What changed in this filing

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Item 1. Financial Statements

2021-05-06 compared with 2020-11-05 · 176 added, 429 removed, 452 unchanged (57% of the section changed)

2 unchanged sentences

CONSOLIDATED BALANCE SHEETS

September 30,

2021 December 31,

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Three Months Ended

September 30, Nine Months Ended

September 30,

2020 2019 2020 2019

(in thousands except share and per share data)

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Depreciation and amortization 108,876 122,080

Loss (gain) on disposal of operating assets 208 ( 305 ) 897 ( 553 )

Loss on disposal of operating assets 138 130

Corporate expenses 27,948 28,312

Operating income (loss) ( 504,441 ) 260,041 ( 1,265,178 ) 407,764

Operating loss ( 303,172 ) ( 172,670 )

Interest expense 70,830 43,999

Interest income ( 1,149 ) ( 4,473 )

Equity in losses (earnings) of nonconsolidated affiliates 2,615 2,681 6,656 ( 6,291 )

Equity in earnings of nonconsolidated affiliates ( 581 ) ( 2,572 )

Gain from sale of investments in nonconsolidated affiliates ( 55,933 ) ( 3,555 )

Other expense (income), net ( 6 ) 8,183

Income (loss) before income taxes ( 559,362 ) 221,252 ( 1,413,381 ) 314,839

Loss before income taxes ( 316,333 ) ( 214,252 )

Income tax expense (benefit) 6,389 ( 3,330 )

Net income (loss) ( 542,458 ) 193,972 ( 1,363,964 ) 254,851

Net income (loss) attributable to noncontrolling interests ( 13,556 ) 15,047 ( 82,761 ) 25,015

Net income (loss) attributable to common stockholders of Live Nation $ ( 528,902 ) $ 178,925 $ ( 1,281,203 ) $ 229,836

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

$ ( 2.45 ) $ 0.74 $ ( 6.08 ) $ 0.86

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

Net loss ( 322,722 ) ( 210,922 )

Net loss attributable to noncontrolling interests ( 15,529 ) ( 26,138 )

Net loss attributable to common stockholders of Live Nation $ ( 307,193 ) $ ( 184,784 )

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

$ ( 1.44 ) $ ( 0.94 )

Weighted average common shares outstanding:

Basic 212,593,719 210,621,971 211,781,620 209,849,058

Diluted 212,593,719 218,957,376 211,781,620 218,485,494

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

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

Basic and diluted 214,531,958 211,048,294

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

Net loss attributable to common stockholders of Live Nation

$ ( 307,193 ) $ ( 184,784 )

Accretion of redeemable noncontrolling interests ( 916 ) ( 14,540 )

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

( 521,912 ) 155,345 ( 1,287,158 ) 180,429

Convertible debt interest, net of tax — — — 265

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

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

$ ( 308,109 ) $ ( 199,324 )

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Three Months Ended

September 30, Nine Months Ended

September 30,

2020 2019 2020 2019

(in thousands)

Net income (loss) $ ( 542,458 ) $ 193,972 $ ( 1,363,964 ) $ 254,851

Net loss $ ( 322,722 ) $ ( 210,922 )

Other comprehensive income (loss), net of tax:

Unrealized loss on cash flow hedge ( 2,249 ) — ( 38,845 ) —

Unrealized gain (loss) on cash flow hedge 15,096 ( 30,831 )

Realized loss on cash flow hedge 1,916 —

Foreign currency translation adjustments ( 13,219 ) ( 82,782 )

Comprehensive income (loss) ( 520,870 ) 161,716 ( 1,440,468 ) 219,035

Comprehensive income (loss) attributable to noncontrolling interests

Comprehensive loss ( 318,929 ) ( 324,535 )

Comprehensive loss attributable to noncontrolling interests

( 15,529 ) ( 26,138 )

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

Comprehensive loss attributable to common stockholders of Live Nation

$ ( 303,400 ) $ ( 298,397 )

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

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

Balances at December 31, 2020 214,466,988 $ 2,145 $ 2,386,790 $ ( 2,676,833 ) $ ( 6,865 ) $ ( 177,009 ) $ 338,020 $ ( 133,752 ) $ 272,449

Non-cash and stock-based compensation — — 40,017 — — — — 40,017 —

Common stock issued under stock plans, net of shares withheld for employee taxes 566,285 5 ( 19,949 ) — — — — ( 19,944 ) —

Exercise of stock options, net of shares withheld for option cost and employee taxes 320,731 3 6,683 — — — — 6,686 —

Acquisitions — — — — — — 10,480 10,480 7,349

Divestitures — — — — — — ( 1 ) ( 1 ) —

Exercise of stock options 994,273 10 25,784 — — — — 25,794 —

Purchases of noncontrolling interests — — ( 500 ) — — — — ( 500 ) —

Sales of noncontrolling interests — — 161 — — — 8,868 9,029 —

Redeemable noncontrolling interests fair value adjustments — — ( 916 ) — — — — ( 916 ) 916

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Cash distributions — — — — — — ( 4,477 ) ( 4,477 ) ( 1,139 )

Other — — 184 — — — ( 2,247 ) ( 2,063 ) 16

Comprehensive loss:

Net loss — — — ( 307,193 ) — — ( 7,687 ) ( 314,880 ) ( 7,842 )

Unrealized loss on cash flow hedge — — — — — ( 2,249 ) — ( 2,249 ) —

Unrealized gain on cash flow hedge — — — — — 15,096 — 15,096 —

Realized loss on cash flow hedge — — — — — 1,916 — 1,916 —

Foreign currency translation adjustments — — — — — ( 13,219 ) — ( 13,219 ) —

Balances at September 30, 2020 213,823,002 $ 2,138 $ 2,361,015 $ ( 2,233,501 ) $ ( 6,865 ) $ ( 222,217 ) $ 346,454 $ 247,024 $ 286,987

Balances at March 31, 2021 216,027,546 $ 2,160 $ 2,431,387 $ ( 2,984,026 ) $ ( 6,865 ) $ ( 173,216 ) $ 336,446 $ ( 394,114 ) $ 264,384

See Notes to Consolidated Financial Statements

Live Nation Stockholders’ Equity

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

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

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

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Common stock issued under stock plans, net of shares withheld for employee taxes 262,170 2 ( 7,448 ) — — — — ( 7,446 ) —

Exercise of stock options, net of shares withheld for option cost and employee taxes 1,240,567 12 8,402 — — — — 8,414 —

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

Fair value of convertible debt conversion feature, net of issuance cost — — 33,330 — — — — 33,330 —

Acquisitions — — — — — — 31,165 31,165 11,148

Divestitures — — — — — — 592 592 —

Purchases of noncontrolling interests — — ( 6,485 ) — — — ( 1,032 ) ( 7,517 ) ( 6,411 )

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Unrealized loss on cash flow hedge — — — — — ( 30,831 ) — ( 30,831 ) —

Realized loss on cash flow hedge — — — — — 3,207 — 3,207 —

Foreign currency translation adjustments — — — — — ( 82,782 ) — ( 82,782 ) —

Balances at September 30, 2020 213,823,002 $ 2,138 $ 2,361,015 $ ( 2,233,501 ) $ ( 6,865 ) $ ( 222,217 ) $ 346,454 $ 247,024 $ 286,987

See Notes to Consolidated Financial Statements

Live Nation Stockholders’ Equity

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

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

Non-cash and stock-based compensation — — 12,030 — — — — 12,030 —

Common stock issued under stock plans, net of shares withheld for employee taxes 9,457 — ( 319 ) — — — — ( 319 ) —

Exercise of stock options, net of shares withheld for option cost and employee taxes 206,456 2 3,039 — — — — 3,041 —

Conversion of convertible debt — 8 ( 8 ) — — — — — —

Acquisitions — — — — — — 4,790 4,790 —

Purchases of noncontrolling interests — — ( 24,846 ) — — — ( 2,695 ) ( 27,541 ) —

Redeemable noncontrolling interests fair value adjustments — — ( 23,580 ) — — — — ( 23,580 ) 23,580

Contributions received — — — — — — 4,800 4,800 —

Cash distributions — — — — — — ( 8,185 ) ( 8,185 ) ( 1,624 )

Other — — 135 — — — ( 279 ) ( 144 ) —

Comprehensive income (loss):

Net Income — — — 178,925 — — 3,515 182,440 11,532

Foreign currency translation adjustments — — — — — ( 32,256 ) — ( 32,256 ) —

Balances at September 30, 2019 211,126,056 $ 2,111 $ 2,262,461 $ ( 789,387 ) $ ( 6,865 ) $ ( 181,047 ) $ 235,559 $ 1,522,832 $ 418,816

See Notes to Consolidated Financial Statements

Live Nation Stockholders’ Equity

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

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

Non-cash and stock-based compensation — — 37,022 — — — — 37,022 —

Common stock issued under stock plans, net of shares withheld for employee taxes 322,314 3 ( 10,581 ) — — — — ( 10,578 ) —

Exercise of stock options, net of shares withheld for option cost and employee taxes 843,833 9 13,231 — — — — 13,240 —

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

Acquisitions — — — — — — 30,958 30,958 39,303

Purchases of noncontrolling interests — — ( 24,576 ) — — — ( 2,965 ) ( 27,541 ) ( 1,459 )

Redeemable noncontrolling interests fair value adjustments — — ( 49,407 ) — — — — ( 49,407 ) 49,407

Contributions received — — — — — — 13,124 13,124 —

Cash distributions — — — — — — ( 60,300 ) ( 60,300 ) ( 12,882 )

Other — — ( 15 ) — — — ( 1,540 ) ( 1,555 ) 2,597

Comprehensive income (loss):

Net income — — — 229,836 — — 12,520 242,356 12,495

Foreign currency translation adjustments — — — — — ( 35,816 ) — ( 35,816 ) —

Balances at September 30, 2019 211,126,056 $ 2,111 $ 2,262,461 $ ( 789,387 ) $ ( 6,865 ) $ ( 181,047 ) $ 235,559 $ 1,522,832 $ 418,816

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

See Notes to Consolidated Financial Statements

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CONSOLIDATED STATEMENTS OF CASH FLOWS

Nine Months Ended

September 30,

Three Months Ended

(in thousands)

CASH FLOWS FROM OPERATING ACTIVITIES

Net income (loss) $ ( 1,363,964 ) $ 254,851

Net loss $ ( 322,722 ) $ ( 210,922 )

Reconciling items:

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Amortization of non-recoupable ticketing contract advances 10,621 18,811

Deferred income tax benefit ( 22,615 ) ( 1,008 )

Amortization of debt issuance costs and discounts 9,196 6,871

Non-cash compensation expense 40,017 11,732

Unrealized changes in fair value of contingent consideration ( 25,745 ) 7,372

Equity in losses of nonconsolidated affiliates, net of distributions 8,266 6,526

Provision for uncollectible accounts receivable 48,413 14,413

Loss (gain) on sale of investments in nonconsolidated affiliates ( 53,899 ) 1,192

Other, net ( 6,519 ) ( 19,439 )

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

Decrease (increase) in accounts receivable 406,202 ( 392,065 )

Decrease in accounts receivable 21,861 227,913

Decrease (increase) in prepaid expenses and other assets 4,704 ( 207,157 )

Increase (decrease) in accounts payable, accrued expenses and other liabilities ( 1,213,409 ) 135,672

Increase (decrease) in deferred revenue 684,532 ( 162,782 )

Net cash provided by (used in) operating activities ( 956,903 ) 32,922

Decrease in accounts payable, accrued expenses and other liabilities ( 39,044 ) ( 316,204 )

Increase in deferred revenue 301,483 996,798

Net cash provided by operating activities 74,574 631,675

CASH FLOWS FROM INVESTING ACTIVITIES

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Purchases of intangible assets ( 5,495 ) ( 206 )

Proceeds from sale of investments in nonconsolidated affiliates 60,308 —

Other, net 596 1,055

Net cash used in investing activities ( 224,532 ) ( 403,357 )

Net cash provided by (used in) investing activities 10,108 ( 122,371 )

CASH FLOWS FROM FINANCING ACTIVITIES

1 unchanged sentence

Payments on long-term debt ( 80,316 ) ( 6,032 )

Contributions from noncontrolling interests 2,568 13,124

Distributions to noncontrolling interests ( 5,616 ) ( 15,114 )

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Taxes paid for net share settlement of equity awards ( 19,944 ) ( 7,445 )

Payments for deferred and contingent consideration ( 62,035 ) ( 23,322 )

Other, net ( 994 ) ( 831 )

Net cash provided by (used in) financing activities 1,361,636 ( 139,610 )

Net cash provided by financing activities 417,017 382,422

Effect of exchange rate changes on cash, cash equivalents and restricted cash ( 30,681 ) ( 84,257 )

Net increase (decrease) in cash, cash equivalents, and restricted cash 159,249 ( 569,409 )

Net increase in cash, cash equivalents, and restricted cash 471,018 807,469

Cash, cash equivalents and restricted cash at beginning of period 2,546,439 2,474,242

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

The financial statements should be read in conjunction with the consolidated financial statements and notes thereto included in our 2019 Annual Report on Form 10-K filed with the SEC on February 27, 2020, as amended by the Form 10-K/A filed with the SEC on June 30, 2020.

Due to the seasonal nature of shows at outdoor amphitheaters and festivals, which primarily occur from May through October, our Concerts and Sponsorship & Advertising segments typically 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.

The financial statements should be read in conjunction with the consolidated financial statements and notes thereto included in our 2020 Annual Report on Form 10-K filed with the SEC on March 1, 2021.

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.

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

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

Due to the unprecedented stoppage of our concert and other events globally beginning in mid-March 2020 resulting from the global COVID-19 pandemic, we did not experience our typical seasonality trends in 2020 and do not expect any quarter in 2021 will follow our typical seasonality trends.

Cash, Cash Equivalents and Restricted Cash

Included in the September 30, 2020 and December 31, 2019 cash and cash equivalents balance is $ 614.4 million and $ 837.7 million, respectively, of cash received that includes the face value of tickets sold on behalf of ticketing clients and their share of service charges, which amounts are to be remitted to these clients.

Cash and cash equivalents include all highly liquid investments with an original maturity of three months or less.

Our cash and cash equivalents include domestic and foreign bank accounts as well as interest-bearing accounts consisting primarily of bank deposits and money market accounts managed by third-party financial institutions.

These balances are stated at cost, which approximates fair value.

Included in the March 31, 2021 and December 31, 2020 cash and cash equivalents balance is $ 724.4 million and $ 673.5 million, respectively, of cash received that includes the face value of tickets sold on behalf of ticketing clients and their share of service charges (“client cash”), which amounts are to be remitted to these clients.

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

These amounts are included in accounts payable, client accounts.

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

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

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

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

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

During the first nine months of 2020, we acquired the remaining redeemable noncontrolling interests of certain subsidiaries and settled certain contingent consideration obligations in exchange for debt obligations totaling $ 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.

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

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

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

Accounting Pronouncements - Recently Adopted

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

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.

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.

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.

At March 31, 2021 and December 31, 2020, we had investments in nonconsolidated affiliates of $ 162.5 million and $ 170.5 million, respectively, included in other long-term assets on our consolidated balance sheets.

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

As of March 31, 2021, we continued to maintain a full valuation allowance against our net deferred tax assets in certain jurisdictions due to cumulative pre-tax losses.

As a result of the valuation allowances, no tax benefits have been recognized for losses incurred, if any, in those tax jurisdictions for the first three months of 2021.

Accounting Pronouncements - Not Yet Adopted

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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.

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 business.

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.

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Operating Results

Our third quarter and nine-month results were materially impacted by these necessary actions.

Our overall revenue for the quarter decreased by 95 % to $ 184.0 million and for the nine months decreased by 81 % to $ 1.6 billion.

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

We estimate the lost revenue impact from the global COVID-19 pandemic in the third quarter and first nine months of 2020 to be approximately $ 3.7 billion and $ 7.0 billion, respectively.

Our operating results for the third quarter and nine months decreased as compared to the same periods of 2019 largely due to the global COVID-19 pandemic impacts to our business, totaling approximately $ 818.6 million and $ 1.7 billion, respectively, including $ 3.6 million and $ 15.6 million of impairment charges for the third quarter and first nine months of 2020, respectively.

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

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

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

In addition, we have recorded an estimate of $ 74.0 million in Concerts for refunds that may occur in the future based on the limited amount of data available on refunds resulting from the global shutdown of our live events.

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

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

Our overall revenue for the first quarter of 2021 decreased by 79 % to $ 290.6 million as compared to the same period of the prior year.

The revenue reduction was primarily in our Concerts and Ticketing 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.

The event-related deferred revenue for our Concerts segment, which is reported as part of deferred revenue on our consolidated balance sheets, includes the face value and Concerts’ share of service charges for all tickets sold by March 31, 2021 for shows expected to occur in the next 12 months.

Any refunds committed to for shows cancelled or rescheduled during the first three months of 2021 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 $ 89.0 million in Concerts for refunds that may occur in the future for shows we believe may be cancelled or rescheduled based on the 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 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 September 30, 2021 totaled $ 103 million and is reflected in other long-term liabilities on our consolidated balance sheets.

By the end of the third quarter of 2020, we had cancelled over 5,000 concerts impacted by the stoppage of events starting in mid-March of this year, equating to approximately 15 million tickets.

In addition, we had nearly 6,000 shows, equating to approximately 22 million tickets, that have been postponed and rescheduled into 2021 or were in the process of being rescheduled at the end of the third quarter.

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

Event-related deferred revenue for tickets sold for shows expected to occur after March 31, 2022 totaled $ 229.8 million and is reflected in other long-term liabilities on our consolidated balance sheets.

The revenue recognized in our Ticketing segment during the first three months of 2021 includes our share of ticket service charges for tickets sold during the period for third-party clients and for shows that occurred in the period for our Concerts business where our promoters control the ticketing.

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

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

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.

By the end of the third quarter of 2020 and through the time of this filing, Ticketing had processed or accrued for cancellations or refunds on 23.3 million tickets.

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

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

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

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

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

accordingly, we currently expect the negative impact to continue into next year.

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

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

We have never previously experienced a complete cessation of our live events 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 and we are unable to estimate the impact on our business, financial condition or near- or longer-term financial or operational results.

Cash and available liquidity

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

These amendments will allow us the flexibility to manage our business through the disruption that we are experiencing in 2020 and expect to experience in 2021.

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

Following this increase, we currently have approximately $ 962.6 million in available debt capacity, including $ 400 million in undrawn term loan A capacity and $ 562.6 million in available revolver capacity, net of outstanding letters of credit.

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

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

As of September 30, 2020, our total cash and cash equivalents balance was $ 2.6 billion, which included $ 614 million of ticketing client cash.

We believe this cash, net of client cash, together with our available debt capacity of $ 962.6 million, gives us the liquidity to fund our operations during the pandemic.

Our total cash includes event-related deferred revenue for which the amount can fluctuate over the course of the year, but given the shift of shows into 2021, we expect this number to remain above seasonally normal levels throughout this year.

Event-related deferred revenue consists of cash held by our Concerts business for future shows, with roughly half the funds associated with upcoming shows in the United States and half for international shows as of September 30, 2020.

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

Internationally, the funds held are from a combination of both shows in our owned or operated venues, as well as shows in third-party venues associated with our promoter share of tickets in allocation markets.

We do not otherwise generally hold funds for concerts being held in third-party buildings.

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

Cost and Cash Management Programs

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

As part of these cost reduction efforts, we have implemented salary reductions for most of our employees, with salaries for senior executives reduced by up to 60 %.

Additional cost reduction efforts include hiring freezes, reduction in the use of contractors, rent re-negotiations, furloughs, termination of certain

employees and reduction or elimination of other discretionary spending, including, among other things, travel and entertainment, repairs and maintenance, and marketing.

We are also making use of government support programs globally.

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

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

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

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

As a result of these initiatives and government support programs, we are now targeting over $ 900 million in cost reductions in 2020 and the elimination or deferral into 2021 of $ 1.5 billion in cash outflows, which primarily includes the cost reductions discussed above along with lower capital expenditures, acquisition payments, and concert and ticketing advances.

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

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

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

We cannot assure you that our assumptions used to estimate our liquidity requirements will be correct because we have never previously experienced a complete cessation of our live events and the magnitude, duration and speed of the global pandemic is unknown, and as a consequence, our ability to be predictive is uncertain.

Health and Safety and Planning for a Return to Business

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

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

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

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

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

Recent fan surveys indicate that the demand will be there when the shows return, with nearly 95 % of fans expecting to attend concerts again once the pandemic is over.

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

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

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

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

NOTE 3— LONG-LIVED ASSETS

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

We reviewed our long-lived assets for potential impairment indicators due to the suspension of our live 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 through the remainder of the year.

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

We currently do not anticipate a significant change in activity levels until early in the second half of 2021 led by outdoor events and festivals in the United States and United Kingdom.

We expect that most larger venues will reopen and global tours will resume 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.

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

September 30, December 31,

March 31, December 31,

(in thousands)

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2,711,853 2,703,526

Less accumulated depreciation 1,583,637 1,421,383

accumulated depreciation 1,647,682 1,602,112

$ 1,064,171 $ 1,101,414

Definite-lived Intangible Assets

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

contracts Client /

relationships Trademarks

rights Venue management & leaseholds Technology Other (1)

The following table presents the changes in the gross carrying amount and accumulated amortization of definite-lived intangible assets for the three months ended March 31, 2021:

relationships Revenue-

contracts Venue management and leaseholds Trademarks

rights Technology Other (1)

(in thousands)

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Net change ( 4,979 ) ( 11,674 ) ( 3,495 ) ( 3,902 ) 2,428 ( 1,250 ) ( 22,872 )

Balance as of September 30, 2020:

Balance as of March 31, 2021:

Gross carrying amount

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

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

The 2021 additions to definite-lived intangible assets from acquisitions have weighted-average lives as follows:

Life (years) (1)

Revenue-generating contracts 8

Client/vendor relationships 5

Trademarks and naming rights 1

Venue management and leaseholds 7

Non-compete agreements 2

All categories 3

______________

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

The current year acquisitions amount above for technology intangibles includes software licenses acquired in the normal course of business.

We test for possible impairment of definite-lived intangible assets whenever events or circumstances change, such as a significant reduction in operating cash flow or a change in the manner in which the asset is intended to be used, which may indicate that the carrying amount of the asset may not be recoverable.

During the nine months ended September 30, 2020 and

2019, we reviewed the carrying value of certain definite-lived intangible assets that management determined had an indicator that future operating cash flows may not support their carrying value, as a result of the expected impacts from the global COVID-19 pandemic for the 2020 period, and it was determined that those assets were impaired since the estimated undiscounted operating cash flows associated with those assets were less than their carrying value.

For the nine months ended September 30, 2020 and 2019, we recorded impairment charges related to definite-lived intangible assets of $ 15.3 million and $ 19.4 million, respectively, as a component of depreciation and amortization.

For both periods, these impairment charges primarily related to intangible assets for revenue-generating contracts and client/vendor relationships in the Concerts segment.

During the three months ended March 31, 2021 and 2020, we reviewed the carrying value of certain definite-lived intangible assets that management determined had an indicator that future operating cash flows may not support their carrying value, as a result of the expected impacts from the global COVID-19 pandemic, and it was determined that those assets were impaired since the estimated undiscounted operating cash flows associated with those assets were less than their carrying value.

For the three months ended March 31, 2021, there were no significant impairment charges.

For the three months ended March 31, 2020, we recorded impairment charges related to definite-lived intangible assets of $ 10.1 million as a component of depreciation and amortization primarily related to intangible assets for revenue-generating contracts in the Concerts segment.

See Note 6—Fair Value Measurements for further discussion of the inputs used to determine the fair value.

Amortization of definite-lived intangible assets for the three months ended September 30, 2020 and 2019 was $ 58.4 million and $ 69.3 million, respectively, and for the nine months ended September 30, 2020 and 2019 was $ 180.4 million and $ 166.0 million, respectively.

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

(in thousands)

October 1 - December 31, 2020 $ 50,797

2021 $ 178,297

2022 $ 150,749

2023 $ 128,758

2024 $ 110,858

Amortization of definite-lived intangible assets for the three months ended March 31, 2021 and 2020 was $ 51.9 million and $ 64.2 million, respectively.

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

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As such, we completed our annual review in the fourth quarter of 2020 and, as reported in our December 31, 2020 Form 10-K, no impairments were recorded as the fair value of each reporting unit was determined to be in excess of its carrying value for all reporting units.

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

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

The rapid and severe impacts of the global COVID-19 pandemic, and more specifically the need to support global social distancing efforts, mitigate the spread of the virus and comply with restrictions put in place by various governmental entities, led to our decision to stop all tours and close our venues beginning in mid-March 2020.

As such actions will continue to have a material impact on our cash flows during the suspension of operations, we have performed qualitative and sensitivity reviews to assess as of March 31, 2021 whether we believed these actions caused the fair value of any of our reporting units to fall below its carrying value.

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

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

The conclusion for all reporting units was that no impairment trigger existed that would require a further quantitative analysis during the three months ended March 31, 2021.

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

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

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

The following table presents the changes in the carrying amount of goodwill in each of our reportable segments for the three months ended March 31, 2021:

Concerts Ticketing Sponsorship

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Foreign exchange ( 2,980 ) ( 3,673 ) ( 4,252 ) ( 10,905 )

Balance as of September 30, 2020:

Balance as of March 31, 2021:

Goodwill 1,314,010 775,146 459,901 2,549,057

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Net $ 878,647 $ 775,146 $ 459,901 $ 2,113,694

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

We are in various stages of finalizing our acquisition accounting for recent acquisitions, which may 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 our allocation between segments.

Investments in Nonconsolidated Affiliates

During the three months ended March 31, 2021, we sold certain investments in nonconsolidated affiliates for $ 60.3 million in cash plus $ 6.8 million in deferred purchase price consideration resulting in a gain on sale of investments in nonconsolidated affiliates of $ 55.9 million.

NOTE 4— LEASES

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Three Months Ended

September 30, Nine Months Ended

September 30,

2020 2019 2020 2019

(in thousands)

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

In response to the global COVID-19 pandemic, we closed our venues in mid-March and the majority of those venues have remained closed through September 30, 2020.

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

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

Nine Months Ended

September 30,

Three Months Ended

(in thousands)

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Lease assets obtained in exchange for lease obligations, net of terminations $ 6,771 $ 55,042

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

Future maturities of our operating lease liabilities at March 31, 2021 are as follows:

(in thousands)

October 1 - December 31, 2020 $ 41,360

April 1 - December 31, 2021 $ 135,266

Thereafter 1,464,421

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

September 30,

March 31, 2021 December 31, 2020

Weighted average remaining lease term (in years) 13.8 13.9

Weighted average discount rate 6.43 % 6.31 %

As of September 30, 2020, we have additional operating leases that have not yet commenced, with total lease payments of $ 119.1 million.

These operating leases, which are not included on our consolidated balance sheets, have commencement dates ranging from October 2020 to June 2030, with lease terms ranging from 1 to 20 years.

As of March 31, 2021, we have additional operating leases that have not yet commenced, with total lease payments of $ 217.4 million.

These operating leases, which are not included on our consolidated balance sheets, have commencement dates ranging from April 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.

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

NOTE 5— LONG-TERM DEBT

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

A portion of the proceeds were used to pay transaction fees of approximately $ 35.5 million, leaving approximately $ 1.6 billion for general corporate purposes.

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

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

September 30, 2020 December 31, 2019

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

A portion of the proceeds were used to pay estimated fees of $ 7.7 million and repay $ 75.0 million aggregate principal amount of the Company’s senior secured term loan B facility, leaving approximately $ 417.3 million for general corporate purposes, including acquisitions and organic investment opportunities.

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

March 31, 2021 December 31, 2020

(in thousands)

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

3.75% Senior Secured Notes due 2028 500,000 —

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

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Total long-term debt, net $ 5,289,891 $ 4,855,096

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

Future maturities of long-term debt at March 31, 2021 are as follows:

(in thousands)

October 1, 2020 - December 31, 2020 $ 31,638

April 1, 2021 - December 31, 2021 $ 31,125

Thereafter 3,775,036

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See Note 6—Fair Value Measurements for discussion of the fair value measurement of our long-term debt.

Amended Senior Secured Credit Facility

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

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

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

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

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

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

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

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

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

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

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

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

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

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

Based on our outstanding letters of credit of $ 67.4 million, $ 962.6 million was available for future borrowings from our delayed draw term loan A and revolving credit facilities.

3.75% Senior Secured Notes due 2028

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.

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.

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.

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

2.0% Convertible Senior Notes Due 2025

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 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.

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 September 30, 2020, the remaining period for the unamortized debt discount balance of $ 29.6 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 September 30, 2020, the effective interest rate on the liability component of the notes was 4.3 %.

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

Three Months Ended

September 30, 2020 Nine Months Ended September 30, 2020

(in thousands)

Interest cost recognized relating to:

Contractual interest coupon $ 2,017 $ 5,261

Amortization of debt discount 1,645 4,308

Amortization of debt issuance costs 299 797

Total interest cost recognized on the notes $ 3,961 $ 10,366

NOTE 6— DERIVATIVE INSTRUMENTS

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 September 30, 2020, there is no ineffective portion or amount excluded from effectiveness testing.

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

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

During the three and nine months ended September 30, 2020, we recorded unrealized losses of $ 2.2 million and $ 38.8 million, respectively, as a component of other comprehensive loss related to this hedge.

Based on the current interest rate expectations, we estimate that approximately $ 8.3 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.

NOTE 6— FAIR VALUE MEASUREMENTS

The following table shows the fair value of our significant financial assets that are required to be measured at fair value on a recurring basis, which are classified on the consolidated balance sheets as cash and cash equivalents and other long-term liabilities.

Estimated Fair Value

September 30, 2020

March 31, 2021

December 31, 2020

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Cash equivalents $ 379,076 $ — $ 379,076 $ 282,696 $ — $ 282,696

Interest rate swap $ — $ 35,638 $ 35,638 $ — $ — $ —

The fair value for our interest rate swap is based upon inputs corroborated by observable market data with similar tenors, which are considered Level 2 inputs.

Our outstanding debt held by third-party financial institutions is carried at cost, adjusted for any discounts or debt issuance costs.

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Estimated Fair Value at

September 30, 2020 December 31, 2019

March 31, 2021 December 31, 2020

(in thousands)

6.5% Senior Secured Notes due 2027 $ 1,330,212 $ 1,340,688

3.75% Senior Secured Notes due 2028 $ 493,160 $ —

4.75% Senior Notes due 2027 $ 954,978 $ 970,872

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Non-recurring

The following table shows the fair value of our financial assets that have been adjusted to fair value on a non-recurring basis, which had a significant impact on our results of operations for the nine months ended September 30, 2020.

Fair Value Measurements Using

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Definite-lived intangible assets, net $ 7,390 $ — $ — $ 7,390 $ 10,068

Definite-lived intangible assets, net $ — $ — $ — $ — $ 19,372

During the nine months ended September 30, 2020 and 2019, we recorded impairment charges related to definite-lived intangible assets of $ 15.3 million and $ 19.4 million, respectively, as a component of depreciation and amortization.

For the nine months ended September 30, 2020, the impairment charges are primarily related to intangible assets for revenue-generating contracts and client/vendor relationships in the Concerts segment.

For the nine months ended September 30, 2019, the impairment charges were primarily related to intangible assets for revenue-generating contracts 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, as a result of the expected impacts from the global COVID-19 pandemic for the 2020 period.

For the three months ended March 31, 2021, there were no significant impairment charges.

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

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

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Consumer Class Actions

The following putative class action lawsuits were filed against Live Nation and/or Ticketmaster in the United States and Canada:

Ticketmaster LLC (Northern District of Illinois, filed September 2018);

Ticketmaster LLC (Northern District of California, filed September 2018);

Ticketmaster LLC, et al.

(Northern District of California, filed September 2018);

The following putative class action lawsuits were filed against Live Nation and/or Ticketmaster in Canada:

Thompson-Marcial v.

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Live Nation Entertainment, Inc., et al.

(Northern District of New York, filed October 2018);

Ticketmaster LLC, et al.

(Central District of California, filed October 2018);

Live Nation Entertainment, Inc., et al.

(Supreme Court of British Columbia, Vancouver Registry, filed October 2018).

Entertainment, Inc., et al.

(Ontario Superior Court of Justice, filed October 2018);

Ticketmaster LLC, et al.

(Central District of California, filed November 2018);

and Niedbalski v.

Ticketmaster LLC, et al.

(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 and the case was dismissed with prejudice in November 2019.

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

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

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

The Ameri lawsuit was dismissed in May 2019 in light of the parties’ agreement to arbitrate the matter, and 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.

Similar putative class actions were filed in the United States during the same time period, but as of November 2020, each of the lawsuits filed in the United States has been dismissed with prejudice.

The Canadian lawsuits make similar factual allegations that Live Nation and/or Ticketmaster 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 Watch complaint also makes claims related to Ticketmaster’s fee display practices on the primary market.

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 position, cash flows or results of operations.

The McPhee matter is stayed pending the outcome of the Watch matter, and the Thompson-Marcial, Watch, and Gomel cases are in the class certification phase.

In April 2021, the court in the Gomel lawsuit refused to certify all claims other than those pled under British Columbia’s Business Practices and Consumer Protection Act and claims for punitive damages, but the court did certify a class of British Columbia residents who purchased tickets to an event in Canada on any secondary market exchange from June 30, 2015 through April 15, 2021 that were initially purchased on Ticketmaster.ca.

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

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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).

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 May 25, 2020, TNV commenced binding arbitration proceedings, 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.

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Accumulated Other Comprehensive Loss

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

Loss on Cash Flow Hedge Foreign Currency Items Total

The following table presents changes in the components of AOCI, net of taxes, for the three months ended March 31, 2021:

Cash Flow Hedge Foreign Currency Items Total

(in thousands)

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

Other comprehensive loss before reclassifications

Other comprehensive income (loss) before reclassifications

15,096 ( 13,219 ) 1,877

Amount reclassified from AOCI 1,916 — 1,916

Net other comprehensive loss ( 35,638 ) ( 40,866 ) ( 76,504 )

Balance at September 30, 2020 $ ( 35,638 ) $ ( 186,579 ) $ ( 222,217 )

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.

Net other comprehensive income (loss) 17,012 ( 13,219 ) 3,793

Balance at March 31, 2021 $ ( 14,575 ) $ ( 158,641 ) $ ( 173,216 )

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.

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

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

Three Months Ended

September 30, Nine Months Ended

September 30,

2020 2019 2020 2019

(in thousands)

Weighted average common shares—basic 212,593,719 210,621,971 211,781,620 209,849,058

Effect of dilutive securities:

Stock options and restricted stock — 8,335,405 — 8,249,695

Convertible senior notes — — — 386,741

Weighted average common shares—diluted 212,593,719 218,957,376 211,781,620 218,485,494

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

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

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

For the three months ended March 31, 2021 and 2020, there were no reconciling items to the weighted average common shares outstanding in the calculation of diluted net loss per common share.

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

Three Months Ended

September 30, Nine Months Ended

September 30,

2020 2019 2020 2019

Options to purchase shares of common stock 8,334,027 11,050,847

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Beginning in mid-March 2020, 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 September 30, 2020, the deferred revenue has been reclassified to accrued expenses on our consolidated balance sheets where not already refunded to the fan.

For our Concerts segment, the impact is partially a delay in the timing of revenue recognition as many events are being rescheduled to dates later in 2021 or 2022.

For events that have been cancelled as of March 31, 2021, 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.

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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 September 30, 2020, and applying a venue-specific refund take rate.

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

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 March 31, 2021, 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 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 or having new events available for sale can result in refunds of service charges exceeding current quarter sales resulting in negative revenue for that period.

For our Sponsorship & Advertising segment, the impact is 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.

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 along with the limited number of events currently available for sale on our websites.

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

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

Concerts revenue, including intersegment revenue, for the three months ended March 31, 2021 and 2020 are as follows:

Three Months Ended

September 30, Nine Months Ended

September 30,

2020 2019 2020 2019

(in thousands)

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

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

Ticketing revenue, including intersegment revenue, for the three months ended March 31, 2021 and 2020 are as follows:

Three Months Ended

September 30, Nine Months Ended

September 30,

2020 2019 2020 2019

(in thousands)

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Percentage of consolidated revenue 9.7 % 20.8 %

* Percentage is not meaningful.

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

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

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

Reported revenue is net of any refunds made or committed to and the impact of any cancellations of events that occurred during the period 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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Non-recoupable ticketing contract advances, excluding those amounts paid to support clients’ advertising costs, are fixed additional incentives occasionally paid by us to certain clients to secure the contract and are typically amortized over the life of the contract on a straight-line basis as a reduction to revenue.

At September 30, 2020 and December 31, 2019, we had ticketing contract advances of $ 66.6 million and $ 100.9 million, respectively, recorded in prepaid expenses and $ 91.1 million and $ 105.7 million, respectively, recorded in long-term advances on the consolidated balance sheets.

We amortized $ 6.7 million and $ 19.9 million for the three months ended September 30, 2020 and 2019, respectively, and $ 38.8 million and $ 54.1 million for the nine months ended September 30, 2020 and 2019, respectively, related to non-recoupable ticketing contract advances.

At March 31, 2021 and December 31, 2020, we had ticketing contract advances of $ 64.1 million and $ 63.5 million, respectively, recorded in prepaid expenses and $ 82.6 million and $ 87.0 million, respectively, recorded in long-term advances on the consolidated balance sheets.

We amortized $ 10.6 million and $ 18.8 million for the three months ended March 31, 2021 and 2020, respectively, related to non-recoupable ticketing contract advances.

Sponsorship & Advertising

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

Sponsorship & Advertising revenue, including intersegment revenue, for the three months ended March 31, 2021 and 2020 are as follows:

Three Months Ended

September 30, Nine Months Ended

September 30,

2020 2019 2020 2019

(in thousands)

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

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

Sponsorship agreements

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

We also earn revenue from exclusive access rights provided to sponsors in various categories such as ticket pre-sales, beverage pouring rights, venue naming rights, media campaigns, signage within our venues, and advertising on our websites.

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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 September 30, 2020, we had contracted sponsorship agreements with terms greater than one year that had approximately $ 956.3 million of revenue related to future benefits to be provided by us.

We expect to recognize, based on current projections and expectations of our business resuming, approximately 3 %, 38 %, 24 % and 35 % of this revenue in the remainder of 2020, 2021, 2022 and thereafter, respectively.

At March 31, 2021, we had contracted sponsorship agreements with terms greater than one year that had approximately $ 1.1 billion of revenue related to future benefits to be provided by us.

We expect to recognize, based on current projections, approximately 22 %, 31 %, 16 % and 31 % of this revenue in the remainder of 2021, 2022, 2023 and thereafter, respectively.

Deferred Revenue

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We had current deferred revenue of $ 1.8 billion and $ 1.4 billion at December 31, 2020 and 2019, respectively.

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

The table below summarizes the amount of the December 31 current deferred revenue recognized during the three months ended March 31, 2021 and 2020:

Three Months Ended

September 30, Nine Months Ended

September 30,

2020 2019 2020 2019

(in thousands)

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$ 47,828 $ 292,532

As of September 30, 2020, approximately 41.0 % of the current deferred revenue balance from December 31, 2019 is expected to be recognized in 2021 and thus such amounts remain in current deferred revenue or have been reclassified to long-term deferred revenue.

In addition, as of September 30, 2020, approximately 28.3 % of the current deferred revenue balance from December 31, 2019 has been or is expected to be refunded to fans as the corresponding events have been cancelled or refunds are expected to be requested for rescheduled events, and thus such amounts have been reclassified to accrued expenses if not already refunded.

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

We had long-term deferred revenue of $ 164.1 million and $ 34.4 million at September 30, 2020 and December 31, 2019, respectively, which is reflected in other long-term liabilities on the consolidated balance sheets.

As of March 31, 2021, approximately 68.2 % of the current deferred revenue balance from December 31, 2020 is expected to be recognized in 2021 and thus such amounts remain in current deferred revenue.

In addition, as of March 31, 2021, approximately 4.6 % of the current deferred revenue balance from December 31, 2020 has been or is expected to be refunded to fans as the corresponding events have been 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.

Our long-term deferred revenue balance has increased as events have been rescheduled into the second and third quarters of 2022 in markets still experiencing impacts from the global COVID-19 pandemic.

We had long-term deferred revenue of $ 294.1 million and $ 88.6 million at March 31, 2021 and December 31, 2020, respectively, which is reflected in other long-term liabilities on the consolidated balance sheets.

NOTE 10— STOCK-BASED COMPENSATION

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Three Months Ended

September 30, Nine Months Ended

September 30,

2020 2019 2020 2019

(in thousands)

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Total $ 40,017 $ 11,732

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

The increase in stock-based compensation expense for the three months ended March 31, 2021 as compared to the same period of the prior year is primarily due to the issuance of restricted stock awards in late 2020 that vested in the first quarter of 2021.

NOTE 11— SEGMENT DATA

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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.

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

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

Concerts Ticketing Sponsorship

& Advertising Other Corporate Eliminations Consolidated

(in thousands)

Three Months Ended September 30, 2020

Revenue $ 154,791 $ ( 19,822 ) $ 47,927 $ 806 $ — $ 316 $ 184,018

Direct operating expenses 113,283 8,503 8,647 — — 316 130,749

Selling, general and administrative expenses 257,131 126,518 18,891 3,394 — — 405,934

Depreciation and amortization 65,794 42,565 6,634 2,192 2,753 — 119,938

Loss (gain) on disposal of operating assets 208 ( 1 ) — 1 — — 208

Corporate expenses — — — — 31,630 — 31,630

Operating income (loss) $ ( 281,625 ) $ ( 197,407 ) $ 13,755 $ ( 4,781 ) $ ( 34,383 ) $ — $ ( 504,441 )

Intersegment revenue $ ( 286 ) $ ( 30 ) $ — $ — $ — $ 316 $ —

The following table presents the results of operations for our reportable segments for the three months ended March 31, 2021 and 2020:

Concerts Ticketing Sponsorship

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(in thousands)

Three Months Ended September 30, 2019

Revenue $ 3,173,843 $ 388,458 $ 215,247 $ 791 $ — $ ( 4,655 ) $ 3,773,684

Direct operating expenses 2,636,344 127,123 41,617 — — ( 4,655 ) 2,800,429

Selling, general and administrative expenses 355,198 157,590 29,055 704 — — 542,547

Depreciation and amortization 71,247 39,562 11,332 145 4,020 — 126,306

Loss (gain) on disposal of operating assets ( 320 ) 15 — — — — ( 305 )

Corporate expenses — — — — 44,666 — 44,666

Operating income (loss) $ 111,374 $ 64,168 $ 133,243 $ ( 58 ) $ ( 48,686 ) $ — $ 260,041

Intersegment revenue $ 2,092 $ 2,563 $ — $ — $ — $ ( 4,655 ) $ —

Nine Months Ended September 30, 2020

Three Months Ended March 31, 2021

Revenue $ 239,416 $ 28,322 $ 22,647 $ 815 $ — $ ( 591 ) $ 290,609

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Corporate expenses — — — — 27,948 — 27,948

Operating income (loss) $ ( 722,607 ) $ ( 480,460 ) $ 40,764 $ ( 13,034 ) $ ( 89,841 ) $ — $ ( 1,265,178 )

Operating loss $ ( 145,359 ) $ ( 120,656 ) $ ( 6,441 ) $ ( 431 ) $ ( 30,285 ) $ — $ ( 303,172 )

Intersegment revenue $ 591 $ — $ — $ — $ — $ ( 591 ) $ —

Capital expenditures $ 6,653 $ 9,675 $ 1,160 $ — $ 1,449 $ — $ 18,937

Nine Months Ended September 30, 2019

Three Months Ended March 31, 2020

Revenue $ 993,393 $ 284,277 $ 90,261 $ 796 $ — $ ( 3,034 ) $ 1,365,693

2 unchanged sentences

Depreciation and amortization 72,216 38,176 7,512 53 4,123 — 122,080

Loss (gain) on disposal of operating assets ( 675 ) 122 — — — — ( 553 )

Loss on disposal of operating assets 127 2 — 1 — — 130

Corporate expenses — — — — 28,312 — 28,312

3 unchanged sentences

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

What changed 10-Q

Item 1. Financial Statements