What changed in this filing

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Item 2. Management’s Discussion and Analysis

2021-08-03 compared with 2021-05-06 · 200 added, 165 removed, 340 unchanged (52% of the section changed)

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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.

We are beginning to see the positive impacts of successful vaccination rollouts in many of our key markets with social distancing restrictions easing and live events resuming late in the second quarter.

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.

The impact of the global COVID-19 pandemic to our operating results are discussed in Part I—Financial Information—Item 1.

Financial Statements—Note 2—COVID-19 Impacts.

Cash and available liquidity

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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.

As of June 30, 2021, our total cash and cash equivalents balance was $4.0 billion, which included $1.1 billion of ticketing client cash.

We believe this cash, net of client cash, together with our available debt capacity of $970.8 million, gives us the

liquidity to fund our operations during the pandemic.

Event-related deferred revenue consists of cash held by our Concerts segment for future shows, with roughly half the funds associated with upcoming shows in the United States and half for international shows as of June 30, 2021.

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

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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.

As part of these cost reduction efforts, we 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 have fully restored salaries 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.

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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.

As a result of these initiatives and government support programs, in 2020 we achieved over $950 million in cost reductions 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, has positioned us to manage through the global COVID-19 pandemic-related hold on show activity and provides the flexibility to scale up quickly as shows are restarting.

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.

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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.

Health and Safety and Implementing a Return to Business

We are currently implementing steps 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.

Similarly, we are resuming concerts when the time is right on a market by market basis.

We recognize that as concerts have started back up, the experience at our venues has changed, 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.

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.

The reopening of concerts is happening 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.

Activity levels are beginning to increase in the second half of 2021 led by outdoor events and festivals in the United States and United Kingdom.

We expect that most 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.

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 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.

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:

Since the onset of the COVID-19 pandemic, we have held very few traditional concerts in order to ensure the safety of our fans, artists, and employees.

Coupled with minimal sponsor engagement and ticket sales, it has been a challenging environment for our company, but one that we met with prudent cost reductions, focused cash management strategies, and a streamlined organization to overcome this unprecedented hurdle.

After supporting worldwide efforts to mitigate the spread of the virus, we began to see the positive impacts of successful vaccination rollouts in key markets with social distancing restrictions easing and live shows returning by the end of the quarter.

While our Concerts number of fans and events did not return to historic levels in the second quarter, we saw our major markets removing capacity limits, particularly in the United States, where planning for live shows have resumed.

Our Ticketing segment had a significant increase in ticket sales in the second quarter;

a key leading indicator that fans are eager to see their favorite stars performing live in the near future.

The effects of the pandemic are still impacting us, but we are taking steps towards welcoming back fans, artists and employees to our live world.

With our reopening gaining traction, our revenue increased by $502 million in the second quarter, from $74 million in 2020 to $576 million in 2021.

All three of our segments reported revenue growth due to more events, higher ticket sales, and increased sponsor fulfillment over the past three months.

As a result, our operating loss improved by $461 million, or 78%, from $588 million in 2020 to $127 million in 2021.

The improvement resulted from both increased events and ticket sales as well as reduced ticket refunds and sunk costs in the second quarter.

For the first six months of 2021, our revenue decreased by $573 million, from $1.4 billion in 2020 to $867 million in 2021, which was largely due to normal pre-pandemic operations from January through mid-March of 2020 compared to a full shut-down for the first quarter of 2021.

However, our operating loss improved by $331 million or 43%, from $761 million in 2020 to $430 million in 2021, despite the decrease in revenue.

The increase was due to the revenue impacts that drove our second quarter improvement as well as lower fixed costs in the first half of this year.

For the second quarter and year-to-date, the impact of changes in foreign exchange rates did not materially impact our year-over-year variances.

Our Concerts segment revenue for the second quarter increased by $145 million, from $142 million in 2020 to $287 million in 2021.

The revenue growth was a result of increased shows and fans this quarter.

The number of events for the second quarter of 2021 was over 1,600 compared to approximately 100 events in the second quarter of last year.

The number of fans grew from approximately 50,000 in the second quarter of 2020, to 1.3 million in the second quarter of 2021.

The growth was largely in the United States and our Asia-Pacific markets.

Concerts operating loss for the second quarter improved by $134 million, from $280 million in 2020 to $146 million in 2021.

The improvement was primarily due to more shows this year as well as sunk costs recorded in the second quarter of last year for advertising expenses and other costs associated with shows cancelled or rescheduled due to the pandemic.

For the first six months, our Concerts segment revenue decreased by $609 million, from $1.1 billion in 2020 to $526 million in 2021.

The growth in the second quarter was more than offset by the revenue generated in January through mid-March of 2020 when our business was fully open.

Despite the decline in revenue, Concerts operating loss for the first six months improved by $149 million, or 34%, from $441 million in 2020 to $292 million in 2021.

This was partially driven by the sunk cost impact in the second quarter of 2020 as well as lower fixed costs in the first six months of 2021 compared to the first six months of 2020.

Our Ticketing segment revenue for the second quarter increased by $331 million, from negative $87 million in 2020 to positive $244 million in 2021.

The improvement resulted from an increase in ticket sales, stronger pricing, and a reduction in ticket refunds this year.

Excluding refunds, we sold 30 million tickets in the second quarter of this year compared with 2 million tickets in the second quarter of last year.

The improvement was almost entirely driven by sales in the United States, largely for concert and sporting events.

Refunded tickets declined from 11 million in the second quarter of last year to 4 million in the second quarter of this year.

Ticketing operating income for the second quarter improved by $311 million, from a $267 million loss in 2020 to income of $44 million in 2021.

The improvement in operating results was largely driven by increased ticket sales, strong ticket pricing, reduced ticket refunds, and lower fixed costs.

For the first six months, Ticketing revenue increased by $75 million, from $197 million in 2020 to $272 million in 2021, an improvement of 38%.

This was mostly driven by the reduction in refunds across our global Ticketing segment.

Refunded tickets declined from 18 million for the first six months of last year to 7 million for the first six months of this year.

Operating loss improved by $206 million, or 73%, from $283 million in 2020 to $77 million in 2021.

This was largely driven by reduced ticket refunds as well as cost savings in the first six months of this year as compared to last year.

Our Sponsorship & Advertising segment revenue for the second quarter increased by $26 million, from $18 million in 2020 to $45 million in 2021.

The improvement was due to higher activations with our marketing partners due to more events going on sale, venues re-opening, and supplying more advertising content to our clients.

Operating income for the second quarter increased by $17 million, from a loss of $11 million in 2020 to income of $5 million in 2021.

The improvement was due

to more sponsor and online advertising activations resulting from the restart of live events and rapidly increasing ticket sales, particularly in the United States.

For the first six months, Sponsorship & Advertising revenue decreased by $41 million, from $109 million in 2020 to $67 million in 2021.

The growth in the second quarter was more than offset by the revenue generated in January through mid-March of 2020 when our business was fully open.

Operating income for the first six months decreased by $28 million, from $27 million of income in 2020 to a loss of $1 million in 2021 for the same reason.

Even as we begin to see sales returning and events happening in key markets, we continue to focus on mitigating the financial impact of the shutdown.

We are balancing our ramp-up with the cost-savings initiatives we implemented 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 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.

The pace of the recovery will depend on each market’s containment efforts and expeditious 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 believe our aggressive cost-savings and cash management programs, combined with a strong liquidity profile, position Live Nation to manage out of the global COVID-19 pandemic and its impact on live events and provides us the flexibility to scale up quickly as shows resume.

Segment Overview

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

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.

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.

Key Operating Metrics

Three Months Ended

June 30, Six Months Ended

2021 2020 2021 2020

(in thousands except estimated events)

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

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

Fee-bearing tickets sold above are net of refunds of 3.0 million and 7.3 million tickets for the first quarter of March 31, 2021 and 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, which may result in a negative number.

Fee-bearing tickets sold above are net of refunds of 4.1 million and 10.7 million tickets for the three months ended June 30, 2021 and 2020, respectively, and 7.1 million and 18.0 million tickets for the six months ended June 30, 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 March 31, 2021

Three Months Ended June 30, 2021

Concerts $ (146,337) $ 2,469 $ (28) $ 58,450 $ — $ 1,397 $ (84,049)

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Total $ (127,285) $ 12,830 $ (28) $ 103,647 $ 18,107 $ 2,381 $ 9,652

Three Months Ended March 31, 2020

Three Months Ended June 30, 2020

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

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

Six Months Ended June 30, 2021

Concerts $ (291,696) $ 19,944 $ 110 $ 121,336 $ — $ (8,282) $ (158,588)

Ticketing (76,831) 8,878 — 71,366 32,054 1,197 36,664

Sponsorship & Advertising (1,115) 2,988 — 14,671 — — 16,544

Other and Eliminations (141) — — 22 (3,326) — (3,445)

Corporate (60,674) 21,037 — 5,128 — 1,242 (33,267)

Total $ (430,457) $ 52,847 $ 110 $ 212,523 $ 28,728 $ (5,843) $ (142,092)

Six Months Ended June 30, 2020

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

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

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

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

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

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

Adjusted Operating Income (Loss)

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Three Months Ended

(in thousands)

Change Six Months Ended

2021 2020 2021 2020

(in thousands) (in thousands)

Revenue $ 286,958 $ 141,823 * $ 526,374 $ 1,135,216 (54)%

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Depreciation and amortization 58,450 64,342 (9)% 121,336 136,558 (11)%

Loss on disposal of operating assets 138 127 *

Loss (gain) on disposal of operating assets (28) 561 * 110 688 *

Operating loss $ (146,337) $ (279,851) 48% $ (291,696) $ (440,982) 34%

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

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 revenue increased $145.1 million during the three months ended June 30, 2021 as compared to the same period of the prior year primarily due to the resumption of shows in major markets including the United States, Australia and New Zealand as compared to the lack of events during the same period in 2020 driven by the global COVID-19 pandemic.

Operating results

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.

Concerts operating loss decreased $133.5 million during the three months ended June 30, 2021 as compared to the same period of the prior year primarily driven by the higher revenue discussed above along with lower direct operating expenses in the second quarter of 2021 for costs associated with shows cancelled or rescheduled due to the global COVID-19 pandemic.

Concerts revenue decreased $608.8 million during the six months ended June 30, 2021 as compared to the same period of the prior year primarily due to the revenue generated in January through mid-March of 2020 when our business was fully open prior to the global COVID-19 pandemic as compared to the resumption of shows in major markets including the United States, Australia and New Zealand late in the second quarter of 2021.

Operating results

Concerts operating loss decreased $149.3 million during the six months ended June 30, 2021 as compared to the same period of the prior year 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 along with lower costs in 2021 associated with shows cancelled or rescheduled due to the global COVID-19 pandemic.

In addition, we recorded $11.6 million of impairment charges in the first six months of 2020 primarily associated with revenue-generating contract intangible assets.

There were no significant impairments recorded in the first six months of 2021.

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

Three Months Ended

(in thousands)

Change Six Months Ended

2021 2020 2021 2020

(in thousands) (in thousands)

Revenue $ 244,001 $ (87,019) * $ 272,323 $ 197,258 38%

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Depreciation and amortization 34,888 44,313 (21)% 71,366 82,489 (13)%

Loss on disposal of operating assets — 2 *

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

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

Operating income (loss) $ 43,825 $ (267,193) * $ (76,831) $ (283,053) 73%

Operating margin 18.0 % * (28.2) % *

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

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.

Ticketing revenue increased $331.0 million during the three months ended June 30, 2021 as compared to the same period of the prior year primarily due to an increase in North America primary and secondary ticket fees driven by more events on sale due to the resumption of concerts and sporting events in the second quarter of 2021, strong ticket pricing and lower ticket refunds in 2021.

Operating results

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.

Ticketing operating income for the three months ended June 30, 2021 was $43.8 million as compared to an operating loss of $267.2 million for the same period of the prior year primarily driven by the increased ticketing activity discussed above along with lower fixed costs from cost reduction measures implemented in the second quarter of 2020 continuing into 2021, including salary reductions, hiring freezes, furloughs, and reduction or elimination of other discretionary spending along with participating in government support programs globally.

Ticketing revenue increased $75.1 million during the six months ended June 30, 2021 as compared to the same period of the prior year primarily due to an increase in North America primary ticket fees driven by lower ticket refunds in 2021 and strong ticket pricing as concert and sporting events on sales resuming in the second quarter of 2021.

Operating results

Ticketing operating loss decreased $206.2 million during the six months ended June 30, 2021 as compared to the same period of the prior year primarily driven by the increased ticketing activity discussed above along with cost reduction measures implemented in the second quarter of 2020 continuing into 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

(in thousands)

Change Six Months Ended

2021 2020 2021 2020

(in thousands) (in thousands)

Revenue $ 44,561 $ 18,372 * $ 67,208 $ 108,633 (38)%

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Depreciation and amortization 7,507 7,620 (1)% 14,671 15,132 (3)%

Gain on sale of operating assets — — * — — *

Operating income (loss) $ 5,326 $ (11,217) * $ (1,115) $ 27,009 *

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

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.

Sponsorship & Advertising revenue increased $26.2 million during the three months ended June 30, 2021 as compared to the same period of the prior year primarily due to increased activity in online advertising and national sponsorship programs in North America due to the resumption of concert events in the second quarter of 2021.

Operating results

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

Sponsorship & Advertising operating income for the three months ended June 30, 2021 was $5.3 million as compared to an operating loss of $11.2 million in the same period of the prior year primarily driven by higher sponsorship activity discussed above.

Sponsorship & Advertising revenue decreased $41.4 million during the six months ended June 30, 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 into the second quarter of 2021 due to the global COVID-19 pandemic.

As discussed above, we had increased activity in the second quarter of 2021;

however, that increase was more than offset by the revenue generated in January through mid-March prior to the shut down of our business.

Operating results

Sponsorship & Advertising operating loss for the six months ended June 30, 2021 was $1.1 million as compared to an operating income of $27.0 million for the same period of the prior year primarily driven by the lower sponsorship activity discussed above.

Consolidated Results of Operations

Three Months Ended June 30, % Change

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

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Depreciation and amortization 103,647 (3,475) 100,172 122,767 (16)% (18)%

Loss (gain) on disposal of operating assets (28) (1) (29) 559 * *

Corporate expenses 27,598 (15) 27,583 20,916 32% 32%

Operating loss (127,285) $ 8,427 $ (118,858) (588,067) 78% 80%

Operating margin (22.1)% (21.2)% *

Interest expense 68,909 52,689

Interest income (1,471) (2,429)

Equity in losses of nonconsolidated affiliates 2,998 6,613

Loss from sale of investments in nonconsolidated affiliates 993 35

Other expense (income), net 9,461 (5,208)

Loss before income taxes (208,175) (639,767)

Income tax expense (benefit) 2,285 (29,183)

Net loss (210,460) (610,584)

Net loss attributable to noncontrolling interests (14,795) (43,067)

Net loss attributable to common stockholders of Live Nation $ (195,665) $ (567,517)

* Percentages are not meaningful.

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

Interest Expense

Interest expense increased $16.2 million, or 31%, during the three months ended June 30, 2021 as compared to the same period of the prior year due to additional interest costs from 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.

Net loss attributable to noncontrolling interests

Net loss attributable to noncontrolling interests decreased $28.3 million during the three months ended June 30, 2021 as compared to the same period of the prior year primarily due to higher operating results from certain concert and festival promotion businesses in North America during the second quarter of 2021 due to the resumption of events in the second quarter of 2021.

Six Months Ended June 30, % Change

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

(in thousands)

Revenue $ 866,555 $ (23,629) $ 842,926 $ 1,439,777 (40)% (41)%

Operating expenses:

Direct operating expenses 377,086 (12,927) 364,159 1,068,377 (65)% (66)%

Selling, general and administrative expenses 651,747 (18,180) 633,567 837,373 (22)% (24)%

Depreciation and amortization 212,523 (5,453) 207,070 244,847 (13)% (15)%

Loss on disposal of operating assets 110 (4) 106 689 * *

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Equity in earnings of nonconsolidated affiliates 2,417 4,041

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

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

Loss (gain) from sale of investments in nonconsolidated affiliates (52,947) 35

Other expense, net 7,462 (580)

Loss before income taxes (524,508) (854,019)

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Interest expense

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.

Interest expense increased $43.1 million, or 45%, during the six months ended June 30, 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.

Loss (gain) from sale of investments in nonconsolidated affiliates

Gain from sale of investments in nonconsolidated affiliates was $53.0 million during the six months ended June 30, 2021 as compared to a nominal loss during the same period of the prior year primarily due to the sale of certain cost basis investments during the first six months of 2021.

Income tax expense (benefit)

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.

For the six months ended June 30, 2021, we had a net tax expense of $8.7 million on a loss before income taxes of $524.5 million compared to a net tax benefit of $32.5 million on a loss before income taxes of $854.0 million for the six months ended June 30, 2020.

For the six months ended June 30, 2021, the income tax expense consisted of $4.6 million related to foreign entities, $3.4 million related to United States federal taxes, and $0.7 million related to state and local income taxes.

The net increase in tax expense of $41.2 million was primarily due to profits in certain non-United States jurisdictions and other discrete tax benefits recorded in the first six months of 2020.

Net loss attributable to noncontrolling interests

Net loss attributable to noncontrolling interests decreased $38.9 million during the six months ended June 30, 2021 as compared to the same period of the prior year primarily due to higher operating results from certain concert and festival promotion businesses in North America during the first six months of 2021 due to the resumption of events in the second quarter of 2021.

Liquidity and Capital Resources

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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 $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.

Our balance sheet reflects cash and cash equivalents of $4.0 billion at June 30, 2021 and $2.5 billion at December 31, 2020.

Included in the June 30, 2021 and December 31, 2020 cash and cash equivalents balances are $1.1 billion 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 $919.2 million in cash and cash equivalents, excluding client cash, at March 31, 2021.

Our foreign subsidiaries held approximately $1.0 billion in cash and cash equivalents, excluding client cash, at June 30, 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 $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 balance sheet reflects total net debt of $5.3 billion and $4.9 billion at June 30, 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 June 30, 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.

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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.

The proceeds were used to pay 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 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 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%.

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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 March 31, 2021 and we have not drawn down on the delayed draw term loan A.

There were no borrowings under the revolving credit facilities as of June 30, 2021 and we have not drawn down on the delayed draw term loan A.

Based on our outstanding letters of credit of $59.2 million, $970.8 million was available for future borrowings from our delayed draw term loan A and revolving credit facilities.

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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.

Interest on the notes is payable semi-annually in cash in arrears on May 15 and November 15 of each year 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.

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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.

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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.

As of June 30, 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.

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

During the three months ended March 31, 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.

During the six months ended June 30, 2021, we used $7.6 million of cash primarily for the acquisition of a venue in the United Kingdom.

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

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

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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

Six Months Ended

(in thousands)

Maintenance capital expenditures $ 5,657 $ 30,447

Revenue generating capital expenditures 11,438 43,387

Maintenance $ 14,286 $ 45,676

Revenue generating 38,139 83,355

Total capital expenditures $ 52,425 $ 129,031

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.

Maintenance capital expenditures during the first six months of 2021 decreased from the same period of the prior year primarily due to reductions for certain office facility 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 six 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 $170 million for the full year of 2021.

Three Months Ended

Six Months Ended

(in thousands)

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Operating Activities

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.

Cash provided by operating activities was $1.2 billion for the six months ended June 30, 2021 as compared to cash used in operating activities of $390.4 million for the same period of the prior year primarily due to increases in accounts payable, client accounts and deferred revenue resulting from the resumption of events in the second quarter of 2021 along with a reduction of net loss year over year.

Investing Activities

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.

Cash used in investing activities decreased $140.3 million for the six months ended June 30, 2021 as compared to the same period of the prior year primarily due to less cash paid for capital expenditures, proceeds from the sale of investments in nonconsolidated affiliates, and fewer acquisitions.

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

Financing Activities

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.

Cash provided by financing activities decreased $1.1 billion for the six months ended June 30, 2021 as compared to the same period of the prior year primarily due to higher net proceeds in 2020 from debt issuances partially offset by lower purchases of noncontrolling interests in 2021.

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

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

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.

Our foreign operations reported an operating loss of $160.2 million for the six months ended June 30, 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 six months ended June 30, 2021 by $16.0 million.

As of June 30, 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 March 31, 2021, we had forward currency contracts outstanding with a notional amount of $53.2 million.

At June 30, 2021, we had forward currency contracts outstanding with a notional amount of $43.4 million.

Interest Rate Risk

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

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.

We had $5.5 billion of total debt, excluding debt discounts and issuance costs, outstanding as of June 30, 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 June 30, 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 June 30, 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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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.

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.

Financial Statements—Note 3—Long-Lived Assets.

We currently have seven reporting units with goodwill balances:

International Concerts, North America Concerts, Artist Management and Artist Services (non-management) within the Concerts segment;

Sponsorship & Advertising;

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

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

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

The 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 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.

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

This included our expectations of the timing for resuming operations, including the differences in that timing worldwide and the rescheduling efforts for our events, as well as our current aggressive cost-savings and cash management programs.

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

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 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.

Significant variations from current expectations could impact future assessments.

There have been no changes to our critical accounting policies during the six months ended June 30, 2021.

Quantitative and Qualitative Disclosures About Market Risk

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

What changed 10-Q

Item 2. Management’s Discussion and Analysis