What changed in this filing

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Item 2. Management’s Discussion and Analysis

2021-05-06 compared with 2020-11-05 · 210 added, 249 removed, 295 unchanged (61% of the section changed)

14 unchanged sentences

We do not intend to update these forward-looking statements, except as required by applicable law.

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 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.

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

Operating Results

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

We had a limited number of shows in the first quarter of 2021, largely in Australia, New Zealand and the United States.

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

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 in response to the global COVID-19 pandemic.

The volume and pace of cash refunds has had and may continue to 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 in 2021.

The exact timing and pace of the recovery is uncertain given the significant impact of the pandemic and the uncertainty on the timing of the roll out of vaccines 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 currently have approximately $963.6 million available for future borrowings under our senior secured credit facility, including $400 million in undrawn term loan A capacity and $563.6 million in available revolver capacity, net of outstanding letters of credit.

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

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

Additionally, our senior secured credit facility has 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, when we will revert to a net leverage covenant.

We believe these allow us the flexibility to manage our business through the disruption that we continue to experience into 2021.

As of March 31, 2021, our total cash and cash equivalents balance was $3.0 billion, which included $724.4 million of ticketing client cash.

We believe this cash, net of client cash, together with our available debt capacity of $963.6 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 the second half of 2021 and 2022, we expect this number to remain above seasonally normal levels throughout the first half of 2021.

Event-related deferred revenue consists of cash held by our Concerts business for future shows, with roughly half the funds associated with upcoming shows in the United States and half for international shows as of March 31, 2021.

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% during 2020.

We began eliminating the salary reductions in January 2021 and expect to have salaries fully restored during the second quarter.

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 were payroll support programs to mitigate a substantial portion of employee costs, some of which are continuing into 2021.

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 achieved over $950 million in cost reductions in 2020 and the elimination or deferral into 2021 of $1.6 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 2021 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 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 46 countries globally, the timelines will vary from now to not for several months or beyond.

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

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

We expect that most global tours will resume and larger venues will reopen in the second half of 2021 and that the underlying business will begin generating operating income once again.

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.

Executive Overview

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

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

As a result, our overall revenue for the quarter decreased by 95%, from $3.8 billion to $184 million.

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

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

The pandemic led to an operating loss for the quarter of $504 million compared to operating income of $260 million for the third quarter of last year.

For the first nine months of 2020, our total revenue decreased by $7.0 billion, or 81%, as compared to last year.

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

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

Our year-to-date operating loss of $1.3 billion was partially mitigated by the results for the first two and a half months of the year plus our cost savings initiatives, which began at the end of March and generated $507 million of fixed cost savings for the second and third quarters compared to our plan just prior to the onset of the global COVID-19 pandemic.

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

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

To ensure the safety of our artists, fans, and employees, we have held very few traditional events since the onset of this global health crisis, including during the first quarter of 2021.

Our results for the first quarter of 2020 were very strong prior to the shutdown, and as a result, our year-over-year

variances for the first quarter of 2021 against that period are almost entirely due to COVID-19’s impact on our business.

Fortunately, while the effects of the pandemic are still impacting our operations, we are beginning to see pockets of recovery, particularly in the United States and United Kingdom.

If these trends continue, we anticipate favorable year-over-year results in the second half of this year.

Our overall revenue for the first quarter of 2021 decreased by 79%, from $1.4 billion in 2020 to $291 million in 2021.

The reduction was largely in our Concerts and Ticketing segments as a result of minimal show activity in the quarter and lower ticket sales for future shows due to the pandemic.

Our operating loss grew from $173 million in the first quarter of 2020 to $303 million in the first quarter of 2021 also due to the lack of shows and ticket sales, however the lost revenue was partially offset by cost reductions we implemented starting in the second quarter of last year.

While the unparalleled disruption of the pandemic has had a material impact on our business, as the leading global live event and ticketing company, we firmly believe that we are well-positioned to provide the best service to artists, teams, fans and venues as 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 and once again connect audiences to artists at the concerts they are looking forward to.

Our Concerts segment revenue for the quarter decreased by $3.0 billion, or 95%, as compared to last year.

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

Show count for the quarter was down 96% compared to last year to 367 events, which included a few socially distanced club shows in Europe, events in New Zealand (which has recently re-opened for shows), as well as drive-in concerts and some rentals to third parties in North

A total of 269 thousand fans attended these shows.

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

For the first nine months, our Concerts segment revenue decreased by $5.8 billion, or 82%.

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

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

Third quarter revenue was $(20) million, compared to $388 million for the third quarter last year.

Before refunds, our fee-bearing tickets were 6.5 million for the quarter, a reduction of 48.8 million tickets, or 88%, compared to last year.

A total of 5.2 million tickets were refunded in the quarter, amounting to just slightly over $500 million of gross transaction value.

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

For the first nine months, our Ticketing segment revenue fell by $919 million, or 84%.

Before refunds, we had sold 52.1 million fee-bearing tickets year-to-date, a reduction of 67% compared to the first nine months of 2019.

A total of 23.3 million tickets have been refunded year-to-date, amounting to nearly $2.3 billion of gross transaction value.

Our Sponsorship & Advertising segment revenue for the quarter decreased by $167 million, or 78%, as compared to last year.

For the first nine months, our Sponsorship & Advertising segment revenue decreased by $285 million, or 65%, as compared to last year.

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

We are currently focused on mitigating the financial impact of the shutdown.

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

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

As the vaccine rollout has accelerated in the United States and COVID-19 statistics improve, we have begun to see a ramp up of venues reopening, shows confirming to occur later this year and on-sales increasing.

While other parts of the world may be further behind on their path to re-opening, we are actively taking steps to ensure that when the time is right for us to do so in each market, we will be ready to move quickly and responsibly to connect audiences to artists at the concerts they cherish.

Our Concerts segment revenue for the first quarter of 2021 was $239 million, compared to $993 million for 2020, a reduction of 76%.

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

Our operating loss for the quarter was $145 million compared to an operating loss of $161 million for the first quarter of last year.

The improvement was primarily due to cost savings that exceeded the impact of our lost business.

While we had 10.4 million fans attend our events in the first 10 weeks of 2020, we had 760 thousand fans for the first quarter of 2021, largely in Australia, New Zealand and the United States.

Towards the end of this quarter, we began to see encouraging signs of recovery including that our Bonnaroo festival to be held in Tennessee in September 2021 broke all historical sales records.

While we had no venues open at the beginning of the year in the United States, we now have 23% of our United States venues either open or confirmed to open soon.

Our Reading and Leeds festivals as well as Creamfields in the United Kingdom have also sold out while Rhythm & Vines, New Zealand's premier multi-day music festival, had record presales in January 2021.

Our Ticketing segment revenue for the first quarter of 2021 was $28 million, compared to $284 million for the first quarter of last year, a reduction of 90% driven by a lack of ticket sales, partially offset by lower refunds year-over-year for shows that were cancelled or rescheduled.

Our operating loss for the quarter was $121 million compared to an operating loss of $16 million for the first quarter of last year.

The decline in operating results was largely driven by the lack of ticket sales, partially offset by cost savings.

A total of 3.0 million tickets were refunded in the quarter, equating to just slightly over $260 million of gross transaction value.

This was our lowest quarter for refunds since the pandemic began.

To compare, we refunded 10.7 million tickets in the second quarter of 2020, equating to over $1.1 billion of gross transaction value – our highest refund quarter to date.

We have recently seen ticket sales begin to rebound, particularly in the United States and United Kingdom.

Our Sponsorship & Advertising segment revenue for the first quarter of 2021 was $23 million, compared to $90 million for the first quarter of last year, a reduction of 75%.

Despite the lack of live events, we have still been able to engage our fans and brand partners with streaming events for some of our most popular brands including Insomniac and Rolling Loud in the first quarter of 2021.

Our operating loss for the quarter was $6 million compared to operating income of $38 million for the first quarter of last year.

As with Concerts and Ticketing, the reduction in revenue-generating activity has been partially offset by cost reductions.

Even as we begin to see signs of sales returning and events happening in some markets, we continue to be focused on mitigating the financial impact of the shutdown.

We have undertaken cost-savings initiatives across the organization and are also protecting our liquidity by tightly managing cash outflows associated with all our major expenditures:

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

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

Currently, we do not anticipate a significant change in activity levels through next year.

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

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

The magnitude and pace of the recovery will depend on each market and their containment efforts, the nature of the events being held, ongoing efforts to develop rapid testing technologies and rollout of approved vaccines and treatments for COVID-19.

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

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

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

of substantially all of its entertainment assets and liabilities to us.

We completed the separation on December 21, 2005, and became a publicly traded company on the New York Stock Exchange trading under the symbol “LYV.”

On January 25, 2010, we merged with Ticketmaster Entertainment LLC and it became a wholly-owned subsidiary of Live Nation.

Effective with the merger, Live Nation, Inc.

changed its name to Live Nation Entertainment, Inc.

Segment Overview

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

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

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

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

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

All advertising costs incurred during the year for shows in future

years are expensed at the end of the year.

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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Sponsorship & Advertising

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

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

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

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

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

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

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

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

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Three Months Ended

September 30, Nine Months Ended

September 30,

2020 2019 2020 2019

(in thousands except estimated events)

Estimated events:

North America 300 4,772

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Total estimated events 664 7,095

Estimated fans:

North America 331 5,729

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Ticketing (2)

Fee-bearing tickets 1,323 55,348 28,801 158,558

Non-fee-bearing tickets 8,392 61,664 70,031 182,529

Total estimated tickets 9,715 117,012 98,832 341,087

Estimated number of fee-bearing tickets sold 6,581 36,204

Estimated number of non-fee-bearing tickets sold 10,556 55,254

Total estimated tickets sold 17,137 91,458

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

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(2) The fee-bearing tickets estimated above include primary and secondary tickets that are sold using our Ticketmaster systems or that we issue through affiliates.

This metric includes primary tickets sold during the period regardless of event timing, except for our own events where our concert promoters control ticketing which are reported when the events occur.

This metric includes primary tickets sold during the year regardless of event timing, except for our own events where our concert promoters control ticketing which are reported when the events occur.

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

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

Fee-bearing tickets include refunds of 5.2 million and 23.3 million for the three and nine months ended September 30, 2020, respectively.

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

Fee-bearing tickets sold above are net of refunds of 3.0 million and 7.3 million tickets for the first quarter of March 31, 2021 and 2020, respectively.

Non-GAAP Measures

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(loss) Stock-

expense Loss (gain)

on disposal of

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(in thousands)

Three Months Ended September 30, 2020

Concerts $ (281,625) $ 39,635 $ 208 $ 65,794 $ — $ 2,603 $ (173,385)

Ticketing (197,407) 5,422 (1) 42,565 9,178 (1,693) (141,936)

Sponsorship & Advertising 13,755 2,533 — 6,634 — — 22,922

Other and Eliminations (4,781) — 1 2,192 (2,471) — (5,059)

Corporate (34,383) 9,105 — 2,753 — 746 (21,779)

Total $ (504,441) $ 56,695 $ 208 $ 119,938 $ 6,707 $ 1,656 $ (319,237)

Three Months Ended September 30, 2019

Concerts $ 111,374 $ 3,195 $ (320) $ 71,247 $ — $ 9,028 $ 194,524

Ticketing 64,168 1,570 15 39,562 21,783 228 127,326

Sponsorship & Advertising 133,243 718 — 11,332 — — 145,293

Other and Eliminations (58) — — 145 (1,930) — (1,843)

Corporate (48,686) 6,515 — 4,020 — (1) (38,152)

Total $ 260,041 $ 11,998 $ (305) $ 126,306 $ 19,853 $ 9,255 $ 427,148

Nine Months Ended September 30, 2020

Three Months Ended March 31, 2021

Concerts $ (145,359) $ 17,475 $ 138 $ 62,886 $ — $ (9,679) $ (74,539)

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Total $ (303,172) $ 40,017 $ 138 $ 108,876 $ 10,621 $ (8,224) $ (151,744)

Nine Months Ended September 30, 2019

Three Months Ended March 31, 2020

Concerts $ (161,131) $ 2,360 $ 127 $ 72,216 $ — $ (1,745) $ (88,173)

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Three Months Ended

September 30, %

Change Nine Months Ended

September 30, %

2020 2019 2020 2019

(in thousands) (in thousands)

(in thousands)

Revenue $ 239,416 $ 993,393 (76)%

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Depreciation and amortization 62,886 72,216 (13)%

Loss (gain) on disposal of operating assets 208 (320) * 896 (675) *

Operating income (loss) $ (281,625) $ 111,374 * $ (722,607) $ 112,942 *

Loss on disposal of operating assets 138 127 *

Operating loss $ (145,359) $ (161,131) 10%

Operating margin (60.7 %) (16.2 %)

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

Concerts revenue decreased $3.0 billion during the three months ended September 30, 2020 as compared to the same period of the prior year primarily due to the continued unprecedented stoppage of our concert events globally throughout the third quarter of 2020.

Concerts revenue decreased $754.0 million during the three months ended March 31, 2021 as compared to the same period of the prior year primarily due to the unprecedented stoppage of our concert events globally in 2020 and 2021.

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

Concerts had incremental revenue of $26.8 million from acquisitions, primarily that of a merchandise business.

Operating results

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

Concerts revenue decreased $5.8 billion during the nine months ended September 30, 2020 as compared to the same period of the prior year primarily due to the reduction in revenue caused by the global COVID-19 pandemic discussed above.

Concerts had incremental revenue of $123.3 million from the acquisitions of concert promotion, venue management and merchandise businesses.

Operating results

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

Concerts operating results for the nine months ended September 30, 2020 include net operating losses of $44.6 million related to acquisitions and new venues.

The increase in Concerts operating results for the three months ended March 31, 2021 as compared to the same period of the prior year, was primarily driven by cost reduction measures implemented in the second quarter of 2020 and continuing in 2021, including salary reductions, hiring freezes, furloughs, and reduction or elimination of other discretionary spending along with participating in government support programs globally.

In addition, we recorded a $10.1 million impairment charge in the first quarter of 2020 primarily associated with revenue-generating contract intangible assets.

There were no significant impairments recorded for the three months ended March 31, 2021.

This increase in operating results was partially offset by the reduction in revenue caused by the global COVID-19 pandemic discussed above.

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

Three Months Ended

September 30, %

Change Nine Months Ended

September 30, %

2020 2019 2020 2019

(in thousands) (in thousands)

(in thousands)

Revenue $ 28,322 $ 284,277 (90)%

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Depreciation and amortization 36,478 38,176 (4)%

Loss (gain) on disposal of operating assets (1) 15 * — 122 *

Operating income (loss) $ (197,407) $ 64,168 * $ (480,460) $ 170,914 *

Loss on disposal of operating assets — 2 *

Operating loss $ (120,656) $ (15,860) *

Operating margin * (5.6 %)

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

Ticketing revenue decreased $408.3 million during the three months ended September 30, 2020 as compared to the same period of the prior year primarily due to refunds for cancelled events for third-party clients and the lack of tickets available for sale to the public driven by the unprecedented stoppage of concerts, sports and other events globally during the third quarter of 2020 due to the global COVID-19 pandemic.

Operating results

The decrease in Ticketing operating results for the three months ended September 30, 2020 was primarily due to the reduction in revenue caused by the global COVID-19 pandemic discussed above.

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

Ticketing revenue decreased $919.4 million during the nine months ended September 30, 2020 as compared to the same period of the prior year primarily due to the reduction in revenue caused by the global COVID-19 pandemic discussed above.

Ticketing revenue decreased $256.0 million during the three months ended March 31, 2021 as compared to the same period of the prior year primarily due to the lack of tickets available for sale to the public driven by the unprecedented stoppage of concerts, sports and other events globally beginning in mid-March 2020 and continuing in 2021 due to the global COVID-19 pandemic.

Operating results

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

The decrease in Ticketing operating results for the three months ended March 31, 2021 as compared to the same period of the prior year, was primarily driven by the reduction of revenue caused by the global COVID-19 pandemic discussed above.

This decrease was partially offset by cost reduction measures implemented in the second quarter of 2020 and continuing in 2021, including salary reductions, hiring freezes, furloughs, and reduction or elimination of other discretionary spending along with participating in government support programs globally.

Sponsorship & Advertising

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Three Months Ended

September 30, %

Change Nine Months Ended

September 30, %

2020 2019 2020 2019

(in thousands) (in thousands)

(in thousands)

Revenue $ 22,647 $ 90,261 (75)%

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AOI margin ** 15.5 % 51.6 %

* Percentages are not meaningful.

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

Sponsorship & Advertising revenue decreased $167.3 million during the three months ended September 30, 2020 as compared to the same period of the prior year primarily due to a reduction in sponsorship revenue associated with our venues, festivals and lack of online activity as ticket sales declined driven by the unprecedented stoppage of events beginning in mid-March of 2020 due to the global COVID-19 pandemic.

Operating results

The decrease in Sponsorship & Advertising operating results for the three months ended September 30, 2020 was primarily driven by the reduction in revenue discussed above.

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

Sponsorship & Advertising revenue decreased $285.3 million during the nine months ended September 30, 2020 as compared to the same period of the prior year primarily due to the reduction in revenue caused by the global COVID-19 pandemic discussed above.

Sponsorship & Advertising revenue decreased $67.6 million during the three months ended March 31, 2021 as compared to the same period of the prior year primarily due to a reduction in sponsorship revenue associated with our venues, festivals and lack of online activity as ticket sales declined driven by the unprecedented stoppage of events beginning in mid-March 2020 and continuing in 2021 due to the global COVID-19 pandemic.

Operating results

The decrease in Sponsorship & Advertising operating income for the nine months ended September 30, 2020 was primarily driven by the impact of the global COVID-19 pandemic discussed above along with higher fulfillment costs on certain sponsorship programs.

Consolidated Results of Operations

Three Months Ended September 30, % Change

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

(in thousands)

Revenue $ 184,018 $ (5,004) $ 179,014 $ 3,773,684 (95)% (95)%

Operating expenses:

Direct operating expenses 130,749 (1,411) 129,338 2,800,429 (95)% (95)%

Selling, general and administrative expenses 405,934 (4,519) 401,415 542,547 (25)% (26)%

Depreciation and amortization 119,938 253 120,191 126,306 (5)% (5)%

Loss (gain) on disposal of operating assets 208 — 208 (305) * *

Corporate expenses 31,630 (12) 31,618 44,666 (29)% (29)%

Operating income (loss) (504,441) $ 685 $ (503,756) 260,041 * *

Operating margin * * 6.9 %

Interest expense 66,093 36,587

Interest income (2,810) (5,863)

Equity in losses of nonconsolidated affiliates 2,615 2,681

Other expense (income), net (10,977) 5,384

Income (loss) before income taxes (559,362) 221,252

Income tax expense (benefit) (16,904) 27,280

Net income (loss) (542,458) 193,972

Net income (loss) attributable to noncontrolling interests (13,556) 15,047

Net income (loss) attributable to common stockholders of Live Nation $ (528,902) $ 178,925

* Percentages are not meaningful.

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

Corporate Expenses

Corporate expenses decreased $13.0 million, or 29%, during the three months ended September 30, 2020 as compared to the same period of the prior year primarily due to cost reduction efforts implemented during 2020, including salary reductions, with salaries for senior executives reduced by up to 60%.

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

Interest Expense

Interest expense increased $29.5 million, or 81%, during the three months ended September 30, 2020 as compared to the same period of the prior year due to additional interest costs from the issuance of our 4.75% senior notes in October 2019, the issuance of our 2.0% convertible senior notes in February 2020 and the issuance of our 6.5% senior secured notes in May 2020.

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

Net income (loss) attributable to noncontrolling interests

Net income (loss) attributable to noncontrolling interests was a loss of $13.6 million during the three months ended September 30, 2020 as compared to income of $15.0 million for the same period of the prior year primarily due to lower worldwide operating results from certain concert and festival promotion businesses driven by postponed and cancelled events during the third quarter of 2020 due to the global COVID-19 pandemic.

Nine Months Ended September 30, % Change

The decrease in Sponsorship & Advertising operating income for the three months ended March 31, 2021 as compared to the same period of the prior year, was primarily driven by the reduction in revenue caused by the global COVID-19 pandemic discussed above.

Three Months Ended March 31, % Change

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

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Depreciation and amortization 108,876 (1,976) 106,900 122,080 (11)% (12)%

Loss (gain) on disposal of operating assets 897 — 897 (553) * *

Loss on disposal of operating assets 138 (2) 136 130 6% 5%

Corporate expenses 27,948 (12) 27,936 28,312 (1)% (1)%

Operating income (loss) (1,265,178) $ (5,806) $ (1,270,984) 407,764 * *

Operating loss (303,172) $ 4,531 $ (298,641) (172,670) (76)% (73)%

Operating margin * * (12.6 %)

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

Equity in losses (earnings) of nonconsolidated affiliates 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 (1,413,381) 314,839

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

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

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

Net income (loss) attributable to noncontrolling interests (82,761) 25,015

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

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)

* Percentages are not meaningful.

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

Corporate Expenses

Corporate expenses decreased $41.1 million, or 34%, during the nine months ended September 30, 2020 as compared to the same period of the prior year primarily due to cost reduction efforts implemented during 2020, including salary reductions, with salaries for senior executives reduced by up to 60%.

Interest expense

Interest expense increased $52.9 million, or 48%, during the nine months ended September 30, 2020 as compared to the same period of the prior year due to additional interest costs from the issuance of our 4.75% senior notes in October 2019, the issuance of our 2.0% convertible senior notes in February 2020 and the issuance of our 6.5% senior secured notes in May 2020.

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

Equity in losses (earnings) of nonconsolidated affiliates

Equity in losses (earnings) of nonconsolidated affiliates was a loss of $6.7 million for the nine months ended September 30, 2020 as compared to earnings of $6.3 million for the comparable period of the prior year due to lower operating results from certain nonconsolidated affiliates driven by the impacts of the global COVID-19 pandemic.

Interest expense increased $26.8 million, or 61%, during the three months ended March 31, 2021 as compared to the same period of the prior year due to additional interest costs from the issuance of our 2.0% convertible senior notes in February 2020, the issuance of our 6.5% senior secured notes in May 2020 and the issuance of our 3.75% senior secured notes in January 2021.

Gain from sale of investments in nonconsolidated affiliates

Gain from sale of investments in nonconsolidated affiliates increased $52.4 million during the three months ended March 31, 2021 as compared to the same period of the prior year primarily due to the sale of certain cost basis investments during the first three months of 2021.

Income tax expense (benefit)

For the nine months ended September 30, 2020, we had a net tax benefit of $49.4 million on a loss before income taxes of $1.4 billion compared to net tax expense of $60.0 million on income before income taxes of $314.8 million for the nine months ended September 30, 2019.

For the nine months ended September 30, 2020, the income tax benefit consisted of $30.6 million related to foreign entities and $18.7 million related to United States federal taxes, and $0.1 million related to state and local income taxes.

The net decrease in tax expense of $109.4 million was due primarily to a decrease in earnings in certain non-United States jurisdictions.

Net income (loss) attributable to noncontrolling interests

Net income (loss) attributable to noncontrolling interests was a loss of $82.8 million during the nine months ended September 30, 2020 as compared to income of $25.0 million for the same period of the prior year primarily due to lower operating results from certain concert and festival promotion businesses driven by postponed and cancelled events during the first nine months of 2020 due to the global COVID-19 pandemic.

For the three months ended March 31, 2021, we had a net tax expense of $6.4 million on a loss before income taxes of $316.3 million compared to net tax benefit of $3.3 million on loss before income taxes of $214.3 million for the three months ended March 31, 2020.

For the three months ended March 31, 2021, the income tax expense consisted of $4.4 million related to foreign entities, $1.7 million related to United States federal taxes, and $0.3 million related to state and local income taxes.

The net increase in tax expense of $9.7 million was primarily due to unbenefited losses in certain non-United States jurisdictions and other discrete tax adjustments recorded in the first quarter of 2021.

Liquidity and Capital Resources

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

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

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

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

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

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

We have also launched a number of initiatives to reduce fixed costs and conserve cash.

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

We are also making use of governmental support programs globally.

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

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

In February 2020, we issued $400 million principal amount of 2.0% convertible senior notes due 2025, in May 2020, we issued $1.2 billion principal amount of 6.5% senior secured notes due 2027 and in January 2021, we issued $500 million principal amount of 3.75% senior secured notes due 2028.

As a result, we believe these amendments and additional debt issuances will allow us the flexibility to manage our business through the disruption we expect to experience in 2021 until we are able to resume our operations.

Our cash is centrally managed on a worldwide basis.

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

Our balance sheet reflects cash and cash equivalents of $2.6 billion at September 30, 2020 and $2.5 billion at December 31, 2019.

Included in the September 30, 2020 and December 31, 2019 cash and cash equivalents balances are $614.4 million and $837.7 million, respectively, of cash received that includes the face value of tickets sold on behalf of our ticketing clients and their share of service charges, which we refer to as client cash.

Our balance sheet reflects cash and cash equivalents of $3.0 billion at March 31, 2021 and $2.5 billion at December 31, 2020.

Included in the March 31, 2021 and December 31, 2020 cash and cash equivalents balances are $724.4 million and $673.5 million, respectively, of cash received that includes the face value of tickets sold on behalf of our ticketing clients and their share of service charges, which we refer to as client cash.

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

Our foreign subsidiaries held approximately $784.6 million in cash and cash equivalents, excluding client cash, at September 30, 2020.

Our foreign subsidiaries held approximately $919.2 million in cash and cash equivalents, excluding client cash, at March 31, 2021.

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

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

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

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

Our balance sheet reflects total net debt of $5.3 billion and $4.9 billion at March 31, 2021 and December 31, 2020, respectively.

Our weighted-average cost of debt, excluding unamortized debt discounts and debt issuance costs on our term loans and notes, was 4.4% at March 31, 2021.

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

Cash held in non-interest-bearing and interest-bearing operating accounts in many cases

exceeds the Federal Deposit Insurance Corporation insurance limits.

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

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

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

See “—Seasonality” below.

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Sources of Cash

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 6.75x with step downs to 6.25x after four quarters, 5.75x after eight quarters, 5.50x after twelve quarters and 5.25x after fourteen quarters through maturity, (v) adjustment of the applicable interest rate on the undrawn portion of the delayed draw term loan A and existing revolving credit facility, (vi) adjustment of the delayed draw term loan A and existing revolving credit facility commitment fees, (vii) temporary limits on our ability to make certain investments and incur additional indebtedness and liens during the Restricted Period and (viii) temporary suspension of our ability to make certain voluntary restricted payments through the date on which we deliver a compliance certificate reflecting our compliance with the consolidated net leverage ratio (calculated without annualizing consolidated EBITDA).

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

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

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

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

Amended Senior Secured Credit Facility

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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.

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.

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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.

There were no borrowings under the revolving credit facilities as of March 31, 2021 and we have not drawn down on the delayed draw term loan A.

Based on our outstanding letters of credit of $66.4 million, $963.6 million was available for future borrowings from our delayed draw term loan A and revolving credit facilities.

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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.

3.75% Senior Secured Notes Due 2028

Information regarding our 3.75% senior secured notes due 2028 can be found in Part I — Financial Information — Item 1.— Financial Statements — Note 5 —Long-Term Debt.

2.0% Convertible Senior Notes Due 2025

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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.

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

Debt Covenants

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

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

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

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

Non-compliance with one or more of the covenants and restrictions could result in

the full or partial principal balance of the credit facility becoming immediately due and payable.

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

The July 2020 amendment substitutes the consolidated net leverage ratio covenant with a liquidity covenant (as defined in the agreement) that requires our consolidated liquidity be at least $500 million until the earlier of (a) December 31, 2021 and (b) at our election, any fiscal quarter ending prior to December 31, 2021 so long as such election is made during the last month of such fiscal quarter or within 30 days following the end of such fiscal quarter.

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

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

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

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

The indentures governing our 6.5% senior secured notes, 3.75% senior secured notes, 4.75% senior notes, 4.875% senior notes and 5.625% senior notes contain covenants that limit, among other things, our ability and the ability of our restricted subsidiaries to incur certain additional indebtedness and issue preferred stock, make certain distributions, investments and other restricted payments, sell certain assets, agree to any restrictions on the ability of restricted subsidiaries to make payments to us, merge, consolidate or sell all of our assets, create certain liens, and engage in transactions with affiliates on terms that are not on an arms-length basis.

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

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

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

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

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

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

As of March 31, 2021, we believe we were in compliance with all of our debt covenants related to our senior secured credit facility and our corporate senior secured notes, senior notes and convertible senior notes.

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

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

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

During the nine months ended September 30, 2020, we used $37.3 million of cash primarily for the acquisitions of a festival promotion business and a venue management business, both located in the United States.

As of the date of acquisition, the acquired businesses had a total of $71.1 million of cash on their balance sheets, primarily related to deferred revenue for future events.

During the nine months ended September 30, 2019, we used $108.1 million of cash primarily for the acquisitions of a venue management business located in Belgium, a festival promotion business and a venue management business, both located in the United States.

During the three months ended March 31, 2021, we used $6.1 million of cash primarily for the acquisition of a venue in the United Kingdom.

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

As of the date of acquisition, the acquired businesses had a total of $63.7 million of cash on their balance sheets, primarily related to deferred revenue for future events.

Purchases and Sales of Noncontrolling Interests

During the nine months ended September 30, 2020, we used $107.0 million of cash primarily for the acquisitions of the remaining or additional interest in festival promotion businesses located in the United States and Brazil.

Capital Expenditures

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

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

Nine Months Ended

September 30,

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

Three Months Ended

(in thousands)

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Total capital expenditures $ 17,095 $ 73,834

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

Maintenance capital expenditures during the first three months of 2021 decreased from the same period of the prior year primarily due to reductions for certain office facilities and venue-related projects as part of our cash savings initiatives implemented in connection with the global COVID-19 pandemic.

Revenue generating capital expenditures during the first three months of 2021 decreased from the same period of the prior year primarily due to lower spending in our amphitheater venues and a reduction in technology-related projects as part of our cash savings initiatives implemented in connection with the global COVID-19 pandemic.

We currently expect capital expenditures to be approximately $150 million for the full year of 2021.

Nine Months Ended

September 30,

Three Months Ended

(in thousands)

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Operating Activities

Cash used in operating activities was $956.9 million for the nine months ended September 30, 2020 as compared to cash provided by operating activities of $32.9 million in the same period of the prior year.

During the first nine months of 2020, we had lower cash-related income and a decrease in our accounts payable and accrued expenses as compared to an increase in the same period of the prior year due to the impacts of the global COVID-19 pandemic.

In addition, we had an increase in deferred revenue as compared to a decrease in the same period of the prior year as well as decreases in accounts receivable and prepaid expenses as compared to increases in the same period of the the prior year, all due to the cessation of our concert events beginning in mid-March in response to the global COVID-19 pandemic .

Cash provided by operating activities decreased $557.1 million for the three months ended March 31, 2021 as compared to the same period of the prior year primarily due to the continued impacts of the global COVID-19 pandemic resulting in a lower increase in deferred revenue along with lower cash-related income during the first three months of 2021, partially offset by a decrease in prepaid expenses as compared to an increase in the same period of the prior year.

Investing Activities

Cash used in investing activities decreased $178.8 million for the nine months ended September 30, 2020 as compared to the same period of the prior year primarily due to fewer acquisitions and less cash paid for capital expenditures, intangible assets, and investments in nonconsolidated affiliates.

Cash provided by investing activities was $10.1 million for the three months ended March 31, 2021 as compared to cash used in investing activities of $122.4 million in the same period of the prior year primarily due to proceeds from the sale of investments in nonconsolidated affiliates, fewer acquisitions and less cash paid for capital expenditures.

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

Financing Activities

Cash provided by financing activities was $1.4 billion for the nine months ended September 30, 2020 as compared to cash used in financing activities of $139.6 million in the same period of the prior year primarily due to higher net proceeds in 2020 from debt issuances.

Cash provided by financing activities increased $34.6 million for the three months ended March 31, 2021 as compared to the same period of the prior year primarily due to receipt of proceeds from sale of noncontrolling interests in 2021 as compared to purchases of noncontrolling interests in the prior year as well as an increase in proceeds received from exercise of stock options.

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

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

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

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

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

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

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

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

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

Information regarding the seasonality of our business can be found in Part I—Financial Information—Item 1.—Financial Statements—Note 1—Basis of Presentation and Other Information.

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

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

Our foreign operations reported an operating loss of $274.1 million for the nine months ended September 30, 2020.

We estimate that a 10% change in the value of the United States dollar relative to foreign currencies would change our operating loss for the nine months ended September 30, 2020 by $27.4 million.

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

Our foreign operations reported an operating loss of $85.2 million for the three months ended March 31, 2021.

We estimate that a 10% change in the value of the United States dollar relative to foreign currencies would change our operating loss for the three months ended March 31, 2021 by $8.5 million.

As of March 31, 2021, our most significant foreign exchange exposure included the Euro, British Pound, Australian Dollar and Canadian Dollar.

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

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

At September 30, 2020, we had forward currency contracts outstanding with a notional amount of $21.3 million.

At March 31, 2021, we had forward currency contracts outstanding with a notional amount of $53.2 million.

Interest Rate Risk

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

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

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

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

We had $5.5 billion of total debt, excluding debt discounts and issuance costs, outstanding as of March 31, 2021, of which $5.1 billion was fixed-rate debt and $0.4 billion was floating-rate debt.

Based on the amount of our floating-rate debt as of March 31, 2021, each 25-basis point increase or decrease in interest rates would increase or decrease our annual interest expense and cash outlay by approximately $1.0 million.

This potential increase or decrease is based on the simplified assumption that the level of floating-rate debt remains constant with an immediate across-the-board increase or decrease as of March 31, 2021 with no subsequent change in rates for the remainder of the period.

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

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Accounting Pronouncements

Information regarding recently issued and adopted accounting pronouncements can be found in Item 1.—Financial Statements—Note 1—Basis of Presentation and Other Information.

Information regarding recently issued and adopted accounting pronouncements can be found in Part I — Financial Information—Item 1.—Financial Statements—Note 1—Basis of Presentation and Other Information.

Critical Accounting Policies and Estimates

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

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

Management’s Discussion and Analysis of Financial Condition and Results of Operations of our 2019 Annual Report on Form 10-K filed with the SEC on February 27, 2020.

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

Information — Item 7.

Management’s Discussion and Analysis of Financial Condition and Results of Operations of our 2020 Annual Report on Form 10-K filed with the SEC on March 1, 2021.

Impacts to our critical accounting policies and estimates are discussed below and in Part I—Financial Information—Item 1.

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

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

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

The rapid and severe impacts of 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 are having a material impact on our cash flows during the suspension of operations, we performed qualitative and sensitivity reviews in all quarters of this year to assess whether we believed these actions caused the fair value of any of our reporting units to fall below its carrying value.

As such actions are having a material impact on our cash flows during the suspension of operations, we performed qualitative and sensitivity reviews in the first quarter of 2021 to assess whether we believed these actions caused the fair value of any of our reporting units to fall below its carrying value.

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

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

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

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

As a result of these interim assessments, we concluded that, during the three months ended March 31, 2021, no conditions existed that would more likely than not reduce the fair value of any of our reporting units below its carrying amount and therefore we do not believe that our goodwill is impaired.

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.

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Quantitative and Qualitative Disclosures About Market Risk

Required information is within Item 2.—Management’s Discussion and Analysis of Financial Condition and Results of Operations—Market Risk.

Required information is within Part I — Financial Information—Item 2.—Management’s Discussion and Analysis of Financial Condition and Results of Operations—Market Risk.

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

What changed 10-Q

Item 2. Management’s Discussion and Analysis