What changed in this filing

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Item 1. Financial Statements

2020-08-05 compared with 2020-05-07 · 343 added, 171 removed, 512 unchanged (50% of the section changed)

51 unchanged sentences

Three Months Ended

June 30, Six Months Ended

2020 2019 2020 2019

(in thousands except share and per share data)

6 unchanged sentences

Corporate expenses 20,916 40,787 49,228 77,243

Operating loss ( 172,670 ) ( 23,863 )

Operating income (loss) ( 588,067 ) 171,586 ( 760,737 ) 147,723

Interest expense 52,689 36,792 96,688 73,307

Interest income ( 2,429 ) ( 3,818 ) ( 6,902 ) ( 6,366 )

Equity in earnings of nonconsolidated affiliates ( 2,572 ) ( 3,144 )

Other expense (income), net 4,628 ( 3,403 )

Loss before income taxes ( 214,252 ) ( 51,283 )

Equity in losses (earnings) of nonconsolidated affiliates 6,613 ( 5,828 ) 4,041 ( 8,972 )

Other income, net ( 5,173 ) ( 430 ) ( 545 ) ( 3,833 )

Income (loss) before income taxes ( 639,767 ) 144,870 ( 854,019 ) 93,587

Income tax expense (benefit) ( 29,183 ) 28,750 ( 32,513 ) 32,708

Net loss ( 210,922 ) ( 55,241 )

Net loss attributable to noncontrolling interests ( 26,138 ) ( 2,797 )

Net loss attributable to common stockholders of Live Nation $ ( 184,784 ) $ ( 52,444 )

Basic and diluted net loss per common share available to common stockholders of Live Nation

Net income (loss) ( 610,584 ) 116,120 ( 821,506 ) 60,879

Net income (loss) attributable to noncontrolling interests ( 43,067 ) 12,765 ( 69,205 ) 9,968

Net income (loss) attributable to common stockholders of Live Nation $ ( 567,517 ) $ 103,355 $ ( 752,301 ) $ 50,911

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

$ ( 2.67 ) $ 0.43 $ ( 3.62 ) $ 0.12

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

$ ( 2.67 ) $ 0.41 $ ( 3.62 ) $ 0.11

Weighted average common shares outstanding:

Basic and diluted 211,048,294 208,908,323

Reconciliation to net loss available to common stockholders of Live Nation:

Net loss attributable to common stockholders of Live Nation

Basic 211,693,923 209,998,048 211,371,109 209,456,196

Diluted 211,693,923 219,977,612 211,371,109 219,107,351

Reconciliation to net income (loss) available to common stockholders of Live Nation:

Net income (loss) attributable to common stockholders of Live Nation

$ ( 567,517 ) $ 103,355 $ ( 752,301 ) $ 50,911

Accretion of redeemable noncontrolling interests 1,595 ( 13,515 ) ( 12,945 ) ( 25,827 )

Net loss available to common stockholders of Live Nation—basic and diluted

Net income (loss) available to common stockholders of Live Nation—basic

( 565,922 ) 89,840 ( 765,246 ) 25,084

Convertible debt interest, net of tax — 86 — —

Net income (loss) available to common stockholders of Live Nation—diluted

$ ( 565,922 ) $ 89,926 $ ( 765,246 ) $ 25,084

See Notes to Consolidated Financial Statements

LIVE NATION ENTERTAINMENT, INC.

CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)

Three Months Ended

June 30, Six Months Ended

2020 2019 2020 2019

(in thousands)

Net loss $ ( 210,922 ) $ ( 55,241 )

Other comprehensive loss, net of tax:

Net income (loss) $ ( 610,584 ) $ 116,120 $ ( 821,506 ) $ 60,879

Other comprehensive income (loss), net of tax:

Unrealized loss on cash flow hedge ( 5,765 ) — ( 36,596 ) —

Realized loss on cash flow hedge 1,353 — 1,353 —

Foreign currency translation adjustments 19,933 ( 671 ) ( 62,849 ) ( 3,560 )

Comprehensive loss ( 324,535 ) ( 58,130 )

Comprehensive loss attributable to noncontrolling interests

Comprehensive income (loss) ( 595,063 ) 115,449 ( 919,598 ) 57,319

Comprehensive income (loss) attributable to noncontrolling interests

( 43,067 ) 12,765 ( 69,205 ) 9,968

Comprehensive loss attributable to common stockholders of Live Nation

Comprehensive income (loss) attributable to common stockholders of Live Nation

$ ( 551,996 ) $ 102,684 $ ( 850,393 ) $ 47,351

5 unchanged sentences

(in thousands, except share data) (in thousands)

Balances at March 31, 2020 211,834,739 $ 2,118 $ 2,260,509 $ ( 1,137,082 ) $ ( 6,865 ) $ ( 259,326 ) $ 371,478 $ 1,230,832 $ 443,606

Non-cash and stock-based compensation — — 38,538 — — — — 38,538 —

Common stock issued under stock plans, net of shares withheld for employee taxes 79,079 1 ( 217 ) — — — — ( 216 ) —

Exercise of stock options, net of shares withheld for option cost and employee taxes 609,329 6 ( 4,734 ) — — — — ( 4,728 ) —

Fair value of convertible debt conversion feature, net of issuance cost — — 17 — — — — 17 —

Acquisitions — — — — — — 4,157 4,157 751

Divestitures — — — — — — 593 593 —

Purchases of noncontrolling interests — — ( 454 ) — — — — ( 454 ) ( 89,779 )

Redeemable noncontrolling interests fair value adjustments — — 1,595 — — — — 1,595 ( 1,595 )

Contributions received — — — — — — 1,391 1,391 —

Cash distributions — — — — — — ( 7,915 ) ( 7,915 ) ( 3,287 )

Other — — ( 185 ) — — — ( 501 ) ( 686 ) 1

Comprehensive loss:

Net loss — — — ( 567,517 ) — — ( 27,598 ) ( 595,115 ) ( 15,469 )

Unrealized loss on cash flow hedge — — — — — ( 5,765 ) — ( 5,765 ) —

Realized loss on cash flow hedge — — — — — 1,353 — 1,353 —

Foreign currency translation adjustments — — — — — 19,933 — 19,933 —

Balances at June 30, 2020 212,523,147 $ 2,125 $ 2,295,069 $ ( 1,704,599 ) $ ( 6,865 ) $ ( 243,805 ) $ 341,605 $ 683,530 $ 334,228

See Notes to Consolidated Financial Statements

Live Nation Stockholders’ Equity

Common Shares Issued Common Stock Additional Paid-In Capital Accumulated Deficit Cost of Shares Held in Treasury Accumulated Other Comprehensive Loss Noncontrolling Interests Total Equity Redeemable Noncontrolling Interests

(in thousands, except share data) (in thousands)

Balances at December 31, 2019 211,262,062 $ 2,113 $ 2,245,619 $ ( 949,334 ) $ ( 6,865 ) $ ( 145,713 ) $ 318,134 $ 1,463,954 $ 449,498

2 unchanged sentences

Common stock issued under stock plans, net of shares withheld for employee taxes 341,249 3 ( 7,665 ) — — — — ( 7,662 ) —

Exercise of stock options 310,507 3 6,453 — — — — 6,456 —

Exercise of stock options, net of shares withheld for option cost and employee taxes 919,836 9 1,719 — — — — 1,728 —

Fair value of convertible debt conversion feature, net of issuance cost — — 33,347 — — — — 33,347 —

Acquisitions — — — — — — 35,322 35,322 11,899

Divestitures — — — — — — 593 593 —

Purchases of noncontrolling interests — — ( 6,939 ) — — — ( 1,032 ) ( 7,971 ) ( 96,190 )

7 unchanged sentences

Unrealized loss on cash flow hedge — — — — — ( 36,596 ) — ( 36,596 ) —

Realized loss on cash flow hedge — — — — — 1,353 — 1,353 —

Foreign currency translation adjustments — — — — — ( 62,849 ) — ( 62,849 ) —

Balances at June 30, 2020 212,523,147 $ 2,125 $ 2,295,069 $ ( 1,704,599 ) $ ( 6,865 ) $ ( 243,805 ) $ 341,605 $ 683,530 $ 334,228

See Notes to Consolidated Financial Statements

Live Nation Stockholders’ Equity

(in thousands, except share data) (in thousands)

Balances at March 31, 2019 209,857,816 $ 2,099 $ 2,267,761 $ ( 1,071,667 ) $ ( 6,865 ) $ ( 148,120 ) $ 197,186 $ 1,240,394 $ 343,029

Non-cash and stock-based compensation — — 11,754 — — — — 11,754 —

Common stock issued under stock plans, net of shares withheld for employee taxes 60,223 — ( 959 ) — — — — ( 959 ) —

Exercise of stock options 167,776 2 2,525 — — — — 2,527 —

Conversion of convertible debt 824,328 — 28,586 — — — — 28,586 —

Acquisitions — — — — — — 25,194 25,194 32,322

Redeemable noncontrolling interests fair value adjustments — — ( 13,515 ) — — — — ( 13,515 ) 13,515

Contributions received — — — — — — 8,324 8,324 —

Cash distributions — — — — — — ( 6,172 ) ( 6,172 ) ( 7,317 )

Other — — ( 142 ) — — — ( 77 ) ( 219 ) 172

Comprehensive income (loss):

Net Income — — — 103,355 — — 9,158 112,513 3,607

Foreign currency translation adjustments — — — — — ( 671 ) — ( 671 ) —

Balances at June 30, 2019 210,910,143 $ 2,101 $ 2,296,010 $ ( 968,312 ) $ ( 6,865 ) $ ( 148,791 ) $ 233,613 $ 1,407,756 $ 385,328

See Notes to Consolidated Financial Statements

6 unchanged sentences

Exercise of stock options 637,377 7 10,192 — — — — 10,199 —

Conversion of convertible debt 824,328 — 28,586 — — — — 28,586 —

Acquisitions — — — — — — 26,168 26,168 39,303

1 unchanged sentence

Redeemable noncontrolling interests fair value adjustments — — ( 25,827 ) — — — — ( 25,827 ) 25,827

Contributions received — — — — — — 8,324 8,324 —

Cash distributions — — — — — — ( 52,115 ) ( 52,115 ) ( 11,258 )

Other — — ( 150 ) — — — ( 1,261 ) ( 1,411 ) 2,597

Comprehensive loss:

Net loss — — — ( 52,444 ) — — ( 153 ) ( 52,597 ) ( 2,644 )

Comprehensive income (loss):

Net income — — — 50,911 — — 9,005 59,916 963

Foreign currency translation adjustments — — — — — ( 3,560 ) — ( 3,560 ) —

Balances at March 31, 2019 209,857,816 $ 2,099 $ 2,267,761 $ ( 1,071,667 ) $ ( 6,865 ) $ ( 148,120 ) $ 197,186 $ 1,240,394 $ 343,029

Balances at June 30, 2019 210,910,143 $ 2,101 $ 2,296,010 $ ( 968,312 ) $ ( 6,865 ) $ ( 148,791 ) $ 233,613 $ 1,407,756 $ 385,328

See Notes to Consolidated Financial Statements

1 unchanged sentence

CONSOLIDATED STATEMENTS OF CASH FLOWS

Three Months Ended

Six Months Ended

(in thousands)

CASH FLOWS FROM OPERATING ACTIVITIES

Net loss $ ( 210,922 ) $ ( 55,241 )

Net income (loss) $ ( 821,506 ) $ 60,879

Reconciling items:

2 unchanged sentences

Amortization of non-recoupable ticketing contract advances 32,126 34,267

Deferred income tax benefit ( 12,316 ) ( 456 )

Amortization of debt issuance costs and discounts 14,856 10,828

Non-cash compensation expense 50,270 24,926

Unrealized changes in fair value of contingent consideration ( 24,789 ) 5,821

Provision for uncollectible accounts receivable 25,764 5,615

Other, net ( 2,609 ) 922

2 unchanged sentences

Increase in prepaid expenses and other assets ( 50,493 ) ( 380,285 )

Decrease in accounts payable, accrued expenses and other liabilities ( 316,204 ) ( 44,915 )

Increase (decrease) in accounts payable, accrued expenses and other liabilities ( 807,552 ) 5,880

Increase in deferred revenue 597,963 578,763

Net cash provided by operating activities 631,675 469,050

Net cash provided by (used in) operating activities ( 390,360 ) 293,323

CASH FLOWS FROM INVESTING ACTIVITIES

1 unchanged sentence

Collections of notes receivable 12,782 5,337

Investments made in nonconsolidated affiliates ( 8,150 ) ( 28,931 )

Purchases of property, plant and equipment ( 142,509 ) ( 135,940 )

Cash paid for acquisitions, net of cash acquired ( 37,471 ) ( 87,595 )

Purchases of intangible assets ( 5,594 ) ( 20,614 )

Other, net 1,758 20

5 unchanged sentences

Purchases and sales of noncontrolling interests, net ( 88,191 ) ( 1,463 )

Proceeds from exercise of stock options 11,406 10,199

Taxes paid for net share settlement of equity awards ( 17,339 ) ( 10,259 )

Payments for deferred and contingent consideration ( 9,940 ) ( 19,962 )

Other, net 1,467 8,323

1 unchanged sentence

Effect of exchange rate changes on cash, cash equivalents and restricted cash ( 54,974 ) ( 6,983 )

Net increase in cash, cash equivalents, and restricted cash 807,469 305,989

Net increase (decrease) in cash, cash equivalents, and restricted cash 826,123 ( 93,224 )

Cash, cash equivalents and restricted cash at beginning of period 2,474,242 2,378,203

8 unchanged sentences

In the opinion of management, they include all normal and recurring accruals and adjustments necessary to present fairly the results of the interim periods shown.

The financial statements should be read in conjunction with the consolidated financial statements and notes thereto included in our 2019 Annual Report on Form 10-K filed with the SEC on February 27, 2020.

Due to the seasonal nature of shows at outdoor amphitheaters and festivals, which primarily occur from May through October, our Concerts and Sponsorship & Advertising segments experience higher revenue during the second and third quarters.

Due to the unprecedented stoppage of our concert events globally in mid-March due to the global COVID-19 pandemic, we do not expect that any quarter in 2020 will follow our typical seasonality trend.

Our Ticketing segment’s revenue is impacted by fluctuations in the availability of events for sale to the public, which vary depending upon scheduling by its clients.

1 unchanged sentence

Because of these factors, the results to date are not necessarily indicative of the results expected for the full year.

Due to the unprecedented stoppage of concert and other events globally beginning in mid-March due to the global COVID-19 pandemic, we do not expect that any quarter in 2020 will follow our typical seasonality trend.

Cash, Cash Equivalents and Restricted Cash

Included in the March 31, 2020 and December 31, 2019 cash and cash equivalents balance is $ 841.5 million and $ 837.7 million, respectively, of cash received that includes the face value of tickets sold on behalf of ticketing clients and their share of service charges, which amounts are to be remitted to these clients.

Included in the June 30, 2020 and December 31, 2019 cash and cash equivalents balance is $ 744.7 million and $ 837.7 million, respectively, of cash received that includes the face value of tickets sold on behalf of ticketing clients and their share of service charges, which amounts are to be remitted to these clients.

Restricted cash primarily consists of cash held in escrow accounts to fund capital improvements of certain leased or operated venues.

The cash is held in these accounts pursuant to the related lease or operating agreement.

During the first three months of 2020, we completed several acquisitions that were accounted for as business combinations under the acquisition method of accounting.

During the first six months of 2020, we completed several acquisitions that were accounted for as business combinations under the acquisition method of accounting.

When we make these acquisitions, we often acquire a controlling interest without buying 100% of the business.

These acquisitions were not significant either on an individual basis or in the aggregate.

During the first six months of 2020, we acquired the remaining redeemable noncontrolling interests of certain subsidiaries and settled certain contingent consideration obligations in exchange for debt obligations totaling $ 20.9 million which are reflected in current portion of long-term debt, net on our consolidated balance sheets.

These non-cash transactions have not been reflected as cash flows from financing activities within our consolidated statements of cash flows.

Each reporting period, we evaluate the realizability of all of our deferred tax assets in each tax jurisdiction.

As of March 31, 2020, we continued to maintain a full valuation allowance against our net deferred tax assets in certain jurisdictions due to cumulative pre-tax losses.

As a result of the valuation allowances, no tax benefits have been recognized for losses incurred, if any, in those tax jurisdictions for the first three months of 2020 and 2019.

As of June 30, 2020, we continued to maintain a full valuation allowance against our net deferred tax assets in certain jurisdictions due to cumulative pre-tax losses.

As a result of the valuation allowances, no tax benefits have been recognized for losses incurred, if any, in those tax jurisdictions for the first six months of 2020 and 2019.

Accounting Pronouncements - Recently Adopted

In June 2016, the FASB issued guidance that replaces the current incurred loss impairment model of recognizing credit losses with an expected loss model for financial assets measured at amortized cost.

The guidance is effective for annual periods beginning after December 15, 2019 and interim periods within that year.

The guidance is to be applied through a cumulative-effect adjustment to the balance sheet as of the beginning of the fiscal year of adoption.

We adopted this standard on January 1, 2020, and recorded a $ 3.0 million cumulative-effect adjustment to accumulated deficit in the consolidated balance sheet.

1 unchanged sentence

In August 2018, the FASB issued guidance that aligns the requirements for capitalizing implementation costs incurred in a hosting arrangement that is a service contract with the requirements for capitalizing implementation costs incurred to develop or obtain internal-use software.

The amortization period of these implementation costs would include periods covered under renewal options that are reasonably certain to be exercised.

The amortization period of these implementation costs would include periods covered under

renewal options that are reasonably certain to be exercised.

The expense related to the capitalized implementation costs also would be presented in the same financial statement line item as the hosting fees.

The guidance is effective for annual periods beginning after December 15, 2019 and interim periods within that year.

The guidance should be applied either retrospectively

or prospectively to all implementation costs incurred after the date of adoption.

We adopted this guidance prospectively on January 1, 2020.

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Beginning in March, large public events were cancelled, governmental authorities began imposing restrictions on non-essential activities, and businesses suspended activities around the world.

As the impact of the global COVID-19 pandemic became clearer, we ceased all Live Nation tours and closed our venues in mid-March to support global efforts at social distancing and mitigating the virus, and to comply with restrictions put in place by various governmental entities, which has had a materially negative impact on our revenues and financial position.

Operating Results

Our first quarter results were materially impacted by these necessary actions.

Our overall revenue for the quarter decreased by 21 % to $ 1.4 billion.

The revenue reduction was largely in our Concerts and Ticketing segments as a result of no shows occurring globally in the last half of March and a considerable slowing of ticket sales for future shows during the same period, along with the impact of ticket refunds and show cancellations.

We estimate the lost revenue impact from COVID-19 in the first quarter of 2020 to be approximately $ 435 million.

Our operating loss for the quarter increased as compared to the first quarter of 2019 largely due to the COVID-19 impacts to our Concerts and Ticketing businesses, totaling approximately $ 175 million, including $ 10.1 million of definite-lived intangible assets impairment charges.

The revenue recognized in our Concerts segment in the first quarter of 2020 included the results of all the shows that occurred prior to the stoppage of events in mid-March.

Our event-related deferred revenue for Concerts, which is reported as part of deferred revenue on our consolidated balance sheets, includes the face value and Concerts’ share of service charges for all tickets sold by March 31, 2020, for shows expected to occur in the next 12 months.

Any refunds committed to for shows cancelled or rescheduled during the first quarter have either been returned to fans or are reflected in accrued expenses on the consolidated balance sheets.

We have not recorded an estimate for refunds that may occur in the future since we have never experienced a global shutdown of live events and are unable to estimate it.

Our second quarter and six-month results were materially impacted by these necessary actions.

Our overall revenue for the quarter decreased by 98 % to $ 74.1 million and for the six months decreased by 71 % to $ 1.4 billion.

The revenue reduction was across all of our segments as a result of few shows occurring globally beginning in the last half of March and low ticket sales for future shows during the same period, along with the impact of ticket refunds and show cancellations.

We estimate the lost revenue impact from the global COVID-19 pandemic in the second quarter and first six months of 2020 to be approximately $ 2.9 billion and $ 3.3 billion, respectively.

Our operating results for the second quarter and six months decreased as compared to the same periods of 2019 largely due to the global COVID-19 pandemic impacts to our business, totaling approximately $ 755 million and $ 879 million, respectively, including $ 12.1 million of definite-lived intangible assets impairment charges for the first six months of 2020.

The revenue recognized in our Concerts segment in the first six months of 2020 included the results of all the shows that occurred prior to the stoppage of events in mid-March.

Our event-related deferred revenue for Concerts, which is reported as part of deferred revenue on our consolidated balance sheets, includes the face value and Concerts’ share of service charges for all tickets sold by June 30, 2020, for shows expected to occur in the next 12 months.

Any refunds committed to for shows cancelled or rescheduled during the first six months have either been returned to fans or are reflected in accrued expenses on the consolidated balance sheets.

In addition, we have recorded an estimate of $ 180.0 million in Concerts for refunds that may occur in the future based on the limited amount of data available on refunds resulting from the global shutdown of our live events.

This estimate only impacts our financial position as a reclassification from deferred revenue or other long-term liabilities to accrued expenses.

We expect that the majority of our shows postponed due to the pandemic will be rescheduled.

Any ticket proceeds for shows expected to occur after March 31, 2021 are reflected in other long-term liabilities on our consolidated balance sheets.

As of March 31, 2020, we had sold over 45 million tickets to shows scheduled for 2020, down 2 % from the same time last year, net of cancelled shows and shows rescheduled into 2021.

By the end of the first quarter of 2020, we had processed cancellations on 1,500 concerts impacted by the event stoppage starting in mid-March of this year, equating to 1.6 million tickets.

Another 6,800 shows equating to approximately 13.4 million tickets had been postponed and were in the process of being rescheduled.

The revenue recognized in our Ticketing segment in the first quarter of 2020 includes our share of ticket service charges for tickets sold during the period for third-party clients and for shows that occurred in the quarter for our Concerts business where our promoters control the ticketing.

Revenue in the period has been reduced by refunds given during the quarter.

In addition, revenue has been reduced for any shows that were cancelled both during the quarter and up to the time of the filing of these financial statements, and funds have either been returned to the customer or are reflected in accrued expenses on the consolidated balance sheets.

Deferred revenue for tickets sold for shows expected to occur after June 30, 2021 totaled $ 486 million and are reflected in other long-term liabilities on our consolidated balance sheets.

By the end of the second quarter of 2020, we had cancelled nearly 3,900 concerts impacted by the stoppage of events starting in mid-March of this year, equating to approximately 12 million tickets, and have refunded or are in the process of refunding these tickets.

In addition, we had nearly 6,400 shows equating to approximately 22 million tickets, that have been postponed and rescheduled into 2021 or were in the process of being rescheduled at the end of the second quarter.

The revenue recognized in our Ticketing segment in the first six months of 2020 includes our share of ticket service charges for tickets sold during the period for third-party clients and for shows that occurred in the period for our Concerts business where our promoters control the ticketing.

Revenue in the period has been reduced by refunds given during the period.

In addition, revenue has been reduced for any shows that were cancelled and for refunds requested on rescheduled shows, both during the first six months and up to the time of the filing of these financial statements, and funds have either been returned to the customer or are reflected in accrued expenses on the consolidated balance sheets.

Our ticketing clients determine if shows will be rescheduled or cancelled and what the refund policy will be for those shows.

We have not recorded an estimate for refunds that may occur in the future since we have never experienced a global shutdown of live events and because our clients, not Ticketmaster, determine when shows are cancelled or rescheduled so we are unable to estimate it.

By the end of the first quarter of 2020 and through the time of this filing, Ticketing had processed or accrued for cancellations or refunds on 7.2 million tickets.

For events that are cancelled, our standard policy is to refund the fan within 30 days days, though subject to regulations in various markets and in some cases at the discretion of venue or event organizer clients.

We have not recorded an estimate for refunds that may occur in the future since our clients, not Ticketmaster, determine when shows are cancelled or rescheduled and we have a limited amount of historical data of refunds resulting from a global shutdown of live events on which to reliably determine an estimate.

By the end of the second quarter of 2020 and through the time of this filing, Ticketing had processed or accrued for cancellations or refunds on 17.2 million tickets.

For events that are cancelled, our standard policy is to refund the fan within 30 days, though subject to regulations in various markets and in some cases at the discretion of venue or event organizer clients.

Our ticket refund policies for rescheduled shows vary by ticketing client and country.

In multiple international markets, including Germany, Italy and Belgium, government regulations which allow for the issuance of vouchers in place of cash refunds for rescheduled shows, and in some cases for cancelled shows, have been put in place or drafted.

In multiple international markets, including Germany, Italy and Belgium, government regulations which allow for the issuance of vouchers in place of cash refunds for rescheduled shows, and

in some cases for cancelled shows, have been put in place or drafted.

The volume and pace of cash refunds could have a material negative effect on our liquidity and capital resources.

The length and severity of the reduction in live events due to the pandemic is uncertain;

accordingly, we expect the negative impact to continue through the second quarter of 2020.

While we are planning for a modest recovery in demand later in the second half of 2020, the exact timing and pace of the recovery is uncertain given the significant impact of the pandemic on the overall United States and global economies.

We believe the ongoing effects of COVID-19 on our operations have had, and will continue to have a material negative impact on our financial results and liquidity, and such negative impact may continue beyond the containment of such outbreak.

accordingly, we expect the negative impact to continue through the remainder of the year.

The exact timing and pace of the recovery is uncertain given the significant impact of the pandemic on the overall United States and global economies.

We believe the ongoing effects of the global COVID-19 pandemic on our operations have had, and will continue to have a material negative impact on our financial results and liquidity, and such negative impact may continue beyond the containment of such outbreak.

We have never previously experienced a complete cessation of our live events and unprecedented reduction in the number of events selling tickets, and as a consequence, our ability to be predictive regarding the impact of such a cessation is uncertain and we are unable to estimate the impact on our business, financial condition or near- or longer-term financial or operational results.

Cash and available liquidity

We amended our senior secured credit agreement in April 2020 which will, among other things, suspend our net leverage covenant under our existing senior secured credit agreement for the second and third quarters of 2020, while adding a liquidity test for those quarters.

Commencing with the fourth quarter of 2020, through the second quarter of 2021, the net leverage covenant will be calculated by substituting consolidated EBITDA, as defined in the credit agreement, from the second and third quarters of 2020 with consolidated EBITDA from the second and third quarters of 2019.

As a result, this amendment will eliminate the use of consolidated EBITDA from the second and third quarters of 2020 in any net leverage covenant test, allowing us the flexibility to manage our business through the disruption we will experience in 2020.

We amended our senior secured credit facility in April 2020 and further amended it in July 2020 which, among other things, substitutes our net leverage covenant under our existing senior secured credit facility with a $500 million liquidity covenant (as defined in the agreement) until the earlier of (a) December 31, 2021 and (b) at our election, any fiscal quarter prior to December 31, 2021.

These amendments will allow us the flexibility to manage our business through the disruption that we will experience in 2020.

In addition, we added a new incremental revolving credit facility of $ 130 million, extending our undrawn debt capacity.

Following this increase, we have approximately $ 965.5 million in available debt capacity, including $ 400 million in undrawn term loan A capacity and $ 565.5 million in available revolver capacity, net of outstanding letters of credit.

Finally, in May 2020, we issued $ 1.2 billion principal amount of 6.5 % senior secured notes due 2027.

We will continue to evaluate future financing opportunities to further expand liquidity at reasonable costs.

As of March 31, 2020, our total cash and cash equivalents balance was $ 3.3 billion, which included $ 842 million of ticketing client cash.

As of June 30, 2020, our total cash and cash equivalents balance was $ 3.3 billion, which included $ 745 million of ticketing client cash.

This cash, net of client cash, together with our now available debt capacity of $ 965.5 million, we believe gives us the liquidity to fund our operations during the pandemic.

Our total cash includes event-related deferred revenue for which the amount can fluctuate over the course of the year, but given the timing of shows in 2020 and expected substantial volume of on-sales for 2021 shows in the second half of this year, we expect this number to remain above seasonally normal levels throughout this year.

Event-related deferred revenue consists of cash held by our Concerts business for future shows, with roughly half the funds associated with upcoming shows in the United States and half for international shows as of March 31, 2020.

Our total cash includes event-related deferred revenue for which the amount can fluctuate over the course of the year, but given the timing of shows in 2020 and expected substantial volume of on-sales for 2021 shows later in the second half of this year, we expect this number to remain above seasonally normal levels throughout this year.

In the United States, the funds are largely associated with shows in our owned or operated venues, notably amphitheaters, festivals, theaters and clubs.

3 unchanged sentences

Cost and Cash Management Programs

Given the uncertainty associated with the duration of current conditions globally, we have launched a number of initiatives to reduce fixed costs and conserve cash.

As part of these cost reduction efforts, we have implemented salary reductions, with salaries for senior executives reduced by up to 50 %, and our CEO voluntarily forgoing 100 % of his salary for the duration of the salary reduction program.

Given the uncertainty associated with the duration of current conditions globally, we have implemented a number of initiatives to reduce fixed costs and conserve cash.

As part of these cost reduction efforts, we have implemented salary reductions for most of our employees, with salaries for senior executives reduced by up to 50 %.

Additional cost reduction efforts include hiring freezes, reduction in the use of contractors, rent re-negotiations, furloughs, and reduction or elimination of other discretionary spending, including, among other things, travel and entertainment, repairs and maintenance, and marketing.

1 unchanged sentence

In most European and Asian markets, including the United Kingdom, Germany, Italy, France, Spain and Australia, there are robust payroll support programs to mitigate a substantial portion of employee costs.

Additionally, in the United States, we expect to receive payroll support under the Employee Retention Credit program established as part of the 2020 CARES Act.

Additionally, in the United States, we have filed for payroll support under the Employee Retention Credit program established as part of the 2020 CARES Act and expect to receive additional support in the second half of the year.

Finally, the CARES Act also provides for deferred payment of the employer portion of social security taxes through the end of 2020, with 50 % of the deferred amount due December 31, 2021 and the remaining 50 % due December 31, 2022.

We are further protecting our cash outflows by reducing advances in both our ticketing and concert businesses, re-assessing all capital expenditure projects and evaluating all other cash deployment activities.

As a result of these initiatives and government support programs, we are targeting $ 600 million in cost reductions in 2020 and the elimination or deferral into 2021 of $ 1.0 billion in cash outflows.

We believe this aggressive cost and cash management program, combined with a strong liquidity profile, positions us to manage through the COVID-19 related hold on show activity and provides the flexibility to scale-up quickly when shows restart.

Based on these actions and assumptions regarding the impact of COVID-19, we believe that we will be able to generate sufficient liquidity to satisfy our obligations and remain in compliance with our existing debt covenants for the next twelve months prior to giving effect to any additional financing that may occur.

As a result of these initiatives and government support programs, we are now targeting $ 800 million in cost reductions in 2020 and the elimination or deferral into 2021 of $ 1.4 billion in cash outflows, which primarily includes the cost reductions along with lower capital expenditures, acquisition payments, and concert and ticketing advances.

With these additional savings, our operational cash burn rate is now expected to average $ 125 million per month from April to December of 2020.

Adding in the rest of our cash outflows for non-operational items gives us a cash burn rate of an expected average of $ 185 million per month from April through the end of

We believe this aggressive cost and cash management program, combined with a strong liquidity profile, positions us to manage through the global COVID-19 pandemic related hold on show activity and provides the flexibility to scale up quickly when shows restart.

Based on these actions and assumptions regarding the impact of the global COVID-19 pandemic, we believe that we will be able to generate sufficient liquidity to satisfy our obligations for the next twelve months and remain in compliance with our existing debt covenants throughout 2020 prior to giving effect to any additional financing that may occur.

Our forecasted expense management and liquidity measures may be modified as we get more clarity on the timing of events.

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We are currently planning for the health and safety of our employees as they return to work in our offices in the future and for our artists and fans as they return to live events.

We will return to work in local markets only after there is clear consensus that it is safe to do so, and then in appropriate numbers with expanded cleaning and social distancing protocols.

We will return to work in local markets only after there is clear consensus that the time is right to do so, and then in appropriate numbers with expanded cleaning and social distancing protocols.

Similarly, we are planning for the resumption of concerts when the time is right.

We will let the facts and science tell us when we should start putting on concerts again.

We recognize the experience at our venues will change when concerts start back up, and are working with medical experts and public health officials to keep people safe while enjoying our shows.

Recent fan surveys indicate that the demand will be there when the shows return, with over 90 % of fans expecting to attend concerts again once the pandemic is over.

We expect the re-opening of concerts will happen on a market by market basis, and given we operate in 40 countries globally, the timelines will vary from relatively soon to not for several months or beyond.

While this temporary disruption has had a material impact on our business, as the leading global live event and ticketing company we believe that we are well-positioned to provide the best service to artists, teams, fans and venues once business resumes.

We recognize the experience at our venues will change when concerts start back up, and are working with medical experts and public health officials to implement safety precautions and protocols necessary for fans to return to enjoy our shows.

Recent fan surveys indicate that the demand will be there when the shows return, with nearly 90 % of fans expecting to attend concerts again once the pandemic is over.

We expect the re-opening of concerts will happen on a market by market basis, and given we operate in 40 countries globally, the timelines will vary from starting now to not for several months or beyond.

While this disruption has had a material impact on our business, as the leading global live event and ticketing company we believe that we are well-positioned to provide the best service to artists, teams, fans and venues once business resumes.

Twenty years of global growth demonstrates the resilience of fan demand for the live entertainment experience.

We are actively taking steps to ensure that when it is safe for us to do so, we will be ready to ramp back up quickly and once again connect audiences to artists at the concerts they are looking forward to.

We are actively taking steps to ensure that when the time is right for us to do so, we will be ready to ramp back up quickly and once again connect audiences to artists at the concerts they are looking forward to.

NOTE 3—LONG-LIVED ASSETS

We reviewed our long-lived assets for potential impairment due to the temporary suspension of our concert events resulting from the global COVID-19 pandemic.

Our venues are either owned or provide long-term operating rights under lease or management agreements with terms ranging from five to twenty-five years.

Many of our definite-lived intangible assets are based on revenue-generating contracts, and client or vendor relationships associated with live events and have useful lives, established at the time of acquisition, ranging from 3 to 10 years.

Our more significant investments in nonconsolidated affiliates are in the concert event promotion, venue operation or ticketing businesses and are experiencing similar impacts to their operations.

We reviewed our long-lived assets for potential impairment indicators due to the suspension of our concert events resulting from the global COVID-19 pandemic.

Our venues are either owned or we have long-term operating rights under lease or management agreements with terms ranging from 5 to 25 years.

Our more significant investments in nonconsolidated affiliates are in the concert event promotion, venue operation or ticketing businesses and these businesses are experiencing similar impacts to their operations, in line with what we are seeing from the pandemic.

Based on our assessments, we have recorded impairment charges on certain of our definite-lived intangible assets which are discussed below.

We expect that concerts will resume in the second half of the year and that the underlying business supporting all of our long-lived assets will begin generating operating income once again.

The length and severity of the impact to live events and our related sponsorship and ticketing businesses is still uncertain.

We currently do not anticipate a significant change in activity levels through the remainder of the year.

We expect that most global tours will resume and larger venues will reopen in the following year and that the underlying business supporting all of our long-lived assets will begin generating operating income once again.

However, we have never previously experienced a complete cessation of our live events and unprecedented reduction in the number of events selling tickets, and as a consequence, our ability to be predictive regarding the impact of such a cessation is uncertain.

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Property, plant and equipment, net, consisted of the following:

March 31, December 31,

June 30, December 31,

(in thousands)

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Definite-lived Intangible Assets

The following table presents the changes in the gross carrying amount and accumulated amortization of definite-lived intangible assets for the three months ended March 31, 2020:

The following table presents the changes in the gross carrying amount and accumulated amortization of definite-lived intangible assets for the six months ended June 30, 2020:

contracts Client /

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Net change ( 23,802 ) 46,171 ( 7,705 ) ( 4,725 ) 2,257 4,255 16,451

Balance as of March 31, 2020:

Balance as of June 30, 2020:

Gross carrying amount

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(2) Other primarily includes netdowns of fully amortized or impaired assets.

Included in the current year acquisitions amounts above are definite-lived intangible assets primarily associated with the acquisitions of a festival and concert promotion business located in Ireland, a merchandise business and a festival promotion business, both located in the United States.

Included in the current year acquisitions amounts above are definite-lived intangible assets primarily associated with the acquisitions of a festival and concert promotion business located in Ireland, a merchandise business, a festival promotion business and a ticketing business, all located in the United States.

The 2020 additions to definite-lived intangible assets from acquisitions have weighted-average lives as follows:

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We test for possible impairment of definite-lived intangible assets whenever events or circumstances change, such as a significant reduction in operating cash flow or a 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 the three months ended March 31, 2020, we reviewed the carrying value of certain definite-lived intangible assets that management determined had an indicator that future operating cash flows may not support their carrying value as a result of the expected impacts from the global COVID-19 pandemic, and it was determined that those assets were impaired since the estimated undiscounted operating cash flows

associated with those assets were less than their carrying value.

For the three months ended March 31, 2020, we recorded impairment charges related to definite-lived intangible assets of $ 10.1 million as a component of depreciation and amortization.

During the six months ended June 30, 2020, we reviewed the carrying value of certain definite-lived intangible assets that management determined had an indicator that future operating cash flows may not support their carrying value as a result of the expected impacts from the global COVID-19 pandemic, and it was determined that those assets were impaired since the estimated undiscounted operating cash flows associated with those assets were less than their carrying value.

For the six months ended June 30, 2020, we recorded impairment charges related to definite-lived intangible assets of $ 12.1 million as a component of depreciation and amortization.

These impairment charges primarily related to intangible assets for revenue-generating contracts in the Concerts segment.

See Note 7—Fair Value Measurements for further discussion of the inputs used to determine the fair value.

There were no significant impairment charges recorded during the three months ended March 31, 2019.

Amortization of definite-lived intangible assets for the three months ended March 31, 2020 and 2019 was $ 64.2 million and $ 47.2 million, respectively.

The following table presents our estimate of amortization expense for each of the five succeeding fiscal years for definite-lived intangible assets that exist at March 31, 2020:

There were no significant impairment charges recorded during the six months ended June 30, 2019.

Amortization of definite-lived intangible assets for the three months ended June 30, 2020 and 2019 was $ 57.8 million and $ 49.5 million, respectively, and for the six months ended June 30, 2020 and 2019 was $ 122.0 million and $ 96.7 million, respectively.

The following table presents our estimate of amortization expense for each of the five succeeding fiscal years for definite-lived intangible assets that exist at June 30, 2020:

(in thousands)

April 1 - December 31, 2020 $ 241,180

July 1 - December 31, 2020 $ 105,854

2021 $ 178,684

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

The Company reviews goodwill for impairment annually, as of October 1.

As such, we completed our annual review last quarter and, as reported in our December 31, 2019 Form 10-K, no impairments were recorded as the fair value of each reporting unit was determined to be in excess of its carrying value for all reporting units.

The rapid and severe impacts of COVID-19, and more specifically the need to support global social distancing efforts, mitigating the spread of the virus, and comply with restrictions put in place by various governmental entities, led to our decision to cease all tours and to close our venues in mid-March.

As such actions will have a material impact on our cash flows during the temporary suspension of operations, we performed a qualitative review to assess whether we believed these actions caused the fair value of any of our reporting units to fall below its carrying value.

This qualitative review included sensitivity analyses on each reporting unit’s discounted cash flow models considering more recent discount rates, financial results and forecasts, market multiples and terminal value revenue growth rates.

The conclusion for all reporting units was that no impairment trigger existed that would require a further quantitative analysis at March 31, 2020.

We are unable to predict how long the impacts from COVID-19 will impact our operations or what additional restrictions may be imposed by governments.

We review goodwill for impairment annually, as of October 1.

As such, we completed our annual review in the fourth quarter of 2019 and, as reported in our December 31, 2019 Form 10-K, no impairments were recorded as the fair value of each reporting unit was determined to be in excess of its carrying value for all reporting units.

The rapid and severe impacts of the global COVID-19 pandemic, and more specifically the need to support global social distancing efforts, mitigating the spread of the virus, and comply with restrictions put in place by various governmental entities, led to our decision to cease all tours and to close our venues in mid-March.

As such actions will continue to have a material impact on our cash flows during the suspension of operations, we have performed qualitative and sensitivity reviews to assess whether we believed these actions caused the fair value of any of our reporting units to fall below its carrying value.

These qualitative and sensitivity reviews included discounted cash flow model sensitivity analyses, and a consideration of the impact from changes in financial forecasts, discount rates and carrying values.

The conclusion for all reporting units was that no impairment trigger existed that would require a further quantitative analysis during the six months ended June 30, 2020.

We are unable to predict how long the impacts from the global COVID-19 pandemic will impact our operations or what additional restrictions may be imposed by governments.

Significant variations from current expectations could impact future assessments resulting in future impairment charges.

The following table presents the changes in the carrying amount of goodwill in each of our reportable segments for the three months ended March 31, 2020:

The following table presents the changes in the carrying amount of goodwill in each of our reportable segments for the six months ended June 30, 2020:

Concerts Ticketing Sponsorship

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Foreign exchange ( 15,363 ) ( 1,062 ) ( 12,917 ) ( 29,342 )

Balance as of March 31, 2020:

Balance as of June 30, 2020:

Goodwill 1,244,770 767,445 435,789 2,448,004

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The significant components of operating lease expense are as follows:

Three Months Ended March 31,

Three Months Ended

June 30, Six Months Ended

2020 2019 2020 2019

(in thousands)

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Net lease cost $ 74,524 $ 78,286 $ 145,023 $ 135,039

Many of our leases contain contingent rent obligations based on revenue, tickets sold or other variables, while others include periodic adjustments to rent obligations based on the prevailing inflationary index or market rental rates.

Contingent rent obligations are not included in the initial measurement of the lease asset or liability and are recorded as rent expense in the period that the contingency is resolved.

In response to the global COVID-19 pandemic, we closed our venues in mid-March and the majority of those venues have remained closed throughout the second quarter.

As a result, our variable lease cost has declined during the three months and six months ended June 30, 2020.

Supplemental cash flow information for our operating leases is as follows:

Three Months Ended March 31,

Six Months Ended

(in thousands)

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Lease assets obtained in exchange for lease obligations, net of terminations $ 98,052 $ 128,175

Future maturities of our operating lease liabilities at March 31, 2020 are as follows:

Future maturities of our operating lease liabilities at June 30, 2020 are as follows:

(in thousands)

April 1 - December 31, 2020 $ 138,661

July 1 - December 31, 2020 $ 92,241

Thereafter 1,501,426

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Weighted average discount rate 6.05 % 5.75 %

As of March 31, 2020, we have additional operating leases that have not yet commenced with total lease payments of $ 233.0 million.

These operating leases, which are not included on our consolidated balance sheets, have commencement dates ranging from April 2020 to June 2030 with lease terms ranging from 1 to 21 years.

In response to the impacts we are experiencing from the global COVID-19 pandemic, we have begun negotiations with certain of our landlords for deferral or abatement of fixed rent payments.

As of June 30, 2020, we have additional operating leases that have not yet commenced with total lease payments of $ 198.7 million.

These operating leases, which are not included on our consolidated balance sheets, have commencement dates ranging from July 2020 to June 2030 with lease terms ranging from 1 to 21 years.

In response to the impacts we are experiencing from the global COVID-19 pandemic, we have amended certain of our lease agreements and are continuing negotiations with certain of our landlords for deferral or abatement of fixed rent payments.

These lease concessions are not expected to substantially increase our obligations under the respective lease agreements.

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NOTE 5— LONG-TERM DEBT

In February 2020, we issued $ 400 million principal amount of 2.0 % convertible senior notes due 2025.

A portion of the proceeds was used to pay fees of approximately $ 6.5 million, leaving approximately $ 393.5 million for general corporate purposes, including acquisitions.

During the first six months of 2020, we amended our senior secured credit facility, issued $ 1.2 billion principal amount of 6.5 % senior secured notes due 2027 and issued $ 400 million principal amount of 2.0 % convertible senior notes due 2025.

A portion of the proceeds were used to pay fees of approximately $ 33.9 million, leaving approximately $ 1.6 billion for general corporate purposes.

Our senior secured credit facility was further amended in July 2020 to, among other things, provide additional flexibility with our debt covenants.

The amendments to our senior secured credit facility, among other things, provide for (i) a new incremental revolving credit facility, (ii) substitution of the consolidated net leverage ratio covenant with a $ 500.0 million liquidity covenant (as defined in the agreement) until the earlier of (a) December 31, 2021 and (b) at our election, any fiscal quarter ending prior to December 31, 2021, (iii) annualization of consolidated EBITDA for the first three fiscal quarters in which the consolidated net leverage ratio covenant applies (as defined in the agreement), (iv) the reset of the consolidated net leverage ratio upon its resumption to 6.75 x with step downs to 6.25 x after four quarters, 5.75 x after eight quarters, 5.50 x after twelve quarters and 5.25 x after fourteen quarters through maturity, (v) adjustment of the applicable interest rate on the undrawn portion of the delayed draw term loan A and existing revolving credit facility, (vi) adjustment of the delayed draw term loan A and existing revolving credit facility commitment fees, (vii) temporary limits on our ability to make certain investments and incur additional indebtedness and liens for the period commencing on July 29, 2020 and ending on the date that we deliver our financial statements and compliance certificate for the first fiscal quarter in which the consolidated net leverage ratio covenant applies (such period, the “Restricted Period”) and (viii) temporary suspension of our ability to make certain voluntary restricted payments through the date on which we deliver a compliance certificate reflecting our compliance with the consolidated net leverage ratio (calculated without annualizing consolidated EBITDA).

Long-term debt, which includes capital leases, consisted of the following:

March 31, 2020 December 31, 2019

June 30, 2020 December 31, 2019

(in thousands)

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Term loan B $ 942,875 $ 947,625

6.5% Senior Secured Notes due 2027 1,200,000 —

4.75% Senior Notes due 2027 950,000 950,000

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Total long-term debt, net $ 4,831,088 $ 3,271,262

Future maturities of long-term debt at March 31, 2020 are as follows:

Future maturities of long-term debt at June 30, 2020 are as follows:

(in thousands)

April 1, 2020 - December 31, 2020 $ 32,027

July 1, 2020 - December 31, 2020 $ 52,393

Thereafter 3,381,839

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See Note 7—Fair Value Measurements for discussion of the fair value measurement of our long-term debt.

Amended Senior Secured Credit Facility

In April and July 2020, we amended our senior secured credit facility and now have (i) a $ 400 million delayed draw term loan A facility, (ii) a $ 950 million term loan B facility, (iii) a $ 500 million revolving credit facility and (iv) a $ 130 million incremental revolving credit facility.

The delayed draw term loan A facility is available to be drawn until October 2021.

In addition, subject to certain conditions, we have the right to increase such facilities by an amount equal to the sum of (x) $ 425 million during the Restricted Period and $ 855 million after the Restricted Period, (y) the aggregate principal amount of voluntary prepayments of the delayed draw term loan A and term loan B and permanent reductions of the revolving credit facility commitments, in each case, other than from proceeds of long-term indebtedness, and (z) except during the Restricted Period, additional amounts so long as the senior secured leverage ratio calculated on a pro-forma basis (as defined in the agreement) is no greater than 3.75 x.

The combined revolving credit facilities provide for borrowings up to $ 630 million with sublimits of up to (i) $ 150 million for the issuance of letters of credit, (ii) $ 50 million for swingline loans, (iii) $ 300 million for borrowings in Dollars, Euros or British Pounds and (iv) $ 100 million for borrowings in those or one or more other approved currencies.

The amended senior secured credit facility is secured by a first priority lien on substantially all of the tangible and intangible personal property of LNE and LNE’s domestic subsidiaries that are guarantors, and by a pledge of substantially all of the shares of stock, partnership interests and limited liability company interests of our direct and indirect domestic subsidiaries and 65 % of each class of capital stock of any first-tier foreign subsidiaries, subject to certain exceptions.

The interest rates per annum applicable to revolving credit facility loans and the delayed draw term loan A under the amended senior secured credit facility are, at our option, equal to either Eurodollar plus 2.25 % or a base rate plus 1.25 %.

The interest rates per annum applicable to the term loan B are, at our option, equal to either Eurodollar plus 1.75 % or a base rate plus 0.75 %.

The interest rates per annum applicable to the incremental revolving credit facility are, at our option, equal to either Eurodollar plus 2.5 % or a base rate plus 1.5 %.

We are required to pay a commitment fee of 0.5 % per year on the undrawn portion available under the revolving credit facility and delayed draw term loan A, 1.75 % per year on the undrawn portion available under the incremental revolving credit facility and variable fees on outstanding letters of credit.

For the delayed draw term loan A, we are required to make quarterly payments at a rate ranging from 0.625 % of the original principal amount during the first three years to 1.25 % during the last two years, with the balance due at maturity in October 2024.

For the term loan B, we are required to make quarterly payments of $ 2.4 million with the balance due at maturity in October 2026.

Both the existing and incremental revolving credit facilities mature in October 2024.

We are also required to make mandatory prepayments of the loans under the amended credit agreement, subject to specified exceptions, from excess cash flow and with the proceeds of asset sales, debt issuances and specified other events.

There were no borrowings under the revolving credit facilities as of June 30, 2020 and we have not drawn down on the delayed draw term loan A.

Based on our outstanding letters of credit of $ 64.5 million, $ 965.5 million was available for future borrowings from our delayed draw term loan A and revolving credit facilities.

6.5% Senior Secured Notes Due 2027

In May 2020, we issued $ 1.2 billion principal amount of 6.5 % senior secured notes due 2027.

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, 2020, and will mature on May 15, 2027.

We may redeem some or all of the notes, at any time prior to May 15, 2023, 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.

We may redeem up to 35 % of the aggregate principal amount of the notes from the proceeds of certain equity offerings prior to May 15, 2023, at a price equal to 106.5 % of the aggregate principal amount, plus accrued and unpaid interest thereon, if any, to the date of redemption.

In addition, on or after May 15, 2023 we may redeem some or all of the notes at any time at redemption prices starting at 104.875 % of their principal amount, plus any accrued and unpaid interest to the date of redemption.

We must make an offer to redeem the notes at 101 % of their aggregate principal amount, plus accrued and unpaid interest to the repurchase date, if we experience certain defined changes of control.

The notes are secured by a first priority lien on substantially all of the tangible and intangible personal property of LNE and LNE’s domestic subsidiaries that are guarantors, and by a pledge of substantially all of the shares of stock, partnership interests and limited liability company interests of our direct and indirect domestic subsidiaries and 65% of each class of capital stock of any first-tier foreign subsidiaries, subject to certain exceptions.

2.0% Convertible Senior Notes Due 2025

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The notes will mature on February 15, 2025.

The notes will be convertible, under certain circumstances, until November 15, 2024, and on or after such date without condition, at an initial conversion rate of 9.4469 shares of our common stock per $1,000 principal amount of notes, subject to adjustment, which represents a 50.0 % conversion premium based on the last reported sale price for our common stock of $ 70.57 on January 29, 2020 prior to issuing the debt.

Upon conversion, the notes may be settled in shares of common stock or, at our election, cash or a combination of cash and shares of common stock.

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The carrying amount of the equity component of the notes is $ 33.9 million, which is treated as a debt discount, and the principal amount of the liability component (face value of the notes) is $ 400 million.

As of March 31, 2020, the remaining period for the unamortized debt discount balance of $ 32.8 million was approximately five years and the value of the notes, if converted and fully settled in shares, did not exceed the principal amount of the notes.

As of March 31, 2020, the effective interest rate on the liability component of the notes was 4.3 %.

As of June 30, 2020, the remaining period for the unamortized debt discount balance of $ 31.2 million was approximately five years and the value of the notes, if converted and fully settled in shares, did not exceed the principal amount of the notes.

As of June 30, 2020, the effective interest rate on the liability component of the notes was 4.3 %.

The following table summarizes the amount of pre-tax interest cost recognized on the notes:

Three Months Ended March 31, 2020

Three Months Ended

June 30, 2020 Six Months Ended June 30, 2020

(in thousands)

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The principal objective of this contract is to reduce the variability of the cash flow in our variable rate interest payments associated with our senior secured credit facility term loan B, thus reducing the impact of interest rate changes on future interest expense.

As of March 31, 2020, there is no ineffective portion or amount excluded from effectiveness testing.

Cash flows associated with the interest rate swap agreement are reflected as cash flows from operating activities within our consolidated statements of cash flows.

As of June 30, 2020, there is no ineffective portion or amount excluded from effectiveness testing.

As a cash flow hedge, the effective portion of the loss on the derivative instrument was reported as a component of other comprehensive loss.

Amounts are deferred in other comprehensive loss and reclassified into earnings in the same line item associated with the forecasted transaction in the period or periods during which the hedged transaction affects earnings.

During the three months ended March 31, 2020 we recorded an unrealized loss of $ 30.8 million as a component of other comprehensive loss related to this hedge.

During the three and six months ended June 30, 2020, we recorded unrealized losses of $ 5.8 million and $ 36.6 million, respectively, as a component of other comprehensive loss related to this hedge.

Based on the current interest rate expectations, we estimate that approximately $ 7.5 million of this loss in other comprehensive loss will be reclassified into earnings in the next 12 months as an adjustment to interest expense.

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Estimated Fair Value

March 31, 2020 December 31, 2019

June 30, 2020 December 31, 2019

Level 1 Level 2 Total Level 1 Level 2 Total

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Our debt is not publicly traded and the carrying amounts typically approximate fair value for debt that accrues interest at a variable rate, which are considered to be Level 2 inputs as defined in the FASB guidance.

The following table presents the estimated fair values of our senior notes and convertible senior notes:

The following table presents the estimated fair values of our senior secured notes, senior notes and convertible senior notes:

Estimated Fair Value at

March 31, 2020 December 31, 2019

June 30, 2020 December 31, 2019

(in thousands)

6.5% Senior Secured Notes due 2027 $ 1,235,304 $ —

4.75% Senior Notes due 2027 $ 823,223 $ 983,735

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Non-recurring

The following table shows the fair value of our financial assets that have been adjusted to fair value on a non-recurring basis, which had a significant impact on our results of operations for the three months ended March 31, 2020.

Fair Value Measurements Using

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Definite-lived intangible assets, net $ 6,919 $ — $ — $ 6,919 $ 12,063

During the three months ended March 31, 2020, we recorded impairment charges related to definite-lived intangible assets of $ 10.1 million as a component of depreciation and amortization.

During the six months ended June 30, 2020, we recorded impairment charges related to definite-lived intangible assets of $ 12.1 million as a component of depreciation and amortization.

The impairment charges are primarily related to intangible assets for revenue-generating contracts in the Concerts segment.

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The parties reached a settlement and the case was dismissed with prejudice in November 2019.

In April 2019, the court granted the defendants’ motion to compel arbitration of the Lee lawsuit and dismissed the case.

Lee subsequently appealed the District Court’s ruling to the Ninth Circuit.

In April 2019, the court

granted the defendants’ motion to compel arbitration of the Lee lawsuit and dismissed the case.

Lee subsequently appealed the District Court’s ruling to the Ninth Circuit, and in June 2020 the Ninth Circuit affirmed the District Court’s ruling in the defendants’ favor.

The Gaetano lawsuit was voluntarily dismissed with prejudice by the plaintiff in April 2019.

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The complaints seek a variety of remedies, including unspecified compensatory damages, punitive damages, restitution, injunctive relief and attorneys’ fees and costs.

Based on information presently known to management, we do not believe that a loss is probable of occurring at this time, and believe that the potential liability, if any, will not have a material adverse effect on our financial condition, cash flows or results of operations.

Further, we do not currently believe that the claims asserted in these lawsuits have merit, and considerable uncertainty exists regarding any monetary damages that will be asserted against us.

We intend to vigorously defend these actions.

CIE Arbitration

In July 2019, Ticketmaster New Ventures, S.

(“TNV”), an indirect wholly-owned subsidiary of LNE, entered into agreements with Corporación Interamericana de Entretenimiento, S.A.B.

(“CIE”) and Grupo Televisa, S.A.B.

(“TV”) to acquire an aggregate 51% interest in OCESA Entretenimiento, S.A.

(“OCESA”) and certain other related subsidiaries of CIE.

We made our initial concentration notice filings with the regulatory authorities in Mexico in late August 2019 and received approval for the transaction in mid-April 2020.

CIE shareholders approved the acquisition in September 2019.

In May 2020, we notified CIE that we were terminating our agreement with it as a result of CIE’s failure to comply with its contractual obligation to continue operating the target companies in the ordinary course of business and the occurrence of a material adverse effect (as that term is defined in the CIE purchase agreement).

We simultaneously notified TV that we were terminating our agreement with it, which agreement may be terminated if the agreement with CIE is terminated for any reason.

On May 25, 2020, TNV commenced binding arbitration proceedings, seated in New York, New York, before the International Court of Arbitration of the International Chamber of Commerce, seeking a declaratory judgment that it properly terminated the CIE purchase agreement and that any obligations thereunder are excused on the grounds set forth above, among others.

On July 30, 2020, CIE filed its response to TNV’s claims, asserting, among other things, that CIE did not breach its obligation to continue operating the target companies in the ordinary course of business and that no material adverse effect (as that term is defined in the CIE purchase agreement) has occurred, and CIE joined LNE as a party to the arbitration proceedings as a joint obligor under the CIE purchase agreement.

CIE is seeking specific performance to require us to proceed with closing under the CIE purchase agreement and damages in an unspecified amount arising from our alleged failure to timely close.

We intend to vigorously defend these claims.

NOTE 9— EQUITY

Accumulated Other Comprehensive Loss

The following table presents changes in the components of AOCI, net of taxes, for the three months ended March 31, 2020:

The following table presents changes in the components of AOCI, net of taxes, for the six months ended June 30, 2020:

Loss on Cash Flow Hedge Foreign Currency Items Total

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( 36,596 ) ( 62,849 ) ( 99,445 )

Amount reclassified from AOCI 1,353 — 1,353

Net other comprehensive loss ( 35,243 ) ( 62,849 ) ( 98,092 )

Balance at March 31, 2020 $ ( 30,831 ) $ ( 228,495 ) $ ( 259,326 )

Balance at June 30, 2020 $ ( 35,243 ) $ ( 208,562 ) $ ( 243,805 )

See Note 7—Fair Value Measurements for further discussion and disclosure of the fair value of our interest rate swap that has been designated as a cash flow hedge.

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The calculation of diluted net income (loss) per common share includes the effects of the assumed exercise of any outstanding stock options, the assumed vesting of shares of restricted and deferred stock awards and the assumed conversion of our convertible senior notes, where dilutive.

For the three months ended March 31, 2020 and 2019, there were no reconciling items to the weighted average common shares outstanding in the calculation of diluted net income (loss) per common share.

The following table sets forth the computation of weighted average common shares outstanding:

Three Months Ended

June 30, Six Months Ended

2020 2019 2020 2019

(in thousands)

Weighted average common shares—basic 211,693,923 209,998,048 211,371,109 209,456,196

Effect of dilutive securities:

Stock options and restricted stock — 9,636,873 — 9,651,155

Convertible senior notes — 342,691 — —

Weighted average common shares—diluted 211,693,923 219,977,612 211,371,109 219,107,351

The following table shows securities excluded from the calculation of diluted net income (loss) per common share because such securities are anti-dilutive:

Three Months Ended

June 30, Six Months Ended

2020 2019 2020 2019

Options to purchase shares of common stock 10,197,507 486,849 10,197,507 486,849

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NOTE 10— REVENUE RECOGNITION

The global COVID-19 pandemic has significantly impacted the recognition of revenue for our Concerts and Ticketing segments.

In mid-March, we temporarily ceased all of our tours and closed our venues to support global efforts at social distancing to mitigate the spread of the virus, and to comply with restrictions put in place by various governmental entities.

For our Concerts segment, the impact is primarily a delay in the timing of revenue recognition as many events are being rescheduled to dates later in the year or further out into 2021.

For events that have been cancelled as of March 31, 2020, the deferred revenue has been reclassified to accrued expenses on our consolidated balance sheets where not already refunded to the fan.

The global COVID-19 pandemic has significantly impacted the recognition of revenue for our Concerts, Ticketing and Sponsorship & Advertising segments.

Beginning in mid-March, we ceased all of our tours and closed our venues to support global efforts at social distancing to mitigate the spread of the virus, and to comply with restrictions put in place by various governmental entities.

For our Concerts segment, the impact is primarily a delay in the timing of revenue recognition as many events are being rescheduled to dates in 2021.

For events that have been cancelled as of June 30, 2020, the deferred revenue has been reclassified to accrued expenses on our consolidated balance sheets where not already refunded to the fan.

In certain markets, we are offering fans an incentive to receive a voucher for a future ticket purchase to one of our events in lieu of receiving a refund for the cancelled event.

Where a fan has elected to receive the incentive voucher, the cash from the original ticket purchase remains in deferred revenue.

For certain of our rescheduled events, we are offering a limited refund window for fans to request a refund.

Where a fan has elected to receive a refund for a rescheduled event and where we have estimated future refunds, the deferred revenue has been reclassified to accrued expenses if not already refunded.

The estimate of future refunds was developed by allocating our event-related deferred revenue based on where we estimated that the affected events were in the refund process as of June 30, 2020, and applying a venue-specific refund take rate.

The venue-specific refund take rates were based on the refunds we have issued through the end of the current reporting period since we ceased all our tours and closed our venues in mid-March.

For our Ticketing segment, the impact is similar to the Concerts segment if the tickets sold for an event are controlled by our concert promoters.

For the Ticketing segment’s third-party clients, previously recognized service charges are reversed from revenue when the event is cancelled, including events cancelled after the balance sheet date but prior to the filing of our financial statements.

For the Ticketing segment’s third-party clients, previously recognized service charges are reversed from revenue when the event is cancelled or a refund is issued for a rescheduled event, including refunds issued after the balance sheet date but prior to the filing of our financial statements.

The revenue reversal is reflected as accrued expenses on our consolidated balance sheets where not already refunded to the fan.

Concerts revenue, including intersegment revenue, for the three months ended March 31, 2020 and 2019 are as follows:

The timing of our third-party clients’ event cancellations and rescheduling of postponed events or having new events available for sale can result in refunds of service charges exceeding current quarter sales resulting in negative revenue for that period.

For our Sponsorship & Advertising segment, the impact is primarily a delay in the timing of revenue recognition due to our concert events being rescheduled, our venues being closed and the limited number of events currently available for sale on our websites.

In response to the impacts we are experiencing from the global COVID-19 pandemic, we have amended or are continuing negotiations with certain of our sponsors to either provide additional benefits when our venues reopen and our concert events resume or extend the term of the agreement with no additional benefits to the sponsor.

Concerts revenue, including intersegment revenue, for the three and six months ended June 30, 2020 and 2019 are as follows:

Three Months Ended

June 30, Six Months Ended

2020 2019 2020 2019

(in thousands)

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Percentage of consolidated revenue * 83.6 % 78.8 % 81.0 %

* Percentage is not meaningful.

Our Concerts segment generates revenue from the promotion or production of live music events and festivals in our owned or operated venues and in rented third-party venues, artist management commissions and the sale of merchandise for music artists at events.

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The majority of consideration for our Concerts segment is collected in advance of or on the day of the event.

Consideration received in advance of the event is recorded as deferred revenue.

Consideration received in advance of the event is recorded as deferred revenue or in other long-term liabilities if the event is more than twelve months from the balance sheet date.

Any consideration not collected by the day of the event is typically received within three months after the event date.

Ticketing revenue, including intersegment revenue, for the three months ended March 31, 2020 and 2019 are as follows:

Ticketing revenue, including intersegment revenue, for the three and six months ended June 30, 2020 and 2019 are as follows:

Three Months Ended

June 30, Six Months Ended

2020 2019 2020 2019

(in thousands)

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Percentage of consolidated revenue * 11.7 % 13.7 % 14.5 %

* Percentage is not meaningful.

Ticket fee revenue is generated from convenience and order processing fees, or service charges, charged at the time a ticket for an event is sold in either the primary or secondary markets.

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The majority of ticket fee revenue is collected within the month of the ticket sale.

Revenue received from the sale of tickets in advance of our concert

events is recorded as deferred revenue.

Reported revenue is net of any refunds made or committed to during the period and also the impact of any cancellations of events that occurred during the period and up to the time of filing these financial statements.

Revenue received from the sale of tickets in advance of our concert events is recorded as deferred revenue or in other long-term liabilities if the date of the event is more than twelve months from the balance sheet date.

Reported revenue is net of any refunds made or committed to and also the impact of any cancellations of events that occurred during the period and up to the time of filing these financial statements.

Ticketing contract advances, which can be either recoupable or non-recoupable, represent amounts paid in advance to our clients pursuant to ticketing agreements and are reflected in prepaid expenses or in long-term advances if the amount is expected to be recouped or recognized over a period of more than twelve months.

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Non-recoupable ticketing contract advances, excluding those amounts paid to support clients’ advertising costs, are fixed additional incentives occasionally paid by us to certain clients to secure the contract and are typically amortized over the life of the contract on a straight-line basis as a reduction to revenue.

At March 31, 2020 and December 31, 2019, we had ticketing contract advances of $ 81.5 million and $ 100.9 million, respectively, recorded in prepaid expenses and $ 96.1 million and $ 105.7 million, respectively, recorded in long-term advances on the consolidated balance sheets.

We amortized $ 18.8 million and $ 17.2 million for the three months ended March 31, 2020 and 2019, respectively, related to non-recoupable ticketing contract advances.

At June 30, 2020 and December 31, 2019, we had ticketing contract advances of $ 67.7 million and $ 100.9 million, respectively, recorded in prepaid expenses and $ 96.0 million and $ 105.7 million, respectively, recorded in long-term advances on the consolidated balance sheets.

We amortized $ 13.3 million and $ 17.0 million for the three months ended June 30, 2020 and 2019, respectively, and $ 32.1 million and $ 34.3 million for the six months ended June 30, 2020 and 2019, respectively, related to non-recoupable ticketing contract advances.

Sponsorship & Advertising

Sponsorship & Advertising revenue, including intersegment revenue, for the three months ended March 31, 2020 and 2019 are as follows:

Sponsorship & Advertising revenue, including intersegment revenue, for the three and six months ended June 30, 2020 and 2019 are as follows:

Three Months Ended

June 30, Six Months Ended

2020 2019 2020 2019

(in thousands)

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Our Sponsorship & Advertising segment generates revenue from sponsorship and marketing programs that provide its sponsors with strategic, international, national and local opportunities to reach customers through our venue, concert and ticketing assets, including advertising on our websites.

These programs can also include custom events or programs for the sponsors’ specific brands, which are typically experienced exclusively by the sponsors’ customers.

These programs can also include custom events or programs for the

sponsors’ specific brands, which are typically experienced exclusively by the sponsors’ customers.

Sponsorship agreements may contain multiple elements, which provide several distinct benefits to the sponsor over the term of the agreement, and can be for a single or multi-year term.

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Revenue is collected in installment payments during the year, typically in advance of providing the benefit or the event.

Revenue received in advance of the event or the sponsor receiving the benefit is recorded as deferred revenue.

At March 31, 2020, we had contracted sponsorship agreements with terms greater than one year that had approximately $ 1.0 billion of revenue related to future benefits to be provided by us.

We expect to recognize, based on current projections, approximately 29 %, 28 %, 17 % and 26 % of this revenue in the remainder of 2020, 2021, 2022 and thereafter, respectively.

Revenue received in advance of the event or the sponsor receiving the benefit is recorded as deferred revenue or in other long-term liabilities if the date of the event is more than twelve months from the balance sheet date.

At June 30, 2020, we had contracted sponsorship agreements with terms greater than one year that had approximately $ 941.4 million of revenue related to future benefits to be provided by us.

We expect to recognize, based on current projections and expectations of our business resuming, approximately 6 %, 35 %, 24 % and 35 % of this revenue in the remainder of 2020, 2021, 2022 and thereafter, respectively.

Deferred Revenue

The majority of our deferred revenue is classified as current and is shown as a separate line item on the consolidated balance sheets.

The majority of our deferred revenue is typically classified as current and is shown as a separate line item on the consolidated balance sheets.

Deferred revenue that is not expected to be recognized within the next twelve months is classified as long-term and reflected in other long-term liabilities on the consolidated balance sheets.

We had current deferred revenue of $ 1.4 billion and $ 1.2 billion at December 31, 2019 and 2018, respectively.

The table below summarizes the amount of deferred revenue from December 31 recognized during the three months ended March 31, 2020 and 2019:

The table below summarizes the amount of current deferred revenue from December 31 recognized during the three and six months ended June 30, 2020 and 2019:

Three Months Ended

June 30, Six Months Ended

2020 2019 2020 2019

(in thousands)

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$ 19,227 $ 585,562 $ 309,177 $ 900,089

As of March 31, 2020, approximately 4 % of the deferred revenue balance from December 31, 2019 is expected to be recognized in 2021 and thus such amounts remain in deferred revenue, and approximately 3 % of the balance has been or will be refunded to fans as the corresponding events have been cancelled, and thus such amounts have been reclassified to accrued expenses if not already refunded.

As of June 30, 2020, approximately 32.9 % of the current deferred revenue balance from December 31, 2019 is expected to be recognized in 2021 and thus such amounts remain in current deferred revenue or have been reclassified to long-term deferred revenue.

In addition, as of June 30, 2020, approximately 22.9 % of the current deferred revenue balance from December 31, 2019 has been or is expected to be refunded to fans as the corresponding events have been cancelled or refunds are expected to be requested for rescheduled events, and thus such amounts have been reclassified to accrued expenses if not already refunded.

As the global COVID-19 pandemic continues to further delay our ability to resume our concert events and reopen our venues, our long-term deferred revenue balance has increased.

We had long-term deferred revenue of $ 591.5 million and $ 34.4 million at June 30, 2020 and December 31, 2019, respectively, which is reflected in other long-term liabilities on the consolidated balance sheets.

NOTE 11— STOCK-BASED COMPENSATION

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

Three Months Ended

June 30, Six Months Ended

2020 2019 2020 2019

(in thousands)

Selling, general and administrative expenses $ 30,249 $ 5,458 $ 35,212 $ 11,045

Corporate expenses 8,289 6,263 15,058 13,881

Total $ 38,538 $ 11,721 $ 50,270 $ 24,926

The increase in stock-based compensation expense for the three and six months ended June 30, 2020 as compared to the same periods of the prior year is primarily due to the issuance of restricted stock in the second quarter of 2020 in lieu of cash payments due for certain compensation owed to employees, as part of our cash savings initiative in connection with the global COVID-19 pandemic.

NOTE 12— SEGMENT DATA

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Accordingly, segment assets are not reported to, or used by, our management to allocate resources to or assess performance of our segments, and therefore, total segment assets have not been presented.

The following table presents the results of operations for our reportable segments for the three months ended March 31, 2020 and 2019:

The following table presents the results of operations for our reportable segments for the three and six months ended June 30, 2020 and 2019:

Concerts Ticketing Sponsorship

& Advertising Other Corporate Eliminations Consolidated

Three Months Ended March 31, 2020

(in thousands)

Three Months Ended June 30, 2020

Revenue $ 141,823 $ ( 87,019 ) $ 18,372 $ 805 $ — $ 103 $ 74,084

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Depreciation and amortization 64,342 44,313 7,620 4,385 2,107 — 122,767

Loss (gain) on disposal of operating assets 561 ( 1 ) — ( 1 ) — — 559

Corporate expenses — — — — 20,916 — 20,916

Operating income (loss) $ ( 279,851 ) $ ( 267,193 ) $ ( 11,217 ) $ ( 6,783 ) $ ( 23,023 ) $ — $ ( 588,067 )

Intersegment revenue $ ( 136 ) $ 33 $ — $ — $ — $ 103 $ —

Concerts Ticketing Sponsorship

& Advertising Other Corporate Eliminations Consolidated

(in thousands)

Three Months Ended June 30, 2019

Revenue $ 2,639,531 $ 370,765 $ 151,537 $ 790 $ — $ ( 5,614 ) $ 3,157,009

Direct operating expenses 2,186,767 120,630 25,631 — — ( 5,614 ) 2,327,414

Selling, general and administrative expenses 338,054 146,382 28,169 892 — — 513,497

Depreciation and amortization 54,219 39,513 6,374 138 3,582 — 103,826

Loss (gain) on disposal of operating assets ( 210 ) 109 — — — — ( 101 )

Corporate expenses — — — — 40,787 — 40,787

Operating income (loss) $ 60,701 $ 64,131 $ 91,363 $ ( 240 ) $ ( 44,369 ) $ — $ 171,586

Intersegment revenue $ 2,131 $ 3,483 $ — $ — $ — $ ( 5,614 ) $ —

Six Months Ended June 30, 2020

Revenue $ 1,135,216 $ 197,258 $ 108,633 $ 1,601 $ — $ ( 2,931 ) $ 1,439,777

Direct operating expenses 933,122 112,464 25,722 — — ( 2,931 ) 1,068,377

Selling, general and administrative expenses 505,830 285,357 40,770 5,416 — — 837,373

Depreciation and amortization 136,558 82,489 15,132 4,438 6,230 — 244,847

Loss on disposal of operating assets 688 1 — — — — 689

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Capital expenditures $ 83,485 $ 39,237 $ 2,679 $ — $ 5,542 $ — $ 130,943

Three Months Ended March 31, 2019

Six Months Ended June 30, 2019

Revenue $ 3,957,648 $ 708,407 $ 226,615 $ 1,581 $ — $ ( 9,414 ) $ 4,884,837

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Depreciation and amortization 105,580 76,903 13,448 259 6,548 — 202,738

Gain on disposal of operating assets ( 145 ) ( 2 ) — — — — ( 147 )

Loss (gain) on disposal of operating assets ( 355 ) 107 — — — — ( 248 )

Corporate expenses — — — — 77,243 — 77,243

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Capital expenditures $ 78,873 $ 48,745 $ 3,301 $ — $ 9,231 $ — $ 140,150

NOTE 12— SUBSEQUENT EVENT

Amended Senior Secured Credit Facility

In April 2020, we amended our senior secured credit facility, which among other things, provides for:

(i) a new $ 130 million incremental revolving credit facility, with the potential to increase the amount of such facility to $ 150 million if additional commitments are received on or before May 2020;

(ii) substitution of the consolidated net leverage ratio covenant with a liquidity covenant (as defined in the agreement) for the fiscal quarters ending June 30, 2020 and September 30, 2020 that requires our consolidated liquidity be at least $ 500 million at the end of such fiscal quarters;

(iii) substitution of consolidated EBITDA (as defined in the agreement) for the second and third quarters of 2020 with consolidated EBITDA from the second and third quarters of 2019, respectively, for purposes of calculating the consolidated net leverage ratio covenant for the fourth quarter of 2020 through the second quarter of 2021;

(iv) adjustment of the applicable interest rate for delayed draw term loan A and existing revolving credit facility to 2.25 % per annum for Eurodollar rate loans and 1.25 % per annum for base rate loans;

(v) adjustment of the commitment fee on the undrawn portion of the delayed draw term loan A and existing revolving credit facility to 0.50 % per year;

and (vi) temporary suspension of our ability to make certain voluntary restricted payments until (x) the date that we deliver our compliance certificate and annual financial statements for the fiscal year ending December 31, 2020 with respect to payments or prepayments of principal on, or redemptions, repurchases or acquisitions of certain of our indebtedness and (y) September 30, 2021 with respect to other voluntary restricted payments.

The interest rates per annum applicable to the incremental revolving credit facility are, at our option, equal to either Eurodollar plus 2.5 % or a base rate plus 1.5 %.

We are required to pay a commitment fee of 1.75 % per year on the undrawn portion available under the incremental revolving credit facility.

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 1. Financial Statements