			633,852			262,158			-			244,348			-			1,257,644


Acquisitions - current year		71,942			-			-			-			-			-			71,942
Acquisitions - prior year		-			2,380			4,542			-			-			-			6,922
Foreign exchange		9,761			1,410			120			-			10,028			-			21,319


Balance as of December 31, 2012:
Goodwill		468,891			637,642			266,820			-			254,376			13,037			1,640,766
Accumulated impairment losses		(269,902	)		-			-			-			-			(13,037	)		(282,939	)

Net	$	198,989		$	637,642		$	266,820		$	-		$	254,376		$	-		$	1,357,827

(1)	The beginning balance for the eCommerce segment has been recast to allocate goodwill to the Ticketing and Sponsorship & Advertising segments. The total consolidated amount remained unchanged.

Included in the current year acquisitions amount above for 2012 is $71.9 million of goodwill primarily related to the acquisitions of Coppel and Cream.

Included in the current year acquisitions amount above for 2011 is $44.5 million of goodwill primarily related to the acquisitions of Serviticket, LN-HS Concerts and BigChampagne.

Of the total amount of goodwill recognized in connection with the 2012 and 2011 acquisitions, none is expected to be deductible for tax purposes.

The Company reviews for possible impairment of goodwill annually. There was no impairment charge recorded for the years ended December 31, 2012, 2011 and 2010.

The Company is in the process of finalizing its acquisition accounting for recent smaller acquisitions which could result in a change to the relevant purchase price allocations including goodwill.

Long-Lived Asset Disposals

In January 2012, the Company completed the sale of an amphitheater in Ohio. 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 Texas.

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-Spectacor, L.P. In December 2010, the Company also sold a music theater in Sweden and an indoor Latin/salsa event in the Netherlands.

The table below summarizes the asset and liability values at the time of disposal and the resulting gain or loss recorded.


Divested Asset	Segment	Gain (Loss) on Sale of Operating Assets			Current Assets			Noncurrent Assets		Current Liabilities		Noncurrent Liabilities
		(in thousands)
*2012 Divestiture*
Ohio amphitheater	Concerts	$	444		$	-		$	5,400	$	444	$	-

*2011 Divestiture*
Texas amphitheater	Concerts	$	798		$	-		$	3,206	$	-	$	-
Artist management company	Artist Nation	$	(1,264	)	$	3		$	4,153	$	119	$	-

*2010 Divestiture*
Paciolan	Ticketing	$	(5,218	)	$	8,357		$	33,492	$	7,595	$	6,364
Sweden music theater	Concerts	$	3,094		$	(1,258	)	$	15,502	$	3,847	$	-
Latin/salsa event	Concerts	$	(67	)	$	408		$	8	$	348	$	-

Discontinued Operations

For the year ended December 31, 2010, the Company reported $4.2 million of expense, net of tax, related to the 2009 sale of its remaining theatrical venues and operations in the United Kingdom.

Certain agreements relating to disposals of businesses provide for future contingent consideration to be paid to the Company 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 all existing performance targets are met, would not significantly impact the results of operations of the Company. The last contingency period for which the Company has outstanding contingent consideration is for the year ended December 31, 2013.

NOTE 3—ACQUISITIONS

During 2012, the Company completed its acquisitions of Coppel, Cream, HARD and other smaller acquisitions. These acquisitions were accounted for as business combinations under the acquisition method of accounting and were not considered significant on an individual basis or in the aggregate.

During 2011, the Company completed its acquisitions of TGLP, LN Ontario Concerts, Serviticket, Jeff Battaglia Management, LLC, Full Circle, LN-HS Concerts, T-Shirt Printers and BigChampagne. These acquisitions were accounted for as business combinations under the acquisition method of accounting and were not considered significant on an individual basis or in the aggregate.

Front Line

In the first quarter of 2011, the Company acquired all of the remaining equity interests of Front Line that it did not previously own in a series of transactions. As a result of these transactions, the Company was able to further simplify its operating structure and it has achieved or expects to achieve future savings through reduced cash taxes, noncontrolling interest distributions and other synergies.

Under the terms of the stock purchase agreement, the Company purchased all restricted and unrestricted shares of common stock of Front Line held by Irving Azoff and the Azoff Trust (collectively the “Azoff Sellers”), purchased all in-the-money options for common stock of Front Line held by the Azoff Sellers and purchased all shares of common stock of Front Line held by MSG. Irving Azoff was the Company’s Executive Chairman and Chairman of the board of directors until his resignation as officer, director and employee of the Company on December 31, 2012. The Company also paid an amount equal to the 2010 dividend paid by Front Line to the Azoff Sellers and MSG, pro-rated for the period from January 1, 2011 through the closing date, and paid Mr. Azoff a contractually-owed tax gross-up associated with his restricted Front Line common stock and dividend. In total, under the stock purchase agreement, the Company paid $56.3 million in cash and $18.6 million in newly-issued shares of Live Nation common stock to the Azoff Sellers and $0.2 million in cash and $41.0 million in newly issued shares of Live Nation common stock to MSG. These shares were valued using the closing price of the Company’s stock on the date of the transaction. Of the total shares of Live Nation stock issued, the Azoff Sellers received 1.8 million shares of common stock and MSG received 3.9 million shares of common stock.

As part of individual redemption agreements, the Company also purchased the remaining smaller holdings of outstanding Front Line restricted shares of common stock from other individuals for a total of $12.8 million in cash.

The shares purchased under all of these agreements had redemption features and, previous to these repurchases, the Azoff Sellers’ and MSG’s common shares and the Azoff Sellers’ options were classified as redeemable noncontrolling interests and all of the remaining shares were classified as liabilities. All of these instruments were carried at their fair values and amounts paid as part of these agreements were recorded in the income statement to the extent they were in excess of the amount recorded on the balance sheet, with the exception of the unrestricted shares of common stock held by the Azoff Sellers and MSG which were accounted for as the acquisition of noncontrolling interests and the difference between the carrying value and settlement value was recorded in additional paid-in capital. Tax gross-up amounts paid were recorded in the income statement to the extent the amount paid exceeded the amount already accrued. As a result of the repurchases, the Company recorded $24.4 million in selling, general and administrative expenses in the first quarter of 2011, which is classified as stock-based compensation. Further, cash flows from financing activities reflects a $47.9 million use of cash and cash flows from operating activities reflects a $21.4 million use of cash as a result of these transactions. Total non-cash consideration was $59.6 million and is not included in the statement of cash flows.

Merger with Ticketmaster

Description of Transaction

In January 2010, Live Nation completed the merger of Ticketmaster with and into a wholly-owned subsidiary of Live Nation pursuant to the Merger Agreement. In connection with the Merger, each issued and outstanding share of Ticketmaster common stock was cancelled and converted into the right to receive 1.4743728 shares of Live Nation common stock plus cash in lieu of any fractional shares such that Ticketmaster stockholders received approximately 50.01% of the voting power of the combined company.

The combination of Live Nation and Ticketmaster was structured as a merger of equals. The Merger was accounted for as a business combination under the acquisition method of accounting in accordance with GAAP. Live Nation was the deemed “accounting acquirer” of Ticketmaster for accounting purposes.

Actual and Pro Forma Impact of Acquisition

The revenue, income from continuing operations and net income of Ticketmaster that are included in the Company’s 2010 statement of operations since the Merger are detailed below. These amounts are not necessarily indicative of the results of operations that Ticketmaster would have realized if it had continued to operate as a stand-alone company during the period presented primarily due to the elimination of certain headcount and administrative costs since the Merger that are the result of synergy impacts or due to costs that are now reflected by the Company in its results of operations and not allocated to Ticketmaster.


	From the Merger Date through December 31, 2010
	(in thousands)
Revenue	$	1,246,546
Income from continuing operations	$	47,722
Net income attributable to common stockholders of Live Nation Entertainment, Inc.	$	47,124

The following unaudited pro forma information presents the consolidated results of Live Nation and Ticketmaster for the year ended December 31, 2010, with adjustments to give effect to pro forma events that are directly attributable to the Merger and have a continuing impact, as well as to exclude the impact of pro forma events that are directly attributable to the Merger and are one-time in nature. The unaudited pro forma information is presented for illustrative purposes only and is not necessarily indicative of the results of operations of future periods or the results of operations that actually would have been realized had the entities been a single company during the periods presented or the results that the combined company will experience after the Merger. The unaudited pro forma information does not give effect to the potential impact of current financial conditions, regulatory matters or any anticipated synergies, operating efficiencies or cost savings that may be associated with the Merger. The unaudited pro forma information also does not include any integration costs, dis-synergies or remaining future transaction costs that the companies may incur related to the Merger as part of combining the operations of the companies.

The unaudited pro forma consolidated results of operations for the year ended December 31, 2010, assuming the acquisition had occurred on January 1, 2009 are as follows:


	(in thousands)
Unaudited pro forma consolidated results:
Revenue	$	5,089,110
Loss from continuing operations	$	(156,026	)
Net loss attributable to common stockholders of Live Nation Entertainment, Inc.	$	(179,656	)

The Company has incurred a total of $70.0 million of acquisition transaction expenses to date relating to the Merger, of which $1.2 million, $16.9 million and $17.0 million are included in the results of operations for the years ended December 31, 2012, 2011 and 2010, respectively. For the years ended December 31, 2012 and 2011, these expenses were primarily the result of litigation costs relating to the Merger. The Company has incurred a total of $3.0 million of equity issuance costs to date related to the Merger which have been recorded as a charge to additional paid-in capital, as a reduction of the otherwise determined fair value of the equity issued.

In connection with the Merger, the Company incurred severance costs of $8.1 million, $1.2 million and $0.1 million as a component of selling, general and administrative expenses in its Ticketing, Artist Nation and Sponsorship & Advertising segments, respectively, and $4.7 million as a component of corporate expenses for the year ended December 31, 2010. As of December 31, 2012 and 2011, the accrual balance for the Merger restructuring was $0.1 million and $0.4 million, respectively. The Company did not incur additional severance costs in 2012 or 2011.

NOTE 4—LONG-TERM DEBT

Long-term debt, which includes capital leases, at December 31, 2012 and 2011, consisted of the following:


	December 31,
	2012		2011
	(in thousands)

May 2010 Senior Secured Credit Facility:
Term loan A, net of unamortized discount of $0.9 million and $1.2 million at December 30, 2012 and 2011, respectively	$	76,556	$	86,341
Term loan B, net of unamortized discount of $14.1 million and $12.2 million at December 31, 2012 and 2011, respectively		863,370		773,773
Revolving credit facility		-		-
7% Senior Notes due 2020		225,000		-
8.125% Senior Notes due 2018		250,000		250,000
10.75% Senior Notes due 2016, plus unamortized premium of $18.7 million at December 31, 2011		-		305,649
2.875% Convertible Senior Notes due 2027, net of unamortized discount of $20.6 million and $32.4 million at December 31, 2012 and 2011, respectively		199,419		187,627
Other long-term debt		125,660		101,871

		1,740,005		1,705,261
Less: current portion		62,050		52,632


Total long-term debt, net	$	1,677,955	$	1,652,629

Future maturities of long-term debt at December 31, 2012 are as follows:


	(in thousands)

2013	$	62,050
2014		263,241
2015		80,777
2016		875,113
2017		1,567
Thereafter		492,912

Total		1,775,660
Debt discount		(35,655	)

Total including discount	$	1,740,005

All long-term debt without a stated maturity date is considered current and is reflected as maturing in the earliest period shown in the table above. See Note 6—Fair Value Measurements for discussion of fair value measurement of the Company’s long-term debt.

May 2010 Senior Secured Credit Facility

Pursuant to the terms of the Company’s senior secured credit facility described below, subject to certain conditions, the Company had the right to increase its original term loan facilities by up to $300 million in the aggregate. In August 2012, the Company exercised the right and entered into an Incremental Term Loan Joinder Agreement that increased the existing term loan B borrowings by $100 million.

At December 31, 2012, the Company’s senior secured credit facility, dated as of May 6, 2010, consists of (i) a $100 million term loan A with a maturity of five and one-half years, (ii) a $900 million term loan B with a maturity of six and one-half years and (iii) a $300 million revolving credit facility with a maturity of five years. In addition, subject to certain conditions, the Company has the right to increase such facilities by up to $200 million in the aggregate. The five-year revolving credit facility provides for borrowings up to the amount of the facility with sublimits of up to (i) $150 million to be available for the issuance of letters of credit, (ii) $50 million to be available for swingline loans and (iii) $100 million to be available for borrowings in foreign currencies. The senior secured credit facility is secured by a first priority lien on substantially all of the Company’s domestic wholly-owned subsidiaries and on 65% of the capital stock of the Company’s wholly-owned foreign subsidiaries.

The interest rates per annum applicable to loans under the senior secured credit facility are, at the Company’s option, equal to either LIBOR plus 3.25% or a base rate plus 2.25%, subject to stepdowns based on the Company’s leverage ratio. The interest rate for the term loan B is subject to a LIBOR floor of 1.5% and a base rate floor of 2.5%. The Company is required to pay a commitment fee of 0.5% per year on the undrawn portion available under the revolving credit facility and variable fees on outstanding letters of credit.

For the term loan A, the Company is required to make quarterly payments ranging from $1.25 million to $10 million with the balance due at maturity in November 2015. For the term loan B, the Company is now required to make quarterly payments of $2.25 million with the balance due at maturity in November 2016. The Company is also required to make mandatory prepayments of the loans under the credit agreement, subject to specified exceptions, from excess cash flow, and with the proceeds of asset sales, debt issuances and specified other events.

Based on the Company’s outstanding letters of credit of $63.9 million, $236.1 million was available for future borrowings under the revolving credit facility.

7% Senior Notes

In August 2012, the Company issued $225 million of 7% senior notes due 2020. Interest on the notes is payable semi-annually in cash in arrears on March 1 and September 1 of each year, beginning on March 1, 2013, and the notes will mature on September 1, 2020. The Company may redeem some or all of the notes at any time prior to September 1, 2016 at a price equal to 100% of the aggregate principal amount, plus any accrued and unpaid interest to the date of redemption, plus a ‘make-whole’ premium using a discount rate equal to the Treasury Rate plus 50 basis points. The Company may also redeem up to 35% of the notes from the proceeds of certain equity offerings prior to September 1, 2015, at a price equal to 107% of the principal amount, plus any accrued and unpaid interest. In addition, on or after September 1, 2016, the Company may redeem at its option some or all of the notes at redemption prices that start at 103.5% of their principal amount, plus any accrued and unpaid interest to the date of redemption. The Company must make an offer to redeem the notes at 101% of the aggregate principal amount, plus accrued and unpaid interest to the repurchase date, if it experiences certain defined changes of control.

The indentures governing the notes contain covenants that limit, among other things, the Company’s ability, and the ability of its restricted subsidiaries, to incur certain additional indebtedness and issue preferred stock; make certain distributions, investments and other restricted payments; sell certain assets; agree to any restrictions on the ability of restricted subsidiaries to make payments to the Company; create certain liens; merge, consolidate or sell substantially all of the Company’s assets; or enter into certain transactions with affiliates.

8.125% Senior Notes

In May 2010, the Company issued $250 million of 8.125% senior notes due 2018. Interest on the notes is payable semi-annually in cash in arrears on May 15 and November 15 of each year, beginning on November 15, 2010, and the notes will mature on May 15, 2018. The Company may redeem some or all of the notes at any time prior to May 15, 2014 at a price equal to 100% of the principal amount, plus any accrued and unpaid interest to the date of redemption, plus a ‘make-whole’ premium using a discount rate equal to the Treasury Rate plus 50 basis points. The Company may also redeem up to 35% of the notes from the proceeds of certain equity offerings prior to May 15, 2013, at a price equal to 108.125% of their principal amount, plus any accrued and unpaid interest. In addition, on or after May 15, 2014, the Company may redeem some or all of the notes at any time at redemption prices that start at 104.063% of their aggregate principal amount. The Company must also offer to redeem the notes at 101% of their principal amount, plus accrued and unpaid interest to the repurchase date, if it experiences certain kinds of changes of control.

2.875% Convertible Senior Notes

In July 2007, the Company issued $220 million of convertible senior notes due 2027. The notes pay interest semiannually at a rate of 2.875% per annum. Beginning with the period commencing on July 20, 2014 and ending on January 14, 2015, and for each of the interest periods commencing thereafter, the Company will pay contingent interest on the notes if the average trading price of the notes during the five consecutive trading days ending on the second trading day immediately preceding the first day of the applicable interest period equals or exceeds 120% of the principal amount of the notes. The contingent interest payable per note will equal 0.25% per year of the average trading price of such note during the applicable five trading-day reference period, payable in arrears. The notes will be convertible, under certain circumstances, at an initial conversion rate of 36.8395 shares per $1,000 principal amount of notes, which represents a 27.5% conversion premium based on the last reported sale price of $21.29 per share on July 10, 2007. Upon conversion, the notes may be settled in shares of Live Nation common stock or, at the Company’s election, cash or a combination of cash and shares of Live Nation common stock. Assuming the Company fully settled the notes in shares, the maximum number of shares that could be issued to satisfy the conversion is 8.1 million.

Holders of the 2.875% convertible senior notes may require the Company to purchase for cash all or a portion of their notes on July 15, 2014, July 15, 2017 and July 15, 2022 at a price equal to 100% of the principal amount plus accrued and unpaid interest, if any, subject to specified additional conditions. In addition, if the Company experiences a fundamental change, as defined in the indenture governing the notes, holders may require the Company to purchase for cash all or a portion of their notes, subject to specified exceptions, at a price equal to 100% of the principal amount of the notes plus accrued and unpaid interest, if any. Due to its legal structure, the Merger was not considered a fundamental change under these covenants.

On or after July 20, 2014, the Company may redeem all or a portion of the notes for cash at a price equal to 100% of the principal amount being redeemed plus accrued and unpaid interest, if any.

As of December 31, 2012 and 2011, the carrying amount of the equity component of the notes was $73.0 million. As of December 31, 2012 and 2011, the principal amount of the liability component (face value of the notes) was $220.0 million in each of the respective periods. As of December 31, 2012 the remaining period over which the discount will be amortized is approximately two years. At December 31, 2012, the value of the notes, if converted and fully settled in shares, does not exceed the principal amount of the notes. For the years ended December 31, 2012, 2011 and 2010, the effective interest rate on the liability component of the notes was 9.7%. The following table summarizes the amount of pre-tax interest cost recognized on the notes:


	Year Ended December 31,
	2012		2011		2010
	(in thousands)
Interest cost recognized relating to:
Contractual interest coupon	$	6,325	$	6,325	$	6,325
Amortization of debt discount		11,792		10,700		9,710
Amortization of debt issuance costs		703		703		703

Total interest cost recognized on the notes	$	18,820	$	17,728	$	16,738

See Note 5—Derivative Instruments for discussion on the accounting for derivative instruments embedded within the 2.875% convertible senior notes.

Other Long-term Debt

Other long-term debt is comprised of capital leases of $12.4 million and notes payable and other debt of $113.3 million, including debt to noncontrolling interest partners of $24.5 million, debt related to the redevelopment of the O2 Dublin of $13.0 million, $40.4 million of long-term debt for AMG which consists of term loans and shareholder loan notes and $31.1 million of long-term debt for the Company’s Australian operations. Total notes payable consist primarily of seventeen notes with interest rates ranging from 0.4% to 11.0% and maturities of up to nine years.

Debt Extinguishment

In August 2012, the proceeds from the issuance of the 7% senior notes and increased term loan B borrowings were used to repay all of the Company’s outstanding 10.75% senior notes with a principal amount of $287 million, to pay related redemption premium and accrued interest of $19.5 million and to pay related fees and expenses of $6.1 million, leaving $12.4 million in additional cash available for general corporate purposes. The gain on extinguishment of debt resulting from these transactions was not significant.

The December 2005 senior secured credit facility and the Ticketmaster senior secured credit facility were paid in full in May 2010 with proceeds from the May 2010 senior secured credit facility and the issuance of the 8.125% senior notes. In addition, the interest rate swap agreements affiliated with the December 2005 senior secured credit facility were settled in conjunction with the termination of the prior credit facility. See Note 5—Derivative Instruments for further discussion of the interest rate swap settlements. Also, the Company converted the existing preferred stock of one of its subsidiaries with an aggregate liquidation preference of $40 million into the right to receive a cash payment of the outstanding principal and a make-whole payment to compensate the holders for their interest through maturity and settled this obligation. The preferred stock accrued dividends at 13% per annum and was mandatorily redeemable on December 21, 2011. Finally, the Company expensed the deferred debt issuance costs associated with the December 2005 senior secured credit facility and preferred stock. The Company recorded a total of $21.2 million for the loss on extinguishment of debt in the second quarter of 2010.

December 2005 Senior Secured Credit Facility

The Company had a senior secured credit facility that was entered into in December 2005 which consisted of term loans totaling $550 million and a $285 million revolving credit facility. Under the senior secured credit facility, revolving loans bore interest at an annual rate of LIBOR plus 2.25% and term loans bore interest at an annual rate of LIBOR plus 3.25%.

The interest rate paid on the Company’s $285 million, multi-currency revolving credit facility depended on its total leverage ratio. In addition to paying interest on outstanding principal under the credit facility, the Company was required to pay a commitment fee to the lenders under the revolving credit facility in respect of the unutilized commitments. The Company was also required to pay customary letter of credit fees, as necessary.

Ticketmaster Senior Secured Credit Facility

As part of the Merger, the Company acquired the Ticketmaster senior secured credit facility, which consisted of a $100 million term loan A, a $350 million term loan B and a $200 million revolving credit facility.

The interest rates per annum applicable to loans under the Ticketmaster senior secured credit facility at the Merger date were a base rate plus an applicable margin in the case of term loan A and the revolving credit facility and 4.5% per annum plus LIBOR for term loan B. The base rate was the greater of (i) the prime rate as quoted from time to time by JPMorgan Chase Bank, N.A. or (ii) the Federal Funds rate plus 0.5%. At the Merger date, the base rate was 2.5%.

Debt Covenants

The Company’s senior secured credit facility, which was entered into in May 2010, and further amended in June 2012, contains a number of covenants and restrictions that, among other things, require the Company to satisfy certain financial covenants and restrict the Company’s and its subsidiaries’ ability to incur additional debt, make certain investments and acquisitions, repurchase its stock and prepay certain indebtedness, create liens, enter into agreements with affiliates, modify the nature of its business, enter into sale-leaseback transactions, transfer and sell material assets, merge or consolidate, and pay dividends and make distributions (with the exception of subsidiary dividends or distributions to the parent company or other subsidiaries on at least a pro-rata basis with any noncontrolling interest partners). Non-compliance with one or more of the covenants and restrictions could result in the full or partial principal balance of the credit facility becoming immediately due and payable. The senior secured credit facility agreement has two covenants measured quarterly that relate to total leverage and interest coverage. The consolidated total leverage covenant requires the Company to maintain a ratio of consolidated total debt to consolidated EBITDA (both as defined in the credit agreement) of 4.5x over the trailing four consecutive quarters through December 31, 2013. The total leverage ratio will reduce to 4.25x on March 31, 2014, 4.0x on March 31, 2015, and 3.75x on March 31, 2016. The consolidated interest coverage covenant requires us to maintain a minimum ratio of consolidated EBITDA to consolidated interest expense (both as defined in the credit agreement) of 3.0x over the trailing four consecutive quarters.

The indentures governing the 7% senior notes and the 8.125% senior notes contain covenants that limit, among other things, the Company’s ability and the ability of its restricted subsidiaries to incur certain additional indebtedness and issue preferred stock; make certain distributions, investments and other restricted payments; sell certain assets; agree to any restrictions on the ability of restricted subsidiaries to make payments to the Company; merge, consolidate or sell all of the Company’s assets; create certain liens; and engage in transactions with affiliates on terms that are not arm’s length. Certain covenants, including those pertaining to incurrence of indebtedness, restricted payments, asset sales, mergers and transactions with affiliates will be suspended during any period in which the notes are rated investment grade by both rating agencies and no default or event of default under the indentures has occurred and is continuing. The 7% senior notes and the 8.125% senior notes each contain two incurrence-based financial covenants, as defined, requiring a minimum fixed charge coverage ratio of 2.0 to 1.0 and a maximum secured indebtedness leverage ratio of 2.75 to 1.0.

Some of the Company’s other subsidiary indebtedness includes restrictions on entering into various transactions, such as acquisitions and disposals, and prohibits payment of ordinary dividends. They also have financial covenants including minimum consolidated EBITDA to consolidated net interest payable, minimum consolidated cash flow to consolidated debt service and maximum consolidated debt to consolidated EBITDA, all as defined in the applicable debt agreements.

At December 31, 2012, the Company was in compliance with all debt covenants. The Company expects to remain in compliance with all of these covenants throughout 2013.

NOTE 5—DERIVATIVE INSTRUMENTS

The Company primarily uses forward currency contracts and options to reduce its exposure to foreign currency risk associated with short-term artist fee commitments. The Company also enters into forward currency contracts to minimize the risks and/or costs associated with changes in foreign currency rates on forecasted operating income and short-term intercompany loans. At December 31, 2012 and 2011, the Company had forward currency contracts and options outstanding with notional amounts of $100.0 million and $32.5 million, respectively. These instruments have not been designated as hedging instruments. Any change in fair value is reported in earnings during the period of the change. The Company’s foreign currency derivative activity, including the related fair values, are not material to any period presented.

Additionally, the Company has entered into certain interest rate swaps and cap agreements to limit its exposure to variable interest rates, related to portions of the Company’s outstanding debt, some of which have been designated as cash flow hedges. At December 31, 2012 and 2011, the Company had interest rate swaps and cap agreements outstanding with notional amounts of $133.8 million and $131.0 million, respectively. In May 2010, in conjunction with the refinancing of certain of its debt arrangements, the Company settled three interest rate swap agreements, one of which was designated as a cash flow hedge, that were associated with the term loans under the Company’s December 2005 senior secured credit facility. The Company recognized expense of $4.5 million for the settlement of the interest rate swap agreements as a component of loss on extinguishment of debt. Excluding the debt extinguishment settlements, the Company’s interest rate swaps and cap activity, including the related fair values, are not material to any period presented.

As of December 31, 2012 and 2011, there is no ineffective portion or amount excluded from effectiveness testing for derivatives designated as cash flow hedging instruments.

The Company’s 2.875% convertible senior notes issued in July 2007 include certain provisions which are bifurcated from the notes and accounted for as derivative instruments. At the date of issuance and as of December 31, 2012 and 2011, the fair value of these provisions was considered to be de minimis.

The Company does not enter into derivative instruments for speculation or trading purposes and does not anticipate any significant recognition of derivative activity through the income statement in the future related to the instruments currently held. See Note 6—Fair Value Measurements for further discussion and disclosure of the fair values for the Company’s derivative instruments.

NOTE 6—FAIR VALUE MEASUREMENTS

The Company currently has various financial instruments carried at fair value, such as marketable securities, derivatives and contingent consideration, but does not currently have nonfinancial assets and nonfinancial liabilities that are required to be measured at fair value on a recurring basis. The Company’s financial assets and liabilities are measured using inputs from all levels of the fair value hierarchy as defined in the FASB guidance for fair values. For this categorization, only inputs that are significant to the fair value are considered. The three levels are defined as follows:

Level 1—Inputs are unadjusted quoted prices in active markets for identical assets or liabilities that can be accessed at the measurement date.

Level 2—Inputs include quoted prices for similar assets and liabilities in active markets, quoted prices for identical or similar assets or liabilities in markets that are not active, inputs other than quoted prices that are observable for the asset or liability (i.e., interest rates, yield curves, etc.) and inputs that are derived principally from or corroborated by observable market data by correlation or other means (i.e., market corroborated inputs).

Level 3—Unobservable inputs that reflect assumptions about what market participants would use in pricing the asset or liability. These inputs would be based on the best information available, including the Company’s own data.

In accordance with the fair value hierarchy described above, the following table shows the fair value of the Company’s financial assets and liabilities that are required to be measured at fair value on a recurring basis, as of December 31, 2012 and 2011, which are classified on the balance sheets as cash and cash equivalents, other current assets, other long-term assets, other current liabilities and other long-term liabilities:


	Fair Value Measurements at December 31, 2012								Fair Value Measurements at December 31, 2011
	Level 1		Level 2		Level 3		Total		Level 1		Level 2		Level 3		Total
			(in thousands)								(in thousands)
Assets:
Cash equivalents	$	61,996		-	$	-	$	61,996	$	138,537	$	-	$	-	$	138,537
Forward currency contracts		-		81		-		81		-		355		-		355
Interest rate cap		-		-		-		-		-		7		-		7
Stock options		-		-		204		204		-		-		1,060		1,060

Total	$	61,996	$	81	$	204	$	62,281	$	138,537	$	362	$	1,060	$	139,959


Liabilities:
Interest rate swaps	$	-	$	2,811	$	-	$	2,811	$	-	$	3,037	$	-	$	3,037
Forward currency contracts		-		625		-		625		-		-		-		-
Contingent consideration		-		-		6,718		6,718		-		-		8,363		8,363

Total	$	-	$	3,436	$	6,718	$	10,154	$	-	$	3,037	$	8,363	$	11,400

Cash equivalents consist of money market funds. Fair values for cash equivalents are based on quoted prices in an active market. Fair values for forward currency contracts are based on observable market transactions of spot and forward rates. Fair values for the interest rate swaps and the interest rate cap are based on inputs corroborated by observable market data with similar tenors.

The Company has certain contingent consideration obligations related to acquisitions which are measured at fair value using Level 3 inputs. The amounts due to the sellers are based on the achievement of agreed-upon financial performance metrics by the acquired companies where the contingent obligation is either earned or not earned. The Company records the liability at the time of the acquisition based on management’s best estimates of the future results of the acquired companies compared to the agreed-upon metrics. Subsequent to the date of acquisition, the Company updates the original valuation to reflect current projections of future results of the acquired companies and the passage of time. Accretion of, and changes in the valuations of contingent consideration are reported in acquisition transaction expenses. During the year ended December 31, 2012, the Company recognized a decrease of $1.6 million for its contingent consideration obligations primarily due to changes in earnings from artist relationships and a payment of an obligation. During the year ended December 31, 2011, the Company recognized a decrease of $7.6 million for its contingent consideration obligations primarily driven by a reduction in earnings from certain artist relationships and the timing of key artist tours partially offset by a new contingent obligation resulting from the acquisition of LN-HS Concerts. See Note 7—Commitments and Contingent Liabilities for additional information related to the contingent payments.

The Company has stock options in a company that became publicly-traded in the third quarter of 2011 which are measured at fair value using Level 3 inputs. The stock options were received as consideration in connection with a licensing agreement entered into by a subsidiary of the Company and became fully-vested in the second quarter of 2011. The Company has recorded an asset for these options which was valued using the Black-Scholes option pricing model. The Company has recorded revenue based on the valuation of the options as of the measurement date, which was the vesting date. The changes in the valuation after the measurement date are recorded in other expense (income), net.

Due to the short maturity, the carrying amounts of cash and cash equivalents, accounts receivable, accounts payable and accrued expenses approximated their fair values at December 31, 2012 and 2011.

The Company’s outstanding debt held by third-party financial institutions is carried at cost, adjusted for premiums or discounts. The Company’s debt is not publicly-traded and the carrying amounts typically approximate fair value for the Company’s debt that accrues interest at a variable rate, which are considered to be Level 2 inputs. The estimated fair values of the 7% senior notes, the 8.125% senior notes and the 2.875% convertible senior notes were $236.3 million, $273.4 million and $219.4 million at December 31, 2012, respectively. The estimated fair values of the 8.125% senior notes, the 10.75% senior notes and the 2.875% convertible senior notes were $243.3 million, $306.4 million and $193.6 million at December 31, 2011, respectively. See Note 4—Long-term Debt for discussion of the issuance of the 7% senior notes and redemption of the 10.75% senior notes. The estimated fair value of the Company’s third-party fixed-rate debt is based on quoted market prices in active markets for the same or similar debt, which are considered to be Level 2 inputs. The Company has fixed rate debt held by noncontrolling interest partners with a face value of $24.5 million and $26.0 million at December 31, 2012 and 2011, respectively. The Company is unable to determine the fair value of this debt.

The following table shows the fair value of the Company’s financial assets that have been adjusted to fair value on a non-recurring basis which had a significant impact on the Company’s results of operations for the years ended December 31, 2012 and 2011:


	Fair Value Measurement
	As Of		Fair Value Measurements Using						Total
Description	December 31		Level 1		Level 2		Level 3		Losses
	(in thousands)
2012 Impairments
Property, plant and equipment	$	5,983	$	-	$	5,983	$	-	$	4,266
Definite-lived intangible assets, net	$	90,176	$	-	$	-	$	90,176		89,584

2012 Total									$	93,850

2011 Impairments
Property, plant and equipment	$	5,400	$	-	$	5,400	$	-	$	10,030
Definite-lived intangible assets, net	$	44,585	$	-	$	-	$	44,585		14,103

2011 Total									$	24,133

During 2012, 2011 and 2010, the Company recorded an impairment charge of $4.3 million, $10.0 million and $16.4 million, respectively, as a component of depreciation and amortization for certain property, plant and equipment. The 2012 impairment charge was primarily related to certain leasehold improvements and office furniture and equipment in the Artist Nation segment, an amphitheater in the Concerts segment and a theatrical theater in other operations. The 2011 impairment charge related to two amphitheaters, a music theater and a club in the Concerts segment. The 2010 impairment charge was primarily related to a club in the Concerts segment and a theatrical theater in other operations. It was determined that these assets were impaired since the estimated undiscounted future cash flows associated with the respective asset were less than its carrying value. These cash flows were calculated using the estimated sale values for the assets being sold and/or operating cash flows, all of which were discounted to approximate fair value. The estimated sale values and operating cash flows used for these non-recurring fair value measurements are considered Level 2 and Level 3 inputs, respectively.

During 2012, 2011 and 2010, the Company recorded impairments related to definite-lived intangible assets of $89.6 million, $14.1 million and $17.2 million, respectively, as a component of depreciation and amortization. The 2012 impairment charge was primarily related to intangible assets for client/vendor relationships in the Artist Nation segment and revenue-generating contracts and client/vendor relationships in the Concerts segment. The 2011 impairment charge related to intangible assets for client/vendor relationships, revenue-generating contracts and venue management and leaseholds in the Concerts segment. The 2010 impairment charge was primarily related to intangible assets for revenue-generating contracts and trademarks and naming rights in the Concerts segment. In all cases it was determined that these assets were impaired since the most recent estimated undiscounted future cash flows associated with the respective assets fell to levels below their carrying values. These impairments were then calculated using operating cash flows which were discounted to approximate fair value. The key inputs in these calculations include future cash flow projections, including revenue and profit margins, attrition rates as applicable, and, for the fair value computation, a discount rate. The key inputs used for these non-recurring fair value measurements are considered Level 3 inputs.

During 2010, the Company recorded an impairment related to indefinite-lived intangible assets of $10.0 million, as a component of depreciation and amortization in the Ticketing segment. It was determined that certain indefinite-lived intangible assets were impaired since the estimated fair value associated with those assets was less than its carrying value. The fair value of these assets was calculated using a relief-from royalty method. The relief-from royalty method applied a royalty rate to the projected earnings attributable to the indefinite-lived intangible assets. The projected earnings used for these non-recurring fair value measurements are considered Level 3 inputs. There was no impairment charge recorded for the years ended December 31, 2012 and 2011 related to indefinite-lived intangible assets.

During 2010, the Company recorded impairments related to certain artist advances of $13.4 million as a component of direct operating expenses in the Concerts segment. It was determined that the recoverability of certain artist advances was uncertain since the estimated undiscounted future cash flows associated with those advances were less than their carrying value. These cash flows were calculated using operating cash flows which were discounted to approximate fair value. The operating cash flows used for these non-recurring fair value measurements are considered Level 3 inputs.

NOTE 7—COMMITMENTS AND CONTINGENT LIABILITIES

The Company leases office space, certain equipment and many of its concert venues. Some of the lease agreements contain renewal options and annual rental escalation clauses (generally tied to the consumer price index), as well as provisions for the payment of utilities and maintenance by the Company. The Company also has non-cancelable contracts related to minimum performance payments with various artists and other event-related costs. In addition, the Company has commitments relating to additions to property, plant, and equipment under certain construction commitments for facilities and venues.

As of December 31, 2012, the Company’s future minimum rental commitments under non-cancelable operating lease agreements with terms in excess of one year, minimum payments under non-cancelable contracts in excess of one year and capital expenditure commitments consist of the following:


	Non-cancelable Operating Leases		Non-cancelable Contracts		Capital Expenditures
	(in thousands)
2013	$	118,892	$	728,504	$	3,225
2014		114,355		139,508		25
2015		109,639		116,899		25
2016		107,893		80,446		25
2017		98,040		38,039		25
Thereafter		1,415,977		19,629		250

Total	$	1,964,796	$	1,123,025	$	3,575

Commitment amounts for non-cancelable operating leases and non-cancelable contracts which stipulate an increase in the commitment amount based on an inflationary index have been estimated using an inflation factor of 2.5% for North America, 3.1% for the United Kingdom and 2.1% for the Netherlands.

Aggregate minimum rentals of $87.3 million to be received in years 2013 through 2023 under non-cancelable subleases are excluded from the commitment amounts in the above table.

Total rent expense charged to operations for 2012, 2011 and 2010 was $145.2 million, $128.7 million and $128.0 million, respectively. In addition to the minimum rental commitments included in the table above, the Company has leases that contain contingent payment requirements for which payments vary depending on revenue, tickets sold or other variables. Contingent rent expense charged to operations for 2012, 2011 and 2010 was $30.0 million, $17.0 million and $20.1 million, respectively. The above table above does not include contingent rent or rent expense for events in third-party venues.

In connection with asset and business disposals, the Company generally provides indemnifications to the buyers including claims resulting from employment matters, commercial claims and governmental actions that may be taken against the assets or businesses sold. Settlement of these claims is subject to various statutory limitations that are dependent upon the nature of the claim. As of December 31, 2012 and 2011, the balance for these indemnifications for asset and business disposals was $0.7 million and $7.6 million, respectively.

Certain agreements relating to acquisitions that occurred prior to the adoption in January 2009 of the new FASB guidance for business combinations provide for purchase price adjustments and other future contingent payments based on the financial performance of the acquired companies. The Company will accrue additional amounts related to such contingent payments, which were part of business combinations, with a corresponding adjustment to goodwill, if and when it is determinable that the applicable financial performance targets will be met. The aggregate of these contingent payments, if all performance targets are met, would not significantly impact the financial position of the Company. The last contingency period for which the Company has an outstanding contingent earn-out payment is for the period ending December 2017.

The Company also has certain contingent obligations related to acquisitions made after the adoption in January 2009 of the FASB guidance for business combinations. In accordance with the current guidance, contingent consideration associated with business combinations must be recorded at its fair value at the time of the acquisition and reflected at current fair value for each subsequent reporting period thereafter until settled. The Company records these fair value changes in its statements of operations as acquisition transaction expenses. The contingent consideration is generally subject to payout following the achievement of future performance targets and some may be payable in 2013. As of December 31, 2012, the Company has accrued $2.5 million in other current liabilities and $4.2 million in other long-term liabilities and, as of December 31, 2011, the Company had accrued $1.5 million in other current liabilities and $6.9 million in other long-term liabilities representing the fair value of these estimated earn-out arrangements. The last contingency period for which the Company has an outstanding contingent earn-out payment is for the period ending December 2017. See Note 6—Fair Value Measurements for further discussion related to the valuation of the earn-out payments.

In addition, the Company has certain contingent obligations related to acquisitions where the Company does not consolidate the entity, but rather accounts for the investee under the equity method of accounting. If, at acquisition, the fair value of the Company’s share of net assets exceeds the Company’s initial cost, the maximum amount of contingent consideration that could be paid is recorded up to that excess amount. When the contingency is resolved, any difference between the amount recorded and the settlement is recorded as an adjustment to the investment account. The aggregate of contingent payments associated with equity method investments, if all performance targets are met, would not significantly impact the financial position of the Company. As of December 31, 2011, the Company had accrued $3.9 million in other long-term liabilities for these estimated earn-out arrangements. There were no contingent obligations related to investees accounted for under the equity method of accounting accrued at December 31, 2012.

Certain agreements relating to acquisitions provide for deferred purchase consideration payments at future dates. A liability is established at the time of the acquisition for these fixed payments. For obligations payable at a date greater than twelve months from the acquisition date, the Company applies a discount rate to present value the obligations. As of December 31, 2011, the Company had accrued $7.1 million in other current liabilities and $2.6 million in other long-term liabilities related to these deferred purchase consideration payments. These deferred purchase consideration liabilities were settled during 2012.

During 2006, in connection with the Company’s acquisition of Historic Theatre Group, the Company guaranteed obligations related to a lease agreement. In the event of default, the Company could be liable for obligations through the end of 2035 which have future lease payments (undiscounted) of approximately $23.1 million as of December 31, 2012. The scheduled future minimum rentals for this lease for the years 2013 through 2017 are $1.6 million each year. The venues under the lease agreement were included in the sale of the Company’s North American theatrical business. The buyer has assumed the Company’s obligations under the guaranty, however the Company remains contingently liable to the lessor. The Company believes that the likelihood of a material liability being triggered under this lease is remote, and no liability has been accrued for these contingent lease obligations as of December 31, 2012.

As of December 31, 2012 and 2011, the Company guaranteed the debt of third parties of approximately $12.7 million and $13.1 million, respectively, primarily related to maximum credit limits on employee and tour-related credit cards and obligations under a venue management agreement.

Litigation

CTS Arbitration

Live Nation Worldwide, Inc., (“Live Nation Worldwide”) and CTS were parties to an agreement (the “CTS Agreement”), pursuant to which CTS was to develop and Live Nation Worldwide licensed or agreed to use ticketing software or ticketing platforms. Under the agreement, CTS was to develop software to be licensed to Live Nation Worldwide to provide ticketing services in the United States and Canada. The CTS Agreement also generally required Live Nation Worldwide to use CTS’s ticketing platforms in certain European countries so long as CTS’s existing platforms were appropriately modified to meet local market conditions. In June 2010, Live Nation Worldwide terminated the CTS Agreement because CTS materially breached the agreement by failing to deliver a North American ticketing system that met the contractual requirements of being a “world class ticketing system . . . that fits the needs of the North American market,” and by failing to deliver a ticketing system for the United Kingdom and other European countries that fit the needs of those markets as required by the CTS Agreement.

For North America, had CTS performed on the CTS Agreement, it would have been generally entitled to receive, during the then 10-year term of the CTS Agreement, a per ticket license fee upon the sale of certain tickets that Live Nation Worldwide or any of certain of its subsidiaries (collectively, the “Live Nation Worldwide entities”) controlled and had the right to distribute by virtue of certain promotion and venue management relations. This per ticket fee for events in North America was payable to CTS regardless of whether the Live Nation Worldwide entities chose to use the CTS ticketing platform, Ticketmaster’s ticketing platform or another ticketing platform for the sale of such controlled tickets. For events in certain European countries, not including the United Kingdom, Live Nation Worldwide generally was required, during a 10-year term, to exclusively book on the CTS ticketing platform all tickets that the Live Nation Worldwide entities had the right to distribute (or, to the extent other ticketing platforms were used, Live Nation Worldwide was generally required to pay to CTS the same fee that would have been payable had the CTS platform been used). For events in the United Kingdom, Live Nation Worldwide was required, for a 10-year term, to (i) book on the CTS ticketing platform all tickets controlled by Live Nation Worldwide entities that were not allocated by Live Nation Worldwide for sale through other sales channels and (ii) to offer for sale on the CTS UK website a portion of the tickets controlled by the Live Nation Worldwide entities. Finally, the CTS Agreement obligated Live Nation Worldwide and CTS to negotiate a set of noncompete agreements that, subject to legal restrictions, could have precluded Live Nation Worldwide from offering primary market ticketing services to third parties in certain European countries during the term of the CTS Agreement.

In April 2010, CTS filed a request for arbitration with the International Court of Arbitration of the International Chamber of Commerce (“ICC”), pursuant to the CTS Agreement. In its request for arbitration, CTS asserts, among other things, that (i) the terms of the CTS Agreement, including the North America per ticket license fee, European exclusivity obligations and United Kingdom distribution obligations described above, apply to tickets sold and distributed by Ticketmaster, (ii) Ticketmaster’s sales and distribution of tickets following the completion of the Merger have resulted in various breaches of Live Nation Worldwide’s obligations under the CTS Agreement, (iii) Live Nation has failed to allocate the proper number of tickets to CTS’s system in the United Kingdom and (iv) the Merger and the Company’s subsequent actions have breached the implied covenant of good faith and fair dealing. In its request for arbitration, CTS seeks relief in the form of a declaration that Live Nation and Live Nation Worldwide are in breach of the CTS Agreement and the implied covenant of good faith and fair dealing, specific performance of Live Nation Worldwide’s obligations under the CTS Agreement, and unspecified damages resulting from such breaches. In March 2011, CTS provided further specifications on its claims and purported damages, including a claim for royalties that would have been paid over the contemplated 10-year term of the CTS Agreement and on Ticketmaster-controlled tickets (as well as tickets controlled by Live Nation Worldwide or any of certain of its subsidiaries).

In May 2010, the Company responded to CTS’s request for arbitration and filed counterclaims asserting that CTS breached the CTS Agreement by failing to provide ticketing platforms that met the standard required by the CTS Agreement for the North American and European markets. The Company is seeking relief primarily in the form of damages and a declaration that the Company validly terminated the CTS Agreement based on CTS’s material breaches. The Company denies that CTS is entitled to collect damages for royalties that would have been paid over the full 10-year term of the CTS Agreement or on Ticketmaster-controlled tickets. The matter has been assigned to an arbitrator, and hearings were conducted in the summer and fall of 2011. A decision from the arbitrator is currently expected by spring of 2013. While the Company does not believe that a loss is probable of occurring at this time, if the arbitrator rules against the Company on any or all claims, the amounts at stake could be substantial. Considerable uncertainty remains regarding the validity of the claims and damages asserted against the Company. As a result, the Company is currently unable to estimate the possible loss or range of loss for this matter. The Company intends to continue to vigorously defend the action.

Ticketing Fees Consumer Class Action Litigation

In October 2003, a putative representative action was filed in the Superior Court of California challenging Ticketmaster’s charges to online customers for shipping fees and alleging that its failure to disclose on its website that the charges contain a profit component is unlawful. The complaint asserted a claim for violation of California’s Unfair Competition Law (“UCL”) and sought restitution or disgorgement of the difference between (i) the total shipping fees charged by Ticketmaster in connection with online ticket sales during the applicable period, and (ii) the amount that Ticketmaster actually paid to the shipper for delivery of those tickets. In August 2005, the plaintiffs filed a first amended complaint, then pleading the case as a putative class action and adding the claim that Ticketmaster’s website disclosures in respect of its ticket order processing fees constitute false advertising in violation of California’s False Advertising Law. On this new claim, the amended complaint seeks restitution or disgorgement of the entire amount of order processing fees charged by Ticketmaster during the applicable period. In April 2009, the Court granted the plaintiffs’ motion for leave to file a second amended complaint adding new claims that (a) Ticketmaster’s order processing fees are unconscionable under the UCL, and (b) Ticketmaster’s alleged business practices further violate the California Consumer Legal Remedies Act. Plaintiffs later filed a third amended complaint, to which Ticketmaster filed a demurrer in July 2009. The Court overruled Ticketmaster’s demurrer in October 2009.

The plaintiffs filed a class certification motion in August 2009, which Ticketmaster opposed. In February 2010, the Court granted certification of a class on the first and second causes of action, which allege that Ticketmaster misrepresents/omits the fact of a profit component in Ticketmaster’s shipping and order processing fees. The class would consist of California consumers who purchased tickets through Ticketmaster’s website from 1999 to present. The Court denied certification of a class on the third and fourth causes of action, which allege that Ticketmaster’s shipping and order processing fees are unconscionably high. In March 2010, Ticketmaster filed a Petition for Writ of Mandate with the California Court of Appeal, and plaintiffs also filed a motion for reconsideration of the Superior Court’s class certification order. In April 2010, the Superior Court denied plaintiffs’ Motion for Reconsideration of the Court’s class certification order, and the Court of Appeal denied Ticketmaster’s Petition for Writ of Mandate. In June 2010, the Court of Appeal granted the plaintiffs’ Petition for Writ of Mandate and ordered the Superior Court to vacate its February 2010 order denying plaintiffs’ motion to certify a national class and enter a new order granting plaintiffs’ motion to certify a nationwide class on the first and second claims. In September 2010, Ticketmaster filed its Motion for Summary Judgment on all causes of action in the Superior Court, and that same month plaintiffs filed their Motion for Summary Adjudication of various affirmative defenses asserted by Ticketmaster. In November 2010, Ticketmaster filed its Motion to Decertify Class.

In December 2010, the parties entered into a binding agreement providing for the settlement of the litigation and the resolution of all claims therein. In September 2011, the Court declined to approve the settlement in its then-current form. Litigation continued, and in September 2011, the Court granted in part and denied in part Ticketmaster’s Motion for Summary Judgment. The parties reached a new settlement in September 2011, which was approved preliminarily, but in September 2012 the Court declined to grant final approval. In doing so, the court identified potential modifications to the settlement, and the parties continue to discuss such potential modifications and the possibility of a revised settlement agreement. Ticketmaster and its parent, Live Nation, have not acknowledged any violations of law or liability in connection with the matter.

As of December 31, 2012, the Company has accrued $35.4 million, its best estimate of the probable costs associated with the settlement referred to above. This liability includes an estimated redemption rate. Any difference between the Company’s estimated redemption rate and the actual redemption rate it experiences will impact the final settlement amount; however, the Company does not expect this difference to be material.

Canadian Consumer Class Action Litigation Relating to TicketsNow

In February 2009, four putative consumer class action complaints were filed in various provinces of Canada against TicketsNow, Ticketmaster, Ticketmaster Canada Ltd. and Premium Inventory, Inc. All of the cases allege essentially the same set of facts and causes of action. Each plaintiff purports to represent a class consisting of all persons who purchased a ticket from Ticketmaster, Ticketmaster Canada Ltd. or TicketsNow from February 2007 to present and alleges that Ticketmaster conspired to divert a large number of tickets for resale through the TicketsNow website at prices higher than face value. The plaintiffs characterize these actions as being in violation of Ontario’s Ticket Speculation Act, the Amusement Act of Manitoba, the Amusement Act of Alberta or the Quebec Consumer Protection Act. The Ontario case contains the additional allegation that Ticketmaster’s and TicketsNow’s service fees violate anti-scalping laws. Each lawsuit seeks compensatory and punitive damages on behalf of the class.

In February 2012, the parties entered into a settlement agreement that will resolve all of the resale market claims. The court approval process for the settlement has been completed, with final approvals given in all provinces.

As of December 31, 2012, the Company has accrued its best estimate of the probable costs associated with the resale market claims of this matter, the full amount of which was funded by an escrow established in connection with Ticketmaster’s 2008 acquisition of TicketsNow.

While it is reasonably possible that a loss related to the primary market claims of this matter could be incurred by the Company in a future period, the Company does not believe that a loss is probable of occurring at this time. Considerable uncertainty remains regarding the validity of the claims and damages asserted against the Company. As a result, the Company is currently unable to estimate the possible loss or range of loss for the primary market claims of this matter. The Company intends to continue to vigorously defend all claims in all of the actions.

Other Litigation

From time to time, the Company is involved in other legal proceedings arising in the ordinary course of its business, including proceedings and claims based upon violations of antitrust laws and intellectual property rights, and tortious interference, which could cause the Company to incur significant expenses. The Company has also been the subject of personal injury and wrongful death claims relating to accidents at its venues in connection with its operations. As required, the Company has accrued its estimate of the probable settlement or other losses for the resolution of any outstanding claims. These estimates have been developed in consultation with counsel and are based upon an analysis of potential results, including, in some cases, estimated redemption rates for the settlement offered, assuming a combination of litigation and settlement strategies. It is possible, however, that future results of operations for any particular period could be materially affected by changes in the Company’s assumptions or the effectiveness of its strategies related to these proceedings. In addition, under the Company’s agreements with Clear Channel, it has assumed and will indemnify Clear Channel for liabilities related to its business for which they are a party in the defense.

As of December 31, 2012, the Company has accrued $40.6 million for the specific cases discussed above as its best estimate of the probable costs of legal settlement, including $35.4 million for the Ticketing Fees Consumer Class Action litigation settlement.

NOTE 8—RELATED-PARTY TRANSACTIONS

Agreements with Liberty Media

In connection with a stockholder agreement, Liberty Media exercised its right to nominate two members to the Company’s board of directors. In February 2011, the Company entered into a subscription agreement with Liberty Media. Pursuant to the subscription agreement, in February and June 2011, the Company sold to Liberty Media 1.8 million and 5.5 million shares, respectively, of the Company’s common stock for aggregate cash consideration of $18.8 million and $57.7 million, respectively.

Transactions Involving Directors

The following table sets forth expenses incurred and revenue earned from the transactions noted below:


	Year Ended December 31,
	2012		2011		2010
	(in thousands)
Director related-party revenue	$	18,329	$	22,069	$	8

Director related-party expenses	$	21,795	$	25,210	$	7,839

Relationship with Clear Channel

For purposes of governing certain of the ongoing relationships between Clear Channel and Live Nation at and after the Separation, Clear Channel and Live Nation entered into a tax matters agreement, among other agreements.

The Company has a non-employee director as of December 31, 2012 who is also a director and executive officer of Clear Channel. This director receives directors’ fees, stock options and restricted stock awards on the same basis as other non-employee members of the Company’s board of directors. Additionally, during 2012, the Company had an employee director who is also a director of Clear Channel. From time to time, the Company purchases advertising from Clear Channel and its subsidiaries in the ordinary course of business on an arms-length basis. The Company also has various lease and licensing agreements with Clear Channel for office space.

Transactions with IAC

For purposes of governing certain of the ongoing relationships between IAC and Ticketmaster at and after the spin-off of the Spincos from IAC, and to provide for an orderly transition, IAC, Ticketmaster and the other Spincos entered into a separation agreement and a tax sharing agreement, among other agreements.

The Company occupied office space in a building in Los Angeles that is owned by IAC through December 2011. Since the Company had a non-employee director until January 2011 who was also a director and executive officer of IAC, this rental arrangement was considered a related party transaction for 2010.

Transactions with MSG

The Company has a non-employee director as of December 31, 2012 who is also a director and executive officer of MSG and Cablevision. This director receives directors’ fees, stock options and restricted stock awards on the same basis as other non-employee members of the Company’s board of directors. From time to time, the Company promotes events at venues owned and/or operated by MSG and pays rental fees and co-promote fees to MSG and its subsidiaries. In addition, the Company provides ticketing services for venues and sports franchises owned and/or operated by MSG and pays royalty fees to MSG and its subsidiaries. The Company also receives transaction fees from MSG and its subsidiaries for tickets MSG sells using the Company’s ticketing software. Finally, the Company purchases advertising from Cablevision and its subsidiaries from time to time. All of these transactions are entered into in the ordinary course of business on an arms-length basis.

Transactions Involving Executives

ATC Aviation, Inc. (“ATC”), which is owned by Irving Azoff, owns an aircraft. An aircraft management and charter company, unrelated to either the Company or ATC, manages and operates the aircraft on ATC’s behalf and charged market rates for the use of the aircraft when used by Mr. Azoff or other executives on Company business, a portion of which was paid to ATC. For the years ended December 31, 2012, 2011 and from the Merger date through December 31, 2010, the Company made payments to ATC and the outside aircraft management and charter company totaling $1.9 million, $1.7 million and $0.7 million, respectively, pursuant to the foregoing arrangements.

Irving Azoff has a minority ownership interest in an entity that subleases office space from the Company. For the years ended December 31, 2012, 2011 and from the Merger date through December 31, 2010, rent charged by the Company totaled $0.7 million, $0.7 million and $0.6 million, respectively.

The Azoff Trust was a party to the Second Amended and Restated Stockholders’ Agreement of Front Line dated as of June 9, 2008, as amended (the “Front Line Stockholders’ Agreement”). The Front Line Stockholders’ Agreement governed certain matters related to Front Line and the ownership of securities of Front Line, including board designation rights, transaction approval requirements, share transfer provisions, and put and call rights. The Front Line Stockholders’ Agreement also provided for the annual pro rata dividend to be paid to the stockholders as soon as reasonably practicable after the end of each fiscal year. The Front Line Stockholders’ Agreement was terminated in connection with the first quarter 2011 acquisition of the remaining equity interests in Front Line. See Note 3—Acquisitions for further discussion of this 2011 transaction.

In January 2011, the board of directors of Front Line declared a dividend payable in cash to the holders of record of Front Line common stock. This dividend was paid in January 2011 and totaled $20.1 million of which the Company received $15.0 million. The Azoff Trust received a pro rata portion of this dividend totaling $3.0 million. In connection with the January 2011 dividend, Mr. Azoff received a gross-up payment of $0.6 million. Prior to the payment of the dividend, FLMG made a loan to Front Line principally to fund the dividend, evidenced by a promissory note from Front Line to FLMG with a principal amount of $20.7 million and bearing interest at a rate of 4.5%, payable no later than December 31, 2011. As of December 31, 2011, the outstanding principal balance on this promissory note was $1.0 million. The remaining outstanding principal balance was paid in full in January 2012.

Transactions Involving Equity Method Investees

The Company conducts business with certain of its equity method investees in the ordinary course of business. Transactions relate to venue rentals, management fees, sponsorship revenue, and reimbursement of certain costs. Revenue of $2.3 million, $1.3 million and $1.2 million were earned in 2012, 2011 and 2010, respectively, and expenses of $5.4 million, $4.8 million and $5.0 million were incurred in 2012, 2011 and 2010, respectively, from these equity investees for services rendered or provided in relation to these business ventures.

Other Related Parties

During the years ended December 31, 2011 and 2010, the Company paid $6.8 million and $6.9 million, respectively, for deferred consideration due in connection with acquisitions of companies owned by various members of management of one of the Company’s subsidiaries. One of these companies holds venue leases and the agreements were paid in full in 2011.

In January 2011, the Company sold a 49.9% noncontrolling interest in its clubs and theaters venue promotion business in Boston to a company partially owned by two employees of one of the Company’s subsidiaries in exchange for assets and cash valued at $12.6 million. During the year ended December 31, 2010, the Company received $16.6 million in connection with the sale of a theater business in Sweden to an entity owned by employees of one of the Company’s subsidiaries, one of which is an executive officer of the Company.

The Company conducts certain transactions in the ordinary course of business with companies that are owned, in part or in total, by various members of management of the Company’s subsidiaries or companies over which it has significant influence. These transactions primarily relate to venue rentals, concession services, equipment rentals, ticketing, marketing and other services. As of December 31, 2012 and 2011, the Company has a receivable balance of $12.2 million and $13.3 million, respectively, from certain of these companies. The following table sets forth expenses incurred and revenue earned from these companies for services rendered or provided in relation to these business ventures. None of these transactions were with directors or executive officers of the Company.


	Year Ended December 31,
	2012		2011		2010
	(in thousands)
Other related-parties revenue	$	4,958	$	5,226	$	6,846

Other related-parties expenses	$	14,275	$	9,007	$	12,419

NOTE 9—INCOME TAXES

Significant components of the provision for income tax expense (benefit) are as follows:


	2012			2011			2010
	(in thousands)
Current—federal	$	2,235		$	(23,340	)	$	5,907
Current—foreign		34,541			38,328			29,150
Current—state		3,917			4,391			5,118

Total current		40,693			19,379			40,175
Deferred—federal		(386	)		(29,153	)		(21,348	)
Deferred—foreign		(14,591	)		(13,463	)		(2,737	)
Deferred—state		4,020			(2,987	)		(936	)

Total deferred		(10,957	)		(45,603	)		(25,021	)

Income tax expense (benefit)	$	29,736		$	(26,224	)	$	15,154

Current income tax expense increased $21.3 million for the year ended December 31, 2012 as compared to the prior year due principally to the carryback of domestic net operating losses in 2011 which generated $24.2 million of federal tax refunds. Current income tax expense decreased $20.8 million for the year ended December 31, 2011 as compared to the prior year due principally to the carryback of domestic net operating losses which generated $24.2 million of federal tax refunds received in the first quarter of 2012.

Deferred income tax benefit decreased $34.6 million for the year ended December 31, 2012 as compared to the prior year due principally to the reversal of valuation allowances recorded against United States federal and state deferred tax assets driven primarily by deferred tax attributes relating to the acquisition of the remaining interests in Front Line in the first quarter of 2011 and an increase in the blended state tax rate in 2012. Deferred income tax benefit increased $20.6 million for the year ended December 31, 2011 as compared to the prior year due principally to the reversal of valuation allowances recorded against United States federal and state deferred tax assets driven primarily by deferred tax attributes relating to the acquisition of the remaining interests in Front Line in the first quarter of 2011.

The domestic loss from continuing operations before income taxes was $232.3 million, $200.4 million and $294.7 million for 2012, 2011 and 2010, respectively. Non-United States income from continuing operations before income taxes was $100.1 million, $103.8 million and $106.0 million for 2012, 2011 and 2010, respectively.

Significant components of the Company’s deferred tax liabilities and assets as of December 31, 2012 and 2011 are as follows:


	2012			2011
	(in thousands)
Deferred tax liabilities:
Intangible assets	$	281,071		$	317,862
Prepaid expenses		4,575			2,067
Long-term debt		41,949			32,773

Total deferred tax liabilities		327,595			352,702

Deferred tax assets:
Intangible and fixed assets		27,723			75,353
Accrued expenses		53,125			59,346
Net operating loss carryforwards		379,111			288,830
Foreign tax credit carryforwards		38,710			32,541
Equity compensation		47,542			39,249
Investments in nonconsolidated affiliates		5,267			5,125
Other		14,114			13,670

Total gross deferred tax assets		565,592			514,114

Valuation allowance		425,404			336,799

Total deferred tax assets		140,188			177,315

Net deferred tax liabilities	$	(187,407	)	$	(175,387	)

The valuation allowance was recorded due to the uncertainty of the ability to generate sufficient taxable income necessary to realize certain deferred tax assets in future years. If, at a later date, it is determined that due to a change in circumstances, the Company will utilize all or a portion of those deferred tax assets, the Company will reverse the corresponding valuation allowance with the offset to income tax benefit. In the first quarter of 2011, the Company recognized an income tax benefit of $39.5 million due to the partial release of its valuation allowance. This release was related to the Company’s ability to consider Front Line’s net deferred tax liabilities as a source of future taxable income within the consolidated federal tax provision as a result of the acquisition of the remaining Front Line equity interests in 2011. For further discussion of events involving Front Line, see Note 3—Acquisitions.

During 2012 and 2011, the Company recorded net deferred tax liabilities of $21.3 million and $6.3 million, respectively, due principally to differences in financial reporting and tax bases in assets acquired in business combinations.

Deferred tax assets related to intangibles and fixed assets principally relate to differences in book and tax basis of tax-deductible goodwill created from the Company’s various stock acquisitions. As of December 31, 2012, the Company has United States federal and state deferred tax assets related to net operating loss carryforwards of $267.1 million and $69.8 million, respectively. Based on current statutory carryforward periods, these losses will expire on various dates between the years 2016 and 2032. The amount of United States net operating loss carryforwards that will expire if not utilized in 2016 is $18.3 million. The Company’s federal net operating loss is subject to statutory limitations on the amount that can be used in any given year. Pursuant to an amended U.S. federal tax return for the year ended December 31, 2009, changes to deferred tax assets are reflected in the comparative schedule of 2012 and 2011 deferred tax liabilities and assets above. Specifically, as of December 31, 2011, the deferred tax asset for net operating loss carryforwards increased $63.4 million, the deferred tax asset for foreign tax credit carryforwards decreased $50.9 million and the valuation allowance on deferred tax assets increased $12.5 million.

The reconciliation of income tax from continuing operations computed at the United States federal statutory tax rates to income tax expense (benefit) is:


	2012			2011			2010
	(in thousands)
Income tax benefit at statutory rates	$	(46,256	)	$	(33,820	)	$	(66,029	)
State income taxes, net of federal tax benefits		3,917			4,391			5,118
Differences of foreign taxes from U.S.statutory rates		(25,637	)		(25,158	)		(24,150	)
Non-U.S. income inclusions and exclusions		9,901			11,288			19,358
Loss on preferred stock redemption		-			-			3,099
Nondeductible acquisition costs		-			-			15,100
Nondeductible items		9,005			9,252			3,669
Tax contingencies		4,316			2,632			545
Change in valuation allowance		79,214			7,412			55,269
Other, net		(4,724	)		(2,221	)		3,175

	$	29,736		$	(26,224	)	$	15,154

During 2012, the Company recorded income tax expense of approximately $29.7 million on losses from continuing operations before tax of $132.2 million. Income tax expense is principally attributable to the Company’s earnings in foreign tax jurisdictions.

During 2011, the Company recorded an income tax benefit of approximately $26.2 million on losses from continuing operations before tax of $96.6 million. Income tax benefit is principally attributable to the reversal of valuation allowances recorded against United States federal and state deferred tax assets driven primarily by deferred tax attributes of $39.5 million relating to the acquisition of the remaining interests in Front Line in the first quarter of 2011 and the carryback of the Front Line tax loss for the short period January 1, 2011 to February 4, 2011 caused by the acquisition. At December 31, 2011, the Company had a $24.2 million income tax receivable included in accounts receivable on the balance sheet.

Differences of foreign taxes from United States statutory rates of $25.6 million, $25.2 million and $24.2 million for the years ended December 31, 2012, 2011 and 2010, respectively, are primarily attributable to the Company’s Luxembourg holding company structure and tax rulings received from the Luxembourg tax authorities.

The Company regularly assesses the likelihood of additional assessments in each taxing jurisdiction resulting from current and subsequent years’ examinations. Liabilities for income taxes have been established for future income tax assessments when it is probable there will be future assessments and the amount thereof can be reasonably estimated. Once established, liabilities for uncertain tax positions are adjusted only when there is more information available or when an event occurs necessitating a change to the liabilities. The Company believes that the resolution of income tax matters for open years will not have a material effect on its consolidated financial statements although the resolution of income tax matters could impact the Company’s effective tax rate for a particular future period.

At December 31, 2012 and 2011, the Company had $16.0 million and $13.4 million, respectively, of unrecognized tax benefits. All of these unrecognized tax benefits would favorably impact the effective tax rate if recognized at some point in the future.

The Company recognizes interest and penalties related to uncertain tax positions in income tax expense. For the years ended December 31, 2012, 2011 and 2010, the Company has recognized $0.7 million, $0.7 million and ($0.1) million, respectively, of interest and penalties related to uncertain tax positions. As of December 31, 2012 and 2011, the Company has accrued interest related to uncertain tax positions of $1.6 million and $1.3 million, respectively.

The tax years 2001 through 2012 remain open to examination by the major tax jurisdictions to which the Company is subject.

The following table summarizes the activity related to the Company’s unrecognized tax benefits for the years ended December 31, 2012, 2011 and 2010:


	2012			2011			2010
	(in thousands)
Balance at January 1	$	13,357		$	10,917		$	4,144
Balance from current year acquisition		-			-			5,925
Additions:
Tax for current year positions		2,978			1,991			2,769
Tax for prior year positions		652			(86	)		100
Interest and penalties for prior years		686			727			150
Reductions:
Expiration of applicable statue of limitations		-			-			(744	)
Settlements for prior year positions		(1,716	)		-			(1,730	)
Foreign currency		247			(192	)		239
Reclassification to other liabilities		(230	)		-			64

Balance at December 31	$	15,974		$	13,357		$	10,917

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

NOTE 11—STOCK-BASED COMPENSATION

In December 2005, the Company adopted its 2005 Stock Incentive Plan, which has been amended and/or restated on several occasions. The plan authorizes the Company to grant stock option awards, director shares, stock appreciation rights, restricted stock and deferred stock awards, other equity-based awards and performance awards. The Company has granted restricted stock awards and options to purchase its common stock to employees, directors and consultants of the Company and its affiliates under the stock incentive plan at no less than the fair market value of the underlying stock on the date of grant. The options are granted for a term not exceeding ten years and the nonvested options are generally forfeited in the event the employee or director terminates his or her employment or relationship with the Company or one of its affiliates. Any options that have vested at the time of termination are forfeited to the extent they are not exercised within the applicable post-employment exercise period provided in their option agreements. These options vest over one to five years. The stock incentive plan contains anti-dilutive provisions that require the adjustment of the number of shares of the Company’s common stock represented by, and the exercise price of, each option for any stock splits or stock dividends.

The following is a summary of stock-based compensation expense recorded by the Company during the respective periods:


	2012		2011		2010
	(in thousands)

Selling, general and administrative expenses	$	14,297	$	40,496	$	34,509
Corporate expenses		22,766		20,149		27,098


Total stock-based compensation expense	$	37,063	$	60,645	$	61,607

In December 2012, in connection with Mr. Azoff’s resignation, the Company accelerated the vesting of 0.7 million unvested options, 0.3 million shares of unvested restricted stock awards and units and 1.5 million shares of restricted Live Nation common stock held by the Azoff Trust. In addition, Mr. Azoff forfeited 0.4 million unvested options, 0.2 million unvested restricted stock awards and 0.4 million restricted stock units (“RSUs”). As a result of these accelerations and forfeitures, the Company recognized an additional $0.6 million of stock-based compensation expense for the year ended December 31, 2012 as a component of corporate expense.

In the first quarter of 2011, the Company acquired the remaining equity interests of Front Line. As a result of this acquisition, the Company recorded $24.4 million of stock-based compensation in selling, general and administrative expenses. See Note 3—Acquisitions for further discussion regarding the 2011 acquisition of the remaining equity interests in Front Line.

In June 2011, the Company registered an additional 10.0 million shares to service the Live Nation stock incentive plan. In January 2010, the Company registered an additional 4.9 million shares to service the Live Nation stock incentive plan, 1.5 million shares to service the Live Nation stock bonus plan and 16.7 million shares to service the Ticketmaster stock and annual incentive plan.

As part of the Merger Agreement, all Ticketmaster stock options, restricted stock awards and RSUs that were outstanding immediately before the Merger were exchanged for Live Nation awards using the final exchange ratio of 1.4743728. As a result, Live Nation issued 13.0 million stock options, 1.5 million shares of restricted stock and 0.9 million RSUs to employees and directors of Ticketmaster, as well as 2.5 million stock options and 0.2 million RSUs to employees of IAC and the Spincos. The Live Nation awards have the same vesting periods, terms and conditions as the previous Ticketmaster awards, with the exception of 1.5 million shares of restricted Live Nation common stock held by the Azoff Trust. Certain of the unvested shares held by the Azoff Trust at December 31, 2012 were accelerated in connection with Mr. Azoff’s resignation from the Company as noted above. Stock-based compensation expense of $6.3 million, $3.4 million and $3.2 million related to this restricted Live Nation common stock was recorded for the years ended December 31, 2012, 2011 and from the Merger date until December 31, 2010, respectively, as a component of corporate expenses. The value of all exchanged awards which related to services already rendered as of the date of the Merger was included as part of the consideration transferred.

There were 23,825 stock-based awards issued by Front Line that were not exchanged or modified as a result of the Merger. The Company recorded $6.9 million of expense relating to these awards from the date of the Merger through December 31, 2010 as a component of selling, general and administrative expenses. In 2011, the Company acquired the remaining equity interests in Front Line, Vector and other smaller companies including these stock-based awards. See Note 3—Acquisitions for further discussion regarding the Front Line acquisition.

In 2010, the Company accelerated and modified the vesting of 1.4 million shares of unvested outstanding stock-based equity awards granted to certain employees of Ticketmaster effective upon termination, all of which had been converted to Live Nation equity awards in the Merger. The Company also accelerated 1.1 million shares of unvested outstanding stock-based equity awards as a result of the Merger based on employment contract “change of control” provisions for certain employees. In addition to these merger-related accelerations, the Company accelerated and modified the vesting of 3.4 million shares of unvested outstanding stock-based equity awards granted to certain employees of Live Nation effective upon termination. As a result of these accelerations, the Company recognized $18.1 million of stock-based compensation expense for the year ended December 31, 2010. Of this amount, $8.0 million was recorded in corporate expenses and $10.1 million was recorded in selling, general and administrative expenses.

As of December 31, 2012, there was $53.8 million of total unrecognized compensation cost related to stock-based compensation arrangements for stock options and restricted stock awards. This cost is expected to be recognized over a weighted-average period of 3.2 years.

Azoff Trust Note

As part of the Merger, a note was issued to the Azoff Trust in exchange for shares of Ticketmaster’s series A convertible redeemable preferred stock held by the Azoff Trust. The note accrued interest equal to 3.0% of the outstanding principal balance and was payable in monthly installments of $0.8 million through October 1, 2013. The note was paid in full in December 2012 in connection with Mr. Azoff’s resignation.

The Company accounted for the note in accordance with the guidance for stock-based compensation because the note was considered a modification of an existing stock-based award. The Company included $14.4 million in consideration transferred relating to the exchanged award, calculated as the full fair value of the note, as determined by the Company, multiplied by the ratio of the pre-combination service period to the total service period. The Company recognized a total of $24.0 million of stock-based compensation expense, which is the difference between the total cash payments due under the note of $38.4 million and the initial carrying value of $14.4 million at the date of the Merger. This expense was recognized on a straight-line basis over the remaining service period through December 2012 and, in connection with Mr. Azoff’s resignation in December 2012, the remaining unamortized compensation expense was recognized in 2012. For the years ended December 31, 2012, 2011 and from the date of the Merger through December 31, 2010, the Company recorded $11.7 million, $6.4 million and $5.9 million, respectively, related to this note as a component of corporate expenses.

Stock Options

The following assumptions were used to calculate the fair value of the Company’s options on the date of grant:


	2012		2011		2010
Risk-free interest rate		0.83% - 1.14%		0.99% - 2.16%		1.93%
Dividend yield		0.0%		0.0%		0.0%
Volatility factors		54.6% - 61.3%		39.6% - 62.5%		39.6%
Weighted average expected life (in years)		6.46		6.25		6.25

The following table presents a summary of the Company’s stock options outstanding at, and stock option activity during, the years ended December 31, 2012, 2011 and 2010 (“Price” reflects the weighted average exercise price per share):


	2012					2011					2010
	Options			Price		Options			Price		Options			Price
	(in thousands, except per share data)
Outstanding January 1		21,429		$	12.33		20,464		$	12.41		7,099		$	12.13
Granted		5,495			8.80		2,512			11.22		2,471			11.01
Merger conversion		-			-		-			-		15,476			12.72
Exercised		(259	)		4.39		(529	)		5.13		(1,642	)		4.76
Forfeited or expired		(1,943	)		11.70		(1,018	)		15.20		(2,940	)		16.35

Outstanding December 31		24,722		$	11.68		21,429		$	12.33		20,464		$	12.41


Exercisable December 31		15,529		$	13.46		12,276		$	14.71		9,454		$	16.43
Weighted average fair value per option granted				$	3.93				$	5.27				$	4.59

The total intrinsic value of stock options exercised during the years ended December 31, 2012, 2011 and 2010 was $1.3 million, $3.0 million and $12.8 million, respectively. Cash received from stock option exercises for the years ended December 31, 2012, 2011 and 2010 was $1.1 million, $2.7 million and $8.6 million, respectively. Through December 31, 2012, no tax benefits from the exercise of stock options have been recognized. Any future excess tax benefits derived from the exercise of stock options will be recorded prospectively and reported as cash flows from financing activities in accordance with the FASB guidance for stock compensation.

There were 8.0 million shares available for future grants under the stock incentive plan at December 31, 2012. Upon share option exercise or vesting of restricted stock and restricted stock units, the Company issues new shares or treasury shares to fulfill these grants. Vesting dates on the stock options range from January 2013 to December 2017, and expiration dates range from January 2013 to July 2021 at exercise prices and average contractual lives as follows:


Range of Exercise Prices		Outstanding as of 12/31/12			Weighted Average Remaining Contractual Life		Weighted Average Exercise Price		Exercisable as of 12/31/12 *(in thousands)*		Weighted Average Remaining Contractual Life *(in years)*		Weighted Average Exercise Price
	*(in thousands)*			*(in years)*

$0.02 - $4.99			2,936			6.2	$	3.04		1,731		6.2	$	3.03
$5.00 - $9.99			8,956			8.5	$	7.88		3,232		6.6	$	6.21
$10.00 - $14.99			8,646			6.9	$	12.07		6,382		6.4	$	12.35
$15.00 - $19.99			1,296			5.0	$	18.35		1,296		5.0	$	18.35
$20.00 - $24.99			1,692			4.1	$	24.50		1,692		4.1	$	24.50
$25.00 - $29.99			776			2.3	$	29.42		776		2.3	$	29.42
$30.00 - $34.99			5			1.4	$	32.76		5		1.4	$	32.76
$35.00 - $39.99			415			2.4	$	39.93		415		2.4	$	39.93

The total intrinsic value of options outstanding and options exercisable as of December 31, 2012 was $31.3 million and $20.9 million, respectively.

Restricted Stock and Restricted Stock Units

The Company has granted restricted stock awards to its employees and directors under its stock incentive plans. These common shares carry a legend which restricts their transferability for a term of one to five years and are forfeited in the event the recipient’s employment or relationship with the Company is terminated prior to the lapse of the restriction. In addition, certain restricted stock awards require the Company or the recipient to achieve minimum performance targets or market conditions in order for these awards to vest.

RSUs are awards in the form of phantom shares or units, denominated in a hypothetical equivalent number of shares of the Company’s common stock with the value of each RSU equal to the fair value of the Company’s common stock at the date of grant. RSUs may be settled in cash, stock or both, as determined at the time of the grant. The majority of RSUs are settled in stock and are classified as equity. Each RSU is subject to service-based vesting, where a specific period of continued employment must pass before an award vests. The fair value of the RSU is amortized to expense on a straight-line basis over the RSUs vesting period. RSU grants to international employees require cash settlement at the end of the vesting term and are therefore classified as liabilities.

In 2012, the Company granted 0.2 million shares of restricted stock and 1.0 million shares of market-based or performance-based awards under the Company’s stock incentive plans. These awards will all vest over one or four years with the exception of the market-based awards which will vest over four years if a specified stock price is achieved over a specified number of consecutive days during the four years and the performance-based awards which will vest within one to three years if the performance criteria are met.

In 2011, the Company granted 0.8 million shares of restricted stock and 0.4 million shares of market-based or performance-based awards under the Company’s stock incentive plans. These awards will all vest over four years with the exception of the market-based awards which will vest over four years if a specified stock price is achieved over a specified number of consecutive days during the four years and the performance-based awards which will vest within two years if the performance criteria are met.

In 2010, the Company granted 2.7 million shares of restricted stock and 0.5 million shares of market-based or performance-based awards. These awards will all vest over four years with the exception of the market-based awards which will vest if a specified stock price is achieved over a specified number of consecutive days and performance-based awards which will vest within two years if the performance criteria are met.

The following table presents a summary of the Company’s unvested restricted stock awards and equity-settled RSUs outstanding at December 31, 2012, 2011 and 2010 (“Price” reflects the weighted average share price at the date of grant):


	Restricted Stock					RSUs
	Awards			Price		Awards			Price
	(in thousands, except per share data)
Unvested at December 31, 2009		692		$	12.08		-		$	-
Granted		3,191			11.74		586			9.94
Merger conversion		-			-		1,026			10.51
Forfeited		(71	)		10.76		(147	)		10.51
Vested		(787	)		11.93		(459	)		10.51

Unvested at December 31, 2010		3,025		$	11.76		1,006		$	10.16
Granted		1,220			9.97		-			-
Forfeited		(35	)		11.19		(66	)		10.51
Vested		(885	)		11.68		(237	)		10.51

Unvested at December 31, 2011		3,325		$	10.98		703		$	10.03
Granted		1,243			8.96		-			-
Forfeited		(151	)		7.90		(373	)		9.61
Vested		(1,215	)		10.95		(325	)		10.51

Unvested at December 31, 2012		3,202		$	10.32		5		$	10.51

The total fair market value of the shares issued upon the vesting of restricted stock awards and RSUs during the years ended December 31, 2012, 2011 and 2010 was $14.7 million, $12.0 million and $14.0 million, respectively. As of December 31, 2012, there were 1.3 million restricted stock awards outstanding which require the Company or the recipient to achieve minimum performance targets or market conditions in order for the awards to vest. There were no RSUs outstanding at December 31, 2012 that require the Company or the recipient to achieve minimum performance targets or market conditions in order for the award to vest.

Stock-Based Compensation of Acquired Companies

Front Line

As of the Merger date and December 31, 2010, Irving Azoff had 3,402 options outstanding and exercisable to acquire Front Line common stock from a 2006 grant by the Front Line board of directors. As of the Merger date and December 31, 2010, Mr. Azoff and the Azoff Trust held 15,376 restricted shares of Front Line’s common stock from a June 2007 grant which were to cliff vest at the end of the required service period on October 29, 2013. As of the date of the Merger and December 31, 2010, there were 5,047 restricted shares of common stock of Front Line outstanding with various employees and consultants.

The Company recorded $9.8 million relating to all Front Line awards from the date of the Merger through December 31, 2010 as a component of selling, general and administrative expenses.

In the first quarter of 2011, the Company acquired all of the remaining equity interests of Front Line that it did not previously own in a series of transactions. See Note 3—Acquisitions for further discussion regarding the Front Line acquisition.

NOTE 12—OTHER INFORMATION


	December 31,
	2012		2011
	(in thousands)

The following details the components of “Other current assets”:
Inventory	$	12,034	$	12,947
Cash held in escrow		11,498		10,405
Other		12,499		3,348

Total other current assets	$	36,031	$	26,700


The following details the components of “Other long-term assets”:
Long-term advances	$	167,220	$	150,123
Debt issuance costs		16,332		16,105
Prepaid rent		21,153		23,124
Other		45,590		26,754

Total other long-term assets	$	250,295	$	216,106


The following details the components of “Accrued expenses”:
Accrued compensation and benefits	$	132,353	$	113,810
Accrued event expenses		110,267		73,886
Collections on behalf of others		52,856		59,452
Accrued legal		47,936		51,107
Accrued insurance		47,293		44,813
Accrued royalties		16,420		14,586
Other		219,598		221,912

Total accrued expenses	$	626,723	$	579,566


The following details the components of “Other current liabilities”:
Contingent and deferred purchase consideration	$	3,355	$	9,364
Other		13,371		15,872

Total other current liabilities	$	16,726	$	25,236


The following details the components of “Other long-term liabilities”:
Accrued rent	$	51,982	$	51,908
Contingent and deferred purchase consideration		4,180		13,534
Unrecognized tax benefits		15,974		13,357
Deferred revenue		3,601		5,119
Other		18,672		36,775

Total other long-term liabilities	$	94,409	$	120,693

NOTE 13—SEGMENT DATA

The Company’s reportable segments are Concerts, Ticketing, Artist Nation and Sponsorship & Advertising. Prior to 2012, the Company reported an eCommerce segment, which is now included in the Ticketing and Sponsorship & Advertising segments. Specifically, all online advertising and online sponsorships previously reported in the eCommerce segment are now reported in the Sponsorship & Advertising segment while all other activity has been included in the Ticketing segment. This change was made to be consistent with how the four key components of the business are now being managed.

The Concerts segment involves the promotion of live music events globally in the Company’s owned and/or operated venues and in rented third-party venues, the production of music festivals and the operation and management of music venues and is the aggregation of the Company’s North American Concerts and International Concerts operating segments. The Ticketing segment involves the management of the Company’s global ticketing operations including providing ticketing software and services to clients and online access for customers relating to ticket and event information and is responsible for the Company’s primary websites, www.livenation.com and www.ticketmaster.com. The Ticketing segment is the aggregation of the Company’s North American Ticketing and International Ticketing operating segments. The Artist Nation segment provides management services to artists and other services including merchandise, artist fan sites and VIP tickets and is the aggregation of the Company’s Artist Management and Artist Services operating segments. The Sponsorship & Advertising segment manages the development of strategic sponsorship programs in addition to the sale of international, national and local sponsorships and placement of advertising including signage, promotional programs and banner ads in the Company’s owned and/or operated venues and on its primary websites.

The Company has reclassified all periods to conform to the current period presentation. Revenue and expenses earned and charged between segments are eliminated in consolidation. Corporate expenses and all line items below operating income are managed on a total company basis.

The Company manages its working capital on a consolidated basis. Accordingly, segment assets are not reported to, or used by, the Company’s management to allocate resources to or assess performance of the segments, and therefore, total segment assets have not been presented.

There are no customers that individually account for more than ten percent of the Company’s consolidated revenue in any year.

The following table presents the results of operations for the Company’s reportable segments for the years ending December 31, 2012, 2011 and 2010:


	Concerts			Ticketing			Artist Nation			Sponsorship & Advertising		Other			Corporate			Eliminations			Consolidated
	(in thousands)

2012
Revenue	$	3,870,371		$	1,374,049		$	399,940		$	247,921	$	2,997		$	-		$	(76,231	)	$	5,819,047
Direct operating expenses		3,274,951			651,055			263,896			34,738		816			-			(74,179	)		4,151,277
Selling, general and administrative expenses		569,570			434,310			99,786			38,198		1,768			-			-			1,143,632
Depreciation and amortization		145,552			165,947			115,696			1,187		398			2,829			(2,052	)		429,557
Loss (gain) on sale of operating assets		(453	)		(225	)		(42	)		-		206			-			-			(514	)
Corporate expenses		-			-			-			-		-			113,364			-			113,364
Acquisition transaction expenses		847			153			1,163			-		-			1,207			-			3,370

Operating income (loss)	$	(120,096	)	$	122,809		$	(80,559	)	$	173,798	$	(191	)	$	(117,400	)	$	-		$	(21,639	)

Intersegment revenue	$	65,559		$	2,771		$	7,901		$	-	$	-		$	-		$	(76,231	)	$	-
Capital expenditures	$	24,149		$	92,072		$	601		$	5,147	$	4		$	1,244		$	-		$	123,217

2011
Revenue	$	3,506,188		$	1,319,343		$	393,129		$	230,791	$	3,487		$	-		$	(68,940	)	$	5,383,998
Direct operating expenses		2,946,410			618,382			260,884			33,682		(1,839	)		-			(68,031	)		3,789,488
Selling, general and administrative expenses		535,500			428,364			113,199			32,787		2,119			-			-			1,111,969
Depreciation and amortization		132,441			158,071			50,412			483		54			2,466			(909	)		343,018
Loss (gain) on sale of operating assets		(880	)		(96	)		1,264			-		689			1			-			978
Corporate expenses		-			-			-			-		-			112,157			-			112,157
Acquisition transaction expenses		(2,286	)		1,314			(7,758	)		-		-			16,781			-			8,051

Operating income (loss)	$	(104,997	)	$	113,308		$	(24,872	)	$	163,839	$	2,464		$	(131,405	)	$	-		$	18,337

Intersegment revenue	$	58,866		$	1,452		$	8,622		$	-	$	-		$	-		$	(68,940	)	$	-
Capital expenditures	$	21,436		$	78,122		$	4,916		$	4,094	$	-		$	3,476		$	-		$	112,044

2010
Revenue	$	3,438,350		$	1,089,340		$	362,159		$	200,146	$	4,324		$	(333	)	$	(30,238	)	$	5,063,748
Direct operating expenses		2,910,334			513,311			233,016			28,512		-			1,502			(28,365	)		3,658,310
Selling, general and administrative expenses		524,672			362,416			93,995			30,707		2,701			-			-			1,014,491
Depreciation and amortization		139,129			139,007			41,520			255		1,362			2,266			(1,873	)		321,666
Loss (gain) on sale of operating assets		(4,848	)		5,186			20			6		6			4			-			374
Corporate expenses		-			-			-					-			110,252			-			110,252
Acquisition transaction expenses		(2,424	)		780			6,277			- -		-			17,722			-			22,355

Operating income (loss)	$	(128,513	)	$	68,640		$	(12,669	)	$	140,666	$	255		$	(132,079	)	$	-		$	(63,700	)

Intersegment revenue	$	16,876		$	-		$	13,362		$	-	$	-		$	-		$	(30,238	)	$	-
Capital expenditures	$	19,736		$	45,544		$	996		$	67	$	306		$	7,189		$	-		$	73,838

The following table provides revenue and long-lived assets for the Company’s foreign operations included in the consolidated financial statements:


	United Kingdom Operations		Other Foreign Operations		Total Foreign Operations		Total Domestic Operations		Consolidated Total
	(in thousands)
2012
Revenue	$	711,989	$	1,368,768	$	2,080,757	$	3,738,290	$	5,819,047
Long-lived assets	$	87,790	$	102,706	$	190,496	$	531,290	$	721,786

2011
Revenue	$	686,982	$	1,387,295	$	2,074,277	$	3,309,721	$	5,383,998
Long-lived assets	$	85,614	$	99,459	$	185,073	$	535,063	$	720,136

2010
Revenue	$	575,985	$	1,044,288	$	1,620,273	$	3,443,475	$	5,063,748
Long-lived assets	$	73,634	$	82,624	$	156,258	$	580,806	$	737,064

NOTE 14—QUARTERLY RESULTS OF OPERATIONS (Unaudited)


	March 31,						June 30,						September 30,						December 31,
	2012			2011			2012			2011			2012			2011			2012			2011
	(in thousands)
Revenue	$	867,997		$	849,409		$	1,550,677		$	1,558,882		$	1,963,146		$	1,790,025		$	1,437,227		$	1,185,682
Operating expenses:
Direct operating expenses		538,714			547,124			1,106,869			1,138,151			1,457,423			1,286,304			1,048,271			817,909
Selling, general and administrative expenses		268,135			272,969			280,943			266,795			283,846			282,462			310,708			289,743
Depreciation and amortization		79,713			77,481			94,259			76,927			84,684			83,341			170,901			105,269
Loss (gain) on sale of operating assets		(288	)		1,295			93			(660	)		(60	)		231			(259	)		112
Corporate expenses		23,217			21,036			27,415			24,590			30,842			27,385			31,890			39,146
Acquisition transaction expenses		1,309			1,665			(1,870	)		706			1,896			5,493			2,035			187

Operating income (loss)		(42,803	)		(72,161	)		42,968			52,373			104,515			104,809			(126,319	)		(66,684	)

Interest expense		29,710			29,229			29,488			30,845			35,535			30,388			29,007			29,952
Gain on extinguishment of debt		-			-			-			-			(460	)		-			-			-
Interest income		(900	)		(527	)		(931	)		(1,298	)		(994	)		(1,023	)		(1,345	)		(1,367	)
Equity in earnings of nonconsolidated affiliates		(3,881	)		(994	)		(1,801	)		(1,778	)		(3,117	)		(2,777	)		(1,122	)		(2,193	)
Other expense (income), net		(1,782	)		(585	)		5,424			1,331			(6,575	)		6,461			4,266			(700	)

Income (loss) before income taxes		(65,950	)		(99,284	)		10,788			23,273			80,126			71,760			(157,125	)		(92,376	)
Income tax expense (benefit)		4,278			(44,942	)		5,228			6,659			11,950			8,739			8,280			3,320

Net income (loss)		(70,228	)		(54,342	)		5,560			16,614			68,176			63,021			(165,405	)		(95,696	)
Net income (loss) attributable to noncontrolling interests		(1,078	)		(5,882	)		(2,132	)		3,357			10,228			11,309			(5,688	)		3,829
Net income (loss) attributable to common stockholders of Live

Nation Entertainment, Inc.	$	(69,150	)	$	(48,460	)	$	7,692		$	13,257		$	57,948		$	51,712		$	(159,717	)	$	(99,525	)


Basic net income (loss) per common share attributable to common stockholders of Live

Nation Entertainment, Inc.	$	(0.37	)	$	(0.27	)	$	0.04		$	0.07		$	0.31		$	0.28		$	(0.87	)	$	(0.53	)

Diluted net income (loss) per common share attributable to common stockholders of Live

Nation Entertainment, Inc.	$	(0.37	)	$	(0.27	)	$	0.04		$	0.07		$	0.31		$	0.27		$	(0.87	)	$	(0.53	)

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