What changed in this filing

/stocks — the workspaceLOADING

Item 2. Management’s Discussion and Analysis

2020-08-05 compared with 2020-05-07 · 233 added, 131 removed, 314 unchanged (54% of the section changed)

15 unchanged sentences

Executive Overview

In the first two months of 2020, our key pacing metrics indicated we would have another very successful year, with growth across our concerts, ticketing and sponsorship segments.

Confirmed shows, ticket sales, and contracted sponsorship revenue were all up double-digits year-over-year.

However, as the unprecedented 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 spread of the virus, and to comply with restrictions put in place by various governmental entities.

As a result, our first quarter results were materially impacted by these necessary actions.

Our overall revenue for the quarter decreased by 21% to $1.4 billion on a reported basis, representing a 20% decline on a constant-currency basis.

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 ticket sales for future shows considerably slowing during the same period along with 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 million of definite-lived intangible assets impairment charges.

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.

Due to the global COVID-19 pandemic, we ceased all Live Nation tours and closed all our venues beginning in mid-March to support global efforts to mitigate the spread of the virus.

To ensure the safety of our artists, fans, and employees, we held no traditional events in the second quarter and had minimal ticket sales.

As a result, our overall revenue for the quarter decreased by 98%, from $3.2 billion to $74 million on a reported basis.

On a constant currency basis, our second quarter revenue was $80 million, which represents a 97% reduction compared to last year.

The revenue reduction was largely in our Concerts and Ticketing segments as a result of almost no shows occurring globally in the quarter and ticket sales for future shows sharply declining given the uncertainty around when live events will return.

Our Ticketing revenue was also impacted by refunds for cancelled and postponed events.

The pandemic led to an operating loss for the quarter of $588 million compared to operating income of $172 million for the second quarter of last year.

For the first six months of 2020, our total revenue decreased by $3.4 billion, or 71%, on a reported basis as compared to last year.

The change was the same without the impact of foreign exchange rates.

The revenue impact of the global COVID-19 pandemic for the first six months was partially offset by normal operations from January through mid-March, when it appeared we were on track for another record year.

Our year-to-date operating loss of $761 million was partially mitigated by the results for the first two and a half months of the year plus our cost savings initiatives, which began at the end of March and generated over $275 million of fixed cost savings for the second quarter compared to our plan just prior to the onset of the global COVID-19 pandemic.

While the unparalleled disruption of the pandemic has had a material impact on our business, as the leading global live event and ticketing company, we still firmly 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.

Our Concerts segment revenue decreased 25% on a reported basis, or 24% on a constant-currency basis, largely due to the impact of the global COVID-19 pandemic.

Show count for the quarter was down 14% compared to last year while the number of fans attending our concert events decreased by 30% in the quarter to just over 10 million, with the biggest shortfalls in our arena and theater and club businesses.

Concerts operating loss increased for the quarter largely due to lost business resulting from COVID-19 and from sunk costs associated with shows cancelled and rescheduled due to the pandemic.

By the end of the first quarter of 2020, Concerts had processed cancellations on 1,500 shows, 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.

Our Ticketing segment revenue decreased 16% on a reported basis, or 15% on a constant-currency basis.

The revenue decline largely came from a reduction in primary and secondary ticket sales globally as a result of the global COVID-19 pandemic.

Fee-bearing tickets were down 13.8 million tickets for the quarter, a reduction of 28%.

Operating results for the quarter declined, largely from the reduction in primary and resale activity as well as refunds processed or accrued for cancelled events for third-party clients.

Our Sponsorship & Advertising segment revenue increased by 20% on a reported basis, or 22% on a constant-currency basis.

The growth was driven by higher sponsorship revenue in North America from new deals contracted in the past year and expanded ticketing integration projects and clients.

There was a small impact to our Sponsorship business from the global COVID-19 pandemic resulting from the loss of some festival sponsorship expected in March.

We remain optimistic about the long-term potential of our Company and the unique power of live shows to unite people.

We are currently focused on the welfare of our employees and taking steps to mitigate the financial impact of the shutdown.

We are undertaking cost-savings initiatives across the organization, including salary reductions, hiring freezes, furloughs, as well as eliminating costs including the use of consultants, travel and entertainment and repairs and maintenance for our facilities.

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 and once again connect audiences to artists at the concerts they are looking forward to.

Our Concerts segment revenue for the quarter decreased by $2.5 billion, or 95%, on a reported and constant currency basis as compared to last year.

The unfavorable results were almost entirely due to the impact of the global COVID-19 pandemic.

Show count for the quarter was down 99% compared to last year to 131 events, which included a few socially

distanced club shows in Europe and Asia and some drive-in concert events in Denmark.

A total of 49 thousand fans attended these shows.

Concerts operating loss increased for the quarter largely due to lost business resulting from the global COVID-19 pandemic and from sunk costs, such as advertising expenses, associated with shows cancelled or rescheduled to 2021 due to the pandemic.

For the first six months, our Concerts segment revenue decreased by $2.8 billion, or 71%, on a reported and constant currency basis.

By the end of the second quarter of 2020, Concerts 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.

Our Ticketing segment revenue fell below zero for the quarter as a result of refunds being processed for tickets that were sold in previous quarters.

Second quarter revenue was $(87) million, compared to $371 million for the second quarter last year on a reported and constant currency basis.

Before refunds, our fee-bearing tickets were 2.0 million for the quarter, a reduction of 51.3 million tickets, or 96%, compared to last year.

A total of 10.7 million tickets were refunded in the quarter, amounting to just slightly over $1.1 billion of gross transaction value.

The decline in operating results for the quarter was largely driven by the lack of ticket sales as well as refunds processed for cancelled and rescheduled events.

For the first six months, our Ticketing segment revenue fell by $0.5 billion, or 72%, on a reported and constant currency basis.

Before refunds, we had sold 44.7 million fee-bearing tickets year-to-date, a reduction of 57% compared to the first half of 2019.

A total of 17.2 million tickets have been refunded year-to-date, amounting to nearly $1.8 billion of gross transaction value.

Our Sponsorship & Advertising segment revenue for the quarter decreased by $133 million, or 88%, on a reported and constant currency basis as compared to last year.

For the first six months, our Sponsorship & Advertising segment revenue decreased by $118 million, or 52%, on a reported basis as compared to last year, or $116 million, a 51% decrease, on a constant currency basis.

After a very strong performance for the first 10 weeks of the year, there has been a significant reduction to Sponsorship & Advertising revenue and operating results due to the lack of shows and ticket sales resulting from the global COVID-19 pandemic.

We are currently focused on the welfare of our employees and mitigating the financial impact of the shutdown.

We have undertaken cost-savings initiatives across the organization, including salary reductions, hiring freezes, furloughs, as well as eliminating costs for consultants, travel and entertainment and repairs and maintenance for our facilities.

We are also protecting our liquidity by tightly managing cash outflows associated with all of our major expenditures:

operating expenses, capital expenditures, and advances in both our ticketing and concert business.

We believe our aggressive cost-savings and cash management programs, combined with a strong liquidity profile, position Live Nation to manage through the global COVID-19 and its impact on live events and provides us the flexibility to scale-up quickly when our shows re-start.

operating expenses, capital expenditures, acquisitions, and advances in both our ticketing and concert businesses.

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

Currently, we do not anticipate a significant change in activity levels through the remainder of the year.

The magnitude and pace of the recovery will depend on each market and their containment efforts, the nature of the events being held, and ongoing efforts to develop effective treatments and/or vaccines for COVID-19.

We remain optimistic about the long-term potential of our company and the unique power of live shows to unite people.

We believe our aggressive cost-savings and cash management programs, combined with a strong liquidity profile, position Live Nation to manage through the global COVID-19 pandemic and its impact on live events and provides us the flexibility to scale up quickly when our shows resume.

We were incorporated in Delaware on August 2, 2005 in preparation for the contribution and transfer by Clear Channel Communications, Inc.

4 unchanged sentences

changed its name to Live Nation Entertainment, Inc.

Recent Events

In July 2019, we entered into agreements to acquire an aggregate 51% interest in OCESA Entretenimiento, S.A.

(“OCESA”) and certain other related subsidiaries of Corporación Interamericana de Entretenimiento, S.A.B.

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.

Closing of the transaction on the previously agreed terms is uncertain as we continue to evaluate the impact of the global COVID-19 pandemic on OCESA’s business and operations and our rights under the purchase agreements governing the transaction.

We are currently in discussions with CIE and Grupo Televisa, S.A.B.

regarding the timing and terms of the deal and have entered into a standstill agreement with them to facilitate those discussions.

We have reserved all of our rights under the purchase agreements and applicable law in connection therewith.

Segment Overview

2 unchanged sentences

While our Concerts segment operates year-round traditionally, we experience higher revenue during the second and third quarters due to the seasonal nature of shows at our outdoor amphitheaters and festivals, which primarily occur from May through October.

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.

Revenue and related costs for events are generally deferred and recognized when the event occurs.

Due to the unprecedented stoppage of our concert 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.

Revenue and related costs for events are

generally deferred and recognized when the event occurs.

All advertising costs incurred during the year for shows in future years are expensed at the end of the year.

If a current year event is rescheduled into a future year, all advertising costs incurred to date are expensed in the period when the event is rescheduled.

Concerts direct operating expenses include artist fees, event production costs, show-related marketing and advertising expenses, along with other costs.

To judge the health of our Concerts segment, we primarily monitor the number of confirmed events and fan attendance in our network of owned or operated and third-party venues, talent fees, average paid attendance, market ticket pricing, advance

ticket sales and the number of major artist clients under management.

In addition, at our owned or operated venues and festivals, we monitor ancillary revenue per fan and premium ticket sales.

21 unchanged sentences

We typically experience higher revenue in the second and third quarters, as a large portion of sponsorships are associated with shows at our outdoor amphitheaters and festivals, which primarily occur from May through October.

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.

Sponsorship and Advertising direct operating expenses include fulfillment costs related to our sponsorship programs, along with other costs.

3 unchanged sentences

Three Months Ended

June 30, Six Months Ended

2020 2019 2020 2019

(in thousands except estimated events)

16 unchanged sentences

The non-fee-bearing tickets estimated above include primary tickets sold using our Ticketmaster systems, through season seat packages and our venue clients’ box offices, along with tickets sold on our “do it yourself” platform.

These ticketing metrics are net of any refunds that occurred in the period and any cancellations during the period and up to the time of reporting of these financial statements.

These ticketing metrics are net of any refunds requested and any cancellations that occurred during the period and up to the time of reporting of these financial statements.

Fee-bearing tickets include refunds of 10.7 million and 17.2 million for the three and six months ended June 30, 2020, respectively.

Non-GAAP Measures

6 unchanged sentences

(in thousands)

Three Months Ended March 31, 2020

Three Months Ended June 30, 2020

Concerts $ (279,851) $ 24,381 $ 561 $ 64,342 $ — $ (20,128) $ (210,695)

4 unchanged sentences

Total $ (588,067) $ 38,538 $ 559 $ 122,767 $ 13,315 $ (18,969) $ (431,857)

Three Months Ended March 31, 2019

Three Months Ended June 30, 2019

Concerts $ 60,701 $ 3,148 $ (210) $ 54,219 $ — $ 14,899 $ 132,757

4 unchanged sentences

Total $ 171,586 $ 11,721 $ (101) $ 103,826 $ 17,030 $ 15,156 $ 319,218

Six Months Ended June 30, 2020

Concerts $ (440,982) $ 26,741 $ 688 $ 136,558 $ — $ (21,872) $ (298,867)

Ticketing (283,053) 5,797 1 82,489 34,944 943 (158,879)

Sponsorship & Advertising 27,009 2,674 — 15,132 — — 44,815

Other and Eliminations (8,253) — — 4,438 (2,818) — (6,633)

Corporate (55,458) 15,058 — 6,230 — 1,348 (32,822)

Total $ (760,737) $ 50,270 $ 689 $ 244,847 $ 32,126 $ (19,581) $ (452,386)

Six Months Ended June 30, 2019

Concerts $ 1,568 $ 6,631 $ (355) $ 105,580 $ — $ 24,746 $ 138,170

Ticketing 106,746 3,105 107 76,903 36,897 450 224,208

Sponsorship & Advertising 123,544 1,309 — 13,448 — — 138,301

Other and Eliminations (344) — — 259 (2,630) — (2,715)

Corporate (83,791) 13,881 — 6,548 — 1 (63,361)

Total $ 147,723 $ 24,926 $ (248) $ 202,738 $ 34,267 $ 25,197 $ 434,603

Adjusted Operating Income (Loss)

22 unchanged sentences

Three Months Ended

(in thousands)

Change Six Months Ended

2020 2019 2020 2019

(in thousands) (in thousands)

Revenue $ 141,823 $ 2,639,531 (95)% $ 1,135,216 $ 3,957,648 (71)%

3 unchanged sentences

Loss (gain) on disposal of operating assets 561 (210) * 688 (355) *

Operating loss $ (161,131) $ (59,133) *

Operating income (loss) $ (279,851) $ 60,701 * $ (440,982) $ 1,568 *

Operating margin * 2.3 % (38.8 %) — %

3 unchanged sentences

** See “—Non-GAAP Measures” above for the definition and reconciliation of AOI and AOI margin.

Concerts revenue decreased $324.7 million during the three months ended March 31, 2020 as compared to the same period of the prior year.

Excluding the decrease of $12.6 million related to currency impacts, revenue decreased $312.1 million, or 24%, primarily due to postponed and cancelled events during the first quarter of 2020 related to the global COVID-19 pandemic.

Concerts revenue decreased $2.5 billion during the three months ended June 30, 2020 as compared to the same period of the prior year primarily due to the continued unprecedented stoppage of our concert events globally throughout the second quarter of 2020.

Due to the global COVID-19 pandemic, beginning in mid-March 2020 we ceased all of our tours, closed our venues and cancelled or postponed our festivals to support global efforts at social distancing and mitigating the virus, and to comply with restrictions put in place by various governmental entities.

Concerts had incremental revenue of $26.6 million from the acquisitions of concert promotion, venue management and merchandise businesses.

Operating results

The decrease in Concerts operating results for the three months ended March 31, 2020 was primarily driven by the reduction in revenue related to the global COVID-19 pandemic discussed above.

Included in selling, general and administrative expenses for the three months ended March 31, 2020 is $26.0 million of expenses related to new acquisitions and new venues in the Concerts segment.

In addition, we recorded a $10.1 million impairment charge in the first quarter of 2020 primarily associated with revenue-generating contract intangible assets as it was determined that the estimated undiscounted cash flows associated with the respective intangible assets were less than their carrying value as a result of the expected impacts from the global COVID-19 pandemic.

There were no impairments of intangible assets recorded for the three months ended March 31, 2019.

The decrease in Concerts operating results for the three months ended June 30, 2020 was primarily driven by the reduction in revenue related to the global COVID-19 pandemic discussed above partially offset by cost reduction measures implemented during the second quarter of 2020 including salary reductions, hiring freezes, furloughs, and reduction or elimination of other discretionary spending along with participating in government support programs globally.

Concerts revenue decreased $2.8 billion during the six months ended June 30, 2020 as compared to the same period of the prior year.

Excluding the decrease of $17.8 million related to currency impacts, revenue decreased $2.8 billion, or 71%, primarily due to the reduction in revenue related to the global COVID-19 pandemic discussed above.

Concerts had incremental revenue of $104.2 million from the acquisitions of concert promotion, venue management and merchandise businesses.

Operating results

The decrease in Concerts operating results for the six months ended June 30, 2020 was primarily driven by the impact of the global COVID-19 pandemic discussed above.

Included in selling, general and administrative expenses for the six months ended June 30, 2020 is $25.7 million of expenses related to new acquisitions and new venues in the Concerts segment.

In addition, we recorded $11.6 million in impairment charges in the first half of 2020 primarily associated with revenue-generating contract intangible assets as it was determined that the estimated undiscounted cash flows associated with the respective intangible assets were less than their carrying value as a result of the expected impacts from the global COVID-19 pandemic.

There were no impairments of intangible assets recorded for the six months ended June 30, 2019.

Our Ticketing segment operating results were, and discussions of significant variances are, as follows:

Three Months Ended

(in thousands)

Change Six Months Ended

2020 2019 2020 2019

(in thousands) (in thousands)

Revenue $ (87,019) $ 370,765 * $ 197,258 $ 708,407 (72)%

9 unchanged sentences

** See “—Non-GAAP Measures” above for the definition and reconciliation of AOI and AOI margin.

Ticketing revenue decreased $53.4 million during the three months ended March 31, 2020 as compared to the same period of the prior year.

Excluding the decrease of $1.2 million related to currency impacts, revenue decreased $52.2 million, or 15%, primarily due to a reduction in primary and resale ticket onsales and refunds for cancelled events for third-party clients during the first quarter of 2020 due to the global COVID-19 pandemic.

Ticketing revenue decreased $457.8 million during the three months ended June 30, 2020 as compared to the same period of the prior year primarily due to refunds for cancelled events for third-party clients and the lack of tickets available for sale to the public driven by the unprecedented stoppage of concerts, sports and other events globally during the second quarter of 2020 due to the global COVID-19 pandemic.

Operating results

The decrease in Ticketing operating results for the three months ended March 31, 2020 was primarily due to the reduction in ticket sales related to the global COVID-19 pandemic discussed above, without a proportionate reduction in direct operating expenses as credit card fees and other costs associated with processing refunds and responding to fan and ticketing client inquiries continued, along with higher compensation costs associated with headcount growth prior to the pandemic.

The decrease in Ticketing operating results for the three months ended June 30, 2020 was primarily due to the reduction in revenue related to the global COVID-19 pandemic discussed above, without a proportionate reduction in direct operating expenses as credit card fees and other costs associated with processing refunds and responding to fan and ticketing client inquiries continued.

This decrease was partially offset by cost reduction measures implemented during the second quarter of 2020, including salary reductions, hiring freezes, furloughs, and reduction or elimination of other discretionary spending along with participating in government support programs globally.

Ticketing revenue decreased $511.1 million during the six months ended June 30, 2020 as compared to the same period of the prior year primarily due to the reduction in revenue related to the global COVID-19 pandemic discussed above.

Operating results

The decrease in Ticketing operating results for the six months ended June 30, 2020 was primarily driven by the impact of the global COVID-19 pandemic discussed above.

Sponsorship & Advertising

1 unchanged sentence

Three Months Ended

(in thousands)

Change Six Months Ended

2020 2019 2020 2019

(in thousands) (in thousands)

Revenue $ 18,372 $ 151,537 (88)% $ 108,633 $ 226,615 (52)%

2 unchanged sentences

Depreciation and amortization 7,620 6,374 20% 15,132 13,448 13%

Operating income $ 38,226 $ 32,181 19%

Operating income (loss) $ (11,217) $ 91,363 * $ 27,009 $ 123,544 (78)%

Operating margin (61.1 %) 60.3 % 24.9 % 54.5 %

1 unchanged sentence

AOI margin ** (9.8 %) 65.0 % 41.3 % 61.0 %

* Percentages are not meaningful.

** See “—Non-GAAP Measures” above for the definition and reconciliation of AOI and AOI margin.

Sponsorship & Advertising revenue increased $15.2 million during the three months ended March 31, 2020 as compared to the same period of the prior year.

Excluding the decrease of $1.2 million related to currency impacts, revenue increased $16.4 million, or 22%, primarily due growth in our national sponsorship programs in North America.

Sponsorship & Advertising revenue decreased $133.2 million during the three months ended June 30, 2020 as compared to the same period of the prior year primarily due to a reduction in sponsorship revenue associated with our venues, festivals and lack of online activity as ticket sales declined driven by the unprecedented stoppage of events beginning in mid-March of 2020 due to the global COVID-19 pandemic.

Operating results

The increase in Sponsorship & Advertising operating income for the three months ended March 31, 2020 was primarily driven by the higher sponsorship activity discussed above partially offset by higher fulfillment costs on certain sponsorship programs.

The decrease in Sponsorship & Advertising operating results for the three months ended June 30, 2020 was primarily driven by the reduction in revenue discussed above partially offset by lower fulfillment costs on certain sponsorship programs.

In addition, cost reduction measures were implemented during the second quarter of 2020, including salary reductions, hiring freezes, furloughs, and reduction or elimination of other discretionary spending along with participating in government support programs globally.

Sponsorship & Advertising revenue decreased $118.0 million during the six months ended June 30, 2020 as compared to the same period of the prior year.

Excluding the decrease of $1.8 million related to currency impacts, revenue decreased $116.2 million, or 51%, primarily due to the reduction in revenue related to the global COVID-19 pandemic discussed above.

Operating results

The decrease in Sponsorship & Advertising operating income for the six months ended June 30, 2020 was primarily driven by the impact of the global COVID-19 pandemic discussed above.

Consolidated Results of Operations

Three Months Ended March 31, % Change

Three Months Ended June 30, % Change

As Reported Currency Impacts At Constant Currency** As Reported As Reported At Constant Currency**

7 unchanged sentences

Corporate expenses 20,916 7 20,923 40,787 (49)% (49)%

Operating loss (172,670) $ (1,452) $ (174,122) (23,863) * *

Operating income (loss) (588,067) $ (5,023) $ (593,090) 171,586 * *

Operating margin * * 5.4 %

1 unchanged sentence

Interest income (2,429) (3,818)

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)

Other income, net (5,173) (430)

Income (loss) before income taxes (639,767) 144,870

Income tax expense (benefit) (29,183) 28,750

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)

Net income (loss) (610,584) 116,120

Net income (loss) attributable to noncontrolling interests (43,067) 12,765

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

* Percentages are not meaningful.

** See “—Non-GAAP Measures” above for the definition of constant currency.

Net loss attributable to noncontrolling interests

Net loss attributable to noncontrolling interests increased $23.3 million during the three months ended March 31, 2020 as compared to the same period of the prior year primarily related to lower worldwide operating results from certain concert and festival promotion businesses driven by postponed and cancelled events during the first quarter of 2020 due to the global COVID-19 pandemic.

Corporate Expenses

Corporate expenses decreased $19.9 million, or 49%, during the three months ended June 30, 2020 as compared to the same period of the prior year primarily due to cost reduction efforts implemented during the second quarter of 2020, including salary reductions, with salaries for senior executives reduced by up to 50% for the duration of the salary reduction program.

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

Interest Expense

Interest expense increased $15.9 million, or 43%, during the three months ended June 30, 2020 as compared to the same period of the prior year due to additional interest costs from the issuance of our 4.75% senior notes in October 2019, the issuance of our 2.0% convertible senior notes in February 2020 and the issuance of our 6.5% senior secured notes in May 2020.

These additional costs were partially offset by interest cost reductions realized from the October 2019 redemption of our 5.375% senior notes and amendment to our senior secured credit facility.

Equity in losses (earnings) of nonconsolidated affiliates

Equity in losses (earnings) of nonconsolidated affiliates decreased to a loss of $6.6 million for the three months ended June 30, 2020 as compared to earnings of $5.8 million for the comparable period of the prior year due to lower operating results from certain nonconsolidated affiliates driven by the impacts of the global COVID-19 pandemic.

Net income (loss) attributable to noncontrolling interests

Net income (loss) attributable to noncontrolling interests decreased to a loss of $43.1 million during the three months ended June 30, 2020 as compared to income of $12.8 million for the same period of the prior year primarily due to lower worldwide operating results from certain concert and festival promotion businesses driven by postponed and cancelled events during the second quarter of 2020 due to the global COVID-19 pandemic.

Six Months Ended June 30, % Change

As Reported Currency Impacts At Constant Currency** As Reported As Reported At Constant Currency**

(in thousands)

Revenue $ 1,439,777 $ 20,447 $ 1,460,224 $ 4,884,837 (71)% (70)%

Operating expenses:

Direct operating expenses 1,068,377 16,735 1,085,112 3,479,018 (69)% (69)%

Selling, general and administrative expenses 837,373 8,428 845,801 978,363 (14)% (14)%

Depreciation and amortization 244,847 1,742 246,589 202,738 21% 22%

Loss (gain) on disposal of operating assets 689 — 689 (248) * *

Corporate expenses 49,228 14 49,242 77,243 (36)% (36)%

Operating income (loss) (760,737) $ (6,472) $ (767,209) 147,723 * *

Operating margin (52.8 %) (52.5 %) 3.0 %

Interest expense 96,688 73,307

Interest income (6,902) (6,366)

Equity in losses (earnings) of nonconsolidated affiliates 4,041 (8,972)

Other income, net (545) (3,833)

Income (loss) before income taxes (854,019) 93,587

Income tax expense (benefit) (32,513) 32,708

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

Net income (loss) attributable to noncontrolling interests (69,205) 9,968

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

* Percentages are not meaningful.

** See “—Non-GAAP Measures” above for the definition of constant currency.

Corporate Expenses

Corporate expenses decreased $28.0 million, or 36%, during the six months ended June 30, 2020 as compared to the same period of the prior year primarily due to cost reduction efforts implemented during the second quarter of 2020, including salary reductions, with salaries for senior executives reduced by up to 50% for the duration of the salary reduction program.

Interest Expense

Interest expense increased $23.4 million, or 32%, during the six months ended June 30, 2020 as compared to the same period of the prior year due to additional interest costs from the issuance of our 4.75% senior notes in October 2019, the issuance of our 2.0% convertible senior notes in February 2020 and the issuance of our 6.5% senior secured notes in May 2020.

These additional costs were partially offset by interest cost reductions realized from the October 2019 redemption of our 5.375% senior notes and amendment to our senior secured credit facility.

Equity in losses (earnings) of nonconsolidated affiliates

Equity in losses (earnings) of nonconsolidated affiliates decreased to a loss of $4.0 million for the six months ended June 30, 2020 as compared to earnings of $9.0 million for the comparable period of the prior year due to lower operating results from certain nonconsolidated affiliates driven by the impacts of the global COVID-19 pandemic.

Income tax expense (benefit)

For the six months ended June 30, 2020, we had a net tax benefit of $32.5 million on a loss before income taxes of $854.0 million compared to net tax expense of $32.7 million on income before income taxes of $93.6 million for the six months ended June 30, 2019.

For the six months ended June 30, 2020, the income tax benefit consisted of $21.8 million related to foreign entities and $10.9 million related to United States federal taxes, partially offset by tax expense of $0.2 million related to state and local income taxes.

The net decrease in tax expense of $65.2 million was due primarily to a decrease in earnings in certain non-United States jurisdictions.

Net income (loss) attributable to noncontrolling interests

Net income (loss) attributable to noncontrolling interests decreased to a loss of $69.2 million during the six months ended June 30, 2020 as compared to income of $10.0 million for the same period of the prior year primarily due to lower operating results from certain concert and festival promotion businesses driven by postponed and cancelled events during the first six months of 2020 due to the global COVID-19 pandemic.

Liquidity and Capital Resources

In response to the impact that the global COVID-19 pandemic is having on our business, and the uncertainty of the duration of current conditions globally, we are taking certain actions to strengthen our liquidity position and preserve our capital resources.

In April 2020, we amended our senior secured credit facility to provide an incremental $130 million revolving credit facility, with the potential to increase the facility to $150 million if additional commitments are received by May 2020.

The amendment also replaces our net leverage covenant with a liquidity covenant for the second and third quarters of 2020.

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

As a result, we believe that this amendment will allow us the flexibility to manage our business through the disruption we will experience in 2020.

In April 2020, we amended our senior secured credit facility to provide an incremental $130 million revolving credit facility.

We further amended our senior secured credit facility in July 2020, which among other things, subsititutes our net leverage covenant 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.

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

As a result, we believe that these amendments and additional debt issuance will allow us the flexibility to manage our business through the disruption we will experience in 2020.

We have also 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.

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

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 for employers program established as part of the 2020 CARES Act.

Additionally, in the United States, we are receiving payroll support under the Employee Retention Credit for employers program established as part of the 2020 CARES Act.

Our cash is centrally managed on a worldwide basis.

2 unchanged sentences

We may from time to time engage in open market purchases of our outstanding debt securities or redeem or otherwise repay such debt.

Our balance sheet reflects cash and cash equivalents of $3.3 billion at March 31, 2020 and $2.5 billion at December 31, 2019.

Included in the March 31, 2020 and December 31, 2019 cash and cash equivalents balances are $841.5 million and $837.7 million, respectively, of cash received that includes the face value of tickets sold on behalf of our ticketing clients and their share of service charges, which we refer to as client cash.

Our balance sheet reflects cash and cash equivalents of $3.3 billion at June 30, 2020 and $2.5 billion at December 31, 2019.

Included in the June 30, 2020 and December 31, 2019 cash and cash equivalents balances are $744.7 million and $837.7 million, respectively, of cash received that includes the face value of tickets sold on behalf of our ticketing clients and their share of service charges, which we refer to as client cash.

We generally do not utilize client cash for our own financing or investing activities as the amounts are payable to clients on a regular basis.

Our foreign subsidiaries held approximately $1.0 billion in cash and cash equivalents, excluding client cash, at March 31, 2020.

Our foreign subsidiaries held approximately $1.1 billion in cash and cash equivalents, excluding client cash, at June 30, 2020.

We generally do not repatriate these funds, but if we did, we would need to accrue and pay United States state income taxes as well as any applicable foreign withholding or transaction taxes on future repatriations.

1 unchanged sentence

If the original maturity of these borrowings is 90 days or less, we present the borrowings and subsequent repayments on a net basis in the statement of cash flows to better represent our financing activities.

Our balance sheet reflects total net debt of $3.7 billion and $3.3 billion at March 31, 2020 and December 31, 2019, respectively.

Our weighted-average cost of debt, excluding unamortized debt discounts and debt issuance costs on our term loans and notes, was 3.9% at March 31, 2020.

Our balance sheet reflects total net debt of $4.9 billion and $3.3 billion at June 30, 2020 and December 31, 2019, respectively.

Our weighted-average cost of debt, excluding unamortized debt discounts and debt issuance costs on our term loans and notes, was 4.4% at June 30, 2020.

Our cash and cash equivalents are held in accounts managed by third-party financial institutions and consist of cash in our operating accounts and invested cash.

1 unchanged sentence

The invested cash is in interest-bearing funds consisting primarily of bank deposits and money market funds.

While we monitor cash and cash equivalents balances in our operating accounts on a regular basis and adjust the balances as appropriate, these balances could be impacted if the underlying financial institutions fail.

While we monitor cash and cash equivalents balances in our operating

accounts on a regular basis and adjust the balances as appropriate, these balances could be impacted if the underlying financial institutions fail.

To date, we have experienced no loss or lack of access to our cash and cash equivalents;

8 unchanged sentences

When an event is cancelled, any cash held in deferred revenue is reclassified to accrued expenses as those funds are typically refunded to the fan within 30 days of event cancellation.

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 a cancelled event.

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

When a show is rescheduled, fans have the ability to request a refund if they do not want to attend the event on the new date, although historically we have had low levels of refund requests for rescheduled events.

4 unchanged sentences

Cash inflows and outflows depend on the timing of event-related payments but the majority of the inflows generally occur prior to the event.

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.

See “—Seasonality” below.

9 unchanged sentences

Sources of Cash

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.

In April 2020, we amended our senior secured credit facility, which among other things, provides for (i) a new incremental revolving credit facility, (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, (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 on the undrawn portion of the delayed draw term loan A and existing revolving credit facility, (v) adjustment of the delayed draw term loan A and existing revolving credit facility commitment fees 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.

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 6.75x with step downs to 6.25x after four quarters, 5.75x after eight quarters, 5.50x after twelve quarters and 5.25x 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 during 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).

Amended Senior Secured Credit Facility

The amended senior secured credit facility provides for (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, with the potential to increase such facility to $150 million if additional commitments are received by May 2020.

In April 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) $985 million, (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) 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 3.75x.

The revolving credit facility provides for borrowings up to $500 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 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 our tangible and intangible personal property and our 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.

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 3.75x.

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%.

1 unchanged sentence

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 existing 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.

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.

2 unchanged sentences

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 facility as of March 31, 2020 and we have not drawn down on the delayed draw term loan A.

Based on our outstanding letters of credit of $66.9 million, $963.1 million was available for future borrowings from our delayed draw term loan A, revolving credit facility and incremental revolving credit facility (based on current commitments of $130 million).

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

2 unchanged sentences

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.

4 unchanged sentences

Debt Covenants

Our amended senior secured credit facility contains a number of restrictions that, among other things, require us to satisfy a financial covenant and restrict our and our subsidiaries’ ability to incur additional debt, make certain investments and acquisitions, repurchase our stock and prepay certain indebtedness, create liens, enter into agreements with affiliates, modify the nature of our business, enter into sale-leaseback transactions, transfer and sell material assets, merge or consolidate, and pay dividends and make distributions (with the exception of subsidiary dividends or distributions to the parent company or other subsidiaries on at least a pro-rata basis with any noncontrolling interest partners).

Our amended senior secured credit facility contains a number of restrictions that, among other things, (i) require us to satisfy a liquidity covenant until the earlier of (a) December 31, 2021 and (b) at our election, any fiscal quarter ending prior to December 31, 2021 so long as such election is made during the last month of such fiscal quarter or within 30 days following the end of such fiscal quarter (such time, the “Liquidity Covenant End Date”) and a consolidated net leverage ratio covenant after such time and (ii) restrict our and our subsidiaries’ ability to incur additional debt, make certain investments and acquisitions, repurchase our stock and prepay certain indebtedness, create liens, enter into agreements with affiliates, modify the nature of our business, enter into sale-leaseback transactions, transfer and sell material assets, merge or consolidate, and pay dividends and make distributions (with the exception of subsidiary dividends or distributions to the parent company or other subsidiaries on at least a pro-rata basis with any noncontrolling interest partners).

Certain of these restrictions are further limited temporarily by the July 2020 amendment.

Non-compliance with one or more of the covenants and restrictions could result in the full or partial principal balance of the credit facility becoming immediately due and payable.

The amended senior secured credit facility agreement has one covenant, measured quarterly, that relates to net leverage.

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

For fiscal quarters ending after September 30, 2020, the consolidated net leverage covenant requires us to maintain a ratio of consolidated total net debt to consolidated EBITDA (both as defined in the amended credit agreement) of 5.50x over the trailing four consecutive quarters, except for the calculations for the fourth quarter of 2020 through the second quarter of 2021, the consolidated EBITDA for the second and third quarters of 2020 will be substituted with the consolidated EBITDA for the second and third quarters of 2019, respectively.

The consolidated total leverage ratio will reduce to 5.25x on December 31, 2021.

The indentures governing our 4.75% senior notes, 4.875% senior notes and 5.625% senior notes contain covenants that limit, among other things, our ability and the ability of our restricted subsidiaries to incur certain additional indebtedness and issue preferred stock, make certain distributions, investments and other restricted payments, sell certain assets, agree to any restrictions on the ability of restricted subsidiaries to make payments to us, merge, consolidate or sell all of our assets, create certain liens, and engage in transactions with affiliates on terms that are not on an arms-length basis.

The July 2020 amendment substitutes the consolidated net leverage ratio covenant with a liquidity covenant (as defined in the agreement) that requires our consolidated liquidity be at least $500 million until the Liquidity Covenant End Date.

For fiscal quarters after resumption of the consolidated net leverage covenant, we will be required to maintain a ratio of consolidated total net debt to consolidated EBITDA (both as defined in the amended credit agreement) for the trailing four consecutive quarters of 6.75x with step downs to 6.25x after four quarters, 5.75x after eight quarters, 5.50x after twelve quarters and 5.25x after fourteen quarters through maturity, except that calculations of consolidated EBITDA (as defined in the agreement) for the first three fiscal quarters after resumption of the covenant will be substituted with an annualized consolidated EBITDA (as defined in the agreement).

The indentures governing our 6.5% senior secured notes, 4.75% senior notes, 4.875% senior notes and 5.625% senior notes contain covenants that limit, among other things, our ability and the ability of our restricted subsidiaries to incur certain additional indebtedness and issue preferred stock, make certain distributions, investments and other restricted payments, sell certain assets, agree to any restrictions on the ability of restricted subsidiaries to make payments to us, merge, consolidate or sell all of our assets, create certain liens, and engage in transactions with affiliates on terms that are not on an arms-length basis.

Certain covenants, including those pertaining to incurrence of indebtedness, restricted payments, asset sales, mergers, and transactions with affiliates will be suspended during any period in which the notes are rated investment grade by both rating agencies and no default or event of default under the indenture has occurred and is continuing.

2 unchanged sentences

They also have financial covenants including minimum consolidated EBITDA to consolidated net interest payable, minimum consolidated cash flow to consolidated debt service and maximum consolidated debt to consolidated EBITDA, all as defined in the applicable debt agreements.

As of March 31, 2020, we believe we were in compliance with all of our debt covenants related to our senior secured credit facility and our corporate senior notes and convertible senior notes.

As of June 30, 2020, we believe we were in compliance with all of our debt covenants related to our senior secured credit facility and our corporate senior secured notes, senior notes and convertible senior notes.

We expect to remain in compliance with all of these debt covenants throughout 2020.

1 unchanged sentence

All amounts related to the use of cash for acquisitions discussed in this section are presented net of any cash acquired.

During the three months ended March 31, 2020, we used $32.5 million of cash primarily for the acquisitions of a festival promotion business and a venue management business, both located in the United States.

During the six months ended June 30, 2020, we used $37.5 million of cash primarily for the acquisitions of a festival promotion business and a venue management business, both located in the United States.

As of the date of acquisition, the acquired businesses had a total of $64.7 million of cash on their balance sheets, primarily related to deferred revenue for future events.

During the three months ended March 31, 2019, we used $9.9 million of cash primarily for the acquisitions of a concert promotion business located in Canada and a festival promotion business located in Finland.

During the six months ended June 30, 2019, we used $87.6 million of cash primarily for the acquisitions of a venue management business located in Belgium, a festival promotion business and a venue management business, both located in the United States.

As of the date of acquisition, the acquired businesses had a total of $18.1 million of cash on their balance sheets, primarily related to deferred revenue for future events.

Purchases and Sales of Noncontrolling Interests

During the six months ended June 30, 2020, we used $88.2 million of cash primarily for the acquisition of the remaining interest in two festival promotion businesses located in the United States.

Capital Expenditures

6 unchanged sentences

Our capital expenditures, including accruals for amounts incurred but not yet paid for, but net of expenditures funded by outside parties such as landlords or replacements funded by insurance proceeds, consisted of the following:

Three Months Ended

Six Months Ended

(in thousands)

2 unchanged sentences

Total capital expenditures $ 129,031 $ 139,146

Total capital expenditures during the first three months of 2020 increased from the same period of the prior year primarily due to maintenance expenditures for certain venue-related projects.

Maintenance capital expenditures during the first six months of 2020 decreased from the same period of the prior year primarily due to a reduction in venue-related projects and technology enhancements as part of our cash savings initiatives implemented in connection with the global COVID-19 pandemic.

We currently expect capital expenditures to be approximately $215 million for the full year of 2020.

Three Months Ended

Six Months Ended

(in thousands)

4 unchanged sentences

Operating Activities

Cash provided by operating activities increased $162.6 million for the three months ended March 31, 2020 as compared to the same period of the prior year.

During the first three months of 2020, our accounts receivable decreased, we received more cash for future events, and the increase in prepaid expenses was lower due to the timing of cash receipts and payments when compared to the same period of the prior year.

These amounts were offset by lower net cash-related income in 2020 and a larger decrease in event-related accrued expenses due to timing of payments.

Cash used in operating activities was $390.4 million for the six months ended June 30, 2020 as compared to cash provided by operations of $293.3 million in the same period of the prior year.

During the first six months of 2020, we had lower net cash-related income and a lower increase in prepaid expenses due to the impacts of the global COVID-19 pandemic.

In addition, our accounts payable and accrued expenses, and accounts receivable decreased due to the cessation of our concert events beginning in mid-March in response to the global COVID-19 pandemic when compared to the same period of the prior year.

Investing Activities

Cash used in investing activities increased $37.5 million for the three months ended March 31, 2020 as compared to the same period of the prior year primarily due to higher purchases of property, plant and equipment and cash paid for acquisitions.

Cash used in investing activities decreased $91.0 million for the six months ended June 30, 2020 as compared to the same period of the prior year primarily due to fewer acquisitions.

See “—Uses of Cash” above for further discussion.

Financing Activities

Cash provided by financing activities was $382.4 million for the three months ended March 31, 2020 as compared to cash used in financing activities of $71.5 million in the same period of the prior year primarily due to higher net proceeds in 2020 from debt refinancing and lower distributions to noncontrolling interest partners in 2020.

Cash provided by financing activities was $1.5 billion for the six months ended June 30, 2020 as compared to cash used in financing activities of $97.9 million in the same period of the prior year primarily due to higher net proceeds in 2020 from debt issuances.

See “—Sources of Cash” above for further discussion.

Our Concerts and Sponsorship & Advertising segments typically experience higher operating income in the second and third quarters as our outdoor venues and festivals are primarily used in or occur from May through October.

In addition, the timing of when tickets are sold and the tours of top-grossing acts can impact comparability of quarterly results year-over-year, although annual results may not be impacted.

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 revenue is impacted by fluctuations in the availability of events for sale to the public, which vary depending upon scheduling by our clients.

Due to the unprecedented stoppage of our 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 flows from our Concerts segment typically have a slightly different seasonality as payments are often made for artist performance fees and production costs for tours in advance of the date the related event tickets go on sale.

These artist fees and production costs are expensed when the event occurs.

Once tickets for an event go on sale, we generally begin to receive payments from ticket sales at our owned or operated venues and festivals in advance of when the event occurs.

Once tickets for an event go on sale, we generally begin to receive

payments from ticket sales at our owned or operated venues and festivals in advance of when the event occurs.

We record these ticket sales as revenue when the event occurs.

6 unchanged sentences

Currently, we do not have significant operations in hyper-inflationary countries.

Our foreign operations reported an operating loss of $39.7 million for the three months ended March 31, 2020.

We estimate that a 10% change in the value of the United States dollar relative to foreign currencies would change our operating loss for the three months ended March 31, 2020 by $4.0 million.

As of March 31, 2020, our most significant foreign exchange exposure included the Euro, British Pound, Australian Dollar and Canadian Dollar.

This analysis does not consider the implication such currency fluctuations could have on the overall economic conditions of the United States or other foreign countries in which we operate or on the results of operations of our foreign

Our foreign operations reported an operating loss of $162.8 million for the six months ended June 30, 2020.

We estimate that a 10% change in the value of the United States dollar relative to foreign currencies would change our operating loss for the six months ended June 30, 2020 by $16.3 million.

As of June 30, 2020, our most significant foreign exchange exposure included the Euro, British Pound, Australian Dollar and Canadian Dollar.

In addition, the reported carrying value of our assets and liabilities, including the total cash and cash equivalents held by our foreign operations, will also be affected by changes in foreign currency exchange rates.

1 unchanged sentence

We also may enter into forward currency contracts to minimize the risks and/or costs associated with changes in foreign currency rates on forecasted operating income.

At March 31, 2020, we had forward currency contracts outstanding with a notional amount of $121.8 million.

At June 30, 2020, we had forward currency contracts outstanding with a notional amount of $74.7 million.

Interest Rate Risk

Our market risk is also affected by changes in interest rates.

We had $3.8 billion of total debt, excluding debt discounts and issuance costs, outstanding as of March 31, 2020, of which $3.3 billion was fixed-rate debt and $0.5 billion was floating-rate debt.

Based on the amount of our floating-rate debt as of March 31, 2020, each 25-basis point increase or decrease in interest rates would increase or decrease our annual interest expense and cash outlay by approximately $1.2 million.

This potential increase or decrease is based on the simplified assumption that the level of floating-rate debt remains constant with an immediate across-the-board increase or decrease as of March 31, 2020 with no subsequent change in rates for the remainder of the period.

We had $5.0 billion of total debt, excluding debt discounts and issuance costs, outstanding as of June 30, 2020, of which $4.5 billion was fixed-rate debt and $0.5 billion was floating-rate debt.

Based on the amount of our floating-rate debt as of June 30, 2020, each 25-basis point increase or decrease in interest rates would increase or decrease our annual interest expense and cash outlay by approximately $1.2 million.

This potential increase or decrease is based on the simplified assumption that the level of floating-rate debt remains constant with an immediate across-the-board increase or decrease as of June 30, 2020 with no subsequent change in rates for the remainder of the period.

In January 2020, we entered into an interest rate swap agreement that is designated as a cash flow hedge for accounting purposes to effectively convert a portion of our floating-rate debt to a fixed-rate basis.

7 unchanged sentences

Because future events and their effects cannot be determined with certainty, actual results could differ from our assumptions and estimates, and such difference could be material.

Management believes that the accounting estimates involved in business combinations, impairment of long-lived assets and goodwill, revenue recognition, and income taxes are the most critical to aid in fully understanding and evaluating our reported financial results, and they require management’s most difficult, subjective or complex judgments, resulting from the need to make estimates about the effect of matters that are inherently uncertain.

reported financial results, and they require management’s most difficult, subjective or complex judgments, resulting from the need to make estimates about the effect of matters that are inherently uncertain.

These critical accounting estimates, the judgments and assumptions and the effect if actual results differ from these assumptions are described in Part II Financial Information — Item 7.

7 unchanged sentences

We review goodwill for impairment annually, as of October 1, using a two-step process.

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.

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.

We also test goodwill for impairment in other periods if an event occurs or circumstances change that would more likely than not reduce the fair value of a reporting unit below its carrying amount or when we change our reporting units.

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

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 used an assessment of relevant events and circumstances such as recent historical financial performance, industry and market conditions, macroeconomic conditions, reporting unit-specific events, historical results of goodwill impairment testing, and the timing of the last performance of a quantitative assessment.

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

As such actions are having a material impact on our cash flows during the suspension of operations, we performed qualitative and sensitivity reviews in both quarters of this year 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 considered relevant events and circumstances such as recent historical financial performance, industry and market conditions, macroeconomic conditions, reporting unit-specific events, historical results of goodwill impairment testing, and the timing of the last performance of a quantitative assessment.

Inherent in such assessments are certain judgments and estimates relating to future cash flows, including our interpretation of current economic indicators and market influences and valuations, and assumptions about our near-term and strategic plans with regard to our operations.

1 unchanged sentence

Due to the uncertainties associated with such estimates, actual results could differ from such estimates.

Specifically, the assessment included updating recent quantitative tests for current discount rates and financial results and forecasts, and performing tests of model sensitivities to changes in discount rates, revenue and terminal growth rates and market multiples, and in some cases margin, which are the most significant assumptions.

As a result of the interim assessment, we concluded that, as of March 31, 2020, no conditions existed that would more likely than not reduce the fair value of any of our reporting units below its carrying amount and therefore that we do not believe that our goodwill is impaired.

Specifically, these reviews included updating recent quantitative tests for current discount rates and financial results and forecasts, performing tests of model sensitivities to changes in discount rates, revenue and terminal growth rates and market multiples, or a consideration of the impact from changes in financial forecasts, discount rates and carrying values.

As a result of these interim assessments, we concluded that, during the six months ended June 30, 2020, no conditions existed that would more likely than not reduce the fair value of any of our reporting units below its carrying amount and therefore we do not believe that our goodwill is impaired.

Our Artist Management and Artist Services reporting units continue to be more sensitive than our other reporting units.

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 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.

2 unchanged sentences

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 2. Management’s Discussion and Analysis