What changed in this filing

/stocks — the workspaceLOADING

Item 2. Management’s Discussion and Analysis

2022-08-04 compared with 2022-05-05 · 213 added, 182 removed, 215 unchanged (65% of the section changed)

15 unchanged sentences

Executive Overview

The first quarter of 2022 was a record start to the year for our company, a remarkable feat considering our position one year ago and the fact that many of our markets remained closed for at least some portion of the quarter.

Despite some disruption caused by COVID-19 variants, the general trend has been towards re-opening business and re-starting shows as the prevalence of COVID-19 shifts from pandemic to endemic in our larger markets.

Fan demand has never been stronger, which led to a record first quarter for our Ticketing segment and sets us up for a strong year across all three of our segments.

Even with the challenges associated with the pandemic, the conflict in Eastern Europe, supply chain issues, labor shortages and inflationary pressures, the supply and demand dynamic with artists and fans continues to strengthen.

Live shows offer a unique and uplifting experience for people of all ages – perhaps even more powerful in these times than ever before.

The appeal of live concerts and sporting events is evidenced by the ticket sales we have seen so far this year.

The first quarter of 2022 was our second highest quarter ever for transacted GTV and two of our top three transacted volume months occurred in the first quarter.

Our overall revenue increased by nearly $1.5 billion for the quarter.

All three of our segments had revenue growth in the quarter with the largest increase coming from our Concerts segment as a result of major markets re-opening for shows, most notably the United States and the United Kingdom.

We had operating income of $27 million in the first quarter of 2022 compared to an operating loss of $303 million in the first quarter of 2021, an improvement of $330 million, resulting from shows and sponsorship restarting leading to notably improved ticketing sales.

The impact of changes in foreign exchange rates did not materially impact our year-over-year variances.

Our Concerts segment revenue for the quarter increased by $968 million, from $239 million in the first quarter of 2021 to $1.2 billion in the first quarter of 2022.

The second quarter of 2022 saw a continuation of our record start to the year from the first quarter.

Fan demand strengthened in the second quarter versus the first quarter of 2022, as Canada and many of our major markets in mainland Europe re-opened, which led to a record second quarter for the Company, reinforcing the health of all three of our segments.

Even with inflationary pressures, supply chain delays, and the ongoing conflict in Ukraine, the supply and demand dynamic with artists and fans continues to strengthen.

This was our highest quarterly AOI ever, fueled by more fans attending our shows, selling more tickets on the Ticketmaster platform, and collaborating with world class sponsorship partners.

The second quarter of 2022 was also our highest quarter ever for both transacted and reported GTV and tickets, signaling the power of our flywheel to deliver results not just through the remainder of this year, but also heading into 2023.

Except for Asia-Pacific, all of our markets and venues were fully open in the second quarter of 2022 for the first time in over two years.

While there have been lingering impacts due to cases with tour crew members, these instances have been limited and not material to our operations.

As we have since the beginning of the COVID-19 pandemic, we will continue to adhere to local health authorities and monitor progress across all our divisions and markets.

For the quarter, consolidated revenue increased by $3.9 billion, from $576 million in 2021 to $4.4 billion this year.

The increase was $4.0 billion without the impact of changes in foreign exchange rates.

All three of our segments had revenue growth in the quarter with the largest increase coming from our Concerts segment.

We had consolidated operating income of $319 million in the second quarter of 2022, compared to an operating loss of $127 million in the second quarter of 2021, an improvement of $446 million, resulting from fans returning to our shows at levels unseen since prior to the pandemic.

Consolidated AOI for the second quarter increased by $470 million, from $10 million in 2021 to $480 million this year.

The increase was $493 million without the impact of changes in foreign exchange rates.

With the United States dollar notably strengthening over the past three months, it has impacted both our revenues and adjusted operating income from international operations.

We expect this trend to continue through the remainder of the year.

For the first six months of 2022, our consolidated revenue grew $5.4 billion, from $867 million in 2021 to $6.2 billion this year.

The increase was $5.6 billion without the impact of changes in foreign currency exchange rates.

We had consolidated operating income of $346 million for the first six months of 2022, compared to an operating loss of $430 million for the first six months of 2021, an improvement of $776 million, resulting from the re-opening of all our major markets this year.

Consolidated AOI for the first six month increased by $831 million, from a loss of $142 million in 2021 to $689 million this year.

The increase was $854 million without the impact of changes in foreign exchange rates.

Having provided the foreign currency exchange impacts for the organization overall and in light of their relative materiality, all of the segment financial comments to follow are based on reported foreign currency exchange rates.

Our Concerts segment revenue for the quarter grew by $3.3 billion, from $287 million in the second quarter of 2021 to $3.6 billion in the second quarter of 2022.

The revenue growth was a result of more shows and fans coming back to venues to enjoy their favorite artists.

The number of events for the quarter was approximately 6,600 compared to approximately 670 in the first quarter of 2021.

The number of fans for the quarter was 10.8 million compared to approximately 0.5 million last year.

The growth was largely in the United States and United Kingdom.

Concerts operating loss for the quarter increased by $4

million, from a loss of $145 million in the first quarter of 2021 to a loss of $150 million in the first quarter of 2022.

While there were more shows and fans in the quarter, this activity was more than offset by the increase in expenses as we ramped up our staffing and infrastructure to prepare for what we expect will be our busiest summer ever.

The first quarter is typically our lightest with respect to show count and fans, but even based on the limited activity we have, we saw improvements to profit per show in the arena, theater and club events in the quarter.

So while we are seeing increases to some of our expenses such as labor and fuel, the ticket pricing and spend per fan has more than offset these cost increases.

Our Ticketing segment revenue for the quarter increased by $452 million, from $28 million in the first quarter of 2021 to $480 million in the first quarter of 2022.

The number of events for the quarter was approximately 12,500 compared to approximately 1,720 in the second quarter of 2021.

The number of fans for the quarter was approximately 33.4 million compared to approximately 1.4 million last year.

This was our highest fan count for a quarter ever, powered by growth across our major divisions as well as the addition of the OCESA business in Mexico.

In particular, stadium fan count doubled in North America compared to the second quarter of 2019 while it increased by nearly 50% in Europe.

Some of the top acts in the quarter included Coldplay, Harry Styles and Dua Lipa.

EDC Vegas, Bonnaroo and Governors Ball played to an aggregate three quarters of a million fans in the United States while Download, Isle of Wight and Graspop got the European festival season off to a stellar start.

Concerts AOI for the quarter increased by $207 million, from a loss of $84 million in 2021 to an income of $123 million in 2022.

For the first six months of 2022, Concerts revenue grew $4.3 billion, from $526 million in 2021 to $4.8 billion in 2022.

Concerts AOI for the first six months increased by $232 million, from a loss of $159 million in 2021 to an income of $74 million in 2022.

Along with the increased number of fans, we are seeing very strong onsite spend across all of our venue types.

Since 2019, our last full year of operations prior to the global COVID-19 pandemic, per fan spend has increased by $9 at our owned and operated amphitheaters, representing strong double-digit percentage growth.

In our Theaters and Clubs across the United States and the United Kingdom, we are also seeing double-digit percentage growth.

Lastly, at our festivals, we have also seen growth in onsite spend, with concessions, camping, and, in particular, VIP sales up substantially at our marquee events.

From what we have seen so far this year, the increases to ancillary spend per fan, along with ticket price increases for those seats highest in demand, are outpacing higher labor and materials costs at our venues and festivals.

Our Ticketing segment revenue for the quarter grew by $331 million, from $244 million in the second quarter of 2021 to $575 million in the second quarter of 2022.

Ticketing AOI for the quarter increased by $131 million, from $99 million in 2021 to $231 million in 2022.

The improvement resulted from an increase in ticket sales, upward pricing momentum due to higher fan demand, and higher ancillary revenue streams.

Excluding refunds, we sold 57 million fee-bearing tickets in the first quarter compared to 10 million tickets in the same period of the prior year.

The increase was largely driven by sales in the United States, the United Kingdom and the addition of OCESA.

We also started to see sales pick up in some of our other major European markets.

Pricing on our fee-bearing tickets increased by double-digits, reflecting strong consumer demand, particularly for premium seats and VIP experiences.

Platinum sales volumes and GTV have more than doubled compared to the first quarter of 2019 this quarter.

Our resale business continued its pronounced rebound in the first quarter, with our second highest resale quarter ever, and double our sales from the first quarter of 2019.

Ticketing operating income for the quarter improved by $275 million, from a $121 million loss in the first quarter of 2021 to income of $155 million in the first quarter of 2022.

The growth in operating results was largely driven by increased ticket sales, upward pricing momentum due to higher fan demand and higher ancillary revenue streams.

Our Sponsorship & Advertising segment revenue for the quarter increased by $93 million, from $23 million in the first quarter of 2021 to $116 million in the first quarter of 2022.

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

Operating income for the quarter increased by $65 million, from a loss of $6 million in the first quarter of 2021 to income of $59 million in the first quarter of 2022.

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

As ticket sales and events scale up in key markets, we are balancing our ramp-up with the cost-savings initiatives we implemented across the organization and are also protecting our liquidity by managing cash outflows associated with all our major expenditures:

Our fee-bearing ticket sales for the quarter were 72 million, 46 million higher than in the second quarter of last year.

This was a record quarter for reported ticket sales, exceeding our last record set in the fourth quarter of 2018 by 9 million tickets or 15%.

The increase was largely driven by sales in the United States, the United Kingdom, our mainland European markets, and the addition of OCESA.

Our resale business continued to excel, with nearly a billion dollars in GTV for the second quarter of 2022, more than doubling resale GTV in the second quarter of 2019.

It was our second highest resale quarter ever, powered by both Concerts and all the major sporting leagues.

For the first six months of 2022, our Ticketing revenue grew by $783 million, from $272 million in 2021 to $1.1 billion in 2022.

Ticketing AOI for the first six month increased by $400 million, from $37 million in 2021 to $437 million in 2022.

Through the end of June, our fee-bearing ticket sales are 124 million tickets, 91 million ahead of 2021 and, notably, 20 million ahead of 2019 when all markets were fully open.

Resale GTV through the end of June 2022 was over $1.8 billion which is 90% of our full-year resale GTV in 2019.

Overall pricing on our fee-bearing tickets for the first half of the year is up more than 15% compared to 2019.

Consumer demand for premium seats and VIP experiences has continued, with our Ticketmaster dynamic price sales and GTV growing by 2.5 times the volume in 2019.

Lastly, we have signed 13 million net new tickets so far this year, which gives us confidence that the Ticketmaster features and functionality will continue to fuel growth going forward.

Our Sponsorship & Advertising segment revenue for the quarter grew by $219 million, from $45 million in the second quarter of 2021 to $264 million in the second quarter of 2022.

The improvement was due to additional revenues from purchase path integration with various new partners, the restart of a full festival season and the addition of the Mexico market to our portfolio.

Sponsorship & Advertising AOI for the quarter increased by $165 million, from $13 million in 2021 to $178 million in 2022.

For the first six months of 2022, our Sponsorship & Advertising revenue grew $312 million, from $67 million in 2021 to $379 million in 2022.

Sponsorship & Advertising AOI for the first six month increased by $231 million, from $17 million in 2021 to $248 million in 2022.

As ticket sales and events have scaled up in key markets, we have balanced our ramp-up with the cost-savings initiatives we implemented across the organization during the COVID-19 pandemic and are also protecting our liquidity by managing cash outflows associated with all our major expenditures:

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

We are optimistic about the long-term potential of our Company and are focused on the key elements of our business model:

expanding our concerts platform and improving the on-site experience for our fans, driving conversion of ticket sales through development of innovative products to sell more tickets, and developing unique marketing and content programs for top brands.

Impact of the Global COVID-19 Pandemic

The global COVID-19 pandemic significantly impacted the business of our Concerts, Ticketing and Sponsorship & Advertising segments from mid-March 2020 through the first half of 2021.

In the third quarter of 2021, we saw a meaningful restart of our operations with outdoor amphitheater events and festivals taking place in both the United States and United Kingdom.

As we moved into 2022, more of our larger markets began resuming shows with the exception of some of our Asia-Pacific markets which continued to experience disruptions from COVID-19 variants.

As discussed above and in our segment operating results below, the impact of the resumption of shows has resulted in significant improvement in both revenue and operating income in the first quarter of 2022 when compared to the same period of the prior year.

We believe the measures we took in 2020 and 2021 to expand our liquidity along with the cost-savings initiatives implemented during the global COVID-19 pandemic provided us the flexibility to manage our business through the disruption that we experienced while our operations were shut down.

We will continue to evaluate future financing opportunities to further expand liquidity at a reasonable cost as we continue to resume concerts across all our markets and pursue growth opportunities through strategic acquisitions or investments.

expanding our concerts platform and improving the on-site experience for our fans,

driving conversion of ticket sales through development of innovative products to sell more tickets, and developing unique marketing and content programs for top brands.

Consolidated Results of Operations

Three Months Ended June 30, % Change

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

(in thousands)

Revenue $ 4,434,174 $ 174,309 $ 4,608,483 $ 575,946 * *

Operating expenses:

Direct operating expenses 3,267,023 134,417 3,401,440 243,120 * *

Selling, general and administrative expenses 672,213 17,624 689,837 328,894 * *

Depreciation and amortization 115,927 2,283 118,210 103,647 12% 14%

Loss (gain) on disposal of operating assets 1,065 2 1,067 (28) * *

Corporate expenses 59,247 20 59,267 27,598 * *

Operating income (loss) 318,699 $ 19,963 $ 338,662 (127,285) * *

Operating margin 7.2% 7.3% (22.1%)

Interest expense 68,435 68,909

Interest income (13,192) (1,471)

Equity in losses (earnings) of nonconsolidated affiliates (1,955) 2,998

Loss (gain) from sale of investments in nonconsolidated affiliates (580) 993

Other expense, net 5,619 9,461

Income (loss) before income taxes 260,372 (208,175)

Income tax expense 31,995 2,285

Net income (loss) 228,377 (210,460)

Net income (loss) attributable to noncontrolling interests 40,577 (14,795)

Net income (loss) attributable to common stockholders of Live Nation $ 187,800 $ (195,665)

* Percentages are not meaningful.

** Constant currency is a non-GAAP financial measure.

We calculate currency impacts as the difference between current period activity translated using the current period’s currency exchange rates and the comparable prior period’s currency exchange rates.

We present constant currency information to provide a framework for assessing how our underlying businesses performed excluding the effect of foreign currency rate fluctuations.

Revenue increased $3.9 billion during the three months ended June 30, 2022 as compared to the same period of the prior year due to increased revenue in our Concerts segment of $3.3 billion, Ticketing segment of $331.3 million and Sponsorship & Advertising of $219.2 million as further discussed within each segment’s operating results.

Corporate expenses

Corporate expenses increased $31.6 million during the three months ended June 30, 2022 as compared to the same period of the prior year primarily due to increased compensation expense driven by headcount growth and incentive compensation as a result of the increased operating results during 2022.

Operating income (loss)

Operating income during the three months ended June 30, 2022 was $318.7 million as compared to an operating loss of $127.3 million for the same period of the prior year primarily driven by increased operating income in our Concerts segment of $184.1 million, Ticketing segment of $135.3 million and Sponsorship & Advertising of $163.6 million as further discussed within each segment’s operating results partially offset by higher Corporate expenses as discussed above.

Net income (loss) attributable to noncontrolling interests

Net income attributable to noncontrolling interests was $40.6 million during the three months ended June 30, 2022 as compared to a net loss of $14.8 million for 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 2022 due to the resumption of events in the third quarter of 2021.

Consolidated Results of Operations

Six Months Ended June 30, % Change

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

(in thousands)

Revenue $ 6,236,982 $ 188,329 $ 6,425,311 $ 866,555 * *

Operating expenses:

Direct operating expenses 4,338,045 142,258 4,480,303 377,086 * *

Selling, general and administrative expenses 1,242,395 24,934 1,267,329 651,747 91% 94%

Depreciation and amortization 216,396 3,233 219,629 212,523 2% 3%

Loss on disposal of operating assets 2,730 — 2,730 110 * *

Corporate expenses 91,657 40 91,697 55,546 65% 65%

Operating income (loss) 345,759 $ 17,864 $ 363,623 (430,457) * *

Operating margin 5.5 % 5.7 % (49.7) %

Interest expense 135,208 139,739

Interest income (20,756) (2,620)

Equity in losses (earnings) of nonconsolidated affiliates (6,243) 2,417

Gain from sale of investments in nonconsolidated affiliates (448) (52,947)

Other expense, net 14,886 7,462

Income (loss) before income taxes 223,112 (524,508)

Income tax expense 43,691 8,674

Net income (loss) 179,421 (533,182)

Net income (loss) attributable to noncontrolling interests 41,803 (30,324)

Net income (loss) attributable to common stockholders of Live Nation $ 137,618 $ (502,858)

* Percentages are not meaningful.

** Constant currency is a non-GAAP financial measure.

We present constant currency information to provide a framework for assessing how our underlying businesses performed excluding the effect of foreign currency rate fluctuations.

Revenue increased $5.4 billion during the six months ended June 30, 2022 as compared to the same period of the prior year driven by increased revenue in our Concerts segment of $4.3 billion, Ticketing segment of $783.4 million and Sponsorship & Advertising of $312.3 million as further discussed within each segment’s operating results.

Corporate expenses

Corporate expenses increased $36.1 million during the six months ended June 30, 2022 as compared to the same period of the prior year primarily due to increased compensation expense driven by headcount growth and incentive compensation as a result of the increased operating results 2022.

Operating income (loss)

Operating income during the six months ended June 30, 2022 was $345.8 million as compared to an operating loss of $430.5 million for the same period of the prior year primarily driven by increased operating income in our Concerts segment of $179.9 million, Ticketing segment of $410.7 million and Sponsorship & Advertising of $229.0 million as further discussed within each segment’s operating results partially offset by higher Corporate expenses as discussed above.

Gain from sale of investments in nonconsolidated affiliates

Gain from sale of investments in nonconsolidated affiliates during the six months ended June 30, 2022 was $0.4 million as compared to a gain of $52.9 million 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

For the six months ended June 30, 2022, we had a net tax expense of $43.7 million on income before income taxes of $223.1 million compared to a net tax expense of $8.7 million on a loss before income taxes of $524.5 million for the six months ended June 30, 2021.

For the six months ended June 30, 2022, the income tax expense consisted of $37.9 million related to foreign entities, $3.7 million related to United States federal taxes, and $2.1 million related to state and local income taxes.

The net increase in tax expense of $35.0 million was primarily due to profits in certain non-United States jurisdictions.

Net income (loss) attributable to noncontrolling interests

Net income attributable to noncontrolling interests was $41.8 million during the six months ended June 30, 2022 as compared to a net loss of $30.3 million during the same period of the prior year primarily due to higher operating results from certain concert and festival promotion businesses during the first six months of 2022 as compared to the resumption of events late in the second quarter of 2021.

Segment Overview

20 unchanged sentences

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.

Non-GAAP Measure

AOI margin is a non-GAAP financial measure that we calculate by dividing AOI by revenue.

We use AOI margin to evaluate the performance of our operating segments.

We believe that information about AOI margin assists investors by allowing them to evaluate changes in the operating results of our portfolio of businesses separate from non-operational factors that affect net income (loss), thus providing insights into both operations and the other factors that affect reported results.

AOI margin is not calculated or presented in accordance with GAAP.

A limitation of the use of AOI margin as a performance measure is that it does not reflect the periodic costs of certain amortizing assets used in generating revenue in our business.

Accordingly, AOI margin should be considered in addition to, and not as a substitute for, operating income (loss) margin, and other measures of financial performance reported in accordance with GAAP.

Furthermore, this measure may vary among other companies;

thus, AOI margin as presented herein may not be comparable to similarly titled measures of other companies.

Key Operating Metrics

Three Months Ended

June 30, Six Months Ended

2022 2021 2022 2021

(in thousands except estimated events)

19 unchanged sentences

These metrics are net of any refunds requested and any cancellations that occurred during the period, which may result in a negative number.

Fee-bearing tickets sold above are net of refunds of 5.2 million and 3.0 million tickets for the three months ended March 31, 2022 and 2021, respectively.

Non-GAAP Measures

The following table sets forth the reconciliation of AOI to operating income (loss):

(loss) Stock-

expense Loss (gain)

on disposal of

assets Depreciation

amortization Amortization of non-recoupable ticketing contract advances Acquisition

(in thousands)

Three Months Ended March 31, 2022

Concerts $ (149,601) $ 25,675 $ 1,868 $ 61,163 $ — $ 11,729 $ (49,166)

Ticketing 154,788 2,371 (203) 28,052 21,212 — 206,220

Sponsorship & Advertising 59,007 2,468 — 8,225 — — 69,700

Other and Eliminations (1,746) — — 51 (2,685) — (4,380)

Corporate (35,388) 18,727 — 2,978 — 348 (13,335)

Total $ 27,060 $ 49,241 $ 1,665 $ 100,469 $ 18,527 $ 12,077 $ 209,039

Three Months Ended March 31, 2021

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

Ticketing (120,656) 7,806 — 36,478 12,423 1,197 (62,752)

Sponsorship & Advertising (6,441) 2,793 — 7,164 — — 3,516

Other and Eliminations (431) — — 11 (1,802) — (2,222)

Corporate (30,285) 11,943 — 2,337 — 258 (15,747)

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

Adjusted Operating Income (Loss)

AOI is a non-GAAP financial measure that we define as operating income (loss) before certain stock-based compensation expense, loss (gain) on disposal of operating assets, depreciation and amortization (including goodwill impairment), amortization of non-recoupable ticketing contract advances and acquisition expenses (including transaction costs, changes in the fair value of accrued acquisition-related contingent consideration obligations, and acquisition-related severance and compensation) .

We use AOI to evaluate the performance of our operating segments.

We believe that information about AOI assists investors by allowing them to evaluate changes in the operating results of our portfolio of businesses separate from non-operational factors that affect net income (loss), thus providing insights into both operations and the other factors that affect reported results.

AOI is not calculated or presented in accordance with GAAP.

A limitation of the use of AOI as a performance measure is that it does not reflect the periodic costs of certain amortizing assets used in generating revenue in our business.

Accordingly, AOI should be considered in addition to, and not as a substitute for, operating income (loss), net income (loss), and other measures of financial performance reported in accordance with GAAP.

Furthermore, this measure may vary among other companies;

thus, AOI as presented herein may not be comparable to similarly titled measures of other companies.

AOI margin is a non-GAAP financial measure that we calculate by dividing AOI by revenue.

We use AOI margin to evaluate the performance of our operating segments.

AOI margin is not calculated or presented in accordance with GAAP.

A limitation of the use of AOI margin as a performance measure is that it does not reflect the periodic costs of certain amortizing assets used in generating revenue in our business.

Accordingly, AOI margin should be considered in addition to, and not as a substitute for, operating income (loss) margin, and other measures of financial performance reported in accordance with GAAP.

Furthermore, this measure may vary among other companies;

thus, AOI margin as presented herein may not be comparable to similarly titled measures of other companies.

Constant Currency

Constant currency is a non-GAAP financial measure.

We present constant currency information to provide a framework for assessing how our underlying businesses performed excluding the effect of foreign currency rate fluctuations.

Fee-bearing tickets sold above are net of refunds of 5.2 million and 4.1 million tickets for the three months ended June 30, 2022 and 2021, respectively, and 10.4 million and 7.1 million for six months ended June 30, 2022 and 2021, respectively.

Segment Operating Results

1 unchanged sentence

Three Months Ended

(in thousands)

Change Six Months Ended

2022 2021 2022 2021

(in thousands) (in thousands)

Revenue $ 3,597,761 $ 286,958 * $ 4,805,586 $ 526,374 *

2 unchanged sentences

Depreciation and amortization 72,595 58,450 24% 133,758 121,336 10%

Loss on disposal of operating assets 1,868 138 *

Operating loss $ (149,601) $ (145,359) (3)%

Loss (gain) on disposal of operating assets 1,058 (28) * 2,926 110 *

Operating income (loss) $ 37,756 $ (146,337) * $ (111,845) $ (291,696) 62%

Operating margin 1.0 % (51.0) % (2.3) % (55.4) %

2 unchanged sentences

* Percentages are not meaningful.

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

Concerts revenue increased $968.4 million during the three months ended March 31, 2022 as compared to the same period of the prior year primarily due to the resumption of shows and festivals in major markets including the United States and United Kingdom as compared to the lack of events during the same period in 2021 driven by the global COVID-19 pandemic.

Concerts had incremental revenue of $131.0 million during the three months ended March 31, 2022 from acquisitions, including OCESA.

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

Concerts revenue increased $3.3 billion during the three months ended June 30, 2022 as compared to the same period of the prior year primarily due to more shows and festivals in major markets including North America and Europe in 2022 as compared to the resumption of shows and festivals in certain major markets, including the United States and United Kingdom, late in the second quarter of 2021.

Concerts had incremental revenue of $143.2 million during the three months ended June 30, 2022 from acquisitions and new venues.

Operating results

Concerts operating loss increased $4.2 million during the three months ended March 31, 2022 as compared to the same period of the prior year primarily driven by an increase in selling, general and administrative expenses due to higher compensation costs resulting from increased headcount and higher venue-related costs as shows and festivals resumed in 2022.

This decline was partially offset by improved results from the resumption of shows and festivals discussed above.

Concerts operating results during the three months ended March 31, 2022 include net operating losses of $25.2 million related to acquisitions and new venues.

Concerts operating income for the three months ended June 30, 2022 was $37.8 million as compared to an operating loss of $146.3 million and AOI was $122.9 million as compared to adjusted operating loss of $84.0 million for the same period of the prior year primarily driven by increases in revenues due to the higher number of shows and festivals discussed above.

This increase was partially offset by higher direct operating expenses to support these events, higher selling, general and administrative expenses related to increased headcount and compensation expenses, and increased depreciation and amortization of $14.1 million for additional capital expenditures.

Concerts revenue increased $4.3 billion during the six months ended June 30, 2022 as compared to the same period of the prior year primarily due to more shows and festivals in major markets including North America and Europe in 2022 as compared to the resumption of shows and festivals in certain major markets, including the United States and United Kingdom, late in the second quarter of 2021.

Concerts had incremental revenue of $274.3 million during the six months ended June 30, 2022 from acquisitions and new venues.

Operating results

Concerts operating loss decreased $179.9 million and AOI increased $232.4 million during the six months ended June 30, 2022 as compared to the same period of the prior year primarily driven by an increase in revenues from the number of shows and festivals discussed above partially offset by increased direct operating expenses to support these events, including acquisitions and new venues, of $36.4 million, and increased selling general and administrative expenses primarily related to increased headcount and compensation expenses.

Costs incurred outside of AOI increased by $52.5 million primarily related to higher acquisition expense of $28.3 million for costs incurred related to acquisitions and contingent considerations changes, depreciation and amortization of $12.4 million for additional capital expenditures incurred to support the increased operations, and stock-based compensation of $8.9 million attributable to increased headcount.

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

Three Months Ended

(in thousands)

Change Six Months Ended

2022 2021 2022 2021

(in thousands) (in thousands)

Revenue $ 575,305 $ 244,001 * $ 1,055,704 $ 272,323 *

2 unchanged sentences

Depreciation and amortization 28,605 34,888 (18)% 56,657 71,366 (21)%

Gain on disposal of operating assets (203) — *

Loss (gain) on disposal of operating assets 7 — * (196) — *

Operating income (loss) $ 179,075 $ 43,825 * $ 333,863 $ (76,831) *

3 unchanged sentences

* Percentages are not meaningful.

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

Ticketing revenue increased $452.1 million during the three months ended March 31, 2022 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 starting in the second quarter of 2021 and upward pricing momentum due to higher fan demand.

Ticketing had incremental revenue of $27.5 million during three months ended March 31, 2022 due to the OCESA acquisition.

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

Ticketing revenue increased $331.3 million during the three months ended June 30, 2022 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 and upward pricing momentum due to higher fan demand in 2022 as compared to the resumption of concerts and sporting events starting late in the second quarter of 2021.

Ticketing had incremental revenue of $26.1 million during three months ended June 30, 2022 due to acquisitions.

Operating results

Ticketing operating income for the three months ended March 31, 2022 was $154.8 million as compared to an operating loss of $120.7 million for the same period of the prior year primarily driven by the increased ticketing activity discussed above partially offset by higher selling, general and administrative expenses driven by increased compensation expenses from increased headcount as operations have resumed.

Ticketing operating income increased $135.3 million and AOI increased by $131.3 million during the three months ended June 30, 2022 as compared to the same period of the prior year.

These increases were primarily driven by increased revenues from higher ticketing activity discussed above partially offset by the associated increases in direct costs to support higher operations, and higher selling, general and administrative expenses attributable to increased compensation expenses from increased headcount for resumed operations during the quarter.

Ticketing revenue increased $783.4 million during the six months ended June 30, 2022 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 and upward pricing momentum due to higher fan demand in 2022 as compared to the resumption of concerts and sporting events starting late in the second quarter of 2021.

Ticketing had incremental revenue of $53.7 million during six months ended June 30, 2022 due to acquisitions.

Operating results

Ticketing operating income for the six months ended June 30, 2022 was $333.9 million as compared to an operating loss of $76.8 million for the same period of the prior year and AOI increased $400.3 million as compared to the same period prior year primarily driven by increased ticketing activity discussed above and incremental operating income from acquisitions of $23.9 million.

These increases were partially offset by higher direct operating expenses to support the increased operations and higher selling, general and administrative expenses attributable to increased compensation expenses from increased headcount as operations have resumed.

Sponsorship & Advertising

1 unchanged sentence

Three Months Ended

(in thousands)

Change Six Months Ended

2022 2021 2022 2021

(in thousands) (in thousands)

Revenue $ 263,786 $ 44,561 * $ 379,475 $ 67,208 *

7 unchanged sentences

* Percentages are not meaningful.

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

Sponsorship & Advertising revenue increased $93.0 million during the three months ended March 31, 2022 as compared to the same period of the prior year primarily due to increased activity in national and local sponsorship programs, festival sponsorships and online advertising in North America due to the resumption of concert events and festivals starting in the second quarter of 2021.

Sponsorship & Advertising had incremental revenue of $24.0 million during three months ended March 31, 2022 from acquisitions, including OCESA.

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

Sponsorship & Advertising revenue increased $219.2 million during the three months ended June 30, 2022 as compared to the same period of the prior year primarily driven by increased activity in national and local sponsorship programs, festival sponsorships and online advertising in the United States and Europe due to the resumption of concert events and festivals starting late in the second quarter of 2021.

Sponsorship & Advertising had incremental revenue of $28.5 million during three months ended June 30, 2022 from acquisitions.

Operating results

Sponsorship & Advertising operating income for the three months ended March 31, 2022 was $59.0 million as compared to an operating loss of $6.4 million for the same period of the prior year primarily driven by higher sponsorship activity discussed above along with incremental operating income from acquisitions including OCESA.

Consolidated Results of Operations

Three Months Ended March 31, % Change

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

(in thousands)

Revenue $ 1,802,808 $ 14,020 $ 1,816,828 $ 290,609 * *

Operating expenses:

Direct operating expenses 1,071,022 7,841 1,078,863 133,966 * *

Selling, general and administrative expenses 570,182 7,310 577,492 322,853 77% 79%

Depreciation and amortization 100,469 950 101,419 108,876 (8)% (7)%

Loss on disposal of operating assets 1,665 (2) 1,663 138 * *

Corporate expenses 32,410 20 32,430 27,948 16% 16%

Operating income (loss) 27,060 $ (2,099) $ 24,961 (303,172) * *

Operating margin 1.5 % 1.4 % *

Interest expense 66,773 70,830

Interest income (7,564) (1,149)

Equity in earnings of nonconsolidated affiliates (4,288) (581)

Loss (gain) from sale of investments in nonconsolidated affiliates 132 (55,933)

Other expense (income), net 9,267 (6)

Loss before income taxes (37,260) (316,333)

Income tax expense 11,696 6,389

Net loss (48,956) (322,722)

Net income (loss) attributable to noncontrolling interests 1,226 (15,529)

Net loss attributable to common stockholders of Live Nation $ (50,182) $ (307,193)

* Percentages are not meaningful.

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

Loss (gain) from sale of investments in nonconsolidated affiliates

Loss (gain) from sale of investments in nonconsolidated affiliates during the three months ended March 31, 2022 was a loss of $0.1 million as compared to a gain of $55.9 million for 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

For the three months ended March 31, 2022, we had a net tax expense of $11.7 million on a loss before income taxes of $37.3 million compared to a net tax expense of $6.4 million on a loss before income taxes of $316.3 million for the three months ended March 31, 2021.

For the three months ended March 31, 2022, the income tax expense consisted of $9.5 million related to foreign entities, $1.9 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 $5.3 million was primarily due to profits in certain non-United States jurisdictions.

Sponsorship & Advertising operating income increased $163.6 million and AOI increased $165.3 million for the three months ended June 30, 2022 as compared to the same period of the prior year.

These increases were primarily due to increased revenues from higher sponsorship activity discussed above and incremental operating income from acquisitions.

The increases were partially offset by increases in direct operating expenses to support higher activity levels as operations resumed during the period.

Sponsorship & Advertising revenue increased $312.3 million during the six months ended June 30, 2022 as compared to the same period of the prior year primarily due to increased activity in national and local sponsorship programs, festival sponsorships and online advertising in the United States and Europe due to the resumption of concert events and festivals starting late in the second quarter of 2021.

Sponsorship & Advertising had incremental revenue of $52.6 million during six months ended June 30, 2022 from acquisitions.

Operating results

Sponsorship & Advertising operating income for the six months ended June 30, 2022 was $227.9 million as compared to an operating loss of $1.1 million for the same period of the prior year and AOI increased $231.5 million as compared to the same period of the prior year.

These increases were primarily due to higher sponsorship activity revenues discussed above and incremental operating income of $22.0 million from acquisitions, and were offset by increases in direct costs and selling, general and administrative expenses to support higher activity levels as operations resumed during the period.

Liquidity and Capital Resources

3 unchanged sentences

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 $5.9 billion at March 31, 2022 and $4.9 billion at December 31, 2021.

Included in the March 31, 2022 and December 31, 2021 cash and cash equivalents balances are $1.5 billion and $1.3 billion, 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 $5.9 billion at June 30, 2022 and $4.9 billion at December 31, 2021.

Included in the June 30, 2022 and December 31, 2021 cash and cash equivalents balances are $1.4 billion and $1.3 billion, 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 $1.8 billion in cash and cash equivalents, excluding client cash, at March 31, 2022.

Our foreign subsidiaries held approximately $1.8 billion in cash and cash equivalents, excluding client cash, at June 30, 2022.

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.

1 unchanged sentence

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 $5.8 billion and $5.7 billion at March 31, 2022 and December 31, 2021, respectively.

Our weighted-average cost of debt, excluding unamortized debt discounts and debt issuance costs on our term loans and notes, was 4.3% at March 31, 2022.

Our balance sheet reflects total net debt of $5.7 billion and $5.7 billion at June 30, 2022 and December 31, 2021, respectively.

Our weighted-average cost of debt, excluding unamortized debt discounts and debt issuance costs on our term loans and notes, was 4.3% at June 30, 2022, with approximately 85% of our debt at a fixed rate.

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.

30 unchanged sentences

In September 2021, we elected to draw down the $400 million term loan A under the amended senior secured credit facility prior to expiration of the drawdown period on October 17, 2021.

We intend to use the proceeds from the drawdown for general corporate purposes.

We also completed the public offering of 5,239,259 shares of common stock.

2 unchanged sentences

Amended Senior Secured Credit Facility

At March 31, 2022, our senior secured credit facility consists of (i) a $400 million term loan A facility, (ii) a $950 million term loan B facility, (iii) a $500 million revolving credit facility and (iv) a $130 million incremental revolving credit facility.

At June 30, 2022, our senior secured credit facility consists of (i) a $400 million term loan A facility, (ii) a $950 million term loan B facility, (iii) a $500 million revolving credit facility and (iv) a $130 million incremental revolving credit facility.

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

10 unchanged sentences

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, 2022.

There were no borrowings under the revolving credit facilities as of June 30, 2022.

Based on our outstanding letters of credit of $66.2 million, $563.8 million was available for future borrowings from revolving credit facilities.

3.75% Senior Secured Notes Due 2028

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

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

We may redeem some or all of the notes, at any time prior to January 15, 2024, at a price equal to 100% of the aggregate principal amount, plus any accrued and unpaid interest to the date of redemption, plus a ‘make-whole’ premium.

We may redeem up to 35% of the aggregate principal amount of the notes from the proceeds of certain equity offerings prior to January 15, 2024, at a price equal to 103.75% of the aggregate principal amount, plus accrued and unpaid interest thereon to the date of redemption.

In addition, on or after January 15, 2024 we may redeem some or all of the notes at any time at redemption prices specified in the notes indenture, plus any accrued and unpaid interest to the date of redemption.

We must make an offer to redeem the notes at 101% of their aggregate principal amount, plus accrued and unpaid interest to the repurchase date, if we experience certain defined changes of control.

The notes are secured by a first priority lien on substantially all of the tangible and intangible personal property of LNE and LNE’s domestic subsidiaries that are guarantors, and by a pledge of substantially all of the shares of stock, partnership interests and limited liability company interests of our direct and indirect domestic subsidiaries.

Debt Covenants

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).

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.

We are 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 through September 30, 2022 with step downs to 6.25x on December 31, 2022, 5.75x on December 31, 2023, 5.50x on December 31, 2024 and 5.25x on June 30, 2025 through maturity, except that calculations of consolidated EBITDA (as defined in the agreement) will be substituted with an annualized consolidated EBITDA (as defined in the agreement) through June 30, 2022.

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.

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

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

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

As of March 31, 2022, 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, 2022, 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 2022.

1 unchanged sentence

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, 2022, we used $14.0 million of cash primarily for the acquisition of a venue management business 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 six months ended June 30, 2022, we used $39.9 million of cash primarily for the acquisition of a sports management 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.

Capital Expenditures

6 unchanged sentences

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 expenditures funded by insurance proceeds, consisted of the following:

Three Months Ended

Six Months Ended

(in thousands)

2 unchanged sentences

Total capital expenditures $ 102,204 $ 52,425

Maintenance capital expenditures during the first three months of 2022 increased from the same period of the prior year primarily due to leasehold improvements of certain office facilities and venue-related projects.

Revenue generating capital expenditures during the first three months of 2022 increased from the same period of the prior year primarily due to enhancements at our venues and higher investments in technology-related projects.

Maintenance capital expenditures during the first six months of 2022 increased from the same period of the prior year primarily due to venue-related and technology-related projects.

Revenue generating capital expenditures during the first six months of 2022 increased from the same period of the prior year primarily due to enhancements at our venues and higher investments in technology-related projects.

We currently expect capital expenditures to be approximately $375 million for the full year of 2022.

Three Months Ended

Six Months Ended

(in thousands)

4 unchanged sentences

Operating Activities

Cash provided by operating activities increased by $1.1 billion for the three months ended March 31, 2022 as compared to the same period of the prior year primarily due to increases in deferred revenue resulting from the resumption of events in

certain markets starting late in the second quarter of 2021 and continuing into the first quarter of 2022 along with a reduction of net loss year over year.

Cash provided by operating activities increased by $377.4 million for the six months ended June 30, 2022 as compared to the same period of the prior year primarily due to an overall increase in operating results, offset by changes in working capital, resulting from the resumption of events in certain markets starting late in the second quarter of 2021 and continuing into the first six months of 2022.

Investing Activities

Cash used in investing activities was $115.0 million for the three months ended March 31, 2022 as compared to cash provided by investing activities of $10.1 million for the same period of the prior year primarily due to more cash paid for capital expenditures along with higher proceeds from the sale of investments in nonconsolidated affiliates in 2021 that did not recur in 2022.

Cash used in investing activities increased by $194.4 million for the six months ended June 30, 2022 as compared to the same period of the prior year primarily due to more cash paid for capital expenditures and acquisitions during the current period, and the same period prior year being impacted by higher proceeds from the sale of investments in nonconsolidated affiliates.

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

Financing Activities

Cash used in financing activities was $75.0 million for the three months ended March 31, 2022 as compared to cash provided by financing activities of $417.0 million for the same period of the prior year primarily due to higher net proceeds in 2021 from debt issuances.

Cash used in financing activities was $137.6 million for the six months ended June 30, 2022 as compared to cash provided by financing activities of $401.5 million for the same period of the prior year primarily due to higher net proceeds in 2021 from debt issuances.

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

7 unchanged sentences

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

Our foreign operations reported an operating loss of $45.4 million for the three months ended March 31, 2022.

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, 2022 by $4.5 million.

As of March 31, 2022, our most significant foreign exchange exposure included the Euro, British Pound, Australian Dollar, Canadian Dollar and Mexican Peso.

Our foreign operations reported an operating income of $106.2 million for the six months ended June 30, 2022.

We estimate that a 10% change in the value of the United States dollar relative to foreign currencies would change our operating income for the six months ended June 30, 2022 by $10.6 million.

As of June 30, 2022, our most significant foreign exchange exposure included the Euro, British Pound, Australian Dollar, Canadian Dollar and Mexican Peso.

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.

1 unchanged sentence

We primarily use forward currency contracts, in addition to options, to reduce our exposure to foreign currency risk associated with short-term artist fee commitments.

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, 2022, we had forward currency contracts outstanding with a notional amount of $93.0 million.

At June 30, 2022, we had forward currency contracts outstanding with a notional amount of $63.8 million.

Interest Rate Risk

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

We had $5.8 billion of total debt, excluding unamortized debt discounts and issuance costs, outstanding as of March 31, 2022.

We had $5.8 billion of total debt, excluding unamortized debt discounts and issuance costs, outstanding as of June 30, 2022.

Of the total amount, we had $5.0 billion of fixed-rate debt and $0.8 billion of floating-rate debt.

Based on the amount of our floating-rate debt as of March 31, 2022, each 25-basis point increase or decrease in interest rates would increase or decrease our annual interest expense and cash outlay by approximately $1.9 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, 2022 with no subsequent change in rates for the remainder of the period.

Based on the amount of our floating-rate debt as of June 30, 2022, each 25-basis point increase or decrease in interest rates would increase or decrease our annual interest expense and cash outlay by approximately $1.9 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, 2022 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.

10 unchanged sentences

Management’s Discussion and Analysis of Financial Condition and Results of Operations of our 2021 Annual Report on Form 10-K filed with the SEC on February 23, 2022.

There have been no changes to our critical accounting policies during the three months ended March 31, 2022.

There have been no changes to our critical accounting policies during the six months ended June 30, 2022.

Quantitative and Qualitative Disclosures About Market Risk

1 unchanged sentence

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