What changed in this filing

/stocks — the workspaceLOADING

Item 8. Financial Statements and Supplementary Data

2021-03-01 compared with 2020-02-27 · 353 added, 260 removed, 1171 unchanged (34% of the section changed)

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generally accepted accounting principles.

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the Company's internal control over financial reporting as of December 31, 2019, based on criteria established in Internal Control-Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (2013 framework), and our report dated February 27, 2020, expressed an unqualified opinion thereon.

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the Company's internal control over financial reporting as of December 31, 2020, based on criteria established in Internal Control-Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (2013 framework), and our report dated March 1, 2021, expressed an unqualified opinion thereon.

Adoption of New Accounting Standard

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(1) relates to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective or complex judgments.

The communication of the critical audit matter does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on the account or disclosures to which it relates.

Goodwill - Artist Management Reporting Unit

Description of the Matter At December 31, 2019, the goodwill recorded in the Artist Management reporting unit was $309 million.

Goodwill - North America Concerts Reporting Unit

Description of the Matter At December 31, 2020, the goodwill recorded in the North America Concerts reporting unit was $287 million.

As discussed in Note 1 to the consolidated financial statements, goodwill is tested by the Company’s management for impairment at least annually at the reporting unit level.

Auditing the Company’s annual goodwill impairment test was complex due to the significant judgment in estimating the fair value of the reporting units when a quantitative assessment of fair value is performed and the fair value is at or near carrying value.

In particular, the Artist Management reporting unit was evaluated using a quantitative assessment to determine whether or not goodwill was impaired.

The fair value estimate for this reporting unit was sensitive to assumptions including the discount rate and revenue growth rates which are affected by expectations about future market or economic conditions.

In particular, the North America Concerts reporting unit was evaluated using a quantitative assessment to determine whether or not goodwill was impaired.

The fair value estimate for this reporting unit was sensitive to assumptions including the discount rate, revenue growth rates and EBITDA margin which are affected by expectations about future market or economic conditions.

How We Addressed the Matter in Our Audit We obtained an understanding, evaluated the design and tested the operating effectiveness of controls over the Company’s goodwill impairment review process.

This includes controls over management’s review of the significant assumptions described above.

To test the estimated fair value of the Company’s Artist Management reporting unit, we performed audit procedures with the assistance of our valuation specialists that included, among others, assessing methodologies and testing the significant assumptions discussed above and the underlying data used by the Company in its analysis.

To test the estimated fair value of the Company’s North America Concerts reporting unit, we performed audit procedures with the assistance of our valuation specialists that included, among others, assessing methodologies and testing the significant assumptions discussed above and the underlying data used by the Company in its analysis.

We compared the significant assumptions used by management to current industry and economic trends.

We assessed the historical accuracy of management’s estimates and performed sensitivity analyses of significant assumptions to evaluate the changes in the fair value of the Artist Management reporting unit that would result from changes in the assumptions.

We assessed the historical accuracy of management’s estimates and performed sensitivity analyses of significant assumptions to evaluate the changes in the fair value of the North America Concerts reporting unit that would result from changes in the assumptions.

/s/ Ernst & Young LLP

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Los Angeles, California

February 27, 2020

March 1, 2021

LIVE NATION ENTERTAINMENT, INC.

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Corporate expenses 102,100 168,839 153,406

Operating income 324,844 272,536 91,397

Operating income (loss) ( 1,653,192 ) 324,844 272,536

Interest expense 226,832 157,521 140,976

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

Equity in earnings of nonconsolidated affiliates ( 5,457 ) ( 2,747 ) ( 1,161 )

Equity in losses (earnings) of nonconsolidated affiliates 5,458 ( 5,457 ) ( 2,747 )

Other expense (income), net ( 17,080 ) 2,082 12,163

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Income tax expense (benefit) ( 28,875 ) 66,892 40,765

Net income 118,212 90,340 7,774

Net income attributable to noncontrolling interests 48,323 30,091 13,789

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

Net income (loss) attributable to noncontrolling interests ( 103,255 ) 48,323 30,091

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

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LIVE NATION ENTERTAINMENT, INC.

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)

Year Ended December 31,

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(in thousands)

Net income $ 118,212 $ 90,340 $ 7,774

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

Other comprehensive income (loss), net of tax:

Unrealized loss on cash flow hedge ( 36,689 ) — —

Realized loss on cash flow hedge 5,102 — —

Foreign currency translation adjustments 291 ( 482 ) ( 36,689 )

Comprehensive income 117,730 53,651 75,939

Comprehensive income attributable to noncontrolling interests

Comprehensive income (loss) ( 1,859,086 ) 117,730 53,651

Comprehensive income (loss) attributable to noncontrolling interests

( 103,255 ) 48,323 30,091

Comprehensive income attributable to common stockholders of Live Nation

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

$ ( 1,755,831 ) $ 69,407 $ 23,560

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434,707 4 ( 12,460 ) — — — — ( 12,456 ) —

Exercise of stock options 3,137,997 31 51,038 — — — — 51,069 —

Exercise of stock options, net of shares withheld for option cost and employee taxes 1,823,809 18 ( 24,345 ) — — — — ( 24,327 ) —

Fair value of convertible debt conversion feature, net of issuance costs

— — 62,639 — — — — 62,639 —

Repurchase of convertible debt conversion feature 28 — ( 92,641 ) — — — — ( 92,641 ) —

Acquisitions — — — — — — 33,564 33,564 25,542

Divestitures — — — — — — ( 6,684 ) ( 6,684 ) —

Purchases of noncontrolling interests — — ( 8,210 ) — — — ( 4,877 ) ( 13,087 ) ( 10,356 )

Sales of noncontrolling interests — — 1,410 — — — ( 958 ) 452 —

Redeemable noncontrolling interests fair value adjustments

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Comprehensive income (loss):

Net income (loss) — — — ( 6,015 ) — — 20,957 14,942 ( 7,167 )

Net income — — — 60,249 — — 23,583 83,832 6,508

Foreign currency translation adjustments — — — — — ( 36,689 ) — ( 36,689 ) —

Other — — — — — 461 — 461 —

Balances at December 31, 2018 209,135,581 2,091 2,268,209 ( 1,019,223 ) ( 6,865 ) ( 145,231 ) 243,762 1,342,743 329,355

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392,147 5 ( 15,357 ) — — — — ( 15,352 ) —

Exercise of stock options, net of shares withheld for option cost and employee taxes 1,823,809 18 ( 24,345 ) — — — — ( 24,327 ) —

Fair value of convertible debt conversion feature, net of issuance costs

— — 62,639 — — — — 62,639 —

Repurchase of convertible debt conversion feature 28 — ( 92,641 ) — — — — ( 92,641 ) —

Exercise of stock options 910,006 9 14,095 — — — — 14,104 —

Conversion of convertible debt 824,328 8 28,578 — — — — 28,586 —

Acquisitions — — — — — — 137,981 137,981 52,373

Divestitures — — — — — — ( 6,684 ) ( 6,684 ) —

Purchases of noncontrolling interests — — ( 23,878 ) — — — ( 24,867 ) ( 48,745 ) ( 1,459 )

Sales of noncontrolling interests — — 1,410 — — — ( 958 ) 452 —

Redeemable noncontrolling interests fair value adjustments

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Foreign currency translation adjustments — — — — — ( 482 ) — ( 482 ) —

Other — — — — — — — — —

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

Cumulative effect of change in accounting principle — — — ( 2,964 ) — — — ( 2,964 ) —

Non-cash and stock-based compensation — — 116,899 — — — — 116,899 —

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1,382,256 14 ( 37,876 ) — — — — ( 37,862 ) —

Exercise of stock options 910,006 9 14,095 — — — — 14,104 —

Conversion of convertible debt 824,328 8 28,578 — — — — 28,586 —

Exercise of stock options, net of shares withheld for option cost and employee taxes 1,822,670 18 20,952 — — — — 20,970 —

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

— — 33,347 — — — — 33,347 —

Acquisitions — — — — — — 54,378 54,378 23,511

Divestitures — — — — — — 6 6 —

Purchases of noncontrolling interests — — 14,336 — — — ( 3,975 ) 10,361 ( 129,652 )

Sales of noncontrolling interests — — ( 7,667 ) — — — 39,406 31,739 —

Redeemable noncontrolling interests fair value adjustments

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Comprehensive income (loss):

Net income — — — 69,889 — — 33,267 103,156 15,056

Net loss — — — ( 1,724,535 ) — — ( 46,774 ) ( 1,771,309 ) ( 56,481 )

Unrealized loss on cash flow hedge — — — — — ( 36,689 ) — ( 36,689 ) —

Realized loss on cash flow hedge — — — — — 5,102 — 5,102 —

Foreign currency translation adjustments — — — — — 291 — 291 —

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CASH FLOWS FROM OPERATING ACTIVITIES

Net income $ 118,212 $ 90,340 $ 7,774

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

Reconciling items:

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Unrealized changes in fair value of contingent consideration ( 24,448 ) 6,698 14,125

Loss (gain) on disposal of operating assets ( 2,373 ) 10,369 ( 969 )

Equity in earnings of nonconsolidated affiliates, net of distributions 14,152 11,693 6,898

Equity in losses (earnings) of nonconsolidated affiliates, net of distributions 18,280 14,152 11,693

Other, net ( 16,745 ) ( 6,027 ) 6,609

Changes in operating assets and liabilities, net of effects of acquisitions and dispositions:

Increase in accounts receivable ( 159,792 ) ( 135,429 ) ( 133,020 )

Increase in prepaid expenses and other assets ( 170,486 ) ( 266,241 ) ( 238,549 )

Decrease (increase) in accounts receivable 490,588 ( 159,792 ) ( 135,429 )

Decrease (increase) in prepaid expenses and other assets 141,631 ( 170,486 ) ( 266,241 )

Increase (decrease) in accounts payable, accrued expenses and other liabilities ( 1,379,461 ) ( 45,920 ) 323,459

Increase in deferred revenue 826,699 88,291 344,539

Net cash provided by operating activities 469,783 941,586 623,522

Net cash provided by (used in) operating activities ( 1,083,388 ) 469,783 941,586

CASH FLOWS FROM INVESTING ACTIVITIES

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Purchases of intangible assets ( 8,863 ) ( 42,261 ) ( 35,630 )

Proceeds from sale of investments in nonconsolidated affiliates 19,003 1,455 —

Other, net 7,863 2,542 2,070

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Other, net 36 — ( 4,345 )

Net cash provided by (used in) financing activities 328,889 188,784 ( 127,083 )

Net cash provided by financing activities 1,350,082 328,889 188,784

Effect of exchange rate changes on cash, cash equivalents and restricted cash 29,565 ( 11,633 ) ( 84,080 )

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changed its name to Live Nation Entertainment, Inc.

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

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

Our Concerts and Sponsorship & Advertising segments typically experience higher revenue and 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.

Our seasonality also results in higher balances in cash and cash equivalents, accounts receivable, prepaid expenses, accrued expenses and deferred revenue at different times in the year.

Due to the unprecedented stoppage of our concert and other events globally beginning in mid-March resulting from the global COVID-19 pandemic, we did not experience our typical seasonality trends in 2020.

We cannot predict when these trends will recommence in the future.

Basis of Presentation and Principles of Consolidation

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Investments in nonconsolidated affiliates in which we own less than 20% of the voting common stock and do not exercise significant influence over operating and financial policies are accounted for at fair value unless the investment does not have a readily determinable fair value in which case the investment is accounted for at cost less any impairment.

All of our cash flow activity reflected on the consolidated statements of cash flows is presented net of any non-cash transactions so the amounts reflected may be different than amounts shown in other places in our financial statements that are based on accrual accounting and therefore include non-cash amounts.

All of our cash flow activity reflected on the consolidated statements of cash flows is presented net of any non-cash transactions so the amounts reflected may be different than amounts shown in other places in our consolidated financial statements that are based on accrual accounting and therefore include non-cash amounts.

For example, purchases of property, plant and equipment reflected on the consolidated statements of cash flows reflect the amount of cash paid during the year for these purchases and does not include the impact of the changes in accrued expenses related to capital expenditures during the year.

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In determining whether we are the primary beneficiary of a VIE, we assess whether we have the power to direct activities that most significantly impact the economic performance of the entity and have the obligation to absorb losses or the right to receive benefits from the entity that could potentially be significant to the VIE.

The activities we believe most significantly impact the economic performance of our VIEs include the unilateral ability to approve the annual budget, the unilateral ability to terminate key management and the unilateral ability to approve entering into agreements with artists, among others.

The activities we believe most significantly impact the economic performance of our VIEs include the unilateral ability to approve the annual budget, to terminate key management and to approve entering into agreements with artists, among others.

We have certain rights and obligations related to our involvement in the VIEs, including the requirement to provide operational cash flow funding.

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None of our VIEs are significant on an individual basis.

Nonconsolidated Affiliates

In general, nonconsolidated investments in which we own more than 20% of the common stock or otherwise exercise significant influence over an affiliate are accounted for under the equity method.

We review the value of equity method investments and record impairment charges in the statements of operations for any decline in value that is determined to be other-than-temporary.

If we obtain control of a nonconsolidated affiliate through the purchase of additional ownership interest or changes in the governing agreements, we remeasure our investment to fair value first and then apply the accounting guidance for business combinations.

Any gain or loss resulting from the remeasurement to fair value is recorded as a component of other expense (income), net in the statements of operations.

Cash, Cash Equivalents and Restricted Cash

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

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

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

Allowance for Doubtful Accounts

We evaluate the collectability of our accounts receivable based on a combination of factors.

Generally, we record specific reserves to reduce the amounts recorded to what we believe will be collected when a customer’s account ages beyond typical collection patterns, or we become aware of a customer’s inability to meet its financial obligations.

Generally, we record reserves based on the amount of cash we expect to receive when an account receivable balance is established.

Our reserve estimate is primarily based on our historical accounts receivable write-offs.

We adjust the historical reserve estimate applied to current accounts receivable when events or circumstances change, such as changes in current economic conditions or there is a significant deterioration in our accounts receivable aging, indicating that the reserve estimate may be insufficient to cover the expected loss.

We generally apply a portfolio approach to all of our accounts receivable based on reporting unit unless there are facts and circumstances that indicate a specific group of customers is at greater risk of nonpayment.

We believe that the credit risk with respect to trade receivables is limited due to the large number and the geographic diversification of our customers.

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These acquisitions and the related results of operations were not significant on either an individual basis or in the aggregate.

During 2020, we acquired the remaining redeemable noncontrolling interests of certain subsidiaries and settled certain contingent consideration obligations in exchange for debt obligations totaling $ 11.8 million which are reflected in current portion of long-term debt, net on our consolidated balance sheets.

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

We account for our business combinations under the acquisition method of accounting.

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If it is concluded that it is more likely than not impaired, we perform a quantitative impairment test by comparing the fair value with the carrying amount.

If the qualitative assessment is not performed first, we perform only this quantitative test.

When specific assets are determined to be impaired, the cost basis of the asset is reduced to reflect the current fair value.

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If a reporting unit’s carrying value is negative, the reporting unit passes the impairment test.

In this case, we will disclose the amount of goodwill allocated to that reporting unit and disclose which reportable segment the reporting unit is included in.

In both steps, discount rates, market multiples, and sensitivity tests are derived and/or computed with the assistance of external valuation consultants.

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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.

Nonconsolidated Affiliates

In general, nonconsolidated investments in which we own more than 20% of the common stock or otherwise exercise significant influence over an affiliate are accounted for under the equity method.

We review the value of equity method investments and record impairment charges in the statements of operations for any decline in value that is determined to be other-than-temporary.

Any gain or loss resulting from the remeasurement to fair value is recorded as a component of other expense (income), net in the statements of operations.

We lease office space, many of our concert venues, festival sites and certain equipment.

We do not recognize an operating lease asset or liability on our consolidated balance sheets for leases with an initial term of twelve months or less, including multi-year festival site leases where the sum of the non-consecutive periods of rental time is less than twelve months.

We record a lease asset and liability on our consolidated balance sheets at the inception of the lease or when we take possession of the leased space or equipment, if later, based on the required payments over the term of the lease.

We do not recognize a lease asset or liability for leases with an initial term of twelve months or less, including multi-year festival site leases where the sum of the non-consecutive periods of rental time is less than twelve months.

Rent expense for these short-term leases is generally recognized on a straight-line basis over the lease term.

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Our Ticketing segment’s revenue, which primarily consists of service fees from its ticketing operations, is recorded net of the face value of the ticket as we generally act as an agent in these transactions.

Business Interruption Insurance Recovery

We record revenue or offset expense for covered business interruptions in the period we determine it is probable we will be compensated for the costs incurred or the applicable contingencies with the insurance company are resolved for lost revenue.

This may result in business interruption insurance recoveries being recorded in a period subsequent to the period the Company experiences lost revenue and/or incurred the expenses from a covered event that are being reimbursed.

For the year ended December 31, 2020, we recorded business interruption insurance recoveries of $ 125.7 million, primarily due to the global COVID-19 pandemic, with roughly half recorded as revenue and half as a reduction to our direct operating and selling, general and administrative expenses.

For the years ended December 31, 2019 and December 31, 2018, business interruption insurance recoveries were not significant.

Foreign Currency

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Throughout the year, general advertising expenses are recognized as they are incurred, but event-related advertising for concerts is recognized once the show occurs.

If an event is rescheduled into the following year, the advertising costs are expensed in the period the event is rescheduled.

However, all advertising costs incurred during the year and not previously recognized are expensed at the end of the year.

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We follow the fair value recognition provisions in the FASB guidance for stock compensation.

Stock-based compensation expense recognized includes compensation expense for all share-based payments using the estimated grant date fair value.

Stock-based compensation expense includes compensation expense for all share-based payments using the estimated grant date fair value.

Stock-based compensation expense is adjusted for forfeitures as they occur.

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Use of Estimates

The preparation of financial statements in conformity with GAAP requires management to make estimates, judgments, and assumptions that affect the amounts reported in the financial statements and accompanying notes including, but not limited to, legal, tax and insurance accruals, acquisition accounting and impairments.

The preparation of consolidated financial statements in conformity with GAAP requires management to make estimates, judgments, and assumptions that affect the amounts reported in the consolidated financial statements and accompanying notes including, but not limited to, legal, tax and insurance accruals, acquisition accounting and impairments.

We base our estimates on historical experience and on various other assumptions that are believed to be reasonable under the circumstances.

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Accounting Pronouncements - Recently Adopted

Lease Accounting

In February 2016, the FASB issued guidance that requires lessees to recognize most leases on their balance sheet as a lease liability and asset, and to disclose key information about leasing arrangements.

The guidance should be applied on a modified retrospective basis.

We adopted this standard on January 1, 2019, applying the transitional provisions of the standard to the beginning of the period of adoption and elected the package of practical expedients available under the transition guidance within the new guidance which, among other things, allowed us to carry forward the historical lease classification.

We also made an accounting policy election to keep leases with an initial term of twelve months or less off the balance sheet, recognizing those lease payments in our statements of operations generally on a straight-line basis over the term of the lease.

We have implemented third-party lease software, and corresponding internal controls, to account for our leases and facilitate compliance with the new guidance.

The new guidance had a material impact on our balance sheet, but did not have a material impact on our statements of operations or an impact on our compliance with the debt covenant requirements under our senior secured credit facility and other debt arrangements.

Upon adoption, we recognized operating lease assets and liabilities of $ 1.1 billion and $ 1.2 billion, respectively.

The initial operating lease assets and liabilities were based on the present value of the remaining minimum lease payments, discounted using our secured incremental borrowing rate which varies based on geographical region and term of the underlying lease.

The operating lease assets were also reduced by $ 85.3 million for prepaid rent, straight-line rent accruals and lease incentives.

Accounting Pronouncements - Not Yet Adopted

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

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

Early adoption is permitted for fiscal periods after December 15, 2018 and interim periods within that year.

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

We will adopt this standard on January 1, 2020, and the adoption will not have a material effect on our financial position or results of operations.

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

The adoption is not expected to have a material effect on our future financial position or results of operations.

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

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

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

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

The guidance should be applied either retrospectively or prospectively to all implementation costs incurred after the date of adoption.

We will adopt this guidance on January 1, 2020, and will apply it prospectively.

Adoption of this guidance will result in expense previously reported as depreciation and amortization to be reported as selling, general and administrative expenses or corporate expenses within our statements of operations.

In addition, implementation cost previously reported as property, plant and equipment, net will now be reported as prepaid expenses and other long-term assets on our balance sheets.

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

We adopted this guidance prospectively on January 1, 2020.

Adoption of this guidance resulted in expense that would have previously been reported as depreciation and amortization to be reported as selling, general and administrative expenses or corporate expenses within our statements of operations going forward.

In addition, implementation costs previously recorded as property, plant and equipment, net will now be reported as prepaid expenses and other long-term assets on our balance sheets, prospectively.

Accounting Pronouncements - Not Yet Adopted

In August 2020, the FASB issued guidance that simplifies the accounting for convertible instruments and its application of the derivatives scope exception for contracts in an entity’s own equity.

The new guidance reduces the number of accounting models that require separating embedded conversion features from convertible instruments.

As a result, only conversion features accounted for under the substantial premium model and those that require bifurcation will be accounted for separately.

For contracts in an entity’s own equity, the new guidance eliminates some of the current requirements for equity classification.

The guidance also addresses how convertible instruments are accounted for in the diluted earnings per share calculation and requires enhanced disclosures about the terms of convertible instruments and contracts in an entity’s own equity.

The guidance is effective for annual periods beginning after December 15, 2021 and interim periods within that year.

Early adoption is permitted for annual periods beginning after December 15, 2020 and interim periods within that year.

The guidance should be applied using either a modified retrospective method or a full retrospective method.

We will adopt this guidance on January 1, 2022, and are currently assessing which implementation method we will apply and the impact that adoption will have on our financial position and results of operations.

NOTE 2— IMPACT OF THE GLOBAL COVID-19 PANDEMIC

The unprecedented and rapid spread of COVID-19 and the related government restrictions and social distancing measures implemented throughout the world have significantly impacted our live event business.

We initially saw event restrictions in Asia and parts of Europe.

Beginning in March 2020, large public events were cancelled, governmental authorities began imposing restrictions on non-essential activities, and businesses suspended activities around the world.

As the impact of the global COVID-19 pandemic became clearer, we ceased all Live Nation tours and closed our venues in mid-March 2020 to support global efforts at social distancing and mitigating the virus, and to comply with restrictions put in place by various governmental entities, which has had a materially negative impact on our revenue and financial position.

Operating Results

Our annual results were materially impacted by these necessary actions.

Our overall revenue for the year decreased by 84 % to $ 1.9 billion.

The revenue reduction was across all of our segments as a result of few shows occurring globally beginning in the last half of March 2020 and low ticket sales for future shows during the same period, along with the impact of ticket refunds and show cancellations.

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

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

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

In addition, we have recorded an estimate of $ 102.0 million in Concerts for refunds that may occur in the future for shows we believe may be cancelled or rescheduled based on the limited amount of data available on refunds resulting from the global shutdown of our live events.

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

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

Event-related deferred revenue for tickets sold for shows expected to occur after December 31, 2021 totaled $ 35.1 million and is reflected in other long-term liabilities on our consolidated balance sheets.

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

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

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

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

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

NOTE 3— LONG-LIVED ASSETS

Property, Plant and Equipment, Net

Property, plant and equipment, net includes expenditures for the construction of new venues, major renovations to existing buildings or buildings that are being added to our venue network, the development of new ticketing tools and technology enhancements along with the renewal and improvement of existing venues and technology systems, web development and administrative offices.

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

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

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

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

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

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

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

We currently do not anticipate a significant change in activity levels until early in the second half of 2021.

We expect that most global tours will resume and larger venues will reopen in the second half of 2021 and that the underlying business supporting all of our long-lived assets will begin generating operating income once again.

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

As a result, the underlying assumptions used in our impairment assessments could change resulting in future impairment charges.

Property, Plant and Equipment

Property, plant and equipment includes expenditures for the construction of new venues, major renovations to existing buildings or buildings that are being added to our venue network, the development of new ticketing tools and technology enhancements along with the renewal and improvement of existing venues and technology systems, web development and administrative offices.

Property, plant and equipment consisted of the following:

(in thousands)

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2,703,526 2,539,315

Less accumulated depreciation 1,421,383 1,270,337

accumulated depreciation 1,602,112 1,421,383

$ 1,101,414 $ 1,117,932

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The following table presents the changes in the gross carrying amount and accumulated amortization of definite-lived intangible assets for the years ended December 31, 2020 and 2019:

contracts Client /

relationships Trademarks

rights Venue management & Leaseholds Technology Other (1)

relationships Revenue-

contracts Venue management & leaseholds Trademarks

rights Technology Other (1)

(in thousands)

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Acquisitions—prior year — — 43 — — — 43

Dispositions — ( 11,812 ) — — — ( 18,754 ) ( 30,566 )

Foreign exchange

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( 65,059 ) ( 94,439 ) ( 10,683 ) ( 14,513 ) ( 27,512 ) ( 11,326 ) ( 223,532 )

Dispositions — 8,146 — — — 13,238 21,384

Foreign exchange

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

Included in the current year acquisitions amounts above for 2020 are definite-lived intangible assets primarily associated with the acquisitions of a festival and concert promotion business located in Ireland, a merchandise business, a festival promotion business and ticketing relationships, all located in the United States.

Included in the current year acquisitions amount above for 2019 are definite-lived intangible assets primarily associated with the acquisitions of concert promotion businesses located in Canada and Chile, venue management businesses located in the United States and Belgium and a festival promotion business located in Brazil that had been accounted for as an equity investment.

Included in the current year acquisitions amount above for 2018 are definite-lived intangible assets primarily associated with the acquisitions of various concert and festival promotion business and artist management businesses that are all located in the United States, and the acquisition of certain software assets from a business located in the United States.

The 2020 and 2019 additions to definite-lived intangible assets from acquisitions have weighted-average lives as follows:

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All categories 7 9

During all years presented, we reviewed the carrying value of certain definite-lived intangible assets that management determined would not be renewed or that had an indicator that future operating cash flows may not support their carrying value.

It was determined that certain assets were impaired since the estimated undiscounted future cash flows associated with those assets were less than their carrying value.

_____________________

(1) The weighted average life of technology intangibles does not include purchased software licenses that are typically amortized over 1 to 3 years.

For the year ended December 31, 2020, we recorded impairment charges of $ 23.6 million as a component of depreciation and amortization primarily related to intangible assets for revenue-generating contracts, venue management and leaseholds and client/vendor relationships in the Concerts segment primarily as a result of the expected impacts from the global COVID-19 pandemic where the useful life of the definite-lived intangible asset was expiring within the near term.

For the year ended December 31, 2019, we recorded impairment charges of $ 26.8 million as a component of depreciation and amortization primarily related to intangible assets for revenue-generating contracts in the Concerts and Sponsorship & Advertising segments.

There were no significant impairment charges recorded in 2018.

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

There were no significant impairment charges recorded in 2018 and 2017.

Amortization of definite-lived intangible assets for the years ended December 31, 2020, 2019 and 2018 was $ 239.3 million, $ 223.5 million and $ 190.7 million, respectively.

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a qualitative review and a quantitative analysis.

In 2019, as part of our annual test for impairment of goodwill, five reporting units were assessed under the initial qualitative evaluation and did not require a quantitative analysis.

These reporting units account for approximately 85 % of our goodwill at December 31, 2019.

Considerations included (a) excess of fair values over carrying values in the most recent quantitative analysis performed, (b) market multiples, (c) discount rates, (d) financial results and (e) sensitivity analyses.

Finally, for two reporting units that account for approximately 15 % of our goodwill at December 31, 2019, the qualitative analysis was inconclusive 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.

As such, quantitative analysis was performed for these reporting units.

We performed the quantitative analysis using a combination of a discounted cash flows methodology, which uses both market-based and internal assumptions, and a market multiple methodology, which uses primarily market-based assumptions applied to our projections of future cash flows.

No impairment charges were recorded in 2019 as a result of our annual test.

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

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 test for impairment, four of our reporting units with goodwill were assessed under the initial qualitative evaluation.

Three of these four reporting units, accounting for approximately 28 % of our goodwill at December 31, 2020, did not advance to the second step.

Considerations included (a) excess of fair values over carrying values in the most recent quantitative analysis performed, (b) discount rates, (c) financial results and (d) sensitivity analyses.

For one of these four reporting units, that accounts for approximately 13 % of our goodwill at December 31, 2020, the qualitative analysis was inconclusive primarily due to the loss of revenue resulting from the current cessation of concerts and an increase in its carrying value.

As such, a quantitative analysis was performed for this reporting unit.

We performed the quantitative analysis using a discounted cash flows methodology, which uses both market-based inputs and internal assumptions.

The remaining three of our reporting units, accounting for approximately 59 % of our goodwill at December 31, 2020, 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.

No impairment charges were recorded in 2020 and 2019 as a result of our annual test or interim tests when performed.

Based upon the results of the annual test in 2018, we recorded impairment charges of $ 10.5 million related to our Artist Services (non-management) reporting unit.

See Note 7—Fair Value Measurements for discussion of the impairment calculation.

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Acquisitions—prior year 8,428 — — 8,428

Dispositions ( 7,053 ) — — ( 7,053 )

Impairment ( 10,500 ) — — ( 10,500 )

Foreign exchange 1,670 ( 707 ) 2,371 3,334

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Net $ 882,910 $ 782,559 $ 463,734 $ 2,129,203

Included in the current year acquisitions amount above for 2019 is goodwill associated with the acquisitions of a concert promotion business located in Canada, venue management businesses located in Belgium and the United States and a festival promotion business located in Brazil that had been accounted for as an equity method investment.

Included in the current year acquisitions amount above for 2018 is goodwill associated with the acquisitions of various concert and festival promotion businesses and various artist management businesses that are all located in the United States.

Included in the prior year acquisitions amount above for 2018 is a purchase price adjustment recognized in connection with contingent consideration paid during 2018 related to an acquisition that occurred prior to our adoption of the current FASB guidance for business combinations.

Under the previous guidance, which was in place at the time of this acquisition, such contingent payments were recognized when it was determinable that the applicable financial targets were met.

Included in the current year acquisitions amounts above for 2020 are goodwill primarily associated with the acquisitions of a festival and concert promotion business located in Ireland as well as a merchandise business, a festival promotion business and a concerts streaming business located in the United States.

Included in the prior year acquisitions amount above for 2020 are changes primarily associated with the acquisition of a venue management business located in the United States.

Included in the current year acquisitions amount above for 2019 are goodwill associated with the acquisitions of a concert promotion business located in Canada, venue management businesses located in Belgium and the United States and a festival promotion business located in Brazil that had been accounted for as an equity method investment.

We are in various stages of finalizing our acquisition accounting for recent acquisitions, which include the use of external valuation consultants, and the completion of this accounting could result in a change to the associated purchase price allocations, including goodwill and the allocation between segments.

Investments in Nonconsolidated Affiliates

We have investments in various affiliates which are not consolidated and are accounted for under the equity method of accounting.

We record our investments in these entities in the balance sheet as investments in nonconsolidated affiliates reported as part of other long-term assets.

Our interests in these operations are recorded in the statements of operations as equity in losses (earnings) of nonconsolidated affiliates.

For the year ended December 31, 2019, certain of our investments are considered significant on an aggregate basis.

Summarized balance sheet and income statement information for these entities is as follows (at 100%):

(in thousands)

Current assets $ 40,937 $ 71,685

Noncurrent assets $ 6,845 $ 4,074

Current liabilities $ 35,662 $ 42,470

Noncontrolling interests $ 1,624 $ 1,095

Year Ended December 31,

2019 2018 2017

(in thousands)

Revenue $ 54,173 $ 56,857 $ 56,078

Operating income $ 30,262 $ 34,841 $ 29,684

Net income $ 23,969 $ 28,554 $ 24,116

Net income attributable to the common stockholders of the equity investees

$ 23,440 $ 27,935 $ 23,995

NOTE 4— LEASES

The significant components of operating lease expense are as follows:

December 31, 2020 Year Ended

December 31, 2019

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Net lease cost $ 263,751 $ 317,635

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

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

In response to the global COVID-19 pandemic, we closed our venues in mid-March 2020 and the majority of those venues have remained closed through December 31, 2020.

As a result, our variable and short-term lease cost has declined during the year ended December 31, 2020 as compared to the previous year.

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

December 31, 2020 Year Ended

December 31, 2019

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The weighted average remaining lease term and weighted average discount rate for our operating leases are as follows:

December 31, 2020 Year Ended

December 31, 2019

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As of December 31, 2020, we have additional operating leases that have not yet commenced with total lease payments of $ 181.0 million.

These operating leases, which are not included on our consolidated balance sheets, have commencement dates ranging from January 2020 to December 2021 with lease terms ranging from 1 to 21 years.

These operating leases, which are not included on our consolidated balance sheets, have commencement dates ranging from January 2021 to June 2030 with lease terms ranging from 1 to 20 years.

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

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

Therefore, we have elected to account for these lease concessions as though enforceable rights and obligations for those concessions existed in our lease agreements rather than applying the lease modification guidance as clarified by the FASB.

NOTE 5— LONG-TERM DEBT

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

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

(in thousands)

Senior Secured Credit Facility:

Term loan A $ — $ 156,750

Term loan B $ 938,125 $ 947,625

4.75% Senior Notes due 2027 950,000 —

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

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

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

Senior Secured Credit Facility

In October 2019, we amended our senior secured credit facility and now have (i) a five -year $ 400 million delayed 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 the facility 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 credit agreement) is no greater than 3.75 x.

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.

This 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 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.

Amended Senior Secured Credit Facility

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

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

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

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

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

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

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

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 range 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.

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

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

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

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

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

Based on our outstanding letters of credit of $ 83.5 million, $ 416.5 million was available for future borrowings under the revolving credit facility at December 31, 2019.

4.75% Senior Notes

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

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

There were no borrowings under the revolving credit facilities as of December 31, 2020 and we have not drawn down on the delayed draw term loan A.

Based on our outstanding letters of credit of $ 68.3 million, $ 961.7 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.

4.75% Senior Notes Due 2027

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.

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

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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

4.875% Senior Notes Due 2024

At December 31, 2020, we had $ 575 million principal amount of 4.875 % senior notes due 2024.

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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

In March 2018, we issued $ 300 million principal amount of 5.625 % senior notes due 2026.

5.625% Senior Notes Due 2026

At December 31, 2020, 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 of each year, and the notes will mature on March 15, 2026.

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2.5% Convertible Senior Notes Due 2023

In March 2018, we issued $ 550 million principal amount of 2.5 % convertible senior notes due 2023.

At December 31, 2020, 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 of each year, at a rate of 2.5 % per annum.

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The carrying amount of the equity component of the notes is $ 64.0 million, which is treated as a debt discount and the principal amount of the liability component (face value of the notes) is $ 550 million.

As of December 31, 2019, the remaining period for the unamortized debt discount balance of $ 42.4 million was approximately three years and the value of the notes, if converted and fully settled in shares, exceed the principal amount of the notes by $ 27.9 million.

As of December 31, 2020, the remaining period for the unamortized debt discount balance of $ 29.1 million was approximately two years and the value of the notes, if converted and fully settled in shares, exceeds the principal amount of the notes by $ 44.1 million.

As of December 31, 2020, the effective interest rate on the liability component of the notes was 5.7 %.

The following table summarizes the amount of pre-tax interest cost recognized on the 2.5 % convertible senior notes due 2023 and 2019:

2.0% Convertible Senior Notes Due 2025

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

Interest on the notes is payable semiannually in arrears on February 15 and August 15, 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 notes.

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.

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 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.

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

As of December 31, 2020, the remaining period for the unamortized debt discount balance of $ 27.9 million was approximately four years and the value of the notes, if converted and fully settled in shares, did not exceed the principal amount of the notes.

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

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

Year Ended December 31,

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As of December 31, 2020, other long-term debt includes capital leases of $ 4.2 million, debt to noncontrolling interest partners of $ 73.9 million and $ 30.3 million of a subsidiary’s term loan and revolving credit facility.

Our other long-term debt has a weighted average cost of debt of 4.6 % and maturities at various dates through July 2046.

Debt Extinguishment

Our other long-term debt has a weighted average cost of debt of 4.2 % and maturities at various dates through September 2050.

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.

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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).

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).

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 senior secured credit facility agreement has a 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 5.75 x over the trailing four consecutive quarters through September 30, 2020.

The consolidated total leverage ratio will reduce to 5.50 x on December 31, 2020 and 5.25 x on December 31, 2021.

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

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 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.

The July 2020 amendment also requires the liquidity covenant to be measured monthly beginning January 31, 2021 until the earlier of (x) November 30, 2021 and (y) the last day of the month before the consolidated net leverage ratio covenant applies.

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

For the avoidance of doubt, the consolidated net leverage covenant will resume for the quarter ended December 31, 2021 at the latest.

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.

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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.

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

As of December 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 secured notes, senior notes and convertible senior notes.

We expect to remain in compliance with all of these covenants throughout 2021.

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Our foreign currency derivative activity, including the related fair values, are not material to any period presented.

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.

The swap agreement expires in October 2026, has a notional amount of $ 500 million and ensures that a portion of our floating-rate debt does not exceed 3.397 %.

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

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

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

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

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

During the year ended December 31, 2020, we recorded unrealized losses of $ 36.7 million, as a component of other comprehensive loss related to this hedge.

Based on the current interest rate expectations, we estimate that approximately $ 7.7 million of this loss in other comprehensive loss will be reclassified into earnings in the next 12 months as an adjustment to interest expense.

See Note 7—Fair Value Measurements for further discussion and disclosure of the fair values for this interest rate swap derivative.

We do not enter into derivative instruments for speculative or trading purposes and do not anticipate any significant recognition of derivative activity through the income statement in the future related to the instruments currently held.

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Total $ 282,696 $ 118 $ — $ 282,814 $ 215,674 $ 11 $ — $ 215,685

Interest rate swap

$ — $ 31,587 $ — $ 31,587 $ — $ — $ — $ —

Forward currency contracts

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Fair values for forward currency contracts are based on observable market transactions of spot and forward rates.

Certain third parties have a put option to sell their noncontrolling interest in one of our subsidiaries to us and such put option is carried at fair value using Level 3 inputs because either (i) the put option is triggered by the occurrence of specific events, one of which is certain to occur, that requires us to buy the noncontrolling interest or (ii) the redemption price is not at fair value and the equity holder does not bear the risk and rewards of ownership.

The redemption price for these put options are a variable amount based on a formula linked to historical earnings.

We have recorded a current liability for these put options which are valued based on the historic results of that subsidiary.

The fair value for our interest rate swap is based upon inputs corroborated by observable market data with similar tenors.

Certain third parties have a put option or a subsidiary equity award to sell to us their noncontrolling interest in certain of our subsidiaries and such put option or subsidiary equity award is carried at fair value using Level 3 inputs.

The put option is triggered by the occurrence of specific events, one of which is certain to occur, that requires us to buy the noncontrolling interest.

The redemption price for the subsidiary equity award is not at fair value and the equity holder does not bear the risk and rewards of ownership.

The redemption price for both the put option and subsidiary equity award is a variable amount based on a formula linked to historical earnings.

We have recorded a current liability for the put option and subsidiary equity award which are valued based on the historic results of that subsidiary.

Changes in the fair value are recorded in selling, general and administrative expenses.

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

The following table presents the estimated fair values of our senior notes and convertible senior notes at December 31, 2019 and 2018:

The following table presents the estimated fair values of our senior secured notes, senior notes and convertible senior notes at December 31, 2020 and 2019:

Estimated Fair Value at:

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(in thousands)

4.75% Senior Notes Due 2027 $ 983,735 $ —

6.5% Senior Secured Notes Due 2027 $ 1,340,688 $ —

4.75% Senior Notes Due 2027 $ 970,872 $ 983,735

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Definite-lived intangible assets, net $ 7,963 $ — $ — $ 7,963 $ 23,630

Goodwill $ 20,332 $ — $ — $ 20,332 $ 10,500

Definite-lived intangible assets, net $ — $ — $ — $ — $ 26,751

During 2020, we recorded impairment charges related to definite-lived intangible assets of $ 23.6 million as a component of depreciation and amortization.

The impairment charges are primarily related to intangible assets for revenue-generating contracts, venue management and leaseholds and client/vendor relationships in the Concerts segment.

It was determined that these assets were impaired since the most recent estimated undiscounted future cash flows associated with these assets were less than their carrying value, primarily as a result of the expected impacts from the global COVID-19 pandemic for the 2020 period.

These impairments were calculated using operating cash flows, which were discounted to approximate fair value.

The key inputs in these calculations include future cash flow projections, including revenue profit margins, and, for the fair value computation, a discount rate.

The key inputs used for these non-recurring fair value measurements are considered Level 3 inputs.

During 2019, we recorded impairment charges related to definite-lived intangible assets of $ 26.8 million as a component of depreciation and amortization.

The impairment charges are primarily related to intangible assets for revenue-generating contracts in the Concerts and Sponsorship & Advertising segments.

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The key inputs used for these non-recurring fair value measurements are considered Level 3 inputs.

During 2018 and 2017, in conjunction with our annual impairment tests, goodwill impairments were recorded for the Artist Services (non-management) reporting unit in the Concerts segment in the amount of $ 10.5 million and $ 20.0 million, respectively, as a component of depreciation and amortization.

We calculated these impairments using a combination of a discounted cash flow methodology, which uses both Level 2 and Level 3 inputs, and a market multiple methodology, which uses primarily Level 2 inputs.

During 2018, in conjunction with our annual impairment test, a goodwill impairment was recorded for the Artist Services (non-management) reporting unit in the Concerts segment in the amount of $ 10.5 million as a component of depreciation and amortization.

We calculated this impairment using a combination of a discounted cash flow methodology, which uses both Level 2 and Level 3 inputs, and a market multiple methodology, which uses primarily Level 2 inputs.

The key inputs include discount rates, market multiples, control premiums, revenue growth and estimates of future financial performance.

See Note 1—The Company and Summary of Significant Accounting Policies and Note 2—Long-Lived Assets for further discussion of our methodology and these impairments.

See Note 1—The Company and Summary of Significant Accounting Policies and Note 3—Long-Lived Assets for further discussion of our methodology and this impairment.

NOTE 8— COMMITMENTS AND CONTINGENT LIABILITIES

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Total $ 2,407,265 $ 42,214

In connection with asset and business disposals, we generally provide indemnifications to the buyers including claims resulting from employment matters, commercial claims and governmental actions that may be taken against the assets or businesses sold.

Settlement of these claims is subject to various statutory limitations that are dependent upon the nature of the claim.

Certain agreements relating to acquisitions provide for deferred purchase consideration payments at future dates.

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As of December 31, 2020, we have accrued $ 27.5 million in other current liabilities and $ 19.1 million in other long-term liabilities and, as of December 31, 2019, we had accrued $ 6.0 million in other current liabilities and $ 58.9 million in other long-term liabilities, representing the fair value of these estimated payments.

The last contingency period for which we have an outstanding contingent payment is for the period ending March 2026.

The last contingency period for which we have an outstanding contingent payment is for the period ending June 2025.

See Note 7—Fair Value Measurements for further discussion related to the valuation of these contingent payments.

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(Central District of California, filed December 2018).

In March 2019, the court granted the defendants’ motion to compel arbitration of the Dickey lawsuit and stayed the matter.

The parties reached a settlement in October 2019, and the case was thereafter dismissed with prejudice.

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

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

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

The Ameri lawsuit was dismissed in May 2019 in light of the parties’ agreement to arbitrate the matter and was subsequently settled and dismissed with prejudice in December 2019.

The Vaccaro lawsuit was settled and dismissed in June 2019.

The Messing and Niedbalski lawsuits are stayed pending the outcome of the appeal in the Lee matter.

The remaining lawsuits make similar factual allegations that Live Nation and/or Ticketmaster LLC engage in conduct that is intended to encourage the resale of tickets on secondary ticket exchanges at elevated prices.

Based on these allegations, each plaintiff asserts violations of different state/provincial and federal laws.

As of November 2020, each of the consumer class actions filed in the United States had been dismissed with prejudice.

In March 2019, the Dickey lawsuit was dismissed, and the Gaetano lawsuit was voluntarily dismissed with prejudice by the plaintiff in April 2019.

The Ameri lawsuit was dismissed in May 2019, and the Vaccaro lawsuit was dismissed in June 2019.

In June 2020, the Ninth Circuit Court of Appeals affirmed the District Court’s ruling in the Lee lawsuit, compelling arbitration and dismissing the case.

In November 2020, the Messing and Niedbalski lawsuits were dismissed with prejudice.

The remaining Canadian lawsuits make similar factual allegations that Live Nation and/or Ticketmaster LLC engage in conduct that is intended to encourage the resale of tickets on secondary ticket exchanges at elevated prices.

Based on these allegations, each plaintiff asserts violations of different provincial and federal laws.

Each plaintiff also seeks to represent a class of individuals who purchased tickets on a secondary ticket exchange, as defined in each plaintiff’s complaint.

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

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

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

We intend to vigorously defend these actions.

We continue to vigorously defend these actions.

CIE Arbitration

In July 2019, Ticketmaster New Ventures, S.

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

(“CIE”) and Grupo Televisa, S.A.B.

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

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

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

CIE shareholders approved the acquisition in September 2019.

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

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

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

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

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

The matter has been assigned to a panel of arbitrators and a hearing has been scheduled to commence in March 2022.

We intend to vigorously defend these claims.

Other Litigation

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We also receive transaction fees from the sports franchise for tickets the sports franchise sells using our ticketing software.

From time to time, we purchase advertising from a Sirius XM, a satellite radio company that is a subsidiary of Liberty Media.

Our Chief Executive Officer became a member of the board of directors of Legends Hospitality Holding Company, LLC (“Legends”) in February 2015.

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Income tax expense (benefit) $ ( 28,875 ) $ 66,892 $ 40,765

The domestic income (loss) before income taxes was $ 36.1 million, $ 43.5 million and $( 132.6 ) million for 2019 , 2018 and 2017 , respectively.

Foreign income before income taxes was $ 149.0 million, $ 87.6 million and $ 123.2 million for 2019, 2018 and 2017, respectively.

The domestic income (loss) before income taxes was $( 1.5 ) billion, $ 36.1 million and $ 43.5 million for 2020 , 2019 and 2018 , respectively.

Foreign income (loss) before income taxes was $( 374.5 ) million, $ 149.0 million and $ 87.6 million for 2020, 2019 and 2018, respectively.

Significant components of our deferred tax liabilities and assets are as follows:

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Valuation allowance 1,100,407 667,242

Total deferred tax assets 215,919 3,620

Total net deferred tax assets 269,717 215,919

Net deferred tax liabilities $ ( 157,122 ) $ ( 163,856 )

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As a result of the valuation allowances, no tax benefits have been recognized for losses incurred in those tax jurisdictions in 2020, 2019 and 2018.

The leases deferred tax liabilities and leases deferred tax assets were recorded in 2019 pursuant to the new lease accounting standard.

See Note 1—The Company and Summary of Significant Accounting Policies for a discussion of the new lease standard.

During 2020 and 2019, we recorded net deferred tax liabilities of $ 35.3 million and $ 43.3 million, respectively, due principally to differences in financial reporting and tax bases in assets acquired in business combinations.

This is the primary reason for the increase in intangible assets deferred tax liability

As of December 31, 2020, we have United States federal, state and foreign deferred tax assets related to net operating loss carryforwards of $ 393.9 million, $ 148.2 million and $ 413.1 million, respectively.

The increase in net operating loss carryforwards is primarily attributed to loss carryforwards as reported in our most recently filed tax returns.

The increase in net operating loss carryforwards is primarily attributed to increases in loss carryforwards during 2020.

The majority of the increase in net operating loss carryforwards are in jurisdictions for which we maintain a full valuation allowance against net deferred tax assets.

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(in thousands)

Income tax expense (benefit) at United States statutory rates ( 21 %, 21 % and 35 %, respectively)

Income tax expense (benefit) at United States statutory rate of 21 %

$ ( 389,900 ) $ 38,872 $ 27,532

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( 12,794 ) 6,384 2,650

United States tax reform rate change — — ( 55,685 )

Non-United States income inclusions and exclusions 1,809 ( 3,222 ) ( 3,425 )

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$ ( 28,875 ) $ 66,892 $ 40,765

Income tax expense is principally attributable to our earnings in foreign tax jurisdictions along with state income taxes.

Income tax expense (benefit) is principally attributable to our earnings in foreign tax jurisdictions along with state income taxes.

Amounts included in differences between foreign and United States statutory rates are impacted by changes in the mix of international earnings subject to various tax rates which can differ greatly in their proximity to the United States statutory rate.

The differences between statutory rates is also impacted by our Luxembourg affiliates and tax rulings which include the application of a reduced Luxembourg effective rate to the net income before tax resulting from our financing activities in Luxembourg.

The United States tax reform change amount in 2017 pertains to the impact of the provisions associated with the Tax Cuts and Jobs Act (“TCJA”).

Amounts included in United States income inclusions and exclusions for 2019 and 2018 include the favorable impact of tax deductions for vesting of restricted stock awards and exercises of stock options partially offset by unfavorable inclusions for global intangible low-taxed income (“GILTI”) under the provisions associated with the TCJA.

Nondeductible items in 2019 and 2018 include the impact of increased nondeductible expenses pursuant to the provisions of the TCJA including nondeductible executive compensation.

Nondeductible items in 2018 and 2017 include our goodwill impairment for Artist Services (non-managment) which was not deductible for income tax purposes.

The change in valuation allowance for each period presented resulted primarily from changes in the income within jurisdictions with full valuation allowances, including the United States.

Amounts included in United States income inclusions and exclusions include the favorable impact of tax deductions for vesting of restricted stock awards and exercises of stock options partially offset in 2019 and 2018 by unfavorable inclusions for GILTI under the provisions associated with the TCJA.

Nondeductible items for all years presented include the impact of increased nondeductible expenses pursuant to the provisions of the TCJA including nondeductible executive compensation.

The 2020 nondeductible expenses also include adjustments for nondeductible noncontrolling interest.

Nondeductible items in 2018 includes our goodwill impairment for Artist Services (non-management) which was not deductible for income tax purposes.

The change in valuation allowance for each period presented resulted primarily from changes in the income (loss) within jurisdictions with full valuation allowances, including the United States.

The following table summarizes the activity related to the Company’s unrecognized tax benefits:

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As of December 31, 2020, it is not expected that the total amounts of unrecognized tax benefits will increase or decrease materially within the next year.

We regularly assesses the likelihood of additional assessments in each taxing jurisdiction resulting from current and subsequent years’ examinations.

We regularly assess the likelihood of additional assessments in each taxing jurisdiction resulting from current and subsequent years’ examinations.

Liabilities for income taxes are established for future income tax assessments when it is probable there will be future assessments and the amount can be reasonably estimated.

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NOTE 11— EQUITY

From inception and through December 31, 2020, we have not declared or paid any dividends.

We currently intend to retain future earnings, if any, to finance the expansion of our business.

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Common Stock Reserved for Future Issuance

Common stock of approximately 22.1 million shares as of December 31, 2019 is reserved for future issuances under the stock incentive plan (including 11.3 million options, 1.2 million restricted stock awards and 2.5 million of deferred stock awards currently granted).

Common stock of approximately 19.0 million shares as of December 31, 2020 is reserved for future issuances under the stock incentive plan (including 9.3 million options, 1.6 million restricted stock awards and 2.4 million deferred stock awards currently granted).

Noncontrolling Interests

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Changes in Live Nation’s additional paid-in capital for sales of noncontrolling interests, net of transaction costs

( 7,667 ) — 1,410

Net transfers of noncontrolling interests 6,669 ( 23,878 ) ( 6,800 )

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In accordance with the FASB guidance for business combinations, the redeemable noncontrolling interests are recorded at their fair value at acquisition date.

For put arrangements that are not currently redeemable, we accrete up to the estimated redemption value over the period from the date of issuance to the earliest redemption date of the individual puts, with the offset recorded to additional paid-in capital.

For put arrangements that are not currently redeemable, we accrete to the estimated redemption value over the period from the date of issuance to the earliest redemption date of the individual puts, with the offset recorded to additional paid-in capital.

Decreases in accretion are only recognized to the extent that increases had been previously recognized.

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The following table presents changes in the components of AOCI, net of taxes, for the years ended December 31, 2020, 2019 and 2018:

Foreign Currency Items Other Total

Loss on Cash Flow Hedges Foreign Currency Items Total

(in thousands)

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Balance at December 31, 2019 — ( 145,713 ) ( 145,713 )

Other comprehensive loss before reclassifications ( 482 ) — ( 482 )

Other comprehensive income (loss) before reclassifications ( 36,689 ) 291 ( 36,398 )

Amount reclassified from AOCI 5,102 — 5,102

Net other comprehensive loss ( 482 ) — ( 482 )

Net other comprehensive income (loss) ( 31,587 ) 291 ( 31,296 )

Balance at December 31, 2020 $ ( 31,587 ) $ ( 145,422 ) $ ( 177,009 )

The realized loss in other reclassified from AOCI during 2017 resulted from the termination of a pension plan.

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

Earnings per Share

Basic net income (loss) per common share is computed by dividing the net income (loss) available to common stockholders by the weighted average number of common shares outstanding during the period.

Diluted net income per common share adjusts basic net income per common share for the effects of stock options, restricted stock and other potentially dilutive financial instruments only in the periods in which such effect is dilutive.

Diluted net income per common share adjusts basic net income per common share for the effects of stock options, restricted and deferred stock awards and other potentially dilutive financial instruments only in the periods in which such effect is dilutive.

Our convertible senior notes are considered in the calculation of diluted net income per common share, if dilutive.

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NOTE 12— REVENUE RECOGNITION

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

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

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

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

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

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

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

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

The estimate of future refunds was developed by allocating our event-related deferred revenue based on where we estimated that the affected events were in the refund process as of December 31, 2020, and applying a venue-specific refund take rate.

The venue-specific refund take rates were based on the refunds we have issued since we ceased all our tours and closed our venues in mid-March 2020 through the end of the current reporting period.

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

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

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

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

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

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

Concerts revenue, including intersegment revenue, for the years ended December 31, 2020, 2019 and 2018 are as follows:

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

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

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

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

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Our Ticketing segment is primarily an agency business that sells tickets for events on behalf of its clients, which include venues, concert promoters, professional sports franchises and leagues, college sports teams, theater producers and museums.

Our Ticketing segment is acting as an agent on behalf of its clients and records revenue arising from convenience and order processing fees, regardless of whether these fees are related to tickets sold in the primary or secondary market, and regardless of whether these fees are associated with our concert events or third-party clients’ concert events.

Our Ticketing segment records revenue arising from convenience and order processing fees, regardless of whether these fees are related to tickets sold in the primary or secondary market, and regardless of whether these fees are associated with our concert events or third-party clients’ concert events.

Our Ticketing segment does not record the face value of the tickets as revenue.

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

Revenue received from the sale of tickets in advance of our concert events is recorded as deferred revenue.

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

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

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

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

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

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

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

We expect to recognize approximately 33 %, 26 %, 17 % and 24 % of this revenue in 2020, 2021, 2022 and thereafter, respectively.

We expect to recognize, based on current projections, approximately 33 %, 26 %, 15 % and 26 % of this revenue in 2021, 2022, 2023 and thereafter, respectively.

Deferred Revenue

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

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

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

We had current deferred revenue of $ 1.2 billion and $ 925.2 million at December 31, 2018 and 2017, respectively.

The table below summarizes the amount of deferred revenue recognized during the years ended December 31, 2019 and 2018:

At December 31, 2020, 2019 and 2018, we had current deferred revenue of $ 1.8 billion, $ 1.4 billion and $ 1.2 billion, respectively.

The table below summarizes the amount of prior year current deferred revenue recognized during the years ended December 31, 2020 and 2019:

(in thousands)

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$ 321,617 $ 1,207,322

As of December 31, 2020, approximately 40.6 % of the current deferred revenue balance from December 31, 2019 is expected to be recognized in 2021 and thus such amounts remain in current deferred revenue.

In addition, as of December 31, 2020, approximately 32.7 % of the current deferred revenue balance from December 31, 2019 has been or is expected to be refunded to fans as the corresponding events have cancelled or refunds were or are expected to be requested for rescheduled events, and thus such amounts have been reclassified to accrued expenses if not already refunded.

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

We had long-term deferred revenue of $ 88.6 million, $ 34.4 million and $ 27.5 million at December 31, 2020, 2019 and 2018, respectively, which is reflected in other long-term liabilities on the consolidated balance sheets.

NOTE 13— STOCK-BASED COMPENSATION

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Total $ 116,889 $ 48,785 $ 45,582

The increase in stock-based compensation expense for the year ended December 31, 2020 is primarily due to the issuance of restricted stock awards in 2020 in lieu of cash payments due for bonuses earned in 2019 owed to certain employees, as part of our cash savings initiative in connection with the global COVID-19 pandemic.

As of December 31, 2020, there was $ 84.3 million of total unrecognized compensation cost related to stock-based compensation arrangements for stock options, restricted stock and deferred stock awards.

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Any options that have vested at the time of termination are forfeited to the extent they are not exercised within the applicable post-employment exercise period provided in their option agreements.

These options vest over two to five years .

These options typically vest over one to four years .

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

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Cash received from stock option exercises for the years ended December 31, 2020, 2019 and 2018 was $ 30.6 million, $ 14.1 million and $ 22.6 million, respectively.

There were 7.1 million shares available for future grants under the stock incentive plans at December 31, 2019.

There were 5.6 million shares available for future grants under the stock incentive plan at December 31, 2020.

Upon share option exercise or vesting of restricted or deferred stock, we issue new shares or treasury shares to fulfill these grants.

Vesting dates on the stock options range from February 2020 to June 2023, and expiration dates range from January 2020 to June 2029 at exercise prices and average contractual lives as follows:

Vesting dates on the stock options range from February 2021 to May 2024, and expiration dates range from July 2021 to December 2030 at exercise prices and average contractual lives as follows:

Prices Outstanding

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491 8.2 $ 56.82 154 8.2 $ 56.77

$ 61.00 - $ 70.99

33 9.9 $ 70.26 — 0.0 $ —

The total intrinsic value of options outstanding and options exercisable as of December 31, 2020 was $ 508.6 million and $ 498.7 million, respectively.

Restricted Stock

We have granted restricted stock awards to our employees, directors and consultants under our stock incentive plans.

These common shares carry a legend which restricts their transferability for a term of one to five years and are forfeited in the event the recipient’s employment or relationship with us is terminated prior to the lapse of the restriction.

We have granted restricted stock awards to our employees, directors and consultants under our stock incentive plan.

These common shares carry a legend which typically restricts their transferability for a term of one to five years and are forfeited in the event the recipient’s employment or relationship with us is terminated prior to the lapse of the restriction.

In addition, certain restricted stock awards require us or the recipient to achieve minimum performance targets in order for these awards to vest.

In 2019, we granted 0.2 million shares of restricted stock and 0.2 million shares of performance-based awards, respectively, under our stock incentive plans.

In 2020, we granted 2.1 million shares of restricted stock and 0.3 million shares of performance-based awards, respectively, under our stock incentive plan.

These awards will all vest over 3 months to four years with the exception of the performance-based awards which will vest within two years if the performance criteria are met.

As of December 31, 2020, we determined that the performance-based criteria for these awards were not probable of being met and such awards will be forfeited in 2021.

In 2019, we granted 0.2 million shares of restricted stock and 0.2 million shares of performance-based awards, respectively, under our stock incentive plan.

These awards will all vest over one or four years with the exception of the performance-based awards which will vest within two years if the performance criteria are met.

In 2018, we granted 0.3 million shares of restricted stock and 0.2 million shares of performance-based awards, respectively, under our stock incentive plans.

These awards will all vest over one or four years with the exception of the performance-based awards which will vest within one to two years if the performance criteria are met.

As of December 31, 2020, the performance-based criteria for these awards have been met unless otherwise forfeited.

In 2018, we granted 0.3 million shares of restricted stock and 0.2 million shares of performance-based awards, respectively, under our stock incentive plans.

These awards will vest over one or four years with the exception of the performance-based awards which will generally vest within one to two years if the performance criteria are met.

These awards will all vest over one or four years with the exception of the performance-based awards which will vest within one to two years if the performance criteria are met.

As of December 31, 2020, the performance-based criteria for these awards have been met unless otherwise forfeited.

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The total grant date fair market value of the shares issued upon the vesting of restricted stock awards during the years ended December 31, 2020, 2019 and 2018 was $ 91.6 million, $ 22.6 million and $ 20.0 million, respectively.

As of December 31, 2019, there were 0.2 million restricted stock awards outstanding which require us or the recipient to achieve minimum performance targets in order for the awards to vest.

Deferred Stock

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All of the deferred stock awards require us to achieve minimum market conditions in order for these awards to issue and vest.

In 2017, we granted 2.5 million shares of deferred stock awards with market conditions under our incentive plans.

In 2017, we granted 2.5 million shares of deferred stock awards with market conditions under our incentive plan.

These awards will all vest over one to five years if specified stock prices are achieved over a specific number of days during the five years .

In 2019 and 2018, we achieved minimum market conditions resulting in the issuance of 1.5 million shares and 0.2 million shares of restricted stock, respectively, subject to vesting over one to four years .

As of December 31, 2019, there were 0.8 million deferred stock awards outstanding which require us to achieve minimum market conditions in order for the awards to issue subject to further vesting conditions.

In 2020, 2019 and 2018, we achieved minimum market conditions resulting in the issuance of 0.8 million shares, 1.5 million shares and 0.2 million shares of restricted stock, respectively, subject to vesting over one to four years .

As of December 31, 2020, there were no deferred stock awards outstanding for which the minimum market conditions have not been met.

The following table presents a summary of the Company’s unvested deferred stock awards outstanding at December 31, 2020, 2019 and 2018 (“Price” reflects the weighted average grant date fair value):

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Collections on behalf of others 51,127 48,467

Accrued ticket refunds 143,827 4,432

Other 330,177 485,864

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NOTE 15— SEGMENT DATA

For all periods presented, our reportable segments are Concerts, Ticketing and Sponsorship & Advertising.

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

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

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Revenue and expenses earned and charged between segments are eliminated in consolidation.

Our capital expenditures below include accruals for amounts incurred but not yet paid for, but are not reduced by reimbursements received from outside parties such as landlords or replacements funded by insurance proceeds.

We manage our working capital on a consolidated basis.

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

Total Foreign Operations Total Domestic Operations Consolidated Total

United Kingdom Operations Other Foreign Operations Total Foreign Operations Total Domestic Operations Consolidated Total

(in thousands)

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Long-lived assets $ 71,298 $ 128,001 $ 199,299 $ 747,294 $ 946,593

NOTE 15— QUARTERLY RESULTS OF OPERATIONS (Unaudited)

March 31, June 30, September 30, December 31,

2019 2018 2019 2018 2019 2018 2019 2018

(in thousands)

Revenue $ 1,727,828 $ 1,482,384 $ 3,157,009 $ 2,868,315 $ 3,773,684 $ 3,835,246 $ 2,889,448 $ 2,601,855

Operating income (loss)

$ ( 23,863 ) $ ( 6,030 ) $ 171,586 $ 134,725 $ 260,041 $ 234,219 $ ( 82,920 ) $ ( 90,378 )

Net income (loss) $ ( 55,241 ) $ ( 41,028 ) $ 116,120 $ 83,356 $ 193,972 $ 183,197 $ ( 136,639 ) $ ( 135,185 )

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

$ ( 52,444 ) $ ( 33,906 ) $ 103,355 $ 69,359 $ 178,925 $ 172,683 $ ( 159,947 ) $ ( 147,887 )

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

$ ( 64,756 ) $ ( 50,291 ) $ 89,840 $ 52,187 $ 155,345 $ 151,894 $ ( 185,311 ) $ ( 171,441 )

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

$ ( 64,756 ) $ ( 50,291 ) $ 89,926 $ 52,187 $ 155,345 $ 152,213 $ ( 185,311 ) $ ( 171,441 )

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

$ ( 0.31 ) $ ( 0.24 ) $ 0.43 $ 0.25 $ 0.74 $ 0.73 $ ( 0.88 ) $ ( 0.82 )

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

$ ( 0.31 ) $ ( 0.24 ) $ 0.41 $ 0.24 $ 0.71 $ 0.70 $ ( 0.88 ) $ ( 0.82 )

The following summarizes unusual or infrequent items affecting the quarterly results of operations:

We recorded impairment charges of $ 19.4 million in the third quarter of 2019 primarily related to intangible assets for revenue-generating contracts in the Concerts and Sponsorship & Advertising segments.

See Note 2—Long-Lived Assets and Note 6—Fair Value Measurements for further discussion.

We recorded a goodwill impairment of $ 10.5 million in the fourth quarter of 2018 in connection with our annual impairment test.

See Note 2—Long-Lived Assets and Note 6—Fair Value Measurements for further discussion.

We recorded a net foreign exchange rate loss of $ 8.4 million in the second quarter of 2018, as a component of other expense (income), net.

NOTE 16— SUBSEQUENT EVENT

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

The proceeds will be 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.

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.

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.

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 the Company’s senior secured term loan B facility, leaving approximately $ 417.0 million for general corporate purposes, including acquisitions and organic investment opportunities.

We may redeem some or all of the notes, at any time prior to January 15, 2024, 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 January 15, 2024, at a price equal to 103.75 % of the aggregate principal amount, plus accrued and unpaid interest thereon, if any, to the date of redemption.

In addition, on or after January 15, 2024 we may redeem some or all of the notes at any time at redemption prices specified in the Notes Indenture, 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.

CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE

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 8. Financial Statements and Supplementary Data