What changed in this filing

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Item 7. Management’s Discussion and Analysis

2021-03-01 compared with 2020-02-27 · 172 added, 234 removed, 373 unchanged (52% of the section changed)

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

You should read the following discussion of our financial condition and results of operations together with the audited consolidated financial statements and notes to the financial statements included elsewhere in this Annual Report.

You should read the following discussion of our financial condition and results of operations together with the audited consolidated financial statements and notes to the consolidated financial statements included elsewhere in this Annual Report.

This discussion contains forward-looking statements that involve risks and uncertainties.

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Executive Overview

Live Nation continued to see strong demand for live events in 2019, powering the concerts center of our business flywheel.

The execution of our key strategic initiatives is elevating the live experience through our Concerts, Ticketing and Sponsorship & Advertising businesses to maximize benefits to the fans, to the many artists, teams and corporate sponsors we work with, and to our stockholders.

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 and therefore drive growth across all our businesses.

We believe that by leveraging our leadership position in the entertainment industry to reach fans through the live concert experience, we will sell more tickets and uniquely engage more advertising partners.

By advancing innovation in ticketing technology, we will continue to improve the fan experience by offering increased and more diversified, secure choices in an expanded ticketing marketplace.

This gives us a compelling opportunity to grow our fan base and our results.

Our total revenue for the year was $11.5 billion, an increase of $0.8 billion, or 7%, on a reported basis, or $0.9 billion, or 9%, on a constant currency basis as compared to last year.

The increase was largely driven by our Concerts segment due to more events, fans, and onsite revenue.

We had record attendance at our concerts again in 2019.

Ticketing increased as well, with strong growth in international ticket sales as well as the continued expansion of our resale business.

Fee-bearing ticket sales also hit a record high in 2019.

Sponsorship & Advertising again delivered strong growth over the prior year due in part to our first year with the Rock in Rio festival, as well as adding marquee brands as partners around the globe.

Our operating results improved this year, compared to 2018, due to improved business performance.

Our Concerts segment drove most of our revenue growth this year, generating $9.4 billion of revenue, an increase of $0.7 billion, or 8%, on a reported basis, or $0.8 billion, a 9% increase without the impact of changes in foreign exchange rates.

This higher revenue was due to additional arena activity in the United States, more stadium shows in Europe, expanded theater and club activity worldwide, and adding new markets to our festival footprint.

Some of the biggest tours in 2019 featured Metallica, Ariana Grande, Backstreet Boys, Jonas Brothers, and Post Malone.

Overall, Concerts attendance grew by 4.9 million to nearly 98 million fans, a record for the Company and an increase of 5% over the prior year.

The growth of our amphitheater onsite business continued in 2019, with a focus on increased food and beverage offerings, premium parking, and other upsell programs.

These initiatives helped grow our ancillary revenue per fan at our amphitheaters by $2.50 in 2019.

We have continued to focus on platinum and premium ticket opportunities for fans and improving the sell-through on our best seats.

We will continue to look for expansion opportunities, both domestically and internationally, as well as ways to market our events more effectively, in order to continue to expand our fan base and geographic reach and thereby sell more tickets and onsite products.

Our Ticketing segment revenue for 2019 increased by $15.6 million, or 1%, on a reported basis as compared to last year, or $35.4 million, a 2% increase, without the impact of changes in foreign exchange rates.

We sold 220 million fee-bearing tickets worldwide in 2019, a 2.4 million ticket increase over last year.

During 2019, we grew ticketing-related revenue streams, implemented tools to reduce costly fraudulent activity, and reduced our cost of customer acquisition.

All these factors helped improve operating income for the segment as well as margins for the year.

Our digital ticketing initiative continues to accelerate:

we have installed our Presence system in over 700 venues in North America through the end of 2019, with approximately 121 million fans entering venues via the platform.

App installations increased by 18% during the year, creating additional marketing opportunities for our company and driving conversion from search and discovery to purchase.

On the mobile front, approximately 48% of our total tickets were sold via mobile and tablet devices in 2019, and our total mobile ticket sales increased by 13% year-over-year.

This is a key component of our rollout of SafeTix which benefits our fans, our artists, and our clients.

We will continue to implement new features to drive further expansion of mobile ticket transactions and invest in initiatives aimed at improving the ticket search, purchase and transfer process.

As a result, we expect to continue to attract more ticket buyers and enhance the overall fan and venue/artist client experience.

Our Sponsorship & Advertising segment revenue for the year was up $86.3 million, or 17%, on a reported basis as compared to last year, or $98.6 million, or 20%, without the impact of changes in foreign exchange rates.

Higher revenue largely resulted from new clients and increased festival sponsorship, including the Rock in Rio event in Brazil that occurs every two years.

In 2019, we increased our strategic sponsors globally, and grew revenue from these partners by double-digits.

The investment we have made over the past few years in premium inventory products including viewing decks, VIP clubs and social moments are generating sponsorship growth at our owned and operated venues.

Renewals of our key existing clients were on plan and we saw growth from expanding into new categories such as consumer retail, automotive, and consumer packaged goods.

Operating income improved by double-digits as a result of the strong operational results.

We believe that our extensive onsite and online reach, global venue distribution network, artist relationships, ticketing operations and live entertainment content are the keys to securing long-term sponsorship agreements with major brands, and we plan to expand and enhance these assets while extending further into new markets internationally.

Recent Events

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

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 and are in the process of responding to their requests for additional information in connection with their review of our filings.

CIE shareholders approved the acquisition in September 2019.

The acquisition is anticipated to close in the first half of 2020.

Due to the global COVID-19 pandemic, we ceased all Live Nation tours and closed all our venues beginning in mid-March 2020 to support global efforts to mitigate the spread of the virus.

To ensure the safety of our artists, fans, and employees, we held very few traditional events in the year and had minimal ticket sales.

As a result, our overall revenue for 2020 decreased by 84%, from $11.5 billion in 2019 to $1.9 billion in 2020.

The revenue reduction was largely in our Concerts and Ticketing segments as a result of almost no shows occurring from mid-March through the end of the year and ticket sales for future shows sharply reduced 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 2020 of $1.7 billion compared to operating income of $325 million for 2019.

The impact of foreign exchange rates to both our revenue and operating income were minimal.

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.

Recent fan surveys indicate that the demand will be there when the shows return, with 95% of fans expecting to attend concerts again once government and/or health officials determine events can resume.

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

Our Concerts segment revenue for 2020 was $1.5 billion, compared to $9.4 billion for 2019, a reduction of 84%.

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

Of the 8,117 events we held this year, about 7,100 of those were in the first quarter of 2020, prior to our shutdown.

Overall, our show count went from 40,237 in 2019 down to 8,117 in 2020, a reduction of 80%.

In addition to normal show activity from January through mid-March, we were able to hold drive-in concert events as well as socially distanced shows in some markets during the pandemic.

Towards the end of the year, we saw a return to almost normal levels of activity in New Zealand which held our Rhythm and Vines festival in December with record levels of attendance.

Coinciding with the trend on show count, our total fan count for the year went from 97.7 million in 2019 down to 11.1 million in 2020, a reduction of 89%.

Concerts had an operating loss for the year 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.

Our Ticketing segment revenue for 2020 was $188 million, compared to $1.5 billion for 2019, a reduction of 88% driven by a lack of ticket sales for future events and refunds on 2020 shows that were cancelled or rescheduled.

Before refunds, our fee-bearing tickets sold for the year were 58.5 million, which compares to 219.8 million for 2019, a reduction of 73%.

A total of 27.4 million tickets were refunded in the year, equating to just slightly over $2.6 billion of gross transaction value.

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

Our Sponsorship & Advertising segment revenue for 2020 was $204 million, compared to $590 million for 2019, a reduction of 65%.

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

We continue to be focused on mitigating the financial impact of the shutdown.

We have undertaken cost-savings initiatives across the organization, including salary reductions, hiring freezes, furloughs, termination of certain employees, 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 our major expenditures:

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.

The magnitude and pace of the recovery will depend on each market and their containment efforts, the nature of the events being held, ongoing efforts to develop rapid testing technologies and rollout of approved vaccines and treatments 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.

Segment Overview

Our reportable segments are Concerts, Ticketing and Sponsorship & Advertising.

Our Concerts segment principally involves the global promotion of live music events in our owned or operated venues and in rented third-party venues, the operation and management of music venues, the production of music festivals across the world, the creation of associated content and the provision of management and other services to artists.

While our Concerts segment operates year-round, 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.

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.

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For business that is conducted in foreign markets, we also compare the operating results from our foreign operations to prior periods without the impact of changes in foreign exchange rates.

Our Ticketing segment is primarily an agency business that sells tickets for events on behalf of its clients and retains a portion of the service charges as our fee.

Gross transaction value (“GTV”) represents the total amount of the transaction related to a ticket sale and includes the face value of the ticket as well as the service charge.

Service charges are generally based on a percentage of the face value or a fixed fee.

We sell tickets through websites, mobile apps, ticket outlets and telephone call centers.

Our ticketing sales are impacted by fluctuations in the availability of events for sale to the public, which may vary depending upon scheduling by our clients.

We also offer ticket resale services, sometimes referred to as secondary ticketing, principally through our integrated inventory platform, league/team platforms and other platforms internationally.

Our Ticketing segment manages our online activities including enhancements to our ticketing websites and product offerings.

Through our websites, we sell tickets to our own events as well as tickets for our clients and provide event information.

Revenue related to ticketing service charges is recognized when the ticket is sold for our third-party clients.

For our own events, where our concert promoters control ticketing, revenue is deferred and recognized when the event occurs.

Gross transaction value (“GTV”) represents the total amount of the transaction related to a ticket sale and includes the face value of the ticket as well as the service charge.

We use GTV to evaluate changes in ticket fee revenue that are driven by the pricing of our service charges.

Ticketing direct operating expenses include call center costs and credit card fees, along with other costs.

To judge the health of our Ticketing segment, we primarily review the GTV and the number of tickets sold through our ticketing operations, the number of clients renewed or added and the average royalty rate paid to clients who use our ticketing services.

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Sponsorship & Advertising

Our Sponsorship & Advertising segment employs a sales force that creates and maintains relationships with sponsors through a combination of strategic, international, national and local opportunities that allow businesses to reach customers through our concert, festival, venue and ticketing assets, including advertising on our websites.

We drive increased advertising scale to further monetize our concerts platform through rich media offerings including advertising associated with live streaming and music-related content.

We work with our corporate clients to help create marketing programs that support their business goals and connect their brands directly with fans and artists.

We also develop, book and produce custom events or programs for our clients’ specific brands, which are typically experienced exclusively by the clients’ consumers.

These custom events can involve live music events with talent and media, using both online and traditional outlets.

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.

Revenue related to sponsorship and advertising programs is recognized over the term of the agreement or operating season as the benefits are provided to the sponsor unless the revenue is associated with a specific event, in which case it is recognized when the event occurs.

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

To judge the health of our Sponsorship & Advertising segment, we primarily review the revenue generated through sponsorship arrangements and online advertising, and the percentage of expected revenue under contract.

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Ticketing (2)

Number of fee-bearing tickets sold 219,838 217,441 205,703

Number of non-fee-bearing tickets sold 266,750 265,034 267,713

Total tickets sold 486,588 482,475 473,416

Estimated number of fee-bearing tickets sold 31,101 219,838 217,442

Estimated number of non-fee-bearing tickets sold 88,823 266,750 265,033

Total estimated tickets sold 119,924 486,588 482,475

(1) Events generally represent a single performance by an artist.

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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 requested and any cancellations that occurred during the period and up to the time of reporting of these consolidated financial statements.

Fee-bearing tickets sold above are net of refunds of 27.4 million tickets for the year ended December 31, 2020.

Non-GAAP Measures

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

Concerts revenue increased $658.1 million during the year ended December 31, 2019 as compared to the prior year.

Excluding the decrease of $154.5 million related to currency impacts, revenue increased $812.6 million, or 9%, primarily due to more shows in our North America arenas, international stadiums and theaters and clubs globally, higher average ticket prices in our North America theaters, higher festival activity and more shows sold to third-party promoters in markets where we do not have a local promoter presence.

These increases were partially offset by fewer shows in our North America stadiums, international arenas and North America amphitheaters.

Concerts had incremental revenue of $269.0 million during 2019, primarily from the acquisitions of concert and festival promotion businesses.

Concerts revenue decreased $8.0 billion during the year ended December 31, 2020 as compared to the prior year primarily due to the unprecedented stoppage of our concert events globally during 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 $134.0 million during 2020 from acquisitions, primarily that of a merchandise business.

Operating results

The decline in operating results for Concerts for the year ended December 31, 2019 were primarily driven by higher compensation costs associated with salary increases and headcount growth along with increased depreciation and amortization associated with recent enhancements to certain venues and $21.2 million of impairment charges recorded during 2019 partially offset by improved overall operating results from our events.

The impairment charges recorded in 2019 were 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.

There were no significant impairments of intangible assets recorded during 2018.

In 2018, we recorded a $10.5 million goodwill impairment related to our Artist Services (non-management) business in connection with our annual impairment test.

There was no goodwill impairment recorded in 2019.

Included in selling, general and administrative expenses for t he year ended December 31, 2019 is $91.5 million of expenses related to new acquisitions and new venues in the Concerts segment.

The decrease in Concerts operating results for the year ended December 31, 2020 was primarily driven by the reduction in revenue caused by the global COVID-19 pandemic discussed above partially offset by cost reduction measures implemented during 2020, which have included salary reductions, hiring freezes, furloughs, and reduction or elimination of other discretionary spending along with participating in government support programs globally.

Depreciation and amortization during 2020 includes $23.2 million in impairment charges associated with revenue-generating contracts, venue management and leaseholds and client/vendor relationships intangible assets due to the impacts from the global COVID-19 pandemic.

Depreciation and amortization in 2019 includes $21.2 million in impairment charges primarily associated with revenue-generating contract intangible assets.

Concerts operating results for the year ended December 31, 2020 include net operating losses of $59.2 million related to acquisitions and new venues.

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

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Depreciation and amortization 169,921 156,894 143,551 8% 9%

Loss on disposal of operating assets 116 7 49 * *

Operating income $ 231,958 $ 201,914 $ 90,905 15% *

Loss (gain) on disposal of operating assets (1) 116 7 * *

Operating income (loss) $ (612,002) $ 231,958 $ 201,914 * 15%

Operating margin * 15.0 % 13.2 %

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

Ticketing revenue increased $15.6 million during the year ended December 31, 2019 as compared to the prior year.

Excluding the decrease of $19.8 million related to currency impacts, revenue increased $35.4 million, or 2%, primarily due to increased international primary ticket fees, driven by higher volume for concerts and sporting events, along with higher North America resale volume and increased ancillary revenue.

These increases were partially offset by lower North America ticket volume driven by fewer concert events on sale in the first half of 2019, which was partially driven by more onsales for 2019 events in the fourth quarter of 2018.

Ticketing revenue decreased $1.4 billion during the year ended December 31, 2020 as compared to the prior year primarily due to the lack of tickets available for sale to the public driven by the unprecedented stoppage of concerts, sports and other events globally during 2020 and refunds for cancelled or rescheduled events for third-party clients due to the global COVID-19 pandemic.

Operating results

Ticketing operating income increased for the year ended December 31, 2019 primarily due to improved operating results from the increased ticketing activity discussed above along with lower customer acquisition costs and credit card related costs partially offset by increased depreciation and amortization associated with technology enhancements.

The decrease in Ticketing operating results for the year ended December 31, 2020 was primarily driven by the reduction in revenue caused by 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 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

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

Sponsorship & Advertising revenue increased $86.3 million during the year ended December 31, 2019 as compared to the prior year.

Excluding the decrease of $12.3 million related to currency impacts, revenue increased $98.6 million, or 20%, primarily due to growth in our national sponsorship programs in North America along with increased sponsorship for our festivals and other venues.

Sponsorship & Advertising had incremental revenue of $36.2 million during 2019 primarily from the acquisitions of concert and festival promotion businesses.

Sponsorship & Advertising revenue decreased $386.6 million during the year ended December 31, 2020 as compared to 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 increased operating income for the year ended December 31, 2019 was primarily driven by the higher sponsorship activity discussed above partially offset by higher fulfillment costs on certain sponsorship programs and increased compensation expense driven by headcount growth.

The decreased operating income for the year ended December 31, 2020 was primarily driven by the reduction in revenue discussed above along with higher fulfillment costs on certain sponsorship programs.

Consolidated Results of Operations

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Corporate expenses 102,100 (12) 102,088 168,839 153,406 (40)% (40)% 10%

Operating income 324,844 $ 9,752 $ 334,596 272,536 91,397 19% 23% *

Operating income (loss) (1,653,192) $ (2,578) $ (1,655,770) 324,844 272,536 * * 19%

Operating margin (88.8) % (88.4) % 2.8 % 2.5 %

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Interest income (11,737) (14,406) (8,961)

Equity in earnings of nonconsolidated affiliates

Equity in losses (earnings) of nonconsolidated affiliates

5,458 (5,457) (2,747)

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(28,875) 66,892 40,765

Net income 118,212 90,340 7,774

Net income attributable to noncontrolling interests

Net income (loss) (1,827,790) 118,212 90,340

Net income (loss) attributable to noncontrolling interests

(103,255) 48,323 30,091

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

Corporate expenses increased $15.4 million, or 10%, during the year ended December 31, 2019 as compared to the prior year primarily due to increased compensation expense driven by headcount growth and incentive compensation as a result of the increased operating results.

Corporate expenses decreased $66.7 million, or 40%, during the year ended December 31, 2020 as compared to the prior year primarily due to cost reduction efforts implemented during 2020, including salary reductions, with salaries for senior executives reduced by up to 60%.

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 $16.5 million, or 12%, during the year ended December 31, 2019 as compared to the prior year primarily due to additional interest costs from the 4.75% senior notes issued in October 2019 along with the 5.625% senior notes and the 2.5% convertible senior notes issued in March 2018.

Interest expense increased $69.3 million, or 44%, during the year ended December 31, 2020 as compared to 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.

Our debt balances, excluding unamortized debt discounts and issuance costs, were $5.0 billion and $3.4 billion as of December 31, 2020 and 2019, respectively.

Other expense (income), net

Other expense (income), net was expense of $12.2 million for the year ended December 31, 2018 and includes net foreign exchange rate gains of $11.6 million.

The net foreign exchange rate gains and losses result primarily from revaluation of certain foreign currency denominated net assets held internatio nally.

For the year ended December 31, 2019, we had a net tax expense of $66.9 million on income before income taxes of $185.1 million compared to a net tax expense of $40.8 million on income before income taxes of $131.1 million for 2018.

In 2019, the net income tax expense consisted of a $5.3 million tax expense related to United States federal income taxes, $55.5 million tax expense related to foreign entities and $6.1 million tax expense related to state and local income taxes.

The net increase in tax expense of $26.1 million is due primarily to higher pre-tax earnings in taxable jurisdictions.

Net income attributable to noncontrolling interests

Net income attributable to noncontrolling interests increased $18.2 million during the year ended December 31, 2019 as compared to the prior year primarily from earnings associated with the acquisition of a festival promotion business located in Brazil that had been accounted for as an equity investment and improved operating results from certain artist management businesses located in the United States.

These increases were partially offset by the portion of the intangible impairment attributable to noncontrolling interests.

See “—Concerts” segment above for further discussion.

For the year ended December 31, 2020, we had a net tax benefit of $28.9 million on losses before income taxes of $1.9 billion compared to a net tax expense of $66.9 million on income before income taxes of $185.1 million for 2019.

In 2020, the net income tax benefit consisted of $16.4 million related to United States federal income taxes, $12.8 million related to foreign entities partially offset by $0.3 million tax expense related to state and local income taxes.

The net decrease in tax expense of $95.8 million is due primarily to lower pre-tax income or higher pre-tax losses in taxable jurisdictions.

Net income (loss) attributable to noncontrolling interests

Net income (loss) attributable to noncontrolling interests was a loss of $103.3 million during the year ended December 31, 2020 as compared to income of $48.3 million in the prior year primarily due to lower operating results from certain concert and festival promotion businesses driven by postponed and cancelled events during 2020 due to the global COVID-19 pandemic.

Liquidity and Capital Resources

In response to the impact that the global COVID-19 pandemic has had on our business, and the uncertainty of the duration of current conditions globally, we have taken 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.

We further amended our senior secured credit facility in July 2020, which, among other things, substitutes 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 February 2020, we issued $400 million principal amount of 2.0% convertible senior notes due 2025 and in May 2020 we issued $1.2 billion principal amount of 6.5% senior secured notes due 2027.

In January 2021, we issued $500 million principal amount of 3.75% senior secured notes due 2028.

As a result, we believe that these amendments and additional debt issuances will allow us the flexibility to manage our business through the disruption we experienced in 2020 and expect to experience in 2021.

Our cash is centrally managed on a worldwide basis.

Our primary short-term liquidity needs are to fund general working capital requirements, capital expenditures and debt service requirements while our long-term liquidity needs are primarily related to acquisitions and debt repayment.

Our primary sources of funds for our short-term liquidity needs will be cash flows from operations and borrowings under our senior secured credit facility, while our long-term sources of funds will be from cash flows from operations, long-term bank borrowings and other debt or equity financings.

Our primary sources of funds for our short-term liquidity needs will be cash flows from operations and borrowings under our amended senior secured credit facility, while our long-term sources of funds will be from cash flows from operations, long-term bank borrowings and other debt or equity financings.

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 $2.5 billion at December 31, 2019 and $2.4 billion at December 31, 2018.

Included in the December 31, 2019 and 2018 cash and cash equivalents balance is $837.7 million and $859.1 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 our clients on a regular basis.

Our balance sheet reflects cash and cash equivalents of $2.5 billion for both December 31, 2020 and 2019.

Included in the December 31, 2020 and 2019 cash and cash equivalents balances are $673.5 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.

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 $836.2 million in cash and cash equivalents, excluding client cash, at December 31, 2020.

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

Our weighted-average cost of debt, excluding the unamortized debt discounts and debt issuance costs on our term loans and notes, was 4.2% at December 31, 2019.

Our weighted-average cost of debt, excluding unamortized debt discounts and debt issuance costs on our term loans and notes, was 4.4% at December 31, 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.

Cash held in interest-bearing operating accounts in many cases exceeds the Federal Deposit Insurance Corporation insurance limits.

Cash held in non-interest-bearing and interest-bearing operating accounts in many cases exceeds the Federal Deposit Insurance Corporation insurance limits.

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

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

however, we can provide no assurances that access to our cash and cash equivalents will not be impacted by adverse conditions in the financial markets.

For our Concerts segment, we generally receive cash related to ticket revenue at our owned or operated venues and festivals in advance of the event, which is recorded in deferred revenue until the event occurs.

With the exception of some upfront costs and artist deposits, which are recorded in prepaid expenses until the event occurs, we pay the majority of event-related expenses at or after the event.

however, we can provide no assurances that access to our cash and cash equivalents will not be impacted by adverse conditions in the financial markets, including those resulting from the global COVID-19 pandemic.

For our Concerts segment, we often receive cash related to ticket revenue in advance of the event, which is recorded in deferred revenue until the event occurs.

In the United States, this cash is largely associated with events in our owned or operated venues, notably amphitheaters, festivals, theaters and clubs.

Internationally, this cash is from a combination of both events in our owned or operated venues, as well as events in third-party venues associated with our promoter’s share of tickets in allocation markets.

We do not otherwise generally hold cash for events being held in third-party venues.

In the United States, most venues traditionally hold all the cash, and internationally either the venue holds all the cash or holds the portion of the cash associated with their ticket allocation.

With the exception of some upfront costs and artist advances, which are recorded in prepaid expenses until the event occurs, we pay the majority of event-related expenses at or after the event.

Artists are paid when the event occurs under one of several different formulas, which may include fixed guarantees and/or a percentage of ticket sales or event profits, net of any advance they have received.

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.

We view our available cash as cash and cash equivalents, less ticketing-related client cash, less event-related deferred revenue, less accrued expenses due to artists and cash collected on behalf of others, plus event-related prepaid expenses.

This is essentially our cash available to, among other things, repay debt balances, make acquisitions and finance capital expenditures.

This is essentially our cash available to, among other things, repay debt balances, make acquisitions, pay artist advances and finance capital expenditures.

Our intra-year cash fluctuations are impacted by the seasonality of our various businesses.

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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 beginning in mid-March due to the global COVID-19 pandemic, we did not experience our typical seasonality trends in 2020.

See “—Seasonality” below.

We believe that we have sufficient financial flexibility to fund these fluctuations and to access the global capital markets on satisfactory terms and in adequate amounts, although there can be no assurance that this will be the case, and capital could be less accessible and/or more costly depending on economic conditions at the time.

We expect cash flows from operations and borrowings under our senior secured credit facility, along with other financing alternatives, to satisfy working capital requirements, capital expenditures and debt service requirements for at least the succeeding year.

We expect cash flows from operations and borrowings under our amended senior secured credit facility, along with other financing alternatives, to satisfy working capital requirements, capital expenditures and debt service requirements for at least the succeeding year.

We may need to incur additional debt or issue equity to make other strategic acquisitions or investments.

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We may make significant acquisitions in the near term, subject to limitations imposed by our financing agreements and market conditions.

The lenders under our revolving loans consist of banks and other third-party financial institutions.

While we currently have no indications or expectations that such lenders will be unable to fund their commitments as required, we can provide no assurances that future funding availability will not be impacted by adverse conditions in the financial markets.

The lenders under our revolving loans and counterparty to our interest rate hedge agreement consists of banks and other third-party financial institutions.

Should an individual lender default on its obligations, the remaining lenders would not be required to fund the shortfall, resulting in a reduction in the total amount available to us for future borrowings, but would remain obligated to fund their own commitments.

Should the counterparty to our interest rate hedge agreement default on its obligation, we could experience higher interest rate volatility during the period of any such default.

Fourth Quarter Results of Operations (Unaudited)

(in thousands)

Revenue $ 237,383 $ 2,889,448

Operating loss $ (388,014) $ (82,920)

Net loss $ (463,826) $ (136,639)

Net loss attributable to common stockholders of Live Nation $ (443,332) $ (159,947)

Basic net loss available to common stockholders of Live Nation $ (436,197) $ (185,311)

Diluted net loss available to common stockholders of Live Nation $ (436,197) $ (185,311)

Basic and diluted net loss per common share available to common stockholders of Live Nation (2.04) (0.88)

Sources of Cash

Senior Secured Credit Facility

In October 2019, we amended our senior secured credit facility.

The amended senior secured credit facility provides for (i) a five-year $400 million delayed draw term loan A facility, (ii) a seven-year $950 million term loan B facility and (iii) a five-year $500 million revolving credit facility.

The delayed draw term loan A facility is available to be drawn for the first two years following the amendment.

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.

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 1.75% or a base rate plus 0.75%, subject to stepdowns based on our net leverage ratio.

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%.

We are required to pay a commitment fee of 0.35% per year on the undrawn portion available under the revolving credit facility and delayed draw term loan A, subject to a stepdown based on our net leverage ratio, and variable fees on outstanding letters of credit.

For the 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.

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.

During the year ended December 31, 2019, we made principal payments totaling $170.4 million primarily to repay the outstanding principal balance of our term loan A in connection with the October 2019 amendment.

At December 31, 2019, the outstanding balances on these term loans, excluding discounts and debt issuance costs, were $947.6 million.

There were no borrowings under the revolving credit facility as of December 31, 2019.

Based on our outstanding letters of credit of $83.5 million, $416.5 million was available for future borrowings.

4.75% Senior Notes

In October 2019, we issued $950 million principal amount of 4.75% senior notes due 2027.

Interest on the notes is payable semi-annually in cash in arrears on April 15 and October 15 of each year beginning on April 15, 2020, and will mature on October 15, 2027.

We may redeem some or all of the notes, at any time prior to October 15, 2022, 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 October 15, 2022, at a price equal to 104.750% of the aggregate principal amount, plus accrued and unpaid interest thereon, if any, to the date of redemption.

In addition, on or after October 15, 2022, we may redeem some or all of the notes at any time at redemption prices starting at 103.563% 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.

4.875% Senior Notes

At December 31, 2019, we had $575 million principal amount of 4.875% senior notes due 2024.

Interest on the notes is payable semiannually in cash in arrears on May 1 and November 1 of each year, and the notes will mature in November 2024.

In addition, on or after November 1, 2019, we may redeem some or all of the notes at any time at the redemption prices that start at 103.656% 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.

5.625% Senior Notes

At December 31, 2019, we had $300 million principal amount of 5.625% senior notes due 2026.

Interest on the notes is payable semiannually in cash in arrears on March 15 and September 15 and the notes will mature in March 2026.

We may redeem some or all of the notes at any time prior to March 15, 2021 at a price equal to 100% of the principal amount, plus any accrued and unpaid interest to the date of redemption, plus a ‘make-whole’ premium.

We may redeem up to 35% of the aggregate principal amount of the notes from proceeds of certain equity offerings prior to March 15, 2021, at a price equal to 105.625% of the aggregate principal amount being redeemed, plus any accrued and unpaid interest thereon to the date of redemption.

In addition, on or after March 15, 2021, we may redeem some or all of the notes at any time at redemption prices that start at 104.219% 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 any accrued and unpaid interest to the repurchase date, if we experience certain defined changes of control.

During 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 transaction fees of approximately $35.5 million, leaving approximately $1.6 billion for general corporate purposes.

In January 2021, we issued $500 million principal amount of 3.75% senior secured notes due 2028.

Interest on the notes is payable semi-annually in cash in arrears on January 15 and July 15 of each year beginning on July 15, 2021, and will mature on January 15, 2028.

The proceeds were used to pay estimated fees of $8.0 million and repay $75.0 million aggregate principal amount of our senior secured term loan B facility, leaving approximately $417.0 million for general corporate purposes, including acquisitions and organic investment opportunities.

Amended Senior Secured Credit Facility

Information regarding our amended senior secured credit facility can be found in Part II —Financial Information —Item 8.—Financial Statements and Supplementary Data—Note 5—Long-Term Debt.

6.5% Senior Secured Notes Due 2027

Information regarding our 6.5% senior secured notes due 2027 can be found in Part II —Financial Information —Item 8.—Financial Statements and Supplementary Data—Note 5—Long-Term Debt.

4.75% Senior Notes Due 2027

Information regarding our 4.75% senior notes due 2027 can be found in Part II —Financial Information —Item 8.—Financial Statements and Supplementary Data—Note 5—Long-Term Debt.

4.875% Senior Notes Due 2024

Information regarding our 4.875% senior notes due 2024 can be found in Part II —Financial Information —Item 8.—Financial Statements and Supplementary Data—Note 5—Long-Term Debt.

5.625% Senior Notes Due 2026

Information regarding our 5.625% senior notes due 2026 can be found in Part II —Financial Information —Item 8.—Financial Statements and Supplementary Data—Note 5—Long-Term Debt.

3.75% Senior Secured Notes Due 2028

Information regarding our 3.75% senior secured notes due 2028 can be found in Part II —Financial Information —Item 8.—Financial Statements and Supplementary Data—Note 16—Subsequent Events.

2.5% Convertible Senior Notes Due 2023

At December 31, 2019, we had $550 million principal amount of 2.5% convertible senior notes due 2023.

The notes pay interest semiannually in arrears on March 15 and September 15 at a rate of 2.5% per annum.

The notes will mature in March 2023, and may not be redeemed by us prior to the maturity date.

The notes will be convertible, under certain circumstances, until December 15, 2022, and on or after such date without condition, at an initial conversion rate of 14.7005 shares of our common stock per $1,000 principal amount of notes, subject to adjustment, which represents a 54.4% conversion premium based on the last reported sale price of our common stock of $44.05 on March 19, 2018 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.

Assuming we fully settled the notes in shares, the maximum number of shares that could be issued to satisfy the conversion is currently 8.1 million.

If we experience a fundamental change, as defined in the indenture governing the notes, the holders of the notes may require us to purchase for cash all or a portion of their notes, subject to specified exceptions, at a price equal to 100% of the principal amount of the notes plus any accrued and unpaid interest.

Information regarding our 2.5% convertible senior notes due 2023 can be found in Part II —Financial Information —Item 8.—Financial Statements and Supplementary Data—Note 5—Long-Term Debt.

2.0% Convertible Senior Notes Due 2025

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

The proceeds were used to pay estimated fees of $6.5 million, leaving approximately $393.5 million for general corporate purposes, including acquisitions.

Interest on the notes is payable semiannually in arrears on February 15 and August 15, beginning August 15, 2020, at a rate of 2.0% per annum.

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.

Assuming we fully settled the notes in shares, the maximum number of shares that could be issued to satisfy the conversion is currently 3.8 million.

We may redeem for cash all or a portion of the notes, at our option, on or after February 21, 2023 and before the 41st scheduled trading day before the maturity date, if the sales price of our common stock reaches specified targets as defined in the indenture governing the notes.

The redemption price will equal 100% of the principal amount of the notes plus accrued interest, if any.

If we experience a fundamental change, as defined in the indenture governing the notes, the holders of the 2.0% convertible senior notes due 2025 may require us to purchase for cash all or a portion of their notes, subject to specified exceptions, at a price equal to 100% of the principal amount of the notes plus accrued and unpaid interest, if any.

Information regarding our 2.0% convertible senior notes due 2025 can be found in Part II —Financial Information —Item 8.—Financial Statements and Supplementary Data—Note 5—Long-Term Debt.

Extinguishment of Debt

In October 2019, we issued $950 million principal amount of 4.75% senior notes due 2027 and further amended our senior secured credit facility, including the draw down of $950 million principal amount under the new term loan B facility.

The proceeds were used to repay the $1.1 billion principal balance outstanding on the term loans A and B under our then existing senior secured credit facility, to repay the entire $250 million principal amount of the 5.375% senior notes due 2022, to repay the related redemption premium of $3.4 million on the senior notes and accrued interest and fees of $30.8 million, leaving $527.5 million for general corporate purposes, including acquisitions.

We recorded a $4.5 million loss on extinguishment of debt related to this refinancing.

In March 2018, we issued $300 million principal amount of 5.625% senior notes due 2026 and $550 million principal amount of 2.5% convertible senior notes due 2023 and amended our senior secured credit facility to reduce the applicable interest rate for the term loan B.

Total gross proceeds of $850.0 million from the issuance of the notes were used to repay $246.3 million of the outstanding principal amount of our 2.5% convertible senior notes due 2019, the related repurchase premium of $90.4 million on those convertible senior notes and accrued interest and fees of $20.8 million, leaving $492.5 million in additional cash available for general corporate purposes.

We recorded a $2.5 million loss on extinguishment of debt related to this refinancing.

Information regarding extinguishment of our debt in October 2019 and March 2018 can be found in Part II —Financial Information —Item 8.—Financial Statements and Supplementary Data—Note 5—Long-Term Debt.

Debt Covenants

Our 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).

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

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

The consolidated net leverage covenant requires us to maintain a ratio of consolidated total net debt to consolidated EBITDA (both as defined in the credit agreement) of 5.75x over the trailing four consecutive quarters through September 30, 2020.

The consolidated total leverage ratio will reduce to 5.50x on December 31, 2020 and 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.

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.

All of these notes contain two incurrence-based financial covenants, as defined, requiring a minimum fixed charge coverage ratio of 2.0x and a maximum secured indebtedness leverage ratio of 3.5x.

Some of our other subsidiary indebtedness includes restrictions on entering into various transactions, such as acquisitions and disposals, and prohibits payment of ordinary dividends.

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

As of December 31, 2019, 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.

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

Information regarding our debt covenants can be found in Part II —Financial Information —Item 8.—Financial Statements and Supplementary Data—Note 5—Long-Term Debt.

When we make acquisitions, the acquired entity may have cash at the time of acquisition.

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

During 2020, we used $41.1 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 $77.4 million of cash on their balance sheets, primarily related to deferred revenue for future events.

During 2019, we used $235.1 million of cash primarily for the acquisitions of venue management and concert promotion businesses located in Canada, Belgium and the United States.

As of the date of acquisition, the acquired businesses had a total of $74.7 million of cash on th eir balance sheets, primarily related to deferred revenue for future events.

During 2018, we used $120.2 million of cash primarily for the payment of contingent consideration related to an acquisition in Europe that occurred prior to the current accounting guidance for business combinations along with the acquisitions of various concert promotion and artist management businesses that are all located in the United States.

As of the date of acquisition, the acquired businesses had a total of $19.3 million of c ash on their balance sheets, primarily related to deferred revenue for future events.

Purchases and Sales of Noncontrolling Interests, net

In 2018, we used $159.6 million of cash primarily for the final payment due in connection with the 2017 acquisition of the remaining interest in a concert and festival promotion business located in the United States.

In 2020, we used $106.2 million of cash primarily for the acquisitions of the remaining or additional interest in festival promotion businesses located in the United States and Brazil.

Capital Expenditures

Venue and ticketing operations are capital intensive businesses, requiring continual investment in our existing venues and ticketing systems in order to address audience and artist expectations, technological industry advances and various federal, state and/or local regulations.

Venue and ticketing operations are capital intensive businesses, requiring continual investment in our existing venues and ticketing systems in order to address fan and artist expectations, technological industry advances and various federal, state and/or local regulations.

We categorize capital outlays between maintenance capital expenditures and revenue generating capital expenditures.

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Capital expenditures typically increase during periods when our venues are not in operation since that is the time that such improvements can be completed.

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:

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

Year Ended December 31,

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Total capital expenditures $ 191,556 $ 315,604 $ 250,689

Maintenance capital expenditures for 2019 increased from the prior year primarily due to leasehold improvements of certain office facilities and venue-related projects.

Revenue generating capital expenditures for 2019 increased from the prior year primarily due to enhancements at our North America amphitheaters and higher investment in technology-related projects.

For the years ended December 31, 2019, 2018 and 2017, $22.0 million, $11.6 million and $20.5 million, respectively, of insurance proceeds and landlord reimbursements have been excluded from capital expenditures in the table above.

Maintenance capital expenditures for 2020 decreased from the prior year primarily due to a reduction in leasehold improvements of certain office facilities, venue-related projects and technology enhancements as part of our cash savings initiatives implemented in connection with the global COVID-19 pandemic.

Revenue generating capital expenditures for 2020 decreased from the prior year primarily due to lower spending in our amphitheater venues and a reduction in technology-related projects as part of our cash savings initiatives implemented in connection with the global COVID-19 pandemic.

For the years ended December 31, 2020, 2019 and 2018, $17.9 million, $22.0 million and $11.6 million, respectively, of insurance proceeds and landlord or noncontrolling interest partner reimbursements have been excluded from capital expenditures in the table above.

We currently expect capital expenditures to be approximately $150 million for the year ending December 31, 2021.

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Term loans and revolving credit facility $ 938,125 $ 9,500 $ 19,000 $ 19,000 $ 890,625

4.75% senior notes 950,000 — — — 950,000

4.875% senior notes 575,000 — — 575,000 —

5.625% senior notes 300,000 — — — 300,000

6.5% senior secured notes due 2027 1,200,000 — — — 1,200,000

4.75% senior notes due 2027 950,000 — — — 950,000

4.875% senior notes due 2024 575,000 — — 575,000 —

5.625% senior notes due 2026 300,000 — — — 300,000

2.5% convertible senior notes due 2023 (2)

550,000 — 550,000 — —

2.0% convertible senior notes due 2025 (3)

400,000 — — 400,000 —

Other long-term debt 125,226 43,915 43,501 32,183 5,627

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_____________

(1) Does not include $400 million principal amount of 2.0% convertible senior notes due 2025 issued in February 2020.

Does not include $500 million principal amount of 3.75% senior secured notes due 2028 issued in January 2021.

On or after December 15, 2022, holders may convert their 2.5% convertible senior notes.

On or after November 15, 2024, holders may convert their 2.0% convertible senior notes.

Does not include interest on the delayed draw term loan A or revolving credit facility as the balances were zero as of December 31, 2020.

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Operating Activities

Cash provided by operating activities decreased $471.8 million for the year ended December 31, 2019 as compared to the prior year.

During 2019, our accounts payable and accrued expenses decreased as compared to increasing in 2018 based on the timing of payments and the increase in cash received for future events was lower in 2019 as compared to the same period of the prior year.

These decreases were partially offset by higher net cash-related income in 2019.

Cash provided by operating activities decreased $1.6 billion for the year ended December 31, 2020 as compared to the prior year primarily due to lower cash-related income during 2020 resulting from the cessation of our concert events, and the related rescheduling of shows to 2021, beginning in mid-March in response to the global COVID-19 pandemic.

Investing Activities

Cash used in investing activities increased $194.1 million for the year ended December 31, 2019 as compared to the prior year primarily due to higher acquisition payments, and higher purchases of property, plant and equipment.

Cash used in investing activities decreased $466.9 million for the year ended December 31, 2020 as compared to the prior year primarily due to fewer acquisitions, less cash paid for capital expenditures and an increase in collections of notes receivable.

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

Financing Activities

Cash provided by financing activities increased $140.1 million for the year ended December 31, 2019 as compared to the prior year primarily due to a decrease in purchases of noncontrolling interests and higher net proceeds from the refinancing of debt in October 2019 as compared to the refinancing in March 2018.

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.

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.

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.

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

We expect these trends to continue in the future.

— Risk Factors — “Our operations are seasonal and our results of operations vary from quarter to quarter and year over year, so our financial performance in certain financial quarters or years may not be indicative of, or comparable to, our financial performance in subsequent financial quarters or years.”

Cash provided by financing activities increased $1.0 billion for the year ended December 31, 2020 as compared to the prior year primarily due to higher net proceeds in 2020 from debt issuances.

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

Information regarding the seasonality of our business can be found in Part II—Financial Information—Item 8.—Financial Statements and Supplementary Data—Note 1—The Company and Summary of Significant Accounting Policies.

We are exposed to market risks arising from changes in market rates and prices, including movements in foreign currency exchange rates and interest rates.

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

Our foreign operations reported operating income of $187.9 million for the year ended December 31, 2019.

Our foreign operations reported an operating loss of $355.2 million for the year ended December 31, 2020.

We estimate that a 10% change in the value of the United States dollar relative to foreign currencies would change our operating income for the year ended December 31, 2020 by $35.5 million.

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Critical Accounting Policies and Estimates

The preparation of our financial statements in conformity with GAAP requires management to make estimates, judgments and assumptions that affect the reported amounts of assets and liabilities, disclosure of contingent assets and liabilities at the date of the financial statements and the reported amount of revenue and expenses during the reporting period.

The preparation of our consolidated financial statements in conformity with GAAP requires management to make estimates, judgments and assumptions that affect the reported amounts of assets and liabilities, disclosure of contingent assets and liabilities at the date of the consolidated financial statements and the reported amount of revenue and expenses during the reporting period.

On an ongoing basis, we evaluate our estimates that are based on historical experience and on various other assumptions that are believed to be reasonable under the circumstances.

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Determining the fair value of assets acquired, liabilities assumed and noncontrolling interest requires management’s judgment and often involves the use of significant estimates and assumptions, including assumptions with respect to future cash flows, discount rates and asset lives among other items.

Property, Plant and Equipment

We test for possible impairment of property, plant and equipment whenever events or circumstances change, such as a current period operating cash flow loss combined with a history of, or projections of, operating cash flow losses or a significant adverse change in the manner in which the asset is intended to be used, which could indicate that the carrying amount of the asset may not be recoverable.

If indicators exist, we compare the estimated undiscounted future cash flows related to the assets to the carrying amount of those assets.

If the carrying value is greater than the estimated undiscounted future cash flows, the cost basis of the asset is reduced to reflect the current fair value.

We use various assumptions in determining the current fair value of these assets, including future expected cash flows and discount rates, as well as future salvage values and other fair value measures.

Our impairment loss calculations require us to apply judgment in estimating future cash flows, including forecasting useful lives of the assets and selecting the discount rate that reflects the risk inherent in future cash flows.

If actual results are not consistent with our assumptions and judgments used in estimating future cash flows and asset fair values, we may be exposed to future impairment losses that could be material to our results of operations.

We test for possible impairment of definite-lived intangible assets whenever events or circumstances change, such as a current period operating cash flow loss combined with a history of, or projections of, operating cash flow losses or a significant adverse change in the manner in which the asset is intended to be used, which could indicate that the carrying amount of the asset may not be recoverable.

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and International Ticketing and North America Ticketing within the Ticketing segment.

We test goodwill for impairment in any period when 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 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 have a material impact on our cash flows during the suspension of operations, we performed qualitative and sensitivity reviews in all three interim quarters of 2020 to assess whether we believed these actions caused the fair value of any of our reporting units to fall below its carrying value.

The result of these interim assessments was a conclusion that 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 did not believe that our goodwill was impaired.

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

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 first step of the process is a qualitative evaluation as to whether it is more likely than not that the fair value of any of our reporting units is less than its carrying value using an assessment of relevant events and circumstances.

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A market participant acquisition premium represents the additional value a buyer would pay to obtain control of the respective reporting unit because having control would lead to higher cash flows, lower cost of capital or both.

In 2019, all of our reporting units with goodwill were assessed under the first qualitative step.

Five of the reporting units did not advance to the second step.

These reporting units had improved market multiples, no increases in discount rate and considerable excess of fair value over their carrying value in the most recent quantitative tests.

In 2020, both in the interim qualitative reviews and as part of the October 1 annual review, market multiples were not incorporated into our assessments as our current financial metrics do not support use of the market approach as a corroborating approach.

When our business resumes and stabilizes, we will reincorporate the market approach into our fair value methodology.

In 2020 as part of our annual impairment test, four of our reporting units with goodwill were assessed under the first qualitative step.

Three of these four of the reporting units did not advance to the second step.

These reporting units had no increases in discount rate and considerable excess of fair value over their carrying value in the most recent quantitative tests.

Further review of these reporting units with sensitivity tests did not change our first step conclusions.

The Artist Management reporting unit advanced to the second step because it was unclear whether its fair value would exceed its carrying value due to varied factors such as lower than expected financial results in the current year, mixed changes in market multiples, and a decrease in discount rate.

The North American Concerts reporting unit advanced to the second step because it was unclear whether its fair value would exceed its carrying value primarily due to the loss of revenue resulting from the current cessation of concerts and an increase in its carrying value.

The excess of fair value over carrying value for this reporting unit was approximately 35%.

Therefore, we concluded goodwill for this reporting unit was not impaired.

Sensitivity tests showed that a 500-basis point change in the discount rate, or a 225% decline in the revenue growth rate, or a 400-basis point change in the market multiple was needed to change the conclusion.

The Artist Services reporting unit advanced to the second step because it was unclear whether its fair value would exceed its carrying value due to varied factors such as lower than expected financial results in the current year, mixed changes in market multiples, and a decrease in discount rate.

The excess of fair value over carrying value was approximately 23%.

Therefore, we concluded goodwill for this reporting unit was not impaired.

Sensitivity tests showed that a 250-basis point change in the discount rate, or a 100% decline in the revenue growth rate, or a 250-basis point change in the market multiple was needed to change the conclusion.

Based upon the results of the 2018 and 2017 second test, we recorded impairment charges of $10.5 million and $20.0 million, respectively, for the Artist Services (non-management) reporting unit.

Sensitivity tests showed that a 150-basis point change in the discount rate, or a 66% decline in the long-term revenue growth rate, or a 13% decline in the margin was needed to change the conclusion.

The three remaining reporting units went straight to the second step as part of our policy to perform a quantitative test at least every five years to support future first step qualitative reviews.

The results of these quantitative tests continued to support a healthy amount of excess fair value over carrying value.

Further, we performed an October 1, 2020 market capitalization reconciliation at a stock price of $53.74 which yielded implied premiums of 4.0% and 6.0% for business enterprise value and equity, respectively, which suggests conservative internal forecasts versus the market.

Given the results of the tests performed, although we cannot predict future performance or market conditions, we do not currently believe any of our reporting units are at risk of failing the second step in the near future.

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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-K

Item 7. Management’s Discussion and Analysis