Our Sponsorship & Advertising segment operating results were, and discussions of significant variances are, as follows:
Our cash is centrally managed on a worldwide basis. Our primary short-term liquidity needs are to fund general working capital requirements, capital expenditures and debt service requirements while our long-term liquidity needs are primarily related to acquisitions and debt repayment. Our primary sources of funds for our short-term liquidity needs will be cash flows from operations and borrowings under our amended senior secured credit facility, while our long-term sources of funds will be from cash flows from operations, long-term bank borrowings and other debt or equity financings. We may from time to time engage in open market purchases of our outstanding debt securities or redeem or otherwise repay such debt.
We may from time to time enter into borrowings under our revolving credit facility. 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 $2.3$6.6 billion and $5.9 billion at each of December 31, 20172023 and 2016.2022, respectively. Our weighted-average cost of debt, excluding the unamortized debt discounts and debt issuance costs on our term loans and notes, was 3.9%4.7% at December 31, 2017.2023 with approximately 87% of our debt at a fixed rate. Our weighted-average cost of debt for short-term borrowings outstanding at December 31, 2023, excluding unamortized debt discounts and debt issuance costs on our term loans and notes, was 4.1%.
Our cash and cash equivalents are held in accounts managed by third-party financial institutions and consist of cash in our operating accounts and invested cash. Cash held in non-interest-bearing and interest-bearing operating accounts in many cases exceeds the Federal Deposit Insurance Corporation insurance limits. The invested cash is in interest-bearing funds consisting primarily of bank deposits and money market funds. While we monitor cash and cash equivalents balances in our operating accounts on a regular basis and adjust the balances as appropriate, these balances could be impacted if the underlying financial institutions fail. To date, we have experienced no loss or lack of access to our cash and cash equivalents; however, we can provide no assurances that access to our cash and cash equivalents will not be impacted by adverse conditions in the financial markets.
We view our available cash as cash and cash equivalents, less ticketing-related client cash, less event-related deferred revenue, less accrued expenses due to artists and cash collected on behalf of others, plus event-related prepaid expenses. This is essentially our cash available to, among other things, repay debt balances, make acquisitions, and finance capital expenditures.
Our intra-year cash fluctuations are impacted by the seasonality of our various businesses. Examples of seasonal effects include our Concerts segment, which reports the majority of its revenue in the second and third quarters. Cash inflows and
outflows depend on the timing of event-related payments but the majority of the inflows generally occur prior to the event. See “—Seasonality” below. We believe that we have sufficient financial flexibility to fund these fluctuations and to access the global capital markets on satisfactory terms and in adequate amounts, although there can be no assurance that this will be the case, and capital could be less accessible and/or more costly depending ongiven current economic conditions at the time.conditions. We expect cash flows from operations and borrowings under our amended senior secured credit facility, along with other financing alternatives, to satisfy working capital requirements, capital expenditures and debt service requirements for at least the succeeding year.
We may need to incur additional debt or issue equity to make other strategic acquisitions or investments. There can be no assurance that such financing will be available to us on acceptable terms or at all. We may make significant acquisitions in the near term, subject to limitations imposed by our financing agreements and market conditions.
Purchases and Sales of Noncontrolling Interests, net
In 2017, we used $71.5 million of cash primarily for the acquisition of an additional interest in a concert and festival promotion business located in the United States and the remaining interest in a festival promotion business located in Sweden.
In 2016, we used $69.1 million of cash primarily for the acquisition of all or additional equity interests in two artist management businesses located in the United States and a festival and concert promoter located in Australia.
Capital Expenditures
Venue and ticketing operations are capital intensive businesses, requiring continualrequire ongoing investment in our existing venues and ticketing systems in order to address audiencefan and artist expectations, technological industry advances and various federal, state and/or local regulations.
We categorize capital outlays between maintenance capital expenditures and revenue generating capital expenditures. Maintenance capital expenditures are associated with the renewal and improvement of existing venues and technology systems, web development and administrative offices. Revenue generating capital expenditures generally relate to the construction of new venues to expand our global footprint, major renovations to existing buildings or buildings that are being added to our venue network, the development of new ticketing tools and technology enhancements. Revenue generating capital expenditures can also include smaller projects whose purpose is to increase revenue and/or improve operating income. Maintenance capital expenditures are associated with the renewal and improvement of existing venues and technology systems, web development and administrative offices. Capital expenditures typically increase during periods when our venues are not in operation since that is the time that such improvements can be completed.
Our capital expenditures, including accruals for amounts incurred but not yet paid for but net of expenditures funded by outside parties such as landlords and noncontrolling interest partners or replacements funded by insurance proceeds, consisted of the following:
|
| | | | | | | | | | | |
| | Year Ended December 31, |
| | 2017 | | 2016 | | 2015 |
| | (in thousands) |
| Maintenance capital expenditures | $ | 113,595 |
| | $ | 92,125 |
| | $ | 79,008 |
|
| Revenue generating capital expenditures | 113,756 |
| | 94,702 |
| | 65,726 |
|
| Total capital expenditures | $ | 227,351 |
| | $ | 186,827 |
| | $ | 144,734 |
|
Maintenance capital expenditures for 2017 increased from the prior year primarily associated with the relocation of certain office facilities and technology system enhancements. | | | | | | | | | | | | | | | | | |
| | Year Ended December 31, |
| | 2023 | | 2022 | | 2021 |
| | (in thousands) |
| Revenue generating capital expenditures | $ | 321,885 | | | $ | 237,603 | | | $ | 102,418 | |
| Maintenance capital expenditures | 131,866 | | | 126,957 | | | 68,148 | |
| Total capital expenditures | $ | 453,751 | | | $ | 364,560 | | | $ | 170,566 | |
Revenue generating capital expenditures for 20172023 increased from the same period of the prior year primarily due to wi-fi enhancements at our amphitheaters festival site improvements and higher investmenttheaters in technology.
Maintenance capital expenditures for 2016 increased from the prior year primarily associated with technology system enhancements and venue-related projects.
Revenue generating capital expenditures for 2016 increased from the prior year primarily due to development and enhancement of certain venues.North America.
For the years ended December 31, 2017, 20162023, 2022 and 2015, $20.52021, $15.0 million, $2.8$12.4 million and $0.4$5.9 million, respectively, of insurance proceeds and landlord or noncontrolling interest partner reimbursements have been excluded from capital expenditures in the table above.
We currently expect capital expenditures to be approximately $250$540 million for the year ending December 31, 2018.2024 with approximately two-thirds of the capital expenditure on revenue generating projects and approximately one-third of the capital expenditure on four venues.
Cash Flows | | | | | | | | | | | | | | | | | |
| | Year Ended December 31, |
| | 2023 | | 2022 | | 2021 |
| | (in thousands) |
| Cash provided by (used in): | | | | | |
| Operating activities | $ | 1,370,794 | | | $ | 1,832,063 | | | $ | 1,780,568 | |
| Investing activities | $ | (695,805) | | | $ | (784,691) | | | $ | (566,962) | |
| Financing activities | $ | (87,281) | | | $ | (143,340) | | | $ | 1,171,332 | |
Operating Activities
Cash provided by operating activities decreased $461.3 million for the year ended December 31, 2023 as compared to the prior year primarily due to changes in operating assets and liabilities partially offset by an increase in 2023 operating results as discussed within each segment’s operating results.
Investing Activities
Cash used in investing activities decreased $88.9 million for the year ended December 31, 2023 as compared to the prior year primarily due to lower cash paid for acquisitions, net of cash acquired of $239.7 million. This was partially offset by an increase of $91.4 million in purchases of property, plant and equipment in 2023 for revenue generating and maintenance capital expenditures. See “—Uses of Cash” above for further discussion.
Financing Activities
Cash used in financing activities decreased $56.1 million for the year ended December 31, 2023 as compared to the prior year primarily due to proceeds in 2023 from the issuance of our 3.125% convertible senior notes and draw down from our revolving credit facility partially offset by the repurchase of our 2.5% convertible senior notes and capped call transactions in connection with such issuance, repayment of the delayed draw term A loan facility and higher distributions to noncontrolling interests. See “—Sources of Cash” above for further discussion.
Contractual Obligations and Commitments
Firm Commitments
In addition to the scheduled maturities on our debt, weWe have future cash obligations under various types of contracts.for our debt obligations and operating lease liabilities. We lease office space, certain equipment and many of the venues used in our concert operations under long-term operating leases. Some of our lease agreements contain renewal options and annual rental escalation clauses (generally tied to the consumer price index), as well as provisions for our payment of utilities and maintenance. Information regarding our scheduled maturities of our outstanding debt obligations (excluding unamortized debt discounts and issuance costs) and operating lease liabilities can be found in Part II—Financial Information—Item 8.—Financial Statements and Supplementary Data—Note 5 – Long-Term Debt and —Note 4 – Leases, respectively.
We also have minimum payments associated with non-cancelable contracts related to our operations, such as artist guarantees and client ticketing agreements. As part of our ongoing capital projects, we will enter into construction-related commitments for future capital expenditure work. The scheduled maturities discussed below represent contractual obligationsInformation regarding our minimum payments for non-cancelable contracts and capital expenditures commitments can be found in Part II—Financial Information—Item 8.—Financial Statements and Supplementary Data—Note 8 – Commitments and Contingent Liabilities as of December 31, 20172023 and thus do not represent all expected expenditures for those periods.
The scheduled maturities of our outstanding long-term debt (excluding unamortized debt discounts and issuance costs), future minimum rental commitments under non-cancelable operating lease agreements, minimumestimated interest payments, under other non-cancelable contracts, capital expenditure commitments and expected payments of contingent and deferred consideration liabilities as of December 31, 20172023 are as follows: | | | | | | | | | | | | | | | | | | | | | | | |
| | Payments Due by Period |
| Total | 2024 | 2025 | 2026 | 2027 | 2028 | Thereafter |
| | (in thousands) |
| | | | | | |
| | | | | | | |
| | | | | | | |
| | | | | | | |
| | | | | | | |
| | | | | | | |
| | | | | | | |
| | | | | | | |
| | | | | | | |
| Estimated interest payments | $ | 937,635 | | $ | 301,348 | | $ | 249,576 | | $ | 224,535 | | $ | 118,299 | | $ | 34,890 | | $ | 8,987 | |
| Contingent and deferred consideration | 127,901 | | 98,902 | | 22,292 | | 598 | | 347 | | 343 | | 5,419 | |
| Total | $ | 1,065,536 | | $ | 400,250 | | $ | 271,868 | | $ | 225,133 | | $ | 118,646 | | $ | 35,233 | | $ | 14,406 | |
|
| | | | | | | | | | | | | | | | | | | |
| | Payments Due by Period |
| | Total | | 2018 | | 2019-2020 | | 2021-2022 | | 2023 and thereafter |
| | (in thousands) |
| Long-term debt obligations, including current maturities: | | | | | | | | |
| Term loans and revolving credit facility | $ | 1,138,599 |
| | $ | 28,701 |
| | $ | 90,653 |
| | $ | 104,903 |
| | $ | 914,342 |
|
| 4.875% senior notes | 575,000 |
| | — |
| | — |
| | — |
| | 575,000 |
|
| 5.375% senior notes | 250,000 |
| | — |
| | — |
| | 250,000 |
| | — |
|
2.5% convertible senior notes (1) | 275,000 |
| | 275,000 |
| | — |
| | — |
| | — |
|
| Other long-term debt | 99,393 |
| | 50,037 |
| | 23,208 |
| | 19,656 |
| | 6,492 |
|
Estimated interest payments (2) | 482,747 |
| | 91,329 |
| | 164,309 |
| | 144,931 |
| | 82,178 |
|
Non-cancelable operating leases (3) | 2,168,346 |
| | 175,863 |
| | 327,029 |
| | 242,166 |
| | 1,423,288 |
|
Non-cancelable contracts (3) | 1,372,401 |
| | 897,266 |
| | 311,870 |
| | 66,280 |
| | 96,985 |
|
| Capital expenditures | 60,138 |
| | 16,499 |
| | 7,653 |
| | 5,053 |
| | 30,933 |
|
| Contingent and deferred consideration | 206,096 |
| | 143,932 |
| | 29,306 |
| | 14,469 |
| | 18,389 |
|
Uncertain income tax positions (4) | — |
| | — |
| | — |
| | — |
| | — |
|
| Total | $ | 6,627,720 |
| | $ | 1,678,627 |
| | $ | 954,028 |
| | $ | 847,458 |
| | $ | 3,147,607 |
|
_____________
(1) On or after November 15, 2018, holders may convert their 2.5% convertible senior notes.
(2) Does not include interest on the revolving credit facility as the balance was zero as of December 31, 2017.
(3) Commitment amounts for non-cancelable operating leases and non-cancelable contracts which stipulate an increase in the commitment amount based on an inflationary index have been estimated using an inflation factor of 1.8% for North America, 2.9% for the United Kingdom, 1.7% for Denmark and 1.6% for the Netherlands.
(4) Does not include $9.9 million of uncertain tax positions due to the unpredictable timing of the future payments.
During 2006, in connection with our acquisition of a theatrical business, we guaranteed obligations related to a lease agreement. In the event of default, we could be liable for obligations which have future lease payments (undiscounted) of approximately $15.3 million through the end of 2035 which are not reflected in the table above. The scheduled future minimum rentals for this lease for the years 2018 through 2022 are $1.6 million each year. The venues under the lease agreement were included in the sale of our North American theatrical business in 2008. The buyer assumed our obligations under the guaranty, however we remain contingently liable to the lessor. We believe that the likelihood of a material liability being triggered under this lease is remote, and no liability has been accrued for these contingent lease obligations as of December 31, 2017.
Aggregate minimum rentals of $47.7 million to be paid to us in years 2018 through 2032 under non-cancelable subleases are excluded from the commitment amounts in the above table.
Guarantees of Third-Party Obligations
As of December 31, 20172023 and 2016,2022, we guaranteed the debt of third parties of approximately $18.3$19.4 million and $18.0$19.5 million, respectively, primarily related to maximum credit limits on employee and tour-related credit cards, obligations of a nonconsolidated affiliate and obligations under a venue management agreement.
|
| | | | | | | | | | | |
| | Year Ended December 31, |
| | 2017 | | 2016 | | 2015 |
| | (in thousands) |
| Cash provided by (used in): | | | | | |
| Operating activities | $ | 623,006 |
| | $ | 597,490 |
| | $ | 307,854 |
|
| Investing activities | $ | (327,586 | ) | | $ | (426,477 | ) | | $ | (290,985 | ) |
| Financing activities | $ | (127,083 | ) | | $ | 99,212 |
| | $ | (44,121 | ) |
Operating Activities
Year Ended 2017 Compared to Year Ended 2016
Cash provided by operating activities increased $25.5 million for the year ended December 31, 2017 as compared to the prior year. During 2017, our accounts payable and accrued liabilities increased based on timing of payments partially offset by an increase in prepaid event-related expenses and lower increase in deferred revenue as compared to the prior year.
Year Ended 2016 Compared to Year Ended 2015
Cash provided by operating activities increased $289.6 million for the year ended December 31, 2016 as compared to the prior year. During 2016, our accounts payable and accrued liabilities increased based on the timing of payments, we delivered higher cash-related net income and received more cash for future events, increasing deferred revenue, partially offset by a larger increase in accounts receivable as compared to the prior year.
Investing Activities
Year Ended 2017 Compared to Year Ended 2016
Cash used in investing activities decreased $98.9 million for the year ended December 31, 2017 as compared to the prior year primarily due to lower net payments for acquisitions partially offset by higher purchases of property, plant and equipment. See “—Uses of Cash” above for further discussion.
Year Ended 2016 Compared to Year Ended 2015
Cash used in investing activities increased $135.5 million for the year ended December 31, 2016 as compared to the prior year due to higher acquisition activity and higher purchases of property, plant and equipment partially offset by lower advances of notes receivable. See “—Uses of Cash” above for further discussion.
Financing Activities
Year Ended 2017 Compared to Year Ended 2016
Cash used in financing activities increased $226.3 million for the year ended December 31, 2017 as compared to cash provided by financing activities in the prior year primarily due to net proceeds of $267.3 million received in 2016 from the issuance of the 4.875% senior notes and increased term loan A and term loan B borrowings, after repayment of the 7% senior notes and related costs, partially offset by higher proceeds from the exercise of stock options in 2017.
Year Ended 2016 Compared to Year Ended 2015
Cash provided by financing activities increased $143.3 million for the year ended December 31, 2016 as compared to the prior year primarily due to net proceeds of $267.3 million received in 2016 from the issuance of the 4.875% senior notes and increased term loan A and term loan B borrowings, after repayment of the 7% senior notes and related costs. The higher net proceeds from the debt issuance were partially offset by higher purchases of noncontrolling interests and distributions to noncontrolling interest partners along with higher payments for deferred and contingent consideration due to past acquisitions.
Seasonality
Our ConcertsInformation regarding the seasonality of our business can be found in Part II—Financial Information—Item 8.—Financial Statements and Sponsorship & Advertising segments typically experience higher operating income in the secondSupplementary Data—Note 1 – The Company and third quarters as our outdoor venues and festivals are primarily used in or occur from May through October. In addition, the timingSummary of when tickets are sold and the tours of top-grossing acts can impact comparability of quarterly results year over year, although annual results may not be impacted. Our Ticketing segment revenue is impacted by fluctuations in the availability of events for sale to the public, which vary depending upon scheduling by our clients.Significant Accounting Policies.
Cash flows from our Concerts segment typically have a slightly different seasonality as payments are often made for artist performance fees and production costs for tours in advance of the date the related event tickets go on sale. These artist fees and production costs are expensed when the event occurs. Once tickets for an event go on sale, we generally begin to receive payments from ticket sales at our owned or operated venues and festivals in advance of when the event occurs. We record these ticket sales as revenue when the event occurs.
We expect these trends to continue in the future. See Item 1A.—Risk Factors—“Our operations are seasonal and our results of operations vary from quarter to quarter and year over year, so our financial performance in certain financial quarters or years may not be indicative of, or comparable to, our financial performance in subsequent quarters or years.”
Market Risk
We are exposed to market risks arising from changes in market rates and prices, including movements in foreign currency exchange rates and interest rates.
Foreign Currency Risk
We have operations in countries throughout the world. The financial results of our foreign operations are measured in their local currencies. Our foreign subsidiaries also carry certain net assets or liabilities that are denominated in a currency other than that subsidiary’s functional currency. As a result, our financial results could be affected by factors such as changes in foreign currency exchange rates or weak economic conditions in the foreign markets in which we have operations. Currently, we do not operate in any hyper-inflationary countries. Our foreign operations reported operating income of $139.4$586.0 million for the year ended December 31, 2017.2023. 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 year ended December 31, 20172023 by $13.9$58.6 million. As of December 31, 2017,2023, our most significant foreign exchange exposure included the
Euro, British Pound, Australian Dollar, Canadian Dollar and Canadian Dollar.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. In addition, the reported carrying value of our assets and liabilities, including the total cash and cash equivalents held by our foreign operations, will also be affected by changes in foreign currency exchange rates.
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 December 31, 2017,2023, we had forward currency contracts and options outstanding with a notional amount of $72.4$210.4 million.
Interest Rate Risk
Our market risk is also affected by changes in interest rates. We had $2.3$6.6 billion of total debt, excluding unamortized debt discounts and issuance costs, outstanding as of December 31, 2017.2023. Of the total amount, taking into consideration existing interest rate hedges, we had $1.1$5.8 billion of fixed-rate debt and $1.2$0.8 billion of floating-rate debt.
Based on the amount of our floating-rate debt as of December 31, 2017,2023, each 25-basis point increase or decrease in interest rates would increase or decrease our annual interest expense and cash outlay by approximately $2.9 million when the floor rate is not applicable.$2.1 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 December 31, 20172023 with no subsequent change in rates for the remainder of the period.
We have oneIn January 2020, we entered into an interest rate capswap agreement with an aggregatethat is designated as a cash flow hedge for accounting purposes to effectively convert a portion of our floating-rate debt to a fixed-rate basis. The swap agreement expires in October 2026, has a notional amount of $4.9$500 million at December 31, 2017. The interest rate cap agreementand ensures that a portion of our floating-rate debt does not exceed 4.25% and expires in June 2018. This agreement has not been designated as a hedging instrument. Therefore, any change in fair value is recorded in earnings during the period of the change.3.445%.
Recent Accounting Pronouncements
In May 2014, the FASBInformation regarding recently issued a comprehensive new revenue recognition standard that will supersede nearly all existing revenue recognition guidance under GAAP. The new standard provides a five-step analysis of transactions to determine when and how revenue is recognized. The core principle of the guidance is that a company should recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration which the entity expects to be entitled to receive in exchange for those goods or services. The FASB also issued important guidance clarifying certain guidelines of the standard including (1) reframing the indicators in the principal versus agent guidance to focus on evidence that a company is acting as a principal rather than agent and (2) identifying performance obligations and licensing. The standard is effective for annual periods beginning after December 15, 2017 and interim periods within that year. The guidance should be applied retrospectively, either to each prior period presented in the financial statements, or only to the most current reporting period presented in the financial statements with a cumulative-effect adjustment as of the date of adoption.
The table below represents the impact of the adoption on our consolidated and Ticketing segment’s results of operations. The impact to the consolidated results of operations includes the elimination of intercompany transactions between our Concerts and Ticketing segments.
|
| | | | | | | | | | | | |
| | | As Reported | | Adjustment | | As Restated |
| | | (in thousands) |
| Consolidated | | | | | | |
| 2017 | | | | | | |
| Revenue | | $ | 10,337,448 |
| | $ | (650,226 | ) | | $ | 9,687,222 |
|
| Direct operating expenses | | $ | 7,748,791 |
| | $ | (566,893 | ) | | $ | 7,181,898 |
|
| Depreciation and amortization | | $ | 455,534 |
| | $ | (83,333 | ) | | $ | 372,201 |
|
| 2016 | | | | | | |
| Revenue | | $ | 8,354,934 |
| | $ | (528,598 | ) | | $ | 7,826,336 |
|
| Direct operating expenses | | $ | 6,082,708 |
| | $ | (443,531 | ) | | $ | 5,639,177 |
|
| Depreciation and amortization | | $ | 403,651 |
| | $ | (85,067 | ) | | $ | 318,584 |
|
| Ticketing Segment | | | | | | |
| 2017 | | | | | | |
| Revenue | | $ | 2,143,800 |
| | $ | (797,290 | ) | | $ | 1,346,510 |
|
| Direct operating expenses | | $ | 1,170,121 |
| | $ | (709,240 | ) | | $ | 460,881 |
|
| Depreciation and amortization | | $ | 200,777 |
| | $ | (88,050 | ) | | $ | 112,727 |
|
| 2016 | | | | | | |
| Revenue | | $ | 1,827,930 |
| | $ | (661,901 | ) | | $ | 1,166,029 |
|
| Direct operating expenses | | $ | 956,956 |
| | $ | (574,266 | ) | | $ | 382,690 |
|
| Depreciation and amortization | | $ | 185,925 |
| | $ | (87,635 | ) | | $ | 98,290 |
|
A more comprehensive discussion of the revenue recognition guidance and information regarding other recentadopted accounting pronouncements can be found in Item 8.—Financial Statements and Supplementary Data—Note 1—1 – The Company and Summary of Significant Accounting Policies.
Critical Accounting Policies and Estimates
The preparation of our consolidated financial statements in conformity with GAAP requires management to make estimates, judgments and assumptions that affect the reported amounts of assets and liabilities, disclosure of contingent assets and liabilities at the date of the consolidated financial statements and the reported amount of revenue and expenses during the reporting period. On an ongoing basis, we evaluate our estimates that are based on historical experience and on various other assumptions that are believed to be reasonable under the circumstances. The result of these evaluations forms the basis for making judgments about the carrying values of assets and liabilities and the reported amount of revenue and expenses that are not readily apparent from other sources. Because future events and their effects cannot be determined with certainty, actual results could differ from our assumptions and estimates, and such difference could be material. Management believes that the following accounting estimates 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. The following narrative describes these critical accounting estimates, the judgments and assumptions and the effect if actual results differ from these assumptions where applicable.
Consolidation
Consolidationour accounts, including our majority owned and controlled subsidiaries and VIEs for which we are the primary beneficiary. Intercompany accounts among the consolidated businesses have been eliminated in consolidation. Net income (loss) attributable to noncontrolling interests is reflected in the statements of operations.
Typically, we consolidate entities in which we own more than 50% of the voting common stock and control operations and also VIEs for which we are the primary beneficiary. Investments in nonconsolidated affiliates in which we own more than 20% of the voting common stock or otherwise exercise significant influence over operating and financial policies, but not control of the nonconsolidated affiliate, are accounted for using the equity method of accounting. Investments in nonconsolidated affiliates in which we own less than 20% of the voting common stock and do not exercise significant influence over operating and financial policies are accounted for usingat fair value unless the investment does not have a readily determinable fair value in which case the investment is accounted for at cost method of accounting. Intercompany accounts among the consolidated businesses have been eliminated in consolidation. Net income (loss) attributable to noncontrolling interests is reflected in the statements of operations for consolidated affiliates.less any impairment.
Business Combinations
We account for our business combinations under the acquisition method of accounting. Identifiable assets acquired, liabilities assumed and any noncontrolling interest in the acquiree are recognized and measured as of the acquisition date at fair value. Additionally, contingent consideration is recorded at fair value on the acquisition date and classified as a liability. Goodwill is recognized to the extent by which the aggregate of the acquisition-date fair value of the consideration transferred and any noncontrolling interest in the acquiree exceeds the recognized basis of the identifiable assets acquired, net of assumed liabilities. Determining the fair value of assets acquired, liabilities assumed and noncontrolling interest requires management’s judgment and often involves the use of significant estimates and assumptions, including assumptions with respect to future cash flows, discount rates and asset lives among other items.
Property, Plant and Equipment
We test for possible impairment In addition, when we have acquisitions where substantially all of property, plant and equipment whenever events or circumstances change, such as a current period operating cash flow loss combined with a history of, or projected, operating cash flow losses or a significant adverse change in the manner in which the asset is intended to be used, which may indicate that the carrying amount of the asset may not be recoverable. If indicators exist, we compare the estimated undiscounted future cash flows related to the assets to the carrying amount of those assets. If the carrying value is greater than the estimated undiscounted future cash flows, the cost basis of the asset is reduced to reflect the current fair value. We use various assumptions in determining the current fair value of these assets including future expected cash flowsacquired is concentrated in a single asset or group of similar assets, we account for the acquisitions as asset acquisitions.
Intangibles
We classify intangible assets as definite-lived or indefinite-lived. Definite-lived intangibles include revenue-generating contracts, client/vendor relationships, trademarks and discount rates, as well as future salvage valuesnaming rights, technology, non-compete agreements, and other fair value measures. Our impairment loss calculations require us to apply judgment in estimating future cash flows, including forecasting usefulvenue management and leasehold agreements, all of which are amortized either on a straight-line basis over the respective lives of the agreements, typically 3 to 10 years, or on a basis more representative of the time pattern over which the benefit is derived. We periodically review the appropriateness of the amortization periods related to our definite-lived intangible assets. These assets are stated at cost or fair value at the date of acquisition. Indefinite-lived intangibles consist of trade names and selecting the discount rate that reflects the risk inherent in future cash flows.
If actual resultscryptocurrency assets which are not consistentsubject to amortization. Our amortization expense is presented as a separate line item, with our assumptionsdepreciation expense, in the statements of operations. There is no amortization expense included in direct operating expenses, selling, general and judgments used in estimating future cash flows and asset fair values, we may be exposed to future impairment losses that could be material to our results of operations.
Intangiblesadministrative expenses or corporate expenses.
We test for possible impairment of definite-lived intangible assets whenever events or circumstances change, such as a current period operating cash flow loss combined with a history of, or projected,projections of, operating cash flow losses or a significant adverse change in the manner in which the asset is intended to be used, which maycould indicate that the carrying amount of the asset may not be recoverable. When specific assets are determinedIf indicators exist, we compare the estimated undiscounted future cash flows related to be unrecoverable, the cost basisasset to the carrying value of the assetasset. If the carrying value is reduced to reflectgreater than the currentestimated undiscounted future cash flow amount, an impairment charge is recorded based on the difference between the fair value and the carrying value. Any such impairment charge is recorded in depreciation and amortization in the statements of operations. For the years ended December 31, 2023, 2022 and 2021 there were no significant impairment charges.
We test for possible impairment of indefinite-lived intangible assets on at least an annual basis. Basedannually. Depending on facts and circumstances, we perform either a qualitative or a quantitative assessment for impairment. If a qualitative assessment is performed, andfactors may first be assessed to determine whether the existence of events and circumstances indicate that it is more likely than not that an indefinite-lived intangible asset is impaired. If it is concluded that it is more likely than not impaired, we perform thea quantitative impairment test by comparing the fair value with the carrying amount. When specific assets are determined to be impaired, the cost basis of the asset is reduced to reflect the current fair value.
When performing quantitative assessments for impairment, we use various assumptions in determining the current fair value of these definite-lived and indefinite-lived intangible assets, including future expected cash flows, discount rates and royalty rates as well as other fair value measures. For intangibles related to artist rights, we use assumptions about future revenue and operating income for the rights acquired. These projections are based on information about the artists’ past results and expectations about future results. Our The impairment loss calculations require usmanagement to apply judgment in estimating future cash flows, including forecasting useful lives of the assetsexpected future revenue, discount rates and selecting the discount rateroyalty rates that reflectsreflect the risk inherent in future cash flows.
If actual results are not consistent with our assumptions For the years ended December 31, 2023, 2022 and judgments used in estimating future cash flows and asset fair values, we may be exposed to future2021, there were no significant impairment losses that could be material to our results of operations.
charges.
Goodwill
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 first step is a qualitative evaluation as to whether it is more likely than not that the fair value of any of our reporting units is less than its carrying value using an assessment of relevant events and circumstances. Examples of such events and circumstances include 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.
We also considered changes in discount rates, market multiples, carrying values and forecast since the last quantitative test. If any reporting units are concluded to be more likely than not impaired, or if that conclusion cannot be determined qualitatively, a second step is performed for that reporting unit. Regardless, it isunit utilizing a quantitative approach.
For the year ended December 31, 2023, as part of our policy that allannual test for impairment, one of our reporting units, undergowhich accounted for approximately 12% of our goodwill at December 31, 2023, was assessed under the quantitative analysis primarily using a second step at least once every five years. This second step, useddiscounted cash flows methodology, with a lesser weighting attributed to quantitatively screen for potential impairmentthe market multiple approach. The discounted cash flows methodology estimates fair value by discounting the reporting unit’s estimated future cash flows using a weighted-average cost of capital that reflects current market conditions and measure the impairment, if any, comparesrisk profile of the reporting unit. Under the market multiple approach, the estimated fair value of the reporting unit with its carrying amount, including goodwill. If a reporting unit’s carrying value is negative,was estimated by applying market multiples derived from stock
prices of companies that are engaged in the same or similar lines of business as the reporting unit passes the impairment test. In this case, we will disclose the amount of goodwill allocated toand that reporting unitare actively traded on a free and disclose which reportable segment the reporting unit is included in. In both steps, discount rates, marketopen market. The derived multiples and sensitivity tests are derived and/or computed with the assistance of external valuation consultants. We perform sensitivity analyses when the most likely result is unclear in the first and second steps in our process. Generally, we test for sensitivities to discount rate, revenue growth, and market multiples, which are the most significant assumptions.
The second step that we use to evaluate goodwill for impairment and measure the impairment, if any, involves the determination of the fair value of our reporting units. Inherent in such fair value determinations are certain judgments and estimates relating to future cash flows, including our interpretation of current economic indicators and market valuations, and assumptions about our strategic plans with regard to our operations. Due to the uncertainties associated with such estimates, actual results could differ from such estimates.
In developing fair values for our reporting units, we may employ a market multiple or a discounted cash flow methodology, or a combination thereof. The market multiple methodology compares us to similar companies on the basis of risk characteristics to determine our risk profile relative to those companies as a group. This analysis generally focuses on both quantitative considerations, which include financial performance and other quantifiable data, and qualitative considerations, which include any factors which are expected to impact future financial performance. The most significant assumptions affecting the market multiple methodology are the market multiples and control premium. A control premium represents the additional value an investor would pay in order to obtain a controlling interest in the respective reporting unit.
The discounted cash flow methodology establishes fair value by estimating the present value of the projected future cash flows to be generated from the reporting unit less those cash flows attributable to noncontrolling interests. It is important to note that items such as depreciation, amortization and stock-based compensation expense are not part of cash flows which is more akin to our AOI metric. The discount ratethen applied to the projected future cash flowsreporting unit’s financial metrics. The remaining reporting units with goodwill were assessed under the initial qualitative evaluation and did not advance to arrive at the present value is intended to reflect all risksquantitative analysis.
For the years ended December 31, 2022 and 2021, as part of ownership and the associated risks of realizing the stream of projected future cash flows. The discounted cash flow methodology uses our estimates of future financial performance. The most significant assumptions used in the discounted cash flow methodology are the discount rate and expected future revenue, which vary among reporting units.
If actual results are not consistent with our assumptions and judgments used in estimating future cash flows and asset fair values, we may be exposed to futureannual test for impairment, losses that could be material to our results of operations.
In 2017, all of our reporting units with goodwill were assessed under the firstinitial qualitative step. Five of the reporting unitsevaluation and did not advance to the second step. These five reporting units had improved discount rates and considerable excess of fair value over their carrying value inquantitative analysis. No impairment charges were recorded for the most recent quantitative tests, while also having mixed results on market multiples and financial results when compared to recent financial expectations. Further review of these reporting units with sensitivity tests did not change our first step conclusions.
The Artist Management reporting unit advanced to the second step and its excess of fair value over carrying value was approximately 20%. The reporting unit had lower than expected financial results in the current year and decreased market multiples. Discount rates remained consistent with the prior year. Sensitivity tests on the Artist Management reporting unit showed that a 200-basis point change in the discount rate, or a 56% decline in the revenue growth rate was needed to change the conclusion. It was not sensitive to market multiple changes.
Finally, the Artist Services reporting unit also advanced to the second step. However, due to a decrease in future financial performance expectations and risk associated with those projections, the reporting unit did not pass the quantitative test. This reporting unit accounts for approximately 3% of our goodwill atyears ended December 31, 2017. Based upon the results of the 2017 test, we recorded an impairment charge of $20.0 million for the Artist Services (non-management) reporting unit. There were no impairment charges in 2016 or 2015.
Given the results of the tests performed, although we cannot predict future performance or market conditions, we do not currently believe any of our reporting units are at risk of failing the second step in the near future. 2023, 2022 and 2021.
Revenue Recognition
Revenue from the promotion andor production of an event in our Concerts segment is recognized afterwhen the showevent occurs. Revenue related to larger global tours is also recognized after the show occurs; however, any profits related to these tours, primarily related to music tour production and tour management services, is recognized after minimum revenue thresholds, if any, have been achieved. Revenue collected in advance of the event is recorded as deferred revenue until the event occurs. Revenue collected from sponsorships and other revenue,sponsorship agreements, which is not related to anya single event, is classified as deferred revenue and generally recognized over the operating season or the term of the contract.agreement or operating season as the benefits are provided to the sponsor.
Revenue from our ticketing operations primarily consists of convenience and order processingservice fees charged at the time a ticket for an event is sold and is recorded on a net basis (net ofin either the face value of the ticket).primary or secondary markets. For primary tickets sold to our concert and festival events, where our concert promoters control ticketing, the revenue for events at our owned or operated venues in the United States, and where we control the tickets internationally, revenue is recognized after the show occurs. Revenue for theseassociated ticket service charges collected in advance of the event is recorded as deferred revenue until the event occurs and these service charges will beare shared between our Ticketing and Concerts segments. For primary tickets sold for events atof third-party venues, thisclients and secondary market sales, the revenue is recognized at the time of the sale and is recorded by our Ticketing segment.
We account for taxes that are externally imposed on revenue producing transactions on a net basis, as a reduction of revenue.basis.
Litigation Accruals
We are currently involved in certain legal proceedings and, as required, have accrued our estimate of the probable costs for the resolution of these claims. Management’s estimates used have been developed in consultation with counsel and are based upon an analysis of potential results, assuming a combination of litigation and settlement strategies. It is possible, however, that future results of operations for any particular period could be materially affected by changes in our assumptions or the effectiveness of our strategies related to these proceedings.
Income Taxes
We account for income taxes using the liability method which results in accordance with the FASB guidance for income taxes. Under this method, deferred tax assets and liabilities are determined based on differences between financial reporting bases and tax bases of assets and liabilities and are measured using the enacted tax rates expected to apply to taxable income in the periods in which the deferred tax asset or liability is expected to be realized or settled. Deferred tax assets are reduced by valuation allowances if we believe it is more likely than not that some portion of or the entire asset will not be realized. As almost all earnings from our continuing foreign operations are permanently reinvested and not distributed, our income tax provision does not include additional United States state taxes and foreign withholding or transaction taxes on those foreign earnings that would be incurred if they were distributed. It is not practicable to determine the amount of state and foreign income taxes, if any, that might become due in the event that any remaining available cash associated with these earnings were distributed.
The FASB guidance for income taxes prescribes a recognition threshold and a measurement attribute for the financial statement recognition and measurement of tax positions taken or expected to be taken in a tax return. For those benefits to be recognized, a tax position must be more likely than not to be sustained upon examination by taxing authorities. The amount recognized is measured as the largest amount of benefit that is more likely than not to be realized upon ultimate settlement.
The effectWe have established a policy of the international provisions of the TCJA, which generally establishes a territorial-style system for taxing foreign-sourced income of domestic multinational corporations, is uncertain. The TCJA requires companiesincluding interest related to pay a one-time transition tax on earnings of certain foreign-sourced subsidiaries that were previously tax-deferred and creates new taxes on certain foreign-sourced earnings. At December 31, 2017, we have made a reasonable estimate of the effects on our existing deferred tax balances and the one-time transition tax. The one-time transition tax is based on our total post-1986 earnings and profits (“E&P”) that we previously deferred from United States income taxes. We recorded an estimated amount for our one-time transition tax liability for our foreign subsidiaries of approximately $25.8 million, which does not impactloss contingencies in income tax expense for(benefit) in the statements of operations.
The Tax Cuts and Jobs Act (“TCJA”) enacted in December 2017 since wesubjects a United States corporation to tax on its Global Intangible Low-Taxed Income (“GILTI”). We have reflectedestablished a policy of treating the transition tax liabilitytaxes due on future GILTI inclusions in United States taxable income as a reduction to existing fully-valued tax attribute carryforwards. We have not completed our calculation of the total post-1986 E&P for these foreign subsidiaries. Further, the transition tax is based in part on the amount of those earnings held in cash and other specified assets. This amount may changecurrent-period expense when we finalize the calculation of post-1986 foreign E&P previously deferred from United States federal taxation and finalizeincurred.
the amounts held in cash or other specified assets. No additional income taxes have been provided for any remaining undistributed foreign earnings that we consider to be permanently reinvested.
In December 2017, the SEC issued guidance to address the application of GAAP in situations when a registrant does not have the necessary information available, prepared, or analyzed (including computations) in reasonable detail to complete the accounting for certain income tax effects of the TCJA. In accordance with this guidance, we have determined that the impact of the enacted rate change and the inclusion recorded in connection with the transition tax on the mandatory deemed repatriation of foreign earnings was a provisional amount and a reasonable estimate at December 31, 2017. Additional work is necessary for a more detailed analysis of our deferred tax assets and liabilities and our historical foreign earnings as well as potential correlative adjustments. The estimate of the transition tax inclusion does not impact income tax expense for 2017 since we have reflected the transition tax liability as a reduction to existing fully-valued tax attribute carryforwards. Any subsequent adjustment to the amount will be recorded in the quarter of 2018 when the analysis is complete, but is not anticipated to impact tax expense due to the existence of the aforementioned fully-valued tax attribute carryforwards.
Ratio of Earnings to Fixed Charges
The ratio of earnings to fixed charges is as follows:
|
| | | | | | | | |
| Year Ended December 31, |
| 2017 | | 2016 | | 2015 | | 2014 | | 2013 |
| * | | 1.38 | | 1.03 | | * | | * |
| |
* | For the years ended December 31, 2017, 2014 and 2013, fixed charges exceeded earnings before income taxes and fixed charges by $10.5 million, $104.0 million and $6.0 million, respectively. |
The ratio of earnings to fixed charges was computed on a total company basis. Earnings represent income from continuing operations before income taxes less equity in undistributed net income (loss) of nonconsolidated affiliates plus fixed charges. Fixed charges represent interest, amortization of debt discounts, debt issuance costs and premium and the estimated interest portion of rental charges. Rental charges exclude variable rent expense for events in third-party venues.
ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
Required information is within Item 7.— Management’s Discussion and Analysis of Financial Condition and Results of Operations—Market Risk.
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
Report of Independent Registered Public Accounting Firm
TheTo the Stockholders and the Board of Directors and Stockholders of Live Nation Entertainment, Inc.
Opinion on the Financial Statements
We have audited the accompanying consolidated balance sheets of Live Nation Entertainment, Inc. (the Company) as of December 31, 20172023 and 2016,2022, the related consolidated statements of operations, comprehensive loss,income (loss), changes in equity and cash flows for each of the three years in the period ended December 31, 2017,2023, and the related notes and financial statement schedule listed in the index at Item 15(a)2 (collectively referred to as the “consolidated financial statements”). In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company at December 31, 20172023 and 2016,2022, and the results of its operations and its cash flows for each of the three years in the period ended December 31, 2017,2023, in conformity with U.S. generally accepted accounting principles.
We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the Company's internal control over financial reporting as of December 31, 2017,2023, based on criteria established in Internal Control-IntegratedControl—Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (2013 framework), and our report dated February 27, 201822, 2024, expressed an unqualified opinion thereon.
Basis for Opinion
These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on the Company’s financial statements based on our audits. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion. /s/
Critical Audit Matter
The critical audit matter communicated below is a matter arising from the current period audit of the financial statements that was communicated or required to be communicated to the audit committee and that: (1) relates to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective or complex judgments. The communication of the critical audit matter does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on the accounts or disclosures to which it relates.
| | | | | |
| Goodwill impairment assessment |
| Description of the Matter | As discussed in Note 1 to the consolidated financial statements, management conducts a goodwill impairment assessment annually, and when events or changes in circumstances indicate that it is more likely than not that the carrying value of a reporting unit exceeds its fair value. For one reporting unit with goodwill of $325 million, the Company performed a quantitative assessment as part of their annual impairment assessment as of October 1, 2023. No goodwill impairment charges were recorded for the year ended December 31, 2023.
Auditing the Company’s annual goodwill impairment test was complex due to the significant judgment in estimating the fair value of the reporting unit when a quantitative assessment of fair value is performed. In particular, the fair value estimate was sensitive to significant assumptions, such as changes in the weighted average cost of capital and projected margins, which are affected by expectations about future market or economic conditions.
|
| How We Addressed the Matter in Our Audit | We obtained an understanding, evaluated the design and tested the operating effectiveness of controls over the Company’s goodwill impairment review process, including controls over management’s review of the significant assumptions described above.
To test the estimated fair value of the Company’s reporting unit, we performed audit procedures that included, among others, assessing the valuation methodologies used, testing the significant assumptions described above and testing the completeness and accuracy of the underlying data the Company used in its analyses. For example, we compared the projected margin used in the valuation to actual historical, current industry and economic trends and assessed the historical accuracy of management’s estimates. With the assistance of our internal valuation specialists, we also developed an independent range for the weighted average cost of capital and compared it to the weighted average cost of capital determined by management. We performed sensitivity analyses of the significant assumptions to evaluate the changes in the fair value of the reporting unit that would result from changes in the assumptions.
|
/s/ Ernst & Young LLP
We have served as the Company’s auditor since 2005.
Los Angeles, California
February 27, 2018
22, 2024
LIVE NATION ENTERTAINMENT, INC.
CONSOLIDATED BALANCE SHEETS | | | | | | | | | | | |
| December 31, |
| 2023 | | 2022 |
| | (in thousands, except share data) |
| ASSETS | |
| Current assets | | | |
| Cash and cash equivalents | $ | 6,231,866 | | | $ | 5,606,457 | |
| Accounts receivable, less allowance of $82,350 and $63,294, respectively | 2,069,054 | | | 1,465,383 | |
| Prepaid expenses | 1,147,581 | | | 949,826 | |
| Restricted cash | 7,090 | | | 5,917 | |
| Other current assets | 122,163 | | | 131,939 | |
| Total current assets | 9,577,754 | | | 8,159,522 | |
| Property, plant and equipment, net | 2,101,463 | | | 1,487,663 | |
| Operating lease assets | 1,606,389 | | | 1,571,395 | |
| Intangible assets | | | |
| Definite-lived intangible assets, net | 1,161,621 | | | 1,050,622 | |
| Indefinite-lived intangible assets, net | 377,349 | | | 368,712 | |
| Goodwill | 2,691,466 | | | 2,529,380 | |
| Long-term advances | 623,154 | | | 568,558 | |
| Other long-term assets | 934,849 | | | 724,989 | |
| Total assets | $ | 19,074,045 | | | $ | 16,460,841 | |
| LIABILITIES AND EQUITY | | | |
| Current liabilities | | | |
| Accounts payable, client accounts | $ | 1,866,864 | | | $ | 1,791,025 | |
| Accounts payable | 267,493 | | | 180,076 | |
| Accrued expenses | 3,006,281 | | | 2,368,434 | |
| Deferred revenue | 3,398,028 | | | 3,134,800 | |
| Current portion of long-term debt, net | 1,134,386 | | | 620,032 | |
| Current portion of operating lease liabilities | 158,421 | | | 140,232 | |
| Other current liabilities | 128,430 | | | 68,716 | |
| Total current liabilities | 9,959,903 | | | 8,303,315 | |
| Long-term debt, net | 5,459,026 | | | 5,283,467 | |
| Long-term operating lease liabilities | 1,686,091 | | | 1,654,525 | |
| | | |
| Other long-term liabilities | 488,159 | | | 455,971 | |
| Commitments and contingent liabilities | | | |
| Redeemable noncontrolling interests | 893,709 | | | 669,766 | |
| Stockholders' equity | | | |
| Preferred stock—Series A Junior Participating, $0.01 par value; 20,000,000 shares authorized; no shares issued and outstanding | — | | | — | |
| Preferred stock, $0.01 par value; 30,000,000 shares authorized; no shares issued and outstanding | — | | | — | |
| Common stock, $0.01 par value; 450,000,000 shares authorized; 233,711,176 and 231,671,647 shares issued and 233,303,152 and 231,263,623 shares outstanding in 2023 and 2022, respectively | 2,298 | | | 2,285 | |
| Additional paid-in capital | 2,367,918 | | | 2,698,316 | |
| Accumulated deficit | (2,407,949) | | | (2,971,229) | |
| Cost of shares held in treasury | (6,865) | | | (6,865) | |
| Accumulated other comprehensive income (loss) | 27,450 | | | (90,076) | |
| Total Live Nation stockholders' equity | (17,148) | | | (367,569) | |
| Noncontrolling interests | 604,305 | | | 461,366 | |
| Total equity | 587,157 | | | 93,797 | |
| Total liabilities and equity | $ | 19,074,045 | | | $ | 16,460,841 | |
|
| | | | | | | |
| | December 31, |
| | 2017 | | 2016 |
| | (in thousands, except share data) |
| ASSETS |
|
| Current assets | | | |
| Cash and cash equivalents | $ | 1,825,322 |
| | $ | 1,526,591 |
|
| Accounts receivable, less allowance of $32,755 and $29,634 in 2017 and 2016, respectively | 725,304 |
| | 568,936 |
|
| Prepaid expenses | 546,713 |
| | 528,250 |
|
| Other current assets | 55,403 |
| | 49,774 |
|
| Total current assets | 3,152,742 |
| | 2,673,551 |
|
| Property, plant and equipment | | | |
| Land, buildings and improvements | 955,937 |
| | 838,545 |
|
| Computer equipment and capitalized software | 610,924 |
| | 524,571 |
|
| Furniture and other equipment | 312,962 |
| | 256,765 |
|
| Construction in progress | 133,906 |
| | 125,430 |
|
| | 2,013,729 |
| | 1,745,311 |
|
| Less accumulated depreciation | 1,127,793 |
| | 993,775 |
|
| | 885,936 |
| | 751,536 |
|
| Intangible assets | | | |
| Definite-lived intangible assets, net | 729,265 |
| | 812,031 |
|
| Indefinite-lived intangible assets | 369,023 |
| | 368,766 |
|
| Goodwill | 1,754,589 |
| | 1,747,088 |
|
| Other long-term assets | 612,708 |
| | 411,294 |
|
| Total assets | $ | 7,504,263 |
| | $ | 6,764,266 |
|
| LIABILITIES AND EQUITY | | | |
| Current liabilities | | | |
| Accounts payable, client accounts | $ | 948,637 |
| | $ | 726,475 |
|
| Accounts payable | 85,666 |
| | 55,030 |
|
| Accrued expenses | 1,109,246 |
| | 781,494 |
|
| Deferred revenue | 925,220 |
| | 804,973 |
|
| Current portion of long-term debt, net | 347,593 |
| | 53,317 |
|
| Other current liabilities | 160,638 |
| | 39,055 |
|
| Total current liabilities | 3,577,000 |
| | 2,460,344 |
|
| Long-term debt, net | 1,952,366 |
| | 2,259,736 |
|
| Long-term deferred income taxes | 137,635 |
| | 197,811 |
|
| Other long-term liabilities | 174,391 |
| | 149,791 |
|
| Commitments and contingent liabilities |
|
| |
|
|
| Redeemable noncontrolling interests | 244,727 |
| | 347,068 |
|
| Stockholders’ equity | | | |
| Preferred stock—Series A Junior Participating, $.01 par value; 20,000,000 shares authorized; no shares issued and outstanding | — |
| | — |
|
| Preferred stock, $.01 par value; 30,000,000 shares authorized; no shares issued and outstanding | — |
| | — |
|
| Common stock, $.01 par value; 450,000,000 shares authorized; 208,483,993 and 204,475,849 shares issued and 208,075,969 and 204,067,825 shares outstanding in 2017 and 2016, respectively | 2,069 |
| | 2,034 |
|
| Additional paid-in capital | 2,374,006 |
| | 2,381,011 |
|
| Accumulated deficit | (1,079,472 | ) | | (1,073,457 | ) |
| Cost of shares held in treasury (408,024 shares) | (6,865 | ) | | (6,865 | ) |
| Accumulated other comprehensive loss | (108,542 | ) | | (176,707 | ) |
| Total Live Nation stockholders’ equity | 1,181,196 |
| | 1,126,016 |
|
| Noncontrolling interests | 236,948 |
| | 223,500 |
|
| Total equity | 1,418,144 |
| | 1,349,516 |
|
| Total liabilities and equity | $ | 7,504,263 |
| | $ | 6,764,266 |
|
LIVE NATION ENTERTAINMENT, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
|
| | | | | | | | | | | | |
| | | Year Ended December 31, |
| | | 2017 | | 2016 | | 2015 |
| | (in thousands except share and per share data) |
| Revenue | | $ | 10,337,448 |
| | $ | 8,354,934 |
| | $ | 7,245,731 |
|
| Operating expenses: | | | | | | |
| Direct operating expenses | | 7,748,791 |
| | 6,082,708 |
| | 5,196,473 |
|
| Selling, general and administrative expenses | | 1,907,723 |
| | 1,548,450 |
| | 1,411,855 |
|
| Depreciation and amortization | | 455,534 |
| | 403,651 |
| | 397,241 |
|
| Loss (gain) on disposal of operating assets | | (969 | ) | | 124 |
| | 845 |
|
| Corporate expenses | | 134,972 |
| | 125,061 |
| | 107,945 |
|
| Operating income | | 91,397 |
| | 194,940 |
| | 131,372 |
|
| Interest expense | | 106,722 |
| | 106,506 |
| | 102,881 |
|
| Loss on extinguishment of debt | | 1,048 |
| | 14,049 |
| | — |
|
| Interest income | | (5,717 | ) | | (2,573 | ) | | (3,528 | ) |
| Equity in losses (earnings) of nonconsolidated affiliates | | (1,161 | ) | | 17,802 |
| | (1,502 | ) |
| Other expense (income), net | | (115 | ) | | 10,830 |
| | 27,168 |
|
| Income before income taxes | | (9,380 | ) | | 48,326 |
| | 6,353 |
|
| Income tax expense (benefit) | | (17,154 | ) | | 28,029 |
| | 22,122 |
|
| Net income (loss) | | 7,774 |
| | 20,297 |
| | (15,769 | ) |
| Net income attributable to noncontrolling interests | | 13,789 |
| | 17,355 |
| | 16,739 |
|
| Net income (loss) attributable to common stockholders of Live Nation | | $ | (6,015 | ) | | $ | 2,942 |
| | $ | (32,508 | ) |
| | | | | | | |
| Basic and diluted net loss per common share available to common stockholders of Live Nation | | $ | (0.48 | ) | | $ | (0.23 | ) | | $ | (0.33 | ) |
| | | | | | | |
| Weighted average common shares outstanding: | | | | | | |
| Basic and diluted | | 204,923,740 |
| | 202,076,243 |
| | 200,973,485 |
|
| | | | | | | |
| | | | | | | |
| Reconciliation to net loss available to common stockholders of Live Nation: | |
|
| |
|
| | |
| Net income (loss) attributable to common stockholders of Live Nation | | $ | (6,015 | ) | | $ | 2,942 |
| | $ | (32,508 | ) |
| Accretion of redeemable noncontrolling interests | | (91,631 | ) | | (49,952 | ) | | (33,179 | ) |
| Basic and diluted net loss available to common stockholders of Live Nation | | $ | (97,646 | ) | | $ | (47,010 | ) | | $ | (65,687 | ) |
| | | | | | | |
LIVE NATION ENTERTAINMENT, INC.
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)
|
| | | | | | | | | | | | |
| | | Year Ended December 31, |
| | | 2017 | | 2016 | | 2015 |
| | | (in thousands) |
| Net income (loss) | | $ | 7,774 |
| | $ | 20,297 |
| | $ | (15,769 | ) |
| Other comprehensive income (loss), net of tax: | | | | | | |
| Foreign currency translation adjustments | | 67,704 |
| | (64,947 | ) | | (41,895 | ) |
| Other | | 461 |
| | (103 | ) | | 248 |
|
| Comprehensive income (loss) | | 75,939 |
| | (44,753 | ) | | (57,416 | ) |
| Comprehensive income attributable to noncontrolling interests | | 13,789 |
| | 17,355 |
| | 16,739 |
|
| Comprehensive income (loss) attributable to common stockholders of Live Nation | | $ | 62,150 |
| | $ | (62,108 | ) | | $ | (74,155 | ) |
LIVE NATION ENTERTAINMENT, INC.
CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY
|
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | Live Nation Stockholders’ Equity | | | | | | |
| | | Common
Shares
Issued | | Common
Stock | | Additional
Paid-In
Capital | | Accumulated
Deficit | | Cost of
Shares
Held in
Treasury | | Accumulated
Other
Comprehensive
Income
(Loss) | | Noncontrolling Interests | | Total Equity | | Redeemable Noncontrolling Interests |
| | (in thousands, except share data) | | (in thousands) |
| Balances at December 31, 2014 | | 200,431,276 |
| | $ | 2,004 |
| | $ | 2,414,428 |
| | $ | (1,042,603 | ) | | $ | (6,865 | ) | | $ | (70,010 | ) | | $ | 186,893 |
| | $ | 1,483,847 |
| | $ | 168,855 |
|
| Non-cash and stock-based compensation | | — |
| | — |
| | 33,361 |
| | — |
| | — |
| | — |
| | — |
| | 33,361 |
| | — |
|
| Common stock issued under stock plans, net of shares withheld for employee taxes | | 460,418 |
| | 5 |
| | (7,657 | ) | | — |
| | — |
| | — |
| | — |
| | (7,652 | ) | | — |
|
| Exercise of stock options | | 1,138,891 |
| | 11 |
| | 16,269 |
| | — |
| | — |
| | — |
| | — |
| | 16,280 |
| | — |
|
| Acquisitions | | — |
| | — |
| | — |
| | — |
| | — |
| | — |
| | 30,627 |
| | 30,627 |
| | 83,263 |
|
| Purchases of noncontrolling interests | | — |
| | — |
| | (6,555 | ) | | — |
| | — |
| | — |
| | (3,585 | ) | | (10,140 | ) | | — |
|
| Sales of noncontrolling interests | | — |
| | — |
| | 11,899 |
| | — |
| | — |
| | — |
| | 720 |
| | 12,619 |
| | (9,652 | ) |
| Redeemable noncontrolling interests fair value adjustments | | — |
| | — |
| | (33,179 | ) | | — |
| | — |
| | — |
| | — |
| | (33,179 | ) | | 33,179 |
|
| Noncontrolling interests contributions | | — |
| | — |
| | — |
| | — |
| | — |
| | — |
| | 255 |
| | 255 |
| | — |
|
| Cash distributions | | — |
| | — |
| | — |
| | — |
| | — |
| | — |
| | (24,693 | ) | | (24,693 | ) | | (5,953 | ) |
| Other | | — |
| | — |
| | — |
| | — |
| | — |
| | — |
| | (5,182 | ) | | (5,182 | ) | | 2,215 |
|
| Comprehensive income (loss): | | | | | | | | | | | | | | | |
| | |
| Net income (loss) | | — |
| | — |
| | — |
| | (32,508 | ) | | — |
| | — |
| | 24,931 |
| | (7,577 | ) | | (8,192 | ) |
| Foreign currency translation adjustments | | — |
| | — |
| | — |
| | — |
| | — |
| | (41,895 | ) | | — |
| | (41,895 | ) | | — |
|
| Other | | | | | | | | | | | | 248 |
| | | | 248 |
| | |
| Balances at December 31, 2015 | | 202,030,585 |
| | 2,020 |
| | 2,428,566 |
| | (1,075,111 | ) | | (6,865 | ) | | (111,657 | ) | | 209,966 |
| | 1,446,919 |
| | 263,715 |
|
| Non-cash and stock-based compensation | | — |
| | — |
| | 34,011 |
| | (1,288 | ) | | — |
| | — |
| | — |
| | 32,723 |
| | — |
|
| Common stock issued under stock plans, net of shares withheld for employee taxes | | 302,545 |
| | 3 |
| | (4,110 | ) | | — |
| | — |
| | — |
| | — |
| | (4,107 | ) | | — |
|
| Exercise of stock options | | 1,062,936 |
| | 11 |
| | 20,288 |
| | — |
| | — |
| | — |
| | — |
| | 20,299 |
| | — |
|
| Acquisitions | | — |
| | — |
| | — |
| | — |
| | — |
| | — |
| | 40,697 |
| | 40,697 |
| | 72,560 |
|
| Divestitures | | — |
| | — |
| | — |
| | — |
| | — |
| | — |
| | (1,856 | ) | | (1,856 | ) | | — |
|
| Purchases of noncontrolling interests | | — |
| | — |
| | (49,111 | ) | | — |
| | — |
| | — |
| | (14,049 | ) | | (63,160 | ) | | (12,674 | ) |
| Sales of noncontrolling interests | | — |
| | — |
| | 1,424 |
| | — |
| | — |
| | — |
| | 427 |
| | 1,851 |
| | — |
|
| Redeemable noncontrolling interests fair value adjustments | | — |
| | — |
| | (49,952 | ) | | — |
| | — |
| | — |
| | — |
| | (49,952 | ) | | 49,952 |
|
| Cash distributions | | — |
| | — |
| | — |
| | — |
| | — |
| | — |
| | (34,285 | ) | | (34,285 | ) | | (20,846 | ) |
| Other | | — |
| | — |
| | (105 | ) | | — |
| | — |
| | — |
| | (399 | ) | | (504 | ) | | 5 |
|
| Comprehensive income (loss): | | | | | | | | | | | | | | | |
| | |
| Net income (loss) | | — |
| | — |
| | — |
| | 2,942 |
| | — |
| | — |
| | 22,999 |
| | 25,941 |
| | (5,644 | ) |
| Foreign currency translation adjustments | | — |
| | — |
| | — |
| | — |
| | — |
| | (64,947 | ) | | — |
| | (64,947 | ) | | — |
|
| Other | | — |
| | — |
| | — |
| | — |
| | — |
| | (103 | ) | | — |
| | (103 | ) | | — |
|
| Balances at December 31, 2016 | | 203,396,066 |
| | 2,034 |
| | 2,381,011 |
| | (1,073,457 | ) | | (6,865 | ) | | (176,707 | ) | | 223,500 |
| | 1,349,516 |
| | 347,068 |
|
| Non-cash and stock-based compensation | | — |
| | — |
| | 42,755 |
| | — |
| | — |
| | — |
| | — |
| | 42,755 |
| | — |
|
| Common stock issued under stock plans, net of shares withheld for employee taxes | | 342,974 |
| | 4 |
| | (5,456 | ) | | — |
| | — |
| | — |
| | — |
| | (5,452 | ) | | — |
|
| Exercise of stock options | | 3,137,997 |
| | 31 |
| | 51,038 |
| | — |
| | — |
| | — |
| | — |
| | 51,069 |
| | — |
|
| Acquisitions | | — |
| | — |
| | — |
| | — |
| | — |
| | — |
| | 9,159 |
| | 9,159 |
| | 6,640 |
|
| Purchases of noncontrolling interests | | — |
| | — |
| | (3,616 | ) | | — |
| | — |
| | — |
| | (2,836 | ) | | (6,452 | ) | | (165,227 | ) |
| Redeemable noncontrolling interests fair value adjustments | | — |
| | — |
| | (91,631 | ) | | — |
| | — |
| | — |
| | — |
| | (91,631 | ) | | 91,631 |
|
| Contributions received | | — |
| | — |
| | — |
| | — |
| | — |
| | — |
| | 10,671 |
| | 10,671 |
| | 1,875 |
|
| Cash distributions | | — |
| | — |
| | — |
| | — |
| | — |
| | — |
| | (24,715 | ) | | (24,715 | ) | | (28,994 | ) |
| Other | | — |
| | — |
| | (95 | ) | | — |
| | — |
| | — |
| | 212 |
| | 117 |
| | (1,099 | ) |
| Comprehensive income (loss): | | | | | | | | | | | | | | | |
| | |
| Net income (loss) | | — |
| | — |
| | — |
| | (6,015 | ) | | — |
| | — |
| | 20,957 |
| | 14,942 |
| | (7,167 | ) |
| Foreign currency translation adjustments | | — |
| | — |
| | — |
| | — |
| | — |
| | 67,704 |
| | — |
| | 67,704 |
| | — |
|
| Other | | — |
| | — |
| | — |
| | — |
| | — |
| | 461 |
| | — |
| | 461 |
| | — |
|
| Balances at December 31, 2017 | | 206,877,037 |
| | $ | 2,069 |
| | $ | 2,374,006 |
| | $ | (1,079,472 | ) | | $ | (6,865 | ) | | $ | (108,542 | ) | | $ | 236,948 |
| | $ | 1,418,144 |
| | $ | 244,727 |
|
See Notes to Consolidated Financial Statements
49
LIVE NATION ENTERTAINMENT, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS | | | | | | | | | | | | | | | | | | | | |
| | | Year Ended December 31, |
| | | 2023 | | 2022 | | 2021 |
| | (in thousands except share and per share data) |
| Revenue | | $ | 22,749,073 | | | $ | 16,681,254 | | | $ | 6,268,447 | |
| Operating expenses: | | | | | | |
| Direct operating expenses | | 17,292,016 | | | 12,337,524 | | | 4,355,989 | |
| Selling, general and administrative expenses | | 3,557,167 | | | 2,955,884 | | | 1,754,822 | |
| Depreciation and amortization | | 516,797 | | | 449,976 | | | 416,277 | |
| | | | | | |
| Gain on disposal of operating assets | | (13,927) | | | (32,082) | | | (1,211) | |
| Corporate expenses | | 330,817 | | | 237,834 | | | 160,428 | |
| | | | | | |
| Operating income (loss) | | 1,066,203 | | | 732,118 | | | (417,858) | |
| Interest expense | | 350,244 | | | 278,483 | | | 282,440 | |
| Loss on extinguishment of debt | | 18,504 | | | — | | | — | |
| Interest income | | (237,818) | | | (77,620) | | | (6,625) | |
| Equity in losses (earnings) of nonconsolidated affiliates | | 5,455 | | | (10,571) | | | (2,520) | |
| Loss (gain) from sale of investments in nonconsolidated affiliates | | 341 | | | (448) | | | (83,578) | |
| Other expense, net | | 34,933 | | | 36,827 | | | 3,692 | |
| Income (loss) before income taxes | | 894,544 | | | 505,447 | | | (611,267) | |
| Income tax expense (benefit) | | 160,227 | | | 96,254 | | | (2,481) | |
| Net income (loss) | | 734,317 | | | 409,193 | | | (608,786) | |
| Net income attributable to noncontrolling interests | | 171,037 | | | 113,207 | | | 42,118 | |
| Net income (loss) attributable to common stockholders of Live Nation | | $ | 563,280 | | | $ | 295,986 | | | $ | (650,904) | |
| | | | | | |
| Basic net income (loss) per common share available to common stockholders of Live Nation | | $ | 1.38 | | | $ | 0.66 | | | $ | (3.09) | |
| Diluted net income (loss) per common share available to common stockholders of Live Nation | | $ | 1.37 | | | $ | 0.64 | | | $ | (3.09) | |
| | | | | | |
| Weighted average common shares outstanding: | | | | | | |
| Basic | | 228,628,390 | | | 224,809,558 | | | 217,190,862 | |
| Diluted | | 230,977,326 | | | 231,556,866 | | | 217,190,862 | |
| | | | | | |
| | | | | | |
| Reconciliation to net income (loss) available to common stockholders of Live Nation: | | | | | | |
| Net income (loss) attributable to common stockholders of Live Nation | | $ | 563,280 | | | $ | 295,986 | | | $ | (650,904) | |
| Accretion of redeemable noncontrolling interests | | (247,438) | | | (146,770) | | | (19,771) | |
| Net income (loss) available to common stockholders of Live Nation—basic and diluted | | $ | 315,842 | | | $ | 149,216 | | | $ | (670,675) | |
| | | | | | |
| | | | | | |
| | | | | | |
See Notes to Consolidated Financial Statements
50
LIVE NATION ENTERTAINMENT, INC.
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS) | | | | | | | | | | | | | | | | | | | | |
| | | Year Ended December 31, |
| | | 2023 | | 2022 | | 2021 |
| | | (in thousands) |
| Net income (loss) | | $ | 734,317 | | | $ | 409,193 | | | $ | (608,786) | |
| Other comprehensive income (loss), net of tax: | | | | | | |
| Unrealized gain on cash flow hedge | | 5,225 | | | 49,529 | | | 15,204 | |
| Realized loss (gain) on cash flow hedge | | (17,158) | | | 312 | | | 7,825 | |
| | | | | | |
| Foreign currency translation adjustments | | 129,459 | | | 8,047 | | | 6,016 | |
| Comprehensive income (loss) | | 851,843 | | | 467,081 | | | (579,741) | |
| Comprehensive income attributable to noncontrolling interests | | 171,037 | | | 113,207 | | | 42,118 | |
| Comprehensive income (loss) attributable to common stockholders of Live Nation | | $ | 680,806 | | | $ | 353,874 | | | $ | (621,859) | |
See Notes to Consolidated Financial Statements
51
LIVE NATION ENTERTAINMENT, INC.
CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | Live Nation Stockholders’ Equity | | | | | | |
| | Common
Shares
Issued | | Common
Stock | | Additional
Paid-In
Capital | | Accumulated
Deficit | | Cost of
Shares
Held in
Treasury | | Accumulated
Other
Comprehensive
Income
(Loss) | | Noncontrolling
Interests | | Total
Equity | | Redeemable
Noncontrolling
Interests |
| | (in thousands, except share data) | | (in thousands) |
| Balances at December 31, 2020 | | 214,466,988 | | | $ | 2,145 | | | $ | 2,386,790 | | | $ | (2,676,833) | | | $ | (6,865) | | | $ | (177,009) | | | $ | 338,020 | | | $ | (133,752) | | | $ | 272,449 | |
| Cumulative effect of change in accounting principle | | — | | | — | | | — | | | — | | | — | | | — | | | — | | | — | | | — | |
| Non-cash and stock-based compensation | | — | | | — | | | 96,747 | | | — | | | — | | | — | | | — | | | 96,747 | | | — | |
| Common stock issued under stock plans, net of shares withheld for employee taxes | | 921,186 | | | 9 | | | (27,707) | | | — | | | — | | | — | | | — | | | (27,698) | | | — | |
| Exercise of stock options | | 1,337,301 | | | 13 | | | 12,458 | | | — | | | — | | | — | | | — | | | 12,471 | | | — | |
| Sale of common shares | | 5,239,259 | | | 53 | | | 449,577 | | | — | | | — | | | — | | | — | | | 449,630 | | | — | |
| Acquisitions | | — | | | — | | | — | | | — | | | — | | | — | | | 21,120 | | | 21,120 | | | 280,828 | |
| | | | | | | | | | | | | | | | | | |
| Purchases of noncontrolling interests | | — | | | — | | | (110) | | | — | | | — | | | — | | | (2,577) | | | (2,687) | | | (1,698) | |
| Sales of noncontrolling interests | | — | | | — | | | (289) | | | — | | | — | | | — | | | 9,318 | | | 9,029 | | | — | |
| Redeemable noncontrolling interests fair value adjustments | | — | | | — | | | (19,771) | | | — | | | — | | | — | | | — | | | (19,771) | | | 19,771 | |
| Contributions received | | — | | | — | | | — | | | — | | | — | | | — | | | 21,911 | | | 21,911 | | | 95 | |
| Cash distributions | | — | | | — | | | — | | | — | | | — | | | — | | | (41,011) | | | (41,011) | | | (11,357) | |
| Other | | — | | | — | | | — | | | — | | | — | | | — | | | (3,090) | | | (3,090) | | | 221 | |
| Comprehensive income (loss): | | | | | | | | | | | | | | | | | | |
| Net income (loss) | | — | | | — | | | — | | | (650,904) | | | — | | | — | | | 50,506 | | | (600,398) | | | (8,388) | |
| Unrealized gain on cash flow hedge | | | | | | | | — | | | — | | | 15,204 | | | — | | | 15,204 | | | — | |
| Realized loss on cash flow hedge | | | | | | | | — | | | — | | | 7,825 | | | — | | | 7,825 | | | — | |
| Foreign currency translation adjustments | | — | | | — | | | — | | | — | | | — | | | 6,016 | | | — | | | 6,016 | | | — | |
| | | | | | | | | | | | | | | | | | |
| Balances at December 31, 2021 | | 221,964,734 | | | 2,220 | | | 2,897,695 | | | (3,327,737) | | | (6,865) | | | (147,964) | | | 394,197 | | | (188,454) | | | 551,921 | |
| | | | | | | | | | | | | | | | | | |
| Cumulative effect of change in accounting principle | | — | | | — | | | (95,986) | | | 60,522 | | | — | | | — | | | — | | | (35,464) | | | — | |
| Non-cash and stock-based compensation | | — | | | — | | | 223,136 | | | — | | | — | | | — | | | — | | | 223,136 | | | — | |
| Common stock issued under stock plans, net of shares withheld for employee taxes | | 2,598,569 | | | 26 | | | (120,524) | | | — | | | — | | | — | | | — | | | (120,498) | | | — | |
| Exercise of stock options | | 3,934,799 | | | 39 | | | 5,883 | | | — | | | — | | | — | | | — | | | 5,922 | | | — | |
| | | | | | | | | | | | | | | | | | |
| Acquisitions | | — | | | — | | | — | | | — | | | — | | | — | | | 6,846 | | | 6,846 | | | 30,532 | |
| | | | | | | | | | | | | | | | | | |
| Purchases of noncontrolling interests | | — | | | — | | | (64,601) | | | — | | | — | | | — | | | (7,778) | | | (72,379) | | | (5,848) | |
| Sales of noncontrolling interests | | — | | | — | | | — | | | — | | | — | | | — | | | (336) | | | (336) | | | — | |
| Redeemable noncontrolling interests fair value adjustments | | — | | | — | | | (147,323) | | | — | | | — | | | — | | | — | | | (147,323) | | | 147,230 | |
| Contributions received | | — | | | — | | | — | | | — | | | — | | | — | | | 17,400 | | | 17,400 | | | 25 | |
| Cash distributions | | — | | | — | | | — | | | — | | | — | | | — | | | (79,887) | | | (79,887) | | | (20,773) | |
| | | | | | | | | | | | | | | | | | |
| Other | | — | | | — | | | 36 | | | — | | | — | | | — | | | 30,580 | | | 30,616 | | | (46,184) | |
| Comprehensive income (loss): | | | | | | | | | | | | | | | | | | |
| Net income | | — | | | — | | | — | | | 295,986 | | | — | | | — | | | 100,344 | | | 396,330 | | | 12,863 | |
| Unrealized gain on cash flow hedge | | — | | | — | | | — | | | — | | | — | | | 49,529 | | | — | | | 49,529 | | | — | |
| Realized loss on cash flow hedge | | — | | | — | | | — | | | — | | | — | | | 312 | | | — | | | 312 | | | — | |
| Foreign currency translation adjustments | | — | | | — | | | — | | | — | | | — | | | 8,047 | | | — | | | 8,047 | | | — | |
| | | | | | | | | | | | | | | | | | |
| Balances at December 31, 2022 | | 228,498,102 | | | 2,285 | | | 2,698,316 | | | (2,971,229) | | | (6,865) | | | (90,076) | | | 461,366 | | | 93,797 | | | 669,766 | |
| | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | |
| Non-cash and stock-based compensation | | 58 | | | — | | | 110,021 | | | — | | | — | | | — | | | — | | | 110,021 | | | — | |
| Common stock issued under stock plans, net of shares withheld for employee taxes | | 239,765 | | | 2 | | | (9,486) | | | — | | | — | | | — | | | — | | | (9,484) | | | — | |
| Exercise of stock options | | 890,566 | | | 9 | | | 19,255 | | | — | | | — | | | — | | | — | | | 19,264 | | | — | |
| Repurchase of 2.5% convertible senior notes due 2023 | | 156,750 | | | 2 | | | (27,327) | | | — | | | — | | | — | | | — | | | (27,325) | | | — | |
| Capped call transactions for 3.125% convertible senior notes due 2029 | | — | | | — | | | (75,500) | | | — | | | — | | | — | | | — | | | (75,500) | | | — | |
| Acquisitions | | — | | | — | | | — | | | — | | | — | | | — | | | 129,700 | | | 129,700 | | | 47,375 | |
| Purchases of noncontrolling interests | | — | | | — | | | (100,940) | | | — | | | — | | | — | | | (35,549) | | | (136,489) | | | (11,402) | |
| | | | | | | | | | | | | | | | | | |
| Redeemable noncontrolling interests fair value adjustments | | — | | | — | | | (246,421) | | | — | | | — | | | — | | | — | | | (246,421) | | | 246,421 | |
| Contributions received | | — | | | — | | | — | | | — | | | — | | | — | | | 17,517 | | | 17,517 | | | 85 | |
| Cash distributions | | — | | | — | | | | | — | | | — | | | — | | | (163,301) | | | (163,301) | | | (76,318) | |
| Other | | — | | | — | | | — | | | — | | | — | | | — | | | 71,800 | | | 71,800 | | | (30,483) | |
| Comprehensive income (loss): | | | | | | | | | | | | | | | | | | |
| Net income | | — | | | — | | | — | | | 563,280 | | | — | | | — | | | 122,772 | | | 686,052 | | | 48,265 | |
| Unrealized gain on cash flow hedge | | — | | | — | | | — | | | — | | | — | | | 5,225 | | | — | | | 5,225 | | | — | |
| Realized gain on cash flow hedge | | — | | | — | | | — | | | — | | | — | | | (17,158) | | | — | | | (17,158) | | | — | |
| Foreign currency translation adjustments | | — | | | — | | | — | | | — | | | — | | | 129,459 | | | — | | | 129,459 | | | — | |
| Balances at December 31, 2023 | | 229,785,241 | | | $ | 2,298 | | | $ | 2,367,918 | | | $ | (2,407,949) | | | $ | (6,865) | | | $ | 27,450 | | | $ | 604,305 | | | $ | 587,157 | | | $ | 893,709 | |
See Notes to Consolidated Financial Statements
52
LIVE NATION ENTERTAINMENT, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS | | | | | | | | | | | | | | | | | |
| | Year Ended December 31, |
| 2023 | | 2022 | | 2021 |
| | (in thousands) |
| CASH FLOWS FROM OPERATING ACTIVITIES | | | | | |
| Net income (loss) | $ | 734,317 | | | $ | 409,193 | | | $ | (608,786) | |
| Reconciling items: | | | | | |
| Depreciation | 266,590 | | | 225,770 | | | 222,840 | |
| Amortization of definite-lived intangibles and indefinite-lived intangibles impairment loss | 250,207 | | | 224,206 | | | 193,437 | |
| Amortization of non-recoupable ticketing contract advances | 83,693 | | | 79,043 | | | 74,406 | |
| | | | | |
| Deferred income tax expense (benefit) | (44,018) | | | 7,199 | | | (9,639) | |
| Amortization of debt issuance costs and discounts | 16,884 | | | 16,448 | | | 37,260 | |
| Provision for uncollectible accounts and loans receivable | 78,336 | | | 68,612 | | | (17,826) | |
| Loss on extinguishment of debt | 18,504 | | | — | | | — | |
| Stock-based compensation expense | 115,959 | | | 110,049 | | | 209,337 | |
| Unrealized changes in fair value of contingent consideration | 40,151 | | | 56,704 | | | (6,732) | |
| Gain on mark-to-market of equity investments | (47,878) | | | (22,638) | | | (15,447) | |
| Equity in losses earnings of nonconsolidated affiliates, net of distributions | 30,522 | | | 14,912 | | | 11,189 | |
| Loss (gain) on sale of investments in nonconsolidated affiliates | (979) | | | 1,357 | | | (83,578) | |
| Other, net | (11,509) | | | 3,355 | | | 114 | |
| Changes in operating assets and liabilities, net of effects of acquisitions and dispositions: | | | | | |
| Increase in accounts receivable | (550,670) | | | (463,977) | | | (485,211) | |
| Decrease (increase) in prepaid expenses and other assets | (202,834) | | | (267,945) | | | 95,533 | |
| | | | | |
| Increase in accounts payable, accrued expenses and other liabilities | 460,496 | | | 1,002,158 | | | 1,315,722 | |
| Increase in deferred revenue | 133,023 | | | 367,617 | | | 847,949 | |
| Net cash provided by operating activities | 1,370,794 | | | 1,832,063 | | | 1,780,568 | |
| CASH FLOWS FROM INVESTING ACTIVITIES | | | | | |
| Advances of notes receivable | (181,801) | | | (115,992) | | | (28,899) | |
| Collections of notes receivable | 17,057 | | | 20,527 | | | 23,835 | |
| | | | | |
| Investments made in nonconsolidated affiliates | (54,922) | | | (91,186) | | | (110,589) | |
| Purchases of property, plant and equipment | (438,604) | | | (347,206) | | | (152,734) | |
| | | | | |
| Cash paid for acquisitions, net of cash acquired | (17,534) | | | (257,191) | | | (384,251) | |
| Purchases of intangible assets | (36,653) | | | (6,080) | | | (7,100) | |
| Proceeds from sale of investments in nonconsolidated affiliates | 1,524 | | | 3,863 | | | 90,432 | |
| Other, net | 15,128 | | | 8,574 | | | 2,344 | |
| Net cash used in investing activities | (695,805) | | | (784,691) | | | (566,962) | |
| CASH FLOWS FROM FINANCING ACTIVITIES | | | | | |
| Proceeds from long-term debt, net of debt issuance costs | 1,061,026 | | | 122,251 | | | 903,827 | |
| Payments on long-term debt including extinguishment costs | (730,643) | | | (45,792) | | | (109,705) | |
| Contributions from noncontrolling interests | 19,602 | | | 15,021 | | | 22,026 | |
| Distributions to noncontrolling interests | (239,619) | | | (100,660) | | | (52,368) | |
| Purchases and sales of noncontrolling interests, net | (113,768) | | | (48,306) | | | (9,638) | |
| Proceeds from sale of common stock, net of issuance costs | — | | | — | | | 449,630 | |
| Payments for capped call transactions | (75,500) | | | — | | | — | |
| Proceeds from exercise of stock options | 19,264 | | | 35,775 | | | 30,618 | |
| Taxes paid for net share settlement of equity awards | (9,484) | | | (76,925) | | | (45,845) | |
| Payments for deferred and contingent consideration | (17,757) | | | (44,220) | | | (17,319) | |
| Other, net | (402) | | | (484) | | | 106 | |
| Net cash provided by (used in) financing activities | (87,281) | | | (143,340) | | | 1,171,332 | |
| Effect of exchange rate changes on cash, cash equivalents and restricted cash | 38,874 | | | (179,450) | | | (43,585) | |
| Net increase in cash, cash equivalents and restricted cash | 626,582 | | | 724,582 | | | 2,341,353 | |
| Cash, cash equivalents and restricted cash at beginning of period | 5,612,374 | | | 4,887,792 | | | 2,546,439 | |
| Cash, cash equivalents and restricted cash at end of period | $ | 6,238,956 | | | $ | 5,612,374 | | | $ | 4,887,792 | |
| | | | | |
| SUPPLEMENTAL DISCLOSURE | | | | | |
| Cash paid during the year for: | | | | | |
| Interest, net of interest income | $ | 57,367 | | | $ | 180,878 | | | $ | 224,402 | |
| Income taxes, net of refunds | $ | 175,148 | | | $ | 43,859 | | | $ | 15,911 | |
See Notes to Consolidated Financial Statements
53
|
| | | | | | | | | | | |
| | Year Ended December 31, |
| | 2017 | | 2016 | | 2015 |
| | (in thousands) |
| CASH FLOWS FROM OPERATING ACTIVITIES | | | | | |
| Net income (loss) | $ | 7,774 |
| | $ | 20,297 |
| | $ | (15,769 | ) |
| Reconciling items: | | | | | |
| Depreciation | 149,634 |
| | 139,288 |
| | 134,148 |
|
| Amortization | 305,900 |
| | 264,363 |
| | 263,093 |
|
| Deferred income tax benefit | (71,539 | ) | | (7,891 | ) | | (9,611 | ) |
| Amortization of debt issuance costs, discounts and premium, net | 13,174 |
| | 12,594 |
| | 10,885 |
|
| Provision for uncollectible accounts receivable and advances | 20,295 |
| | 21,681 |
| | 19,505 |
|
| Loss on extinguishment of debt | 1,048 |
| | 14,049 |
| | — |
|
| Non-cash compensation expense | 42,755 |
| | 32,723 |
| | 33,361 |
|
| Unrealized changes in fair value of contingent consideration | 18,011 |
| | (5,715 | ) | | 8,010 |
|
| Equity in losses (earnings) of nonconsolidated affiliates, net of distributions | 6,898 |
| | 27,498 |
| | 9,436 |
|
| Other, net | 67 |
| | (3,587 | ) | | (11,525 | ) |
| Changes in operating assets and liabilities, net of effects of acquisitions and dispositions: | | | | | |
| Increase in accounts receivable | (133,020 | ) | | (146,128 | ) | | (67,235 | ) |
| Increase in prepaid expenses and other assets | (239,065 | ) | | (129,748 | ) | | (122,872 | ) |
| Increase in accounts payable, accrued expenses and other liabilities | 474,301 |
| | 193,775 |
| | 3,480 |
|
| Increase in deferred revenue | 26,773 |
| | 164,291 |
| | 52,948 |
|
| Net cash provided by operating activities | 623,006 |
| | 597,490 |
| | 307,854 |
|
| CASH FLOWS FROM INVESTING ACTIVITIES | | | | | |
| Advances of notes receivable | (19,120 | ) | | (17,227 | ) | | (28,288 | ) |
| Investments made in nonconsolidated affiliates | (25,170 | ) | | (28,922 | ) | | (21,998 | ) |
| Purchases of property, plant and equipment | (238,435 | ) | | (173,827 | ) | | (142,491 | ) |
| Cash paid for acquisitions, net of cash acquired | (47,946 | ) | | (211,624 | ) | | (89,780 | ) |
| Purchases of intangible assets | (10,977 | ) | | (6,234 | ) | | (12,267 | ) |
| Other, net | 14,062 |
| | 11,357 |
| | 3,839 |
|
| Net cash used in investing activities | (327,586 | ) | | (426,477 | ) | | (290,985 | ) |
| CASH FLOWS FROM FINANCING ACTIVITIES | | | | | |
| Proceeds from long-term debt, net of debt issuance costs | 60,912 |
| | 844,451 |
| | 57,276 |
|
| Payments on long-term debt including extinguishment costs | (110,855 | ) | | (606,831 | ) | | (63,569 | ) |
| Contributions from noncontrolling interests | 10,671 |
| | 88 |
| | 711 |
|
| Distributions to noncontrolling interests | (46,036 | ) | | (55,131 | ) | | (30,645 | ) |
| Purchases and sales of noncontrolling interests, net | (71,509 | ) | | (69,106 | ) | | (9,752 | ) |
| Proceeds from exercise of stock options | 51,069 |
| | 20,299 |
| | 16,280 |
|
| Payments for deferred and contingent consideration | (15,883 | ) | | (20,539 | ) | | (6,770 | ) |
| Other, net | (5,452 | ) | | (14,019 | ) | | (7,652 | ) |
| Net cash provided by (used in) financing activities | (127,083 | ) | | 99,212 |
| | (44,121 | ) |
| Effect of exchange rate changes on cash and cash equivalents | 130,394 |
| | (46,759 | ) | | (51,652 | ) |
| Net increase (decrease) in cash and cash equivalents | 298,731 |
| | 223,466 |
| | (78,904 | ) |
| Cash and cash equivalents at beginning of period | 1,526,591 |
| | 1,303,125 |
| | 1,382,029 |
|
| Cash and cash equivalents at end of period | $ | 1,825,322 |
| | $ | 1,526,591 |
| | $ | 1,303,125 |
|
| | | | | | |
| SUPPLEMENTAL DISCLOSURE | | | | | |
| Cash paid during the year for: | | | | | |
| Interest, net of interest income | $ | 87,111 |
| | $ | 96,678 |
| | $ | 92,620 |
|
| Income taxes, net of refunds | $ | 44,871 |
| | $ | 30,312 |
| | $ | 44,287 |
|
LIVE NATION ENTERTAINMENT, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 1—THE COMPANY AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
History
Live Nation was incorporated in Delaware on August 2, 2005 in preparation for the contribution and transfer by Clear Channel Communications, Inc. of substantially all of its entertainment assets and liabilities to the Company. The Companyus. We completed this separation on December 21, 2005 and became a publicly traded company on the New York Stock Exchange trading under the symbol “LYV.”
On January 25, 2010, the Companywe merged with Ticketmaster Entertainment LLC and it became a wholly-owned subsidiary of Live Nation. Effective with the merger, Live Nation, Inc. changed its name to Live Nation Entertainment, Inc.
Seasonality
Due toOur Concerts and Sponsorship & Advertising segments typically experience higher revenue and operating income in the seasonal nature of shows atsecond and third quarters as our outdoor amphitheatersvenue concerts and festivals which primarily occur from May through October the Concerts and Sponsorship & Advertising segments experience higher revenue during the second and third quarters. Thein most major markets. Our Ticketing segment’ssegment revenue is impacted by fluctuations in the availability and timing of events for sale to the public, which vary depending upon scheduling by itsour clients. The Company’s
Cash flows from our Concerts segment typically have a slightly different seasonality as payments are often made for artist performance fees and production costs for tours in advance of the date the related event tickets go on sale. These artist fees and production costs are expensed when the event occurs. Once tickets for an event go on sale, we generally begin to receive payments from ticket sales in advance of when the event occurs. In the United States, this cash is largely associated with events in our owned or operated venues, notably amphitheaters, festivals, theaters and clubs. Internationally, this cash is from a combination of both events in our owned or operated venues, as well as events in third-party venues associated with our promoters’ share of tickets in allocation markets. We record these ticket sales as revenue when the event occurs. Our seasonality also results in higher balances in cash and cash equivalents, accounts receivable, prepaid expenses, accrued expenses and deferred revenue at different times in the year.
We expect our seasonality trends to evolve as we continue to expand our global operations.
Basis of Presentation and Principles of Consolidation
The Company’sOur consolidated financial statements include all of our accounts, of the Company, itsincluding our majority owned and controlled subsidiaries and VIEs for which the Company iswe are the primary beneficiary. Intercompany accounts among the consolidated businesses have been eliminated in consolidation. Net income (loss) attributable to noncontrolling interests is reflected in the statements of operations.
Typically, the Company consolidateswe consolidate entities in which the Company ownswe own more than 50% of the voting common stock and controlscontrol operations and also VIEs for which the Company iswe are the primary beneficiary. Investments in nonconsolidated affiliates in which the Company ownswe own more than 20% of the voting common stock or otherwise exercisesexercise significant influence over operating and financial policies but not control of the nonconsolidated affiliate are accounted for using the equity method of accounting. Investments in nonconsolidated affiliates in which the Company ownswe own less than 20% of the voting common stock and doesdo not exercise significant influence over operating and financial policies are accounted for usingat fair value unless the investment does not have a readily determinable fair value in which case the investment is accounted for at cost method of accounting.less any impairment.
All of our cash flow activity reflected on the consolidated statements of cash flows for the Company is presented net of any non-cash transactions so the amounts reflected may be different than amounts shown in other places in the Company’sour consolidated financial statements that are based on accrual accounting and therefore include non-cash amounts. For example, the purchases of property, plant and equipment reflected on the consolidated statements of cash flows reflectsreflect the amount of cash paid during the year for these purchases and does not include the impact of the changes in accrued expenses related to capital expenditures during the year.
Variable Interest Entities
In the normal course of business, the Company enterswe enter into joint ventures or makesmake investments in companies that will allow itus to expand itsour core business and enter new markets. In certain instances, such ventures or investments may be considered a VIE because the equity at risk is insufficient to permit it to carry on its activities without additional financial support from its equity owners. In determining whether the Company iswe are the primary beneficiary of a VIE, it assesseswe assess whether it haswe have the power to direct activities that most significantly impact the economic performance of the entity and hashave the obligation to absorb losses or the right to receive benefits from the entity that could potentially be significant to the VIE. The activities the Company believeswe believe most significantly impact the economic performance of itsour VIEs include the unilateral ability to approve the annual budget, the unilateral ability to terminate key management and the unilateral ability to approve entering into agreements with artists, among others. The Company hasWe have certain rights and obligations related to itsour involvement in the VIEs, including the requirement to provide operational cash flow funding. As of December 31, 20172023 and 2016,2022, excluding intercompany balances and allocated goodwill and intangible assets, there were $192.1approximately $940 million and $186.4$514 million of assets and $98.0$592 million and $98.9$427 million of liabilities, respectively, related to VIEs included in theour balance sheets. None of the Company’sour VIEs are significant on an individual basis.
Nonconsolidated Affiliates
the common stock or otherwise exercise significant influence over an affiliate are accounted for under the equity method. We review the value of equity method investments and record impairment charges in the statements of operations for any decline in value that is determined to be other-than-temporary. If we obtain control of a nonconsolidated affiliate through the purchase of additional ownership interest or changes in the governing agreements, we remeasure our investment to fair value first and then apply the accounting guidance for business combinations. Any gain or loss resulting from the remeasurement to fair value is recorded as a component of other expense (income), net in the statements of operations.
Cash, and Cash Equivalents and Restricted Cash
Cash and cash equivalents include all highly liquid investments with an original maturity of three months or less. The Company’sOur cash and cash equivalents consist primarily ofinclude domestic and foreign bank accounts as well as interest-bearing accounts consisting primarily of bank deposits and money market accounts managed by third-party financial institutions. These balances are stated at cost, which approximates fair value.
Restricted cash primarily consists of cash held in escrow accounts to fund capital improvements of certain leased or operated venues. The cash is held in these accounts pursuant to the related lease or operating agreement.
Included in the December 31, 20172023 and 20162022 cash and cash equivalents balance is $769.4 million$1.5 billion and $591.0 million,$1.5 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 (“client cash”), which amounts are to be remitted to thethese clients. The CompanyWe generally doesdo not utilize client cash for itsour own financing or investing activities as the amounts are payable to our clients on a regular basis. These amounts due to our clients are included in accounts payable, client accounts.
Cash held in interest-bearing operating accounts in many cases exceeds the Federal Deposit Insurance Corporation insurance limits. To reduce itsour credit risk, the Company monitorswe monitor the credit standing of the financial institutions that hold the Company’sour cash and cash equivalents; however, these balances could be impacted in the future if the underlying financial institutions fail. To date, the Company haswe have experienced no loss of or lack of access to itsour cash or cash equivalents; however, the Companywe can provide no assurances that access to itsour cash and cash equivalents will not be impacted in the future by adverse conditions in the financial markets.
Allowance for Doubtful Accounts
The Company evaluatesWe evaluate the collectability of itsour accounts receivable based on a combination of factors. Generally, it recordswe record reserves based on the amount of cash we expect to receive when an account receivable balance is established. Our reserve estimate is primarily based on our historical accounts receivable write-offs. We adjust the historical reserve estimate applied to current accounts receivable when events or circumstances change, such as changes in current economic conditions or there is a significant deterioration in our accounts receivable aging, indicating that the reserve estimate may be insufficient to cover the expected loss. We generally apply a portfolio approach to all of our accounts receivable based on reporting unit unless there are facts and circumstances that indicate a specific reserves to reduce the amounts recorded to what it believes will be collected when a customer’s account ages beyond typical collection patterns, or the Company becomes awaregroup of a customer’s inability to meet its financial obligations.customers is at greater risk of nonpayment.
The Company believesWe believe that the credit risk with respect to trade receivables is limited due to the large number and the geographic diversification of itsour customers.
Prepaid Expenses
The majority of the Company’sour prepaid expenses relate to event expenses including show advances and deposits and other costs directly related to future concert events. For advances that are expected to be recouped over a period of more than 12twelve months, the long-term portion of the advance is classified as other long-term assets.advances. These prepaid costs are charged to operations upon completion of the related events.
Ticketing contract advances, which can be either recoupable or non-recoupable, represent amounts paid in advance to the Company’sour clients pursuant to ticketing agreements and are reflected in prepaid expenses or in other long-term assetsadvances if the amount is expected to be recouped or recognized over a period of more than 12twelve months. Recoupable ticketing contract advances are generally recoupable against future royalties earned by theour clients, based on the contract terms, over the life of the contract. Non-recoupable ticketing contract advances, excluding those amounts paid to support clients’ advertising costs, are fixed additional incentives occasionally paid by the Companyus to secure the contract with certain clients and are normallytypically amortized over the life of the contract on a straight-line basis. Amortization of these non-recoupable
Artist advances and ticketing contract advances are reviewed for recoverability whenever circumstances change, such as extended delays in an artist’s touring cycle, a decline in an artist’s tour earnings, lack of events on sale for a ticketing client or a decline in a client’s ticket sales, indicating that the advance may not be recoupable over the term of the agreement. We review various factors, including past recoupment amounts, timing of an artist’s last tour, expectations of future tours, ticketing clients’ historical ticket sales and expectations of clients’ future ticket sales, to determine if we believe the advance will recoup as expected. If an advance is includednot expected to be fully recoupable, a reserve is established to reduce the advance to the amount we expect to recoup. The reserves are recorded as a component of direct operating expenses in depreciation and amortization in theour consolidated statements of operations. For the years ended December 31, 2017, 2016 and 2015, the Company amortized $83.3 million, $85.1 million and $86.6 million, respectively, related to non-recoupable ticketing contract advances.
Business Combinations
During 2017, 20162023, 2022 and 2015, the Company2021, we completed several acquisitions that were accounted for as business combinations under the acquisition method of accounting. When we make these acquisitions, we often acquire a controlling interest without buying 100% of the business. These acquisitions and the related results of operations were not significant on either on an individual basis or in the aggregate.aggregate for the years ended December 31, 2023 and 2022. Further information regarding our acquisitions for the year ended December 31, 2021 can be found in Note 2 – Acquisitions.
The Company accountsWe account for itsour business combinations under the acquisition method of accounting. Identifiable assets acquired, liabilities assumed and any noncontrolling interest in the acquiree are recognized and measured as of the acquisition date at fair value. Additionally, any contingent consideration is recorded at fair value on the acquisition date and classified as a liability. Goodwill is recognized to the extent by which the aggregate of the acquisition-date fair value of the consideration transferred and any noncontrolling interest in the acquiree exceeds the recognized basis of the identifiable assets acquired, net of assumed liabilities. Determining the fair value of assets acquired, liabilities assumed and noncontrolling interests requires management’s judgment and often involves the use of significant estimates and assumptions, including assumptions with respect to future cash flows, discount rates and asset lives among other items.
the fair value of assets acquired is concentrated in a single asset or group of similar assets, we account for the acquisitions as asset acquisitions.
Property, Plant and Equipment
Property, plant and equipment are stated at cost or fair value at the date of acquisition. Depreciation which is recorded for both owned assets and assets under capital leases, is computed using the straight-line method over their estimated useful lives, which are typically as follows:
Buildings and improvements - 10 to 50 years
Computer equipment and capitalized software - 3 to 10 years
Furniture and other equipment - 3 to 10 years
Leasehold improvements are depreciated over the shorter of the economic life or associated lease term assuming the Company exercises renewal periods, if appropriate.term. Expenditures for maintenance and repairs are charged to operations as incurred, whereas expenditures for asset renewal and improvements are capitalized. There is no depreciation expense included in direct operating expenses, selling, general and administrative expenses or corporate expenses. Our depreciation expense is presented as a separate line item, with amortization expense, in the statements of operations.
We test for possible impairment of property, plant and equipment whenever events or circumstances change, such as a current period operating cash flow loss combined with a history of, or projected,projections of, operating cash flow losses or a significant adverse change in the manner in which the asset is intended to be used, which maycould indicate that the carrying amount of the asset may not be recoverable. If indicators exist, the Company compareswe compare the estimated undiscounted future cash flows related to the asset to the carrying value of the asset. If the carrying value is greater than the estimated undiscounted future cash flow amount, an impairment charge is recorded based on the difference between the fair value and the carrying value. Any such impairment charge is recorded in depreciation and amortization in the statements of operations. The impairment loss calculations require management to apply judgment in estimating future cash flows and the discount rates that reflect the risk inherent in future cash flows.
Intangible Assets
The Company classifiesWe classify intangible assets as definite-lived or indefinite-lived. Definite-lived intangibles include revenue-generating contracts, client/vendor relationships, trademarks and naming rights, technology, non-compete agreements, and venue management and leasehold agreements, all of which are amortized either on a straight-line basis over the respective lives of the agreements, typically 3 to 1510 years, or on a basis more representative of the time pattern over which the benefit is derived. The CompanyWe periodically reviewsreview the appropriateness of the amortization periods related to itsour definite-lived intangible assets. These assets are stated at cost or fair value at the date of acquisition. Indefinite-lived intangibles consist of trade names. Indefinite-lived intangiblesnames and cryptocurrency assets which are not subject to amortization. Our amortization but are reviewed for impairment at least annually.expense is presented as a separate line item, with depreciation expense, in the statements of operations. There is no amortization expense included in direct operating expenses, selling, general and administrative expenses or corporate expenses.
The Company testsWe test for possible impairment of definite-lived intangible assets whenever events or circumstances change, such as a current period operating cash flow loss combined with a history of, or projected,projections of, operating cash flow losses or a significant adverse change in the manner in which the asset is intended to be used, which maycould indicate that the carrying amount of the asset may not be recoverable. If indicators exist, the Company compareswe compare the estimated undiscounted future cash flows related to the asset to the carrying value of the asset. If the carrying value is greater than the estimated undiscounted future cash flow amount, an impairment charge is recorded based on the difference between the fair value and the carrying value. Any such impairment charge is recorded in depreciation and amortization in the statements of operations. For the years ended December 31, 2023, 2022 and 2021, there were no significant impairment charges.
The Company testsWe test for possible impairment of indefinite-lived intangible assets at least annually. Depending on facts and circumstances, qualitative factors may first be assessed to determine whether the existence of events and circumstances indicate that it is more likely than not that an indefinite-lived intangible asset is impaired. If it is concluded that it is more likely than not impaired, the Company performswe perform a quantitative impairment test by comparing the fair value with the carrying amount. If the qualitative assessment is not performed first, the Company performs only this quantitative test. When specific assets are determined to be impaired, the cost basis of the asset is reduced to reflect the current fair value. Any such impairment charge is recorded in depreciation and amortization in the statements of operations. The impairment loss calculations require management to apply judgment in estimating future cash flows, projected expected future revenue, discount rates and royalty rates that reflect the risk inherent in future cash flows. For the years ended December 31, 2023, 2022 and 2021, there were no significant impairment charges.
Goodwill
The Company reviewsWe review goodwill for impairment annually, as of October 1, using a two-step process. ItWe also teststest 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 the Company changes itswe change our reporting units.
The first step is a qualitative evaluation as to whether it is more likely than not that the fair value of any of the Company’sour reporting units is less than its carrying value using an assessment of relevant events and circumstances. Examples of such events and circumstances include 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.
We also considered changes in discount rates, market multiples, carrying values and forecast since the last quantitative test. If any reporting units are concluded to be more likely than not impaired, or if that conclusion cannot be determined qualitatively, a second step is performed for that reporting unit. Regardless, allunit utilizing a quantitative approach.
For the year ended December 31, 2023, as part of our annual test for impairment, one of our reporting units, undergowhich accounted for approximately 12% of our goodwill at December 31, 2023, was assessed under the quantitative analysis primarily using a second step at least once every five years. This second step, useddiscounted cash flows methodology, with a lesser weighting attributed to quantitatively screen for potential impairmentthe market multiple approach. The discounted cash flows methodology estimates fair value by discounting the reporting unit’s estimated future cash flows using a weighted-average cost of capital that reflects current market conditions and measure the impairment, if any, comparesrisk profile of the reporting unit. Under the market multiple approach, the estimated fair value of the reporting unit with its carrying amount, including goodwill. Ifwas estimated by applying market multiples derived from stock prices of companies that are engaged in the same or similar lines of business as the reporting unit and that are actively traded on a free and open market. The derived multiples are then applied to the reporting unit’s carrying value exceeds its fair value,financial metrics. The remaining reporting units with goodwill were assessed under the excessinitial qualitative evaluation and did not advance to the quantitative analysis.
For the years ended December 31, 2022 and 2021, as part of our annual test for impairment, all of our reporting units with goodwill were assessed under the initial qualitative evaluation and did not advance to the quantitative analysis. No impairment charges were recorded for the years ended December 31, 2023, 2022 and 2021.
Leases
We lease office space, many of our concert venues, festival sites and certain equipment. We record a lease asset and liability on our consolidated balance sheets at the inception of the carrying valuelease or when we take possession of the leased space or equipment, if later, based on the required payments over the fair valueterm of the lease. We do not recognize a lease asset or liability for leases with an initial term of twelve months or less, including multi-year festival site leases where the sum of the non-consecutive periods of rental time is recordedless than twelve months. Rent expense for these short-term leases is generally recognized on a straight-line basis over the lease term.
Some of our lease agreements contain annual rental escalation clauses, as an impairmentwell as provisions for us to goodwill. Ifpay the related utilities and maintenance. We have elected to account for the lease components (i.e., fixed payments including rent and parking) and non-lease components (i.e., common-area maintenance costs) as a reporting unit’s carrying value is negative,single lease component.
Many of our lease agreements contain renewal options that can extend the reporting unit passeslease for additional terms typically ranging from one to ten years. Renewal options at the impairment test. discretion of the lessor are included in the lease term while renewal options at our discretion are generally not included in the lease term unless they are reasonably certain to be exercised.
In this case,addition to fixed rental payments, many of our leases contain contingent rental payments based on a percentage of revenue, tickets sold or other variables, while others include periodic adjustments to rental payments based on the Company will discloseprevailing inflationary index or market rental rates. Contingent rent obligations are not included in the amountinitial measurement of goodwill allocated to that reporting unitthe lease asset or liability and disclose which reportable segmentare recognized as rent expense in the reporting unit is included in. In both steps, discount rates, market multiples, and sensitivity tests are derived and/or computed with the assistance of external valuation consultants.
The second stepperiod that the Company usescontingency is resolved. Our leases do not contain any material residual value guarantees or restrictive covenants.
We measure our lease assets and liabilities using an incremental borrowing rate which varies from lease to evaluate goodwill for impairmentlease depending on geographical location and measure impairment, if any, involves the determinationlength of the fair value of the Company’s reporting units. Inherent in such fair value determinations are certain judgments and estimates relating to future cash flows, including the Company’s interpretation of current economic indicators and market valuations, and assumptions about the Company’s strategic plans with regard to its operations. Due to the uncertainties associated with such estimates, actual results could differ from such estimates.
In developing fair values for its reporting units, the Company employs a market multiple or a discounted cash flow methodology, or a combination thereof. The market multiple methodology compares the Company to similar companies on the basis of risk characteristics to determine its risk profile relative to those companies as a group. This analysis generally focuses on both quantitative considerations, which include financial performance and other quantifiable data, and qualitative considerations, which include any factors which are expected to impact future financial performance. The most significant assumptions affecting the market multiple methodology are the market multiples used and control premium. A control premium represents the additional value an investor would pay in order to obtain a controlling interest in the respective reporting unit.
The discounted cash flow methodology establishes fair value by estimating the present value of the projected future cash flows to be generated from the reporting unit. It is important to note that items such as depreciation, amortization and stock-based compensation expense are not part of cash flows which is more akin to the Company’s AOI metric. The discount rate applied to the projected future cash flows to arrive at the present value is intended to reflect all risks of ownership and the associated risks of realizing the stream of projected future cash flows. The discounted cash flow methodology uses the Company’s estimates of future financial performance. The most significant assumptions used in the discounted cash flow methodology are the discount rate and expected future revenue, which vary among reporting units.
Nonconsolidated Affiliates
In general, nonconsolidated investments in which the Company owns more than 20% of the common stock or otherwise exercises significant influence over an affiliate are accounted for under the equity method. The Company recognizes gains or losses upon the issuance of securities by any of its equity method investees. The Company reviews the value of equity method investments and records impairment charges in the statements of operations for any decline in value that is determined to be other-than-temporary. If the Company obtains control of a nonconsolidated affiliate through the purchase of additional ownership interest or changes in the governing agreements, it remeasures its investment to fair value first and then applies the accounting guidance for business combinations. Any gain or loss resulting from the remeasurement to fair value is recorded as a component of other expense (income), net in the statements of operations.lease.
Accounts Payable, Client Accounts
Accounts payable, client accounts consists of contractual amounts due to our ticketing clients which includes the face value of tickets sold and the clients’ share of service charges.
Income Taxes
The Company accountsWe account for income taxes using the liability method which results in deferred tax assets and liabilities based on differences between financial reporting bases and tax bases of assets and liabilities and are measured using the enacted tax rates expected to apply to taxable income in the periods in which the deferred tax asset or liability is expected to be realized or settled. Deferred tax assets are reduced by valuation allowances if the Company believeswe believe it is more likely than not that some portion of or the entire asset will not be realized. As almost all earnings from the Company’sour continuing foreign operations are permanently reinvested and not distributed, the Company’sour income tax provision does not include additional United States state and foreign withholding or transaction taxes on those foreign earnings that would be incurred if they were distributed. It is not practicable to determine the amount of state and foreign income taxes, if any, that might become due in the event that any remaining available cash associated with these earnings were distributed.
The FASB guidance for income taxes prescribes a recognition threshold and a measurement attribute for the financial statement recognition and measurement of tax positions taken or expected to be taken in a tax return. For those benefits to be recognized, a tax position must be more likely than not to be sustained upon examination by taxing authorities. The amount recognized is measured as the largest amount of benefit that is more likely than not to be realized upon ultimate settlement.
The Company hasWe have established a policy of including interest related to tax loss contingencies in income tax expense (benefit) in the statements of operations.
The Tax Cuts and Jobs Act (“TCJA”) enacted in December 2017 subjects a United States corporation to tax on its Global Intangible Low-Taxed Income (“GILTI”). We have established a policy of treating the taxes due on future GILTI inclusions in United States taxable income as a current-period expense when incurred.
In August 2022, the Inflation Reduction Act (IRA) was enacted in the United States, which includes health care, clean energy, and income tax provisions. The income tax provisions amend the Internal Revenue Code to include amongst other things a corporate alternative minimum tax starting in the 2023 tax year. The Company is still assessing the impact due to lack of United States Treasury regulations; however, the IRA is not expected to have a material impact on the Company's financial statements due to net operating losses and full valuation allowances for the United States, which is our most significant jurisdiction. We will continue to monitor to ensure our financial results and related tax disclosures are in compliance with the IRA tax legislation.
Revenue Recognition
Revenue from the promotion andor production of an event in theour Concerts segment is recognized afterwhen the showevent occurs. Revenue related to larger global tours is also recognized after the show occurs; however, any profits related to these tours, primarily related to music tour production and tour management services, is recognized after minimum revenue guarantee thresholds, if any, have been achieved. RevenueConsideration collected in advance of the event is recorded as deferred revenue until the event occurs. Revenue collected from sponsorships and other revenue,sponsorship agreements, which is not related to anya single event, is classified as deferred revenue and generally recognized over the operating season or the term of the contract.agreement or operating season as the benefits are provided to the sponsor.
Revenue from the Company’sour ticketing operations primarily consists of service fees charged at the time a ticket for an event is sold.sold in either the primary or secondary markets. For primary tickets sold to our concert and festival events, at the Company’s owned or operated venues and festivals in the United States, and where the Company controls the tickets internationally,our concert promoters control ticketing, the revenue for the associated ticket service charges collected in advance of the event is recorded as deferred revenue until the event occurs and these service charges are shared between the Company’sour Ticketing and Concerts segments. For primary tickets sold for events atof third-party venues,clients and secondary market sales, the revenue is recognized at the time of the sale and is recorded by the Company’sour Ticketing segment. Amortization of nonrecoupable ticketing contract advances is recorded as a reduction to revenue.
The Company accountsWe account for taxes that are externally imposed on revenue producing transactions on a net basis.
Gross versus Net Revenue Recognition
The Company reportsWe report revenue on a gross or net basis based on management’s assessment of whether the Company actswe act as a principal or agent in the transaction. To the extent the Company actswe act as the principal, revenue is reported on a gross basis. The determination of whether the Company actswe act as a principal or an agent in a transaction is based on an evaluation of whether we have control of the Company hasgood or service before it is transferred to the substantial risks and rewards of ownership under the terms of an arrangement. Thecustomer. Our Ticketing segment’s revenue, which primarily consists of service fees from its ticketing operations, is recorded net of the face value of the ticket as the Companywe generally actsact as an agent in these transactions.
Business Interruption Insurance Recovery
We record revenue or offset expense for covered business interruptions in the period we determine it is probable we will be compensated for the costs incurred or the applicable contingencies with the insurance company are resolved for lost revenue. This may result in business interruption insurance recoveries being recorded in a period subsequent to the period we experience lost revenue and/or incurred the expenses from a covered event that are being reimbursed. For the years ended December 31, 2023, 2022 and 2021, we recorded business interruption insurance recoveries of $41.5 million, $38.8 million and $97.2 million, respectively. The recoveries were for a variety of claims and primarily recorded as revenue.
Foreign Currency
Results of operations for foreign subsidiaries and foreign equity investees are translated into United States dollars using the average exchange rates during the year. The assets and liabilities of those subsidiaries and investees are translated into United States dollars using the exchange rates at the balance sheet date. The related translation adjustments are recorded in a separate component of stockholders’ equity in AOCI. Foreign currency transaction gains and losses are included in the statements of operations and include the impact of revaluation of certain foreign currency denominated net assets or liabilities held internationally. For the year ended December 31, 2017, the Company2023, 2022 and 2021, we recorded net foreign currency transaction gainslosses of $3.1 million. For the years ended December 31, 2016$74.5 million, $55.8 million and 2015, the Company recorded net foreign currency transaction losses of $8.8 million and $35.3$20.6 million, respectively. The Company does not currently have operations in highly inflationary countries.
Advertising Expense
The Company recordsWe record advertising expense in the year that it is incurred. Throughout the year, general advertising expenses are recognized as they are incurred, but event-related advertising for concerts is recognized once the showevent occurs. If an event is rescheduled into the following year, the advertising costs are expensed in the period the event is rescheduled. However, all advertising costs incurred during the year and not previously recognized are expensed at the end of the year. Advertising expenses of $378.1$706.2 million, $311.9$588.0 million and $275.6$260.8 million for the years ended December 31, 2017, 20162023, 2022 and 2015,2021, respectively, were recorded as a component of direct operating expenses. Advertising expenses of $40.3$47.7 million, $33.2$32.0 million and $28.6$18.1 million for the years ended December 31, 2017, 20162023, 2022 and 2015,2021, respectively, were recorded as a component of
selling, general and administrative expenses.
Direct Operating Expenses
Direct operating expenses include artist fees, show-relatedevent-related marketing and advertising expenses, royalties paid to clients for their share of service charges, rent expense for events in third-party venues, credit card fees, telecommunication and data communication costs associated with the Company’sour call centers, commissions paid on tickets distributed through independent sales outlets away from the box office, and salaries and wages related to seasonal employees at the Company’sour venues along with other costs, including ticket stock and shipping. These costs are primarily variable in nature.
Selling, General and Administrative Expenses
Selling, general and administrative expenses include salaries and other compensation costs related to full-time employees, fixed rent, travel and entertainment, legal expenses and consulting along with other costs.
Depreciation and Amortization
The Company’s depreciation and amortization is presented as a separate line item in the statements of operations. There is no depreciation or amortization included in direct operating expenses, selling, general and administrative expenses or corporate expenses.
Non-cash and Stock-based Compensation
The Company followsWe follow the fair value recognition provisions in the FASB guidance for stock compensation. Stock-based compensation expense recognized includes compensation expense for all share-based payments using the estimated grant date fair value. Stock-based compensation expense is adjusted for forfeitures as they occur.
The fair value for options in Live Nation stock is estimated on the date of grant using the Black-Scholes option-pricing model. The fair value of the options is amortized to expense on a straight-line basis over the options’ vesting period. The Company usesWe use an expected volatility based on an even weighting of itsour own traded options and historical volatility. Beginning in 2017, the Company usesWe use a weighted-average expected life based on historical experience calculated with the assistance of outside consultants. Through December 31, 2016, the Company used the simplified method for estimating the expected life within the valuation model which is the period of time that options granted are expected to be outstanding. The Company used the simplified method as it did not believe its historical experience provided a reasonable basis with which to estimate the expected term due to the impact of a number of divestitures after its inception, the varying vesting terms of awards issued since the Company’s inception and the impact from the type and amount of awards converted pursuant to the Company’s merger with Ticketmaster Entertainment LLC. The risk-free rate for periods within the expected life of the option is based on the United States Treasury note rate.
The fair value of restricted stock awards and deferred stock awards, which is generally the stock price on the date of grant, is amortized to expense on a straight-line basis over the vesting period except for restricted stock awards and deferred stock awards with minimum performance or market targets as their vesting condition. The performance-based awards are amortized to expense on a graded basis over the vesting period to the extent that it is probable that the performance criteria will be met. Specific for market-based awards, theMarket-based award fair value isvalues are estimated using a Monte Carlo simulation model and isare then amortized to expense on a graded basis over the derived service period, which is estimated as the median weighted average vesting period from the Monte Carlo simulation model.models. However, unlike awards with a service or performance condition, the expense for market-based awards will not be reversed solely because the market condition is not satisfied.
Use of Estimates
The preparation of consolidated financial statements in conformity with GAAP requires management to make estimates, judgments, and assumptions that affect the amounts reported in the consolidated financial statements and accompanying notes including, but not limited to, legal, tax and insurance accruals, acquisition accounting and impairments. The Company bases itsWe base our estimates on historical experience and on various other assumptions that are believed to be reasonable under the circumstances. Actual results could differ from those estimates.
Reclassifications
Certain amounts in prior periods have been reclassified to conform to the current year presentation. Such reclassifications did not have any effect on our financial condition or results of operations as previously reported.
Accounting Pronouncements - Recently Adopted
In March 2016,August 2020, the FASB issued accounting standards update 2020-06 (“ASU 2020-06”) that simplifies the accounting for convertible instruments and its application of the derivatives scope exception for contracts in an entity’s own equity. The new guidance clarifyingreduces the number of accounting models that require separating embedded conversion features from convertible instruments. As a result, only conversion features accounted for under the assessmentsubstantial premium model and those that require bifurcation will be accounted for separately. For contracts in an entity’s own equity, the new guidance eliminates some of whether an embedded contingent put or call option is clearly and closely related to the debt instrument only requires an analysis pursuant to the four-step decision sequence outlinedcurrent requirements for equity classification. The guidance also addresses how convertible instruments are accounted for in the guidance for embedded derivatives. The guidance should be applied to existing debtdiluted earnings per share calculation and requires enhanced disclosures about the terms of convertible instruments using a modified retrospective method as of the beginning of the period of adoption. The Companyand contracts in an entity’s own equity. We adopted this guidance on January 1, 2017,2022, using the modified retrospective method and recorded a cumulative-effect adjustment of $60.5 million as a reduction to accumulated deficit in the consolidated balance sheets. The impact of adoption did not have an impact on its financial position or resultsalso resulted in a reduction of operations.
In October 2016,additional paid-in capital of $96.0 million and increases in current portion of long-term debt, net and long-term debt, net of $14.7 million and $20.8 million, respectively, as a result of reversal of the FASB issued guidance that requires a single decision maker evaluating whether it isseparation of the primary beneficiary of a variable interest entity to consider its indirect interests held by related parties that are under common control on a proportionate basis as opposed to considering those interests in their entirety as required by current guidance.convertible debt between debt and equity. The guidance should be applied retrospectively. The Company adopted this guidance on January 1, 2017, and the adoption did not have an impact on its financial position or results of operations.
In December 2016, the FASB issued guidance making technical corrections and improvements, which includes an update clarifying how to account for arrangements that include a license to use internal-use software acquired from third parties. The guidance for this specific technical correction should be applied prospectively. The Company adopted this guidance on January 1, 2017, and the adoption did not have a material effect on its financial positionour consolidated statements of operations or resultsconsolidated statements of operations.cash flows.
In January 2017,October 2021, the FASB issued guidance that eliminatesaccounting standards update 2021-08, Business Combinations (Topic 805): Accounting for Contract Assets and Contract Liabilities from Contracts with Customers, which requires contract assets and contract liabilities acquired in a business combination to be recognized and measured by the requirement to calculate the implied fair value of goodwill to measure a goodwill impairment charge. Instead, entities will record an impairment charge basedacquirer on the excess of a reporting unit’s carrying amount over its fair value. The guidance should be applied prospectively to goodwill impairment tests performed within the period of adoption. The Companyacquisition date in accordance with Accounting Standards Codification 606, Revenue from Contracts with Customers. We adopted this guidance effective October 1, 2017.
Accounting Pronouncements - Not Yet Adopted
Revenue Recognition
In May 2014, the FASB issued a comprehensive new revenue recognition standard that will supersede nearly all existing revenue recognition guidance under GAAP. The new standard provides a five-step analysis of transactions to determine when and how revenue is recognized. The core principle of the guidance is that a company should recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration which the entity expects to be entitled to receive in exchange for those goods or services. The FASB also issued important guidance clarifying certain guidelines of the standard including (1) reframing the indicators in the principal versus agent guidance to focus on evidence that a company is acting as a principal rather than agent and (2) identifying performance obligations and licensing. The standard is effective for annual periods beginning after December 15, 2017 and interim periods within that year. Early adoption of the standard is only permitted for annual periods beginning after December 15, 2016 and interim periods within that year. The guidance should be applied retrospectively, either to each prior period presented in the financial statements, or only to the most current reporting period presented in the financial statements with a cumulative-effect adjustment as of the date of adoption.
To assess the impact of the standard, the Company dedicated personnel to lead the implementation effort and supplemented them with additional external resources. These personnel reviewed the amended guidance and subsequent clarifications, conducted surveys of divisional finance managers to obtain a detailed understanding of contracts with customers within each division, and reviewed a sample of contracts judgmentally selected based on the size and complexity of all major revenue streams. The Company has completed its review and analysis, including the estimated impact of the new guidance.
Based on the procedures performed to date, the Company believes it has identified all material contract types and costs that will be impacted by the new guidance. The Concerts segment, representing approximately 76% of the Company’s 2017 consolidated revenue, will not require a change in its revenue recognition as the Company believes this revenue should continue to be deferred until the event date under the new standard. For the Ticketing segment, representing approximately 21% of 2017 consolidated revenue, the Company has concluded that it will no longer present certain payments to ticketing clients as an expense and will begin reflecting these payments as a reduction of revenue. Previously, the Company recognized royalties paid to ticketing clients as direct operating expenses and nonrecoupable ticketing contract advances as depreciation and amortization. Under the new guidance, the Company will now recognize royalties and ticketing contract advances paid to ticketing clients as a reduction to revenue. Consolidated revenue for 2017 will be reduced by $650.2 million, or approximately 6%, and the Ticketing segment revenue will be reduced by $797.3 million, or approximately 37%. There will be no impact overall to operating income. The timing of revenue recognition will not change for the Ticketing segment. The remaining revenue streams of the Company will not be impacted by the new guidance.
The Company is compiling the data necessary for the required disclosures along with implementing changes to internal controls and accounting policies and processes that may be required to comply with the new revenue recognition and disclosure requirements. The Company will adopt this standard on January 1, 2018, applying it retrospectively to each prior period presented in the consolidated statements of operations.
The table below represents the impact of the adoption to the Company’s consolidated and Ticketing segment’s results of operations. The impact to the consolidated results of operations includes the elimination of intercompany transactions between the Company’s Concerts and Ticketing segments.
|
| | | | | | | | | | | |
| | As Reported | | Adjustment | | As Restated |
| | (in thousands) |
| Consolidated | | | | | |
| 2017 | | | | | |
| Revenue | $ | 10,337,448 |
| | $ | (650,226 | ) | | $ | 9,687,222 |
|
| Direct operating expenses | $ | 7,748,791 |
| | $ | (566,893 | ) | | $ | 7,181,898 |
|
| Depreciation and amortization | $ | 455,534 |
| | $ | (83,333 | ) | | $ | 372,201 |
|
| 2016 | | | | | |
| Revenue | $ | 8,354,934 |
| | $ | (528,598 | ) | | $ | 7,826,336 |
|
| Direct operating expenses | $ | 6,082,708 |
| | $ | (443,531 | ) | | $ | 5,639,177 |
|
| Depreciation and amortization | $ | 403,651 |
| | $ | (85,067 | ) | | $ | 318,584 |
|
| Ticketing Segment | | | | | |
| 2017 | | | | | |
| Revenue | $ | 2,143,800 |
| | $ | (797,290 | ) | | $ | 1,346,510 |
|
| Direct operating expenses | $ | 1,170,121 |
| | $ | (709,240 | ) | | $ | 460,881 |
|
| Depreciation and amortization | $ | 200,777 |
| | $ | (88,050 | ) | | $ | 112,727 |
|
| 2016 | | | | | |
| Revenue | $ | 1,827,930 |
| | $ | (661,901 | ) | | $ | 1,166,029 |
|
| Direct operating expenses | $ | 956,956 |
| | $ | (574,266 | ) | | $ | 382,690 |
|
| Depreciation and amortization | $ | 185,925 |
| | $ | (87,635 | ) | | $ | 98,290 |
|
Lease Accounting
In February 2016, the FASB issued guidance that requires lessees to recognize most leases on their balance sheet as a lease liability and a right-of-use asset, and to disclose key information about leasing arrangements. The guidance is effective for annual periods beginning after December 15, 2018 and interim periods within that year, and early adoption is permitted. The guidance should be applied on a modified retrospective basis.
To assess the impact of the standard, the Company has dedicated certain of its personnel to lead the implementation effort. These personnel reviewed the amended guidance and subsequent clarifications and attended multiple training sessions in order to understand the potential impact the new standard could have on the Company’s financial position and results of operations. The Company has formed a cross-functional steering committee including members from its major divisions. The Company is in the process of implementing a third-party lease accounting software to record, analyze, and calculate the financial statement and disclosure impacts.
The Company will finalize its conclusions in 2018 and ensure that it can produce the data necessary for the required disclosures along with assessing changes to internal controls and processes that may be required to comply with the new lease accounting and disclosure requirements. The Company will adopt this standard on January 1, 2019 and is currently evaluating the impact that this guidance will have on its financial position and results of operations.
Other Pronouncements
In January 2016, the FASB issued amendments for the recognition, measurement, presentation and disclosure of financial instruments. Among other things, the guidance requires equity investments that do not result in consolidation and are not accounted for under the equity method to be measured at fair value with any change in fair value recognized in net income unless the investments do not have readily determinable fair values. The amendments are effective for annual periods beginning after December 15, 2017 and interim periods within that year. Early adoption is not permitted for most of the amendments. The amendments are to be applied through a cumulative-effect adjustment to the balance sheet as of the beginning of the fiscal year of adoption with the exception of equity investments without readily determinable fair values, which will be applied prospectively. The Company will adopt this guidance on January 1, 2018,2023. The adoption did not and doesis not expect the adoptionexpected to have a material impact on itsour consolidated financial position and resultsstatements.
NOTE 2—ACQUISITIONS
During 2023, we completed various acquisitions for total cash paid, net of operations.cash acquired, of $17.5 million. All acquisitions were not material on an individual basis or in aggregate for the year ended December 31, 2023.
In October 2016, the FASB issued guidance that requires companies to recognize the income tax effectsDuring 2022, we completed various acquisitions for total consideration, net of intercompany sales and transferscash acquired, of assets, other than inventory, in the period in which the transfer occurs. That is a change from current
guidance which requires companies to defer the income tax effects of intercompany transfers of assets until the asset has been sold to an outside party or otherwise recognized. The guidance is effective for annual periods beginning after December 15, 2017 and interim periods within that year, and early adoption is permitted. The guidance should be applied on a modified retrospective basis. The Company will adopt this guidance on January 1, 2018, and the adoption will not impact its financial position or results of operations.
In January 2017, the FASB issued guidance that changes the definition of a business to assist entities with evaluating when a set of transferred assets and activities is a business. The guidance requires an entity to evaluate if substantially all of$315.0 million. For certain acquisitions totaling $249.9 million, the fair value of the gross assets acquired is concentratedrepresented substantially all the consideration transferred, and as such we accounted for the acquisitions as asset acquisitions. All acquisitions were not material on an individual basis or in a single identifiable asset or a groupaggregate for the year ended December 31, 2022.
During 2021, we completed the acquisition of similar identifiable assets; if so, the set of transferred assets and activities is not a business and should bean aggregate 51% interest in OCESA. This acquisition was accounted for as an asset acquisition rather than a business combination. combination under the acquisition method of accounting. With the exception of OCESA, all other acquisitions were not material on an individual basis or in the aggregate for the years ended December 31, 2021.
OCESA Acquisition
Description of Transaction
On December 6, 2021, we completed our acquisition of an aggregate 51% of the capital stock of OCESA (the “Acquisition”) for $431.9 million, subject to certain adjustments. OCESA is one of the most prominent live event businesses globally with a robust business portfolio in ticketing, sponsorship, concession, merchandise, and venue operations across Mexico and Latin America. We completed our purchase price accounting during the three-month period ending December 31, 2022.
Recording of Assets Acquired and Liabilities Assumed
The guidance also requiresfollowing table summarizes the final acquisition-date fair value of the identifiable assets acquired, liabilities assumed and noncontrolling interests including goodwill:
| | | | | | | | | | | | | | | | | |
| Initial Allocation (1) | | Adjustments (2) | | Final Allocation |
| | | (in thousands) | | |
| Fair value of consideration transferred | $ | 431,943 | | | $ | — | | | $ | 431,943 | |
| Adjustments for working capital | — | | | 2,269 | | | 2,269 | |
| Fair value of redeemable noncontrolling interests | 280,000 | | | — | | | 280,000 | |
| Fair value of noncontrolling interests | 7,000 | | | (3,000) | | | 4,000 | |
| Fair value of pre-existing investment in nonconsolidated affiliates | 50,000 | | | 16,660 | | | 66,660 | |
| | | | | |
| Less: recognized amounts of identifiable assets acquired and liabilities assumed | | | | |
| Cash and cash equivalents | 113,014 | | | (7,896) | | | 105,118 | |
| Accounts receivable | 89,844 | | | (18,497) | | | 71,347 | |
| Prepaid expenses | 33,070 | | | (7,178) | | | 25,892 | |
| Other current assets | 658 | | | 7,168 | | | 7,826 | |
| Property, plant and equipment | 25,318 | | | (97) | | | 25,221 | |
| Operating lease assets | 67,142 | | | 51 | | | 67,193 | |
| Intangible assets | 340,000 | | | 134,000 | | | 474,000 | |
| Investments in nonconsolidated affiliates | 30,000 | | | — | | | 30,000 | |
| Other long-term assets | 36,525 | | | — | | | 36,525 | |
| Accounts payable, client accounts | (13,344) | | | 13,019 | | | (325) | |
| Accounts payable | (12,584) | | | 18 | | | (12,566) | |
| Accrued expenses | (69,583) | | | 8,514 | | | (61,069) | |
| Deferred revenue | (144,557) | | | 8,401 | | | (136,156) | |
| Current portion of operating lease liabilities | (9,209) | | | (1) | | | (9,210) | |
| | | | | |
| Long-term operating lease liabilities | (57,984) | | | — | | | (57,984) | |
| Long-term deferred income taxes | (102,279) | | | (40,200) | | | (142,479) | |
| Other long-term liabilities | — | | | (10,334) | | | (10,334) | |
| Goodwill | $ | 442,912 | | | $ | (71,039) | | | $ | 371,873 | |
_____________________
(1) As reported in our 2021 Annual Report on Form 10-K.
(2) The adjustments to the initial allocation were based on more detailed information obtained about the specific assets acquired and liabilities assumed. The fair value adjustments made to the initial allocation did not result in significant changes to the amortization expense recorded for the years ended December 31, 2022 and 2021.
Goodwill represents the future economic benefits arising from other assets acquired that could not be individually identified and separately recognized. The goodwill arising from the Acquisition consists largely of new opportunities expected from combining the operations of Live Nation and OCESA. The anticipated synergies primarily relate to increased effectiveness of promotion, venue and festivals as well as ticketing and sponsorship opportunities. Of the total amount of goodwill recognized in connection with the Acquisition, none will be deductible for tax purposes. Goodwill of $195.5 million and $176.4 million has been allocated to the Ticketing and Sponsorship & Advertising segments, respectively, as a businessresult of the Acquisition.
Below is a summary of the methodologies and significant assumptions used in estimating the fair value of intangible assets and noncontrolling interests.
Intangible assets — the fair value of the acquired intangible assets was evaluated using commonly used valuation techniques. In estimating the fair value of the acquired intangible assets, we utilized the valuation methodology determined to be most appropriate for the individual intangible asset being valued. The acquired definite-lived intangible assets include at least one substantive processthe following:
| | | | | | | | |
| Fair Value | Useful Lives (1) |
| (in thousands) | (years) |
| Client/vendor relationships | $ | 90,000 | | 10 |
| Revenue-generating contracts | 325,000 | | 10 |
| Venue management and leaseholds | 14,000 | | 10 |
| Trademarks and naming rights | 45,000 | | 10 |
| Total acquired intangible assets | $ | 474,000 | | |
_____________________
(1) Determination of the estimated useful lives of the individual categories of intangible assets was based on the nature of the applicable intangible asset and narrows the definitionexpected future cash flows to be derived from the intangible asset. Amortization of outputs. The guidanceintangible assets with definite lives is effective for annual periods beginning after December 15, 2017 and interim periods within that year, and early adoption is permitted. The guidance should be applied prospectively to any transactions occurring withinrecognized over the shorter of the respective lives of the agreement or the period of adoption.time the assets are expected to contribute to future cash flows.
Some of the more significant estimates and assumptions inherent in determining the fair value of the identifiable intangible assets are associated with forecasting cash flows and profitability. The Company will adopt this guidanceprimary assumptions used were generally based upon the present value of anticipated cash flows discounted at rates ranging from 12% to 13%. Estimated years of projected earnings generally follow the range of estimated remaining useful lives for each intangible asset class.
Noncontrolling interests — The fair value of the redeemable noncontrolling interests and noncontrolling interests of $280.0 million and $4.0 million, respectively, were estimated by applying the market approach. The fair value estimates are based on January 1, 2018,fair value of consideration transferred, adjustment of 20% to account for acquisition premium and will apply it prospectivelyadjustments of 10% to acquisitions occurring on20% to account for lack of marketability that market participants would consider when estimating the fair value of the individual noncontrolling interests.
We incurred a cumulative total of $13.6 million of acquisition transaction expenses relating to the Acquisition, of which $0.3 million, $1.0 million and $9.0 million are included in selling, general and administrative expenses within our consolidated statements of operations for the years ended December 31, 2023, 2022 and 2021, respectively.
NOTE 3—LONG-LIVED ASSETS, INTANGIBLES, AND GOODWILL
Property, Plant and Equipment, Net
Property, plant and equipment includes expenditures for the construction of new venues, major renovations to existing buildings or after January 1, 2018.buildings that are being added to our venue network, the development of new ticketing tools and technology enhancements along with the renewal and improvement of existing venues and technology systems, web development and administrative offices.
Property, plant and equipment consisted of the following:
| | | | | | | | | | | |
| December 31, |
| 2023 | | 2022 |
| (in thousands) |
| Land, buildings and improvements | $ | 2,043,595 | | | $ | 1,648,488 | |
| Computer equipment and capitalized software | 888,065 | | | 910,793 | |
| Furniture and other equipment | 646,966 | | | 535,719 | |
| Construction in progress | 317,028 | | | 244,618 | |
| Property, plant and equipment, gross | 3,895,654 | | | 3,339,618 | |
| Less: accumulated depreciation | 1,794,191 | | | 1,851,955 | |
| Property, plant and equipment, net | $ | 2,101,463 | | | $ | 1,487,663 | |
NOTE 2—LONG-LIVED ASSETS
Definite-lived Intangible Assets
The following table presents the changes in the gross carrying amount and accumulated amortization of definite-lived intangible assets for the years ended December 31, 20172023 and 2016:2022: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Client /
vendor
relationships | | Revenue-
generating
contracts | | Venue management & leaseholds | | Trademarks
and
naming
rights | | | | | | | | Technology and Other (1) | | Total |
| | (in thousands) |
| Balance as of December 31, 2021: | | | | | | | | | | | | | | |
| Gross carrying amount | $ | 576,930 | | | $ | 593,258 | | | $ | 232,856 | | | $ | 180,865 | | | | | | | | | $ | 47,749 | | | $ | 1,631,658 | |
| Accumulated amortization | (178,725) | | | (275,909) | | | (46,929) | | | (79,349) | | | | | | | | | (24,408) | | | (605,320) | |
| Net | 398,205 | | | 317,349 | | | 185,927 | | | 101,516 | | | | | | | | | 23,341 | | | 1,026,338 | |
| Gross carrying amount: | | | | | | | | | | | | | | |
| Acquisitions—current year | 46,432 | | | 32,919 | | | 11,562 | | | — | | | | | | | | | — | | | 90,913 | |
| Acquisitions—prior year | (7,435) | | | 255,086 | | | (92,290) | | | 7,007 | | | | | | | | | 318 | | | 162,686 | |
| | | | | | | | | | | | | | | | | |
| Foreign exchange | (12,923) | | | (9,308) | | | (3,491) | | | 685 | | | | | | | | | (2,364) | | | (27,401) | |
Other (2) | (39,794) | | | (47,170) | | | (615) | | | 39 | | | | | | | | | (9,967) | | | (97,507) | |
| Net change | (13,720) | | | 231,527 | | | (84,834) | | | 7,731 | | | | | | | | | (12,013) | | | 128,691 | |
| Accumulated amortization: | | | | | | | | | | | | | | |
| Amortization | (75,369) | | | (93,290) | | | (14,277) | | | (18,382) | | | | | | | | | (15,534) | | | (216,852) | |
| | | | | | | | | | | | | | | | | |
| Foreign exchange | 4,402 | | | 5,561 | | | 1,783 | | | 335 | | | | | | | | | 178 | | | 12,259 | |
Other (2) | 40,174 | | | 47,057 | | | 835 | | | (535) | | | | | | | | | 12,655 | | | 100,186 | |
| Net change | (30,793) | | | (40,672) | | | (11,659) | | | (18,582) | | | | | | | | | (2,701) | | | (104,407) | |
| Balance as of December 31, 2022: | | | | | | | | | | | | | | |
| Gross carrying amount | 563,210 | | | 824,785 | | | 148,022 | | | 188,596 | | | | | | | | | 35,736 | | | 1,760,349 | |
| Accumulated amortization | (209,518) | | | (316,581) | | | (58,588) | | | (97,931) | | | | | | | | | (27,109) | | | (709,727) | |
| Net | 353,692 | | | 508,204 | | | 89,434 | | | 90,665 | | | | | | | | | 8,627 | | | 1,050,622 | |
| Gross carrying amount: | | | | | | | | | | | | | | |
| Acquisitions—current year | 46,767 | | | 136,117 | | | 77,329 | | | — | | | | | | | | | 21,789 | | | 282,002 | |
| Acquisitions—prior year | (6,681) | | | (1,830) | | | (11) | | | — | | | | | | | | | — | | | (8,522) | |
| | | | | | | | | | | | | | | | | |
| Foreign exchange | 17,070 | | | 57,797 | | | 3,960 | | | 8,151 | | | | | | | | | (104) | | | 86,874 | |
Other (2) | (36,930) | | | (91,612) | | | (2,512) | | | (13,254) | | | | | | | | | (37,201) | | | (181,509) | |
| Net change | 20,226 | | | 100,472 | | | 78,766 | | | (5,103) | | | | | | | | | (15,516) | | | 178,845 | |
| Accumulated amortization: | | | | | | | | | | | | | | |
| Amortization | (75,994) | | | (103,756) | | | (22,186) | | | (18,390) | | | | | | | | | (17,303) | | | (237,629) | |
| | | | | | | | | | | | | | | | | |
| Foreign exchange | (3,019) | | | (7,900) | | | (1,132) | | | (1,448) | | | | | | | | | (408) | | | (13,907) | |
Other (2) | 36,882 | | | 91,612 | | | 2,688 | | | 13,733 | | | | | | | | | 38,775 | | | 183,690 | |
| Net change | (42,131) | | | (20,044) | | | (20,630) | | | (6,105) | | | | | | | | | 21,064 | | | (67,846) | |
| Balance as of December 31, 2023: | | | | | | | | | | | | | | |
| Gross carrying amount | 583,436 | | | 925,257 | | | 226,788 | | | 183,493 | | | | | | | | | 20,220 | | | 1,939,194 | |
| Accumulated amortization | (251,649) | | | (336,625) | | | (79,218) | | | (104,036) | | | | | | | | | (6,045) | | | (777,573) | |
| Net | $ | 331,787 | | | $ | 588,632 | | | $ | 147,570 | | | $ | 79,457 | | | | | | | | | $ | 14,175 | | | $ | 1,161,621 | |
|
| | | | | | | | | | | | | | | | | | | | | | | |
| | Revenue- generating contracts | | Client / vendor relationships | | Trademarks
and
naming
rights | | Technology | | Other (1) | | Total |
| | (in thousands) |
| Balance as of December 31, 2015: | | | | | | | | |
| Gross carrying amount | $ | 700,795 |
| | $ | 379,282 |
| | $ | 86,556 |
| | $ | 30,265 |
| | $ | 246,003 |
| | $ | 1,442,901 |
|
| Accumulated amortization | (313,743 | ) | | (169,620 | ) | | (14,578 | ) | | (8,602 | ) | | (158,595 | ) | | (665,138 | ) |
| Net | 387,052 |
| | 209,662 |
| | 71,978 |
| | 21,663 |
| | 87,408 |
| | 777,763 |
|
| Gross carrying amount: | | | | | | | | | | |
| Acquisitions—current year | 136,029 |
| | 42,861 |
| | 5,100 |
| | 24,804 |
| | 11,411 |
| | 220,205 |
|
| Acquisitions—prior year | 11,404 |
| | 782 |
| | 3,618 |
| | — |
| | 2,674 |
| | 18,478 |
|
| Dispositions | — |
| | (2,299 | ) | | — |
| | — |
| | (1,225 | ) | | (3,524 | ) |
| Foreign exchange | (25,360 | ) | | (4,528 | ) | | (930 | ) | | (1,364 | ) | | (8,110 | ) | | (40,292 | ) |
Other (2) | (62,470 | ) | | (14,089 | ) | | (6 | ) | | (627 | ) | | (126,746 | ) | | (203,938 | ) |
| Net change | 59,603 |
| | 22,727 |
| | 7,782 |
| | 22,813 |
| | (121,996 | ) | | (9,071 | ) |
| Accumulated amortization: | | | | | | | | | | |
| Amortization | (76,484 | ) | | (60,815 | ) | | (9,623 | ) | | (6,153 | ) | | (25,055 | ) | | (178,130 | ) |
| Dispositions | — |
| | 599 |
| | — |
| | — |
| | 22 |
| | 621 |
|
| Foreign exchange | 10,555 |
| | 1,962 |
| | 477 |
| | 491 |
| | 2,926 |
| | 16,411 |
|
Other (2) | 62,872 |
| | 14,089 |
| | — |
| | 627 |
| | 126,849 |
| | 204,437 |
|
| Net change | (3,057 | ) | | (44,165 | ) | | (9,146 | ) | | (5,035 | ) | | 104,742 |
| | 43,339 |
|
| Balance as of December 31, 2016: | | | | | | | | |
| Gross carrying amount | 760,398 |
| | 402,009 |
| | 94,338 |
| | 53,078 |
| | 124,007 |
| | 1,433,830 |
|
| Accumulated amortization | (316,800 | ) | | (213,785 | ) | | (23,724 | ) | | (13,637 | ) | | (53,853 | ) | | (621,799 | ) |
| Net | 443,598 |
| | 188,224 |
| | 70,614 |
| | 39,441 |
| | 70,154 |
| | 812,031 |
|
| Gross carrying amount: | | | | | | | | | | |
| Acquisitions—current year | 19,095 |
| | 22,635 |
| | — |
| | 12,707 |
| | 6,620 |
| | 61,057 |
|
| Acquisitions—prior year | (6,724 | ) | | — |
| | 35,464 |
| | 1,120 |
| | — |
| | 29,860 |
|
| Foreign exchange | 23,308 |
| | 10,457 |
| | 1,429 |
| | 2,278 |
| | 4,857 |
| | 42,329 |
|
Other (2) | (6,714 | ) | | (93,652 | ) | | (4,900 | ) | | (5,517 | ) | | (253 | ) | | (111,036 | ) |
| Net change | 28,965 |
| | (60,560 | ) | | 31,993 |
| | 10,588 |
| | 11,224 |
| | 22,210 |
|
| Accumulated amortization: | | | | | | | |
| | |
| Amortization | (94,797 | ) | | (61,550 | ) | | (13,315 | ) | | (13,869 | ) | | (19,035 | ) | | (202,566 | ) |
| Foreign exchange | (9,918 | ) | | (4,460 | ) | | (560 | ) | | (764 | ) | | (2,463 | ) | | (18,165 | ) |
Other (2) | 11,504 |
| | 93,438 |
| | 4,918 |
| | 5,525 |
| | 370 |
| | 115,755 |
|
| Net change | (93,211 | ) | | 27,428 |
| | (8,957 | ) | | (9,108 | ) | | (21,128 | ) | | (104,976 | ) |
| Balance as of December 31, 2017: | | | | | | | | |
| Gross carrying amount | 789,363 |
| | 341,449 |
| | 126,331 |
| | 63,666 |
| | 135,231 |
| | 1,456,040 |
|
| Accumulated amortization | (410,011 | ) | | (186,357 | ) | | (32,681 | ) | | (22,745 | ) | | (74,981 | ) | | (726,775 | ) |
| Net | $ | 379,352 |
| | $ | 155,092 |
| | $ | 93,650 |
| | $ | 40,921 |
| | $ | 60,250 |
| | $ | 729,265 |
|
___________________
(1) (2)Other includes non-compete agreements of $31.6 million and $43.9 million at December 31, 2017 and 2016, respectively, and venue management and leaseholds of $27.2 million and $24.3 million at December 31, 2017 and 2016, respectively.
(2) Otherprimarily includes netdowns of fully amortized or impaired assets.
Included in the current year acquisitions amountamounts above for 20172023 are definite-lived intangible assets primarily associated with the acquisitions of ancertain venue and artist management business located in the United States, various concert promotion businesses located in the United States, a concert and Italy, a festival promotion business located in Switzerland and various ticketing businesses locatedAustralia, a promotion business in the United States and the Czech Republic.
Included in the prior year acquisitions amount aboveSouth America, as well as additions for 2017 are changes primarily associated with the acquisitions of festival promotion businesses located in the United States and Australia.music publishing rights.
Included in the current year acquisitions amountamounts above for 20162022 are definitive-liveddefinite-lived intangible assets primarily associated with the acquisitions of festival anda concert promoterspromotion business located in the United States, Australia, Sweden and the United Kingdom, an artistGermany, a ticketing business located in Thailand as well as a concert promotion business, a sports management business with locations in the United States and Canada, a digital content company located in the United States, and the remaining interest in a ticketing-related technologyvenue management business, that had previously been accounted for as a cost method investment.
Included in the prior year acquisitions amount above for 2016which are changes primarily associated with the acquisition of a festival promoterall located in the United States.
The 2017 and 2016 additions to definite-lived intangible assets from acquisitions have weighted-average lives as follows:
| | | | | | | | | | | |
| Weighted-Average Life (1) |
| 2023 | | 2022 |
| (in years) |
| Revenue-generating contracts | 5 | | 5 |
| Client/vendor relationships | 4 | | 4 |
| | | |
Technology (1) | 3 | | n/a |
| | | |
| Venue management and leaseholds | 11 | | 26 |
| | | |
| All categories | 8 | | 7 |
|
| | | |
| Weighted- Average Life (years) |
| | 2017 | | 2016 |
| | | | |
| Revenue-generating contracts | 7 | | 8 |
| Client/vendor relationships | 6 | | 6 |
| Trademarks and naming rights | — | | 10 |
| Technology | 3 | | 5 |
| Other | 9 | | 5 |
| All categories | 6 | | 8 |
(1) The weighted average life of technology intangibles does not include purchased software licenses that are typically amortized over 1 to 3 years.
Amortization of definite-lived intangible assets for the years ended December 31, 2017, 20162023, 2022 and 20152021 was $202.6$237.6 million, $178.1$216.9 million and $174.0$193.4 million, respectively.
The following table presents the Company’sour estimate of amortization expense for each of the five succeeding fiscal years for definite-lived intangible assets that exist at December 31, 2017:2023:
|
| | | |
| | (in thousands) |
| 2018 | $ | 179,251 |
|
| 2019 | $ | 151,852 |
|
| 2020 | $ | 118,439 |
|
| 2021 | $ | 81,950 |
|
| 2022 | $ | 63,920 |
|
| | | | | |
| | (in thousands) |
| 2024 | $ | 234,313 | |
| 2025 | $ | 203,450 | |
| 2026 | $ | 172,937 | |
| 2027 | $ | 137,951 | |
| 2028 | $ | 122,208 | |
As acquisitions and dispositions occur in the future and the valuations of intangible assets for recent acquisitions are completed, amortization expense may vary.
Indefinite-lived Intangibles
The Company hasWe have indefinite-lived intangible assets which consist of trade names.names and cryptocurrency assets. These indefinite-lived intangible assets had a carrying value of $369.0$377.3 million and $368.8$368.7 million as of December 31, 20172023 and 2016,2022, respectively.
Goodwill
In 2016, the Company’s reportable segments were Concerts, Sponsorship & Advertising, Ticketing and Artist Nation. Beginning in 2017, the Company no longer presents Artist Nation as a reportable segment and now includes the business previously reported in the Artist Nation segment in the Concerts segment. See further discussion of the segment change in Note 12—Segment Data. The Company’s reporting units reviewed for impairment remain unchanged.
The Company currently has 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. The Company reviews goodwill for impairment annually, as of October 1, using a two-step process: a qualitative review and a quantitative analysis. In 2017, as part of the Company’s annual test for impairment of goodwill, five reporting units were assessed under the initial qualitative evaluation and did not require a quantitative analysis. These reporting units account for approximately 80% of the Company’s goodwill at December 31, 2017. Considerations included (a) considerable excess of fair values over carrying values in the most recent quantitative analysis performed, (b) improved discount rates, (c) varying results on market multiples and (d) improving financial results.
Finally, for two reporting units that account for approximately 20% of the Company’s goodwill at December 31, 2017, although discount rates remained consistent with prior year, the qualitative analysis was inconclusive due to declines in recent financial performance against prior expectations and varying results on market multiples. As such, quantitative analysis was performed for these reporting units.
The Company performed the quantitative analysis using a combination of a discounted cash flows methodology, which uses both market-based and internal assumptions, and a market multiple methodology, which uses primarily market-based assumptions.
Based upon the results of the annual test for 2017, the Company recorded an impairment charge of $20.0 million related to its Artist Services (non-management) reporting unit. See Note 5—Fair Value Measurements for discussion of the impairment calculation. There were no impairment charges recorded in 2016 or 2015.
Goodwill
The following table presents the changes in the carrying amount of goodwill in each of the Company’sour reportable segments for the years ended December 31, 20172023 and 2016:2022:
| | Concerts | | | Concerts | | Ticketing | | Sponsorship
& Advertising | | Total |
| | | | | | | | | | | (in thousands) |
| | Concerts | | Sponsorship & Advertising | | Ticketing | | Total |
| | (in thousands) |
| Balance as of December 31, 2015: | | | | | | | |
| Balance as of December 31, 2021: | |
| Goodwill | |
| Goodwill | |
| Goodwill | $ | 943,272 |
| | $ | 332,081 |
| | $ | 733,825 |
| | $ | 2,009,178 |
|
| Accumulated impairment losses | (404,863 | ) | | — |
| | — |
| | (404,863 | ) |
| Net | 538,409 |
| | 332,081 |
| | 733,825 |
| | 1,604,315 |
|
| | | | | | | | |
| Acquisitions—current year | 123,952 |
| | 45,376 |
| | 8,671 |
| | 177,999 |
|
| Acquisitions—current year | |
| Acquisitions—current year | |
| Acquisitions—prior year | (18,457 | ) | | 18,302 |
| | (108 | ) | | (263 | ) |
| Dispositions | (323 | ) | | — |
| | — |
| | (323 | ) |
| | Foreign exchange | |
| Foreign exchange | |
| Foreign exchange | (31,424 | ) | | 67 |
| | (3,283 | ) | | (34,640 | ) |
| | | | | | | | |
| Balance as of December 31, 2016: | | | | | | | |
| Balance as of December 31, 2022: | |
| Balance as of December 31, 2022: | |
| Balance as of December 31, 2022: | |
| Goodwill | |
| Goodwill | |
| Goodwill | 1,017,020 |
| | 395,826 |
| | 739,105 |
| | 2,151,951 |
|
| Accumulated impairment losses | (404,863 | ) | | — |
| | — |
| | (404,863 | ) |
| Net | 612,157 |
| | 395,826 |
| | 739,105 |
| | 1,747,088 |
|
| | | | | | | | |
| Acquisitions—current year | 10,265 |
| | 5,438 |
| | 11,139 |
| | 26,842 |
|
| Acquisitions—current year | |
| Acquisitions—current year | |
| Acquisitions—prior year | (21,614 | ) | | (9,822 | ) | | 882 |
| | (30,554 | ) |
| Impairment | (20,000 | ) | | — |
| | — |
| | (20,000 | ) |
| Dispositions | |
| | Foreign exchange | |
| Foreign exchange | |
| Foreign exchange | 10,242 |
| | 10,311 |
| | 10,660 |
| | 31,213 |
|
| | | | | | | | |
| Balance as of December 31, 2017: | | | | | | |
| Balance as of December 31, 2023: | |
| Balance as of December 31, 2023: | |
| Balance as of December 31, 2023: | |
| Goodwill | |
| Goodwill | |
| Goodwill | 1,015,913 |
| | 401,753 |
| | 761,786 |
| | 2,179,452 |
|
| Accumulated impairment losses | (424,863 | ) | | — |
| | — |
| | (424,863 | ) |
| Net | $ | 591,050 |
| | $ | 401,753 |
| | $ | 761,786 |
| | $ | 1,754,589 |
|
Included in the current year acquisitions amountamounts above for 20172023 is goodwill primarily associated with the acquisitions of various ticketing businesses located in the United States, an artist management business located in the United States, various concert promotion businesses located in Italycertain venue and the United States and a festival promotion business located in Switzerland.
Included in the prior year acquisitions amount above for 2017 are changes primarily associated with the acquisitions of festival promotion businesses located in the United States and Australia.Europe as well as a promotion business in South America.
Included in the current year acquisitions amountamounts above for 20162022 is goodwill primarily associated with the acquisitions of festival and concert promoterspromotion businesses located in the United States, AustraliaGermany and the United Kingdom, an artist management business with locations in the United States and Canada, and a digital content company located in the United States.
Included in the prior year acquisitions amount above for 2016 are changes2022 is goodwill primarily associated with the acquisitionsacquisition of a festival promoter located in the United States and a venue management business in New Zealand.OCESA. See Note 2 – Acquisitions for further discussion.
The Company isWe are in various stages of finalizing itsour acquisition accounting for recent acquisitions, which include the use of external valuation consultants, and the completion of this accounting could result in a change to the associated purchase price allocations, including goodwill and itsthe allocation between segments.
Investments in Nonconsolidated Affiliates
The Company has investments in various affiliates which are not consolidated and are accounted for under the equity method of accounting. The Company records its investments in these entities in the balance sheet as investments in nonconsolidated affiliates reported as part of other long-term assets. The Company’s interests in these operations are recorded in the statements of operations as equity in losses (earnings) of nonconsolidated affiliates. ForDuring the year ended December 31, 2017, the Company’s investment2023 and 2022, there were no significant sales of investments in Venta de Boletos por Computadora S.A. de C.V, a 33% owned ticketing distribution services company is considered significant on an individual basis and certain other investments are considered significant on an aggregate basis. Summarized balance sheet and income statement information for these entities is as follows (at 100%):
|
| | | | | | | | |
| | | December 31, |
| | | 2017 | | 2016 |
| | | (in thousands) |
| Current assets | | $ | 125,883 |
| | $ | 58,099 |
|
| Noncurrent assets | | $ | 117,890 |
| | $ | 14,854 |
|
| Current liabilities | | $ | 133,586 |
| | $ | 39,207 |
|
| Noncurrent liabilities | | $ | 15,531 |
| | $ | — |
|
| Noncontrolling interests | | $ | 476 |
| | $ | 355 |
|
|
| | | | | | | | | | | | |
| | | Year Ended December 31, |
| | | 2017 | | 2016 | | 2015 |
| | | (in thousands) |
| Revenue | | $ | 83,363 |
| | $ | 57,620 |
| | $ | 59,770 |
|
| Operating income | | $ | 23,691 |
| | $ | 24,673 |
| | $ | 27,443 |
|
| Net income | | $ | 18,048 |
| | $ | 18,652 |
| | $ | 20,481 |
|
| Net income attributable to the common stockholders of the equity investees | | $ | 17,927 |
| | $ | 18,670 |
| | $ | 20,400 |
|
The company reviews its nonconsolidated affiliates for impairment whenever events or changes in circumstances indicate that the carrying amount of the asset may not be recoverable. Foraffiliates. During the year ended December 31, 2016, the Company recorded impairment charges related to these2021, we sold certain investments of $16.5 million as equity in losses (earnings) of nonconsolidated affiliates primarily related to investmentsfor $110.2 million in cash and noncash consideration resulting in a digital content company and an online merchandise company that are located in the United States. See Note 5—Fair Value Measurements for further discussion of the inputs used to determine the fair values. There were no significant impairmentsgain on sale of investments in nonconsolidated affiliates during 2017 and 2015.
of $83.6 million.
NOTE 3—4—LEASES
The significant components of operating lease expense are as follows: | | | | | | | | |
| Year Ended December 31, |
| 2023 | 2022 |
| (in thousands) |
| Operating lease cost | $ | 274,731 | | $ | 258,115 | |
| Variable and short-term lease cost | 205,768 | | 164,613 | |
| Sublease income | (7,687) | | (5,678) | |
| Net lease cost | $ | 472,812 | | $ | 417,050 | |
Many of our leases contain contingent rent obligations based on revenue, tickets sold or other variables. Contingent rent obligations, including those related to subsequent changes in the prevailing index or market rate after lease inception, are not included in the initial measurement of the lease asset or liability and are recorded as rent expense in the period that the contingency is resolved.
Supplemental cash flow information for our operating leases is as follows: | | | | | | | | |
| Year Ended December 31, |
| 2023 | 2022 |
| (in thousands) |
| Cash paid for amounts included in the measurement of lease liabilities | $ | 259,664 | | $ | 229,669 | |
| Lease assets obtained in exchange for lease obligations, net of terminations | $ | 181,729 | | $ | 251,576 | |
Future maturities of our operating lease liabilities at December 31, 2023 are as follows:
| | | | | |
| (in thousands) |
| 2024 | $ | 261,361 | |
| 2025 | 253,738 | |
| 2026 | 239,181 | |
| 2027 | 227,297 | |
| 2028 | 206,731 | |
| Thereafter | 1,529,939 | |
| Total lease payments | 2,718,247 | |
| Less: Interest | 873,735 | |
| Present value of lease liabilities | $ | 1,844,512 | |
The weighted average remaining lease term and weighted average discount rate for our operating leases are as follows:
| | | | | | | | |
| Year Ended December 31, |
| 2023 | 2022 |
| Weighted average remaining lease term (in years) | 13.0 | 13.6 |
| Weighted average discount rate | 6.16 | % | 6.00 | % |
As of December 31, 2023, we have additional operating leases that have not yet commenced with total lease payments of $113.3 million. These operating leases, which are not included on our consolidated balance sheets, have commencement dates ranging from January 2024 to June 2030 with lease terms ranging from 2 to 30 years.
NOTE 5—LONG-TERM DEBT
In January 2023, we issued $1.0 billion principal amount of 3.125% convertible senior notes due 2029. In February 2023, we amended our senior secured credit facility and in November 2023, we further amended our senior secured credit facility to a $1.3 billion revolving credit facility in addition to the existing $950 million term loan B facility.
Long-term debt, which includes
capitalfinance leases, consisted of the following:
|
| | | | | | | | | | | |
| | | | | | December 31, |
| | | | | | 2017 | | 2016 |
| | | | | | (in thousands) |
| Senior Secured Credit Facility: | | | | |
| | Term loan A | | $ | 175,750 |
| | $ | 187,625 |
|
| | Term loan B | | 962,849 |
| | 972,563 |
|
| 4.875% Senior Notes due 2024 | | 575,000 |
| | 575,000 |
|
| 5.375% Senior Notes due 2022 | | 250,000 |
| | 250,000 |
|
| 2.5% Convertible Senior Notes due 2019 | | 275,000 |
| | 275,000 |
|
| Other long-term debt | | 99,393 |
| | 104,397 |
|
| Total principal amount | | 2,337,992 |
| | 2,364,585 |
|
| Less unamortized discounts and debt issuance costs | | (38,033 | ) | | (51,532 | ) |
| Total long-term debt, net of unamortized discounts and debt issuance costs | | 2,299,959 |
| | 2,313,053 |
|
| Less: current portion | | 347,593 |
| | 53,317 |
|
| | | | | | | | |
| Total long-term debt, net | | $ | 1,952,366 |
| | $ | 2,259,736 |
|
| | | | | | | | | | | | | | | | | | | | | | | |
| | | | | December 31, |
| | | | | 2023 | | 2022 |
| | | | | (in thousands) |
| Senior Secured Credit Facility: | | | | |
| Term loan A | | $ | — | | | $ | 382,500 | |
| Term loan B | | 836,903 | | | 845,644 | |
| Revolving credit facility | | 370,000 | | | — | |
| 6.5% Senior Secured Notes due 2027 | | 1,200,000 | | | 1,200,000 | |
| 3.75% Senior Secured Notes due 2028 | | 500,000 | | | 500,000 | |
| 4.875% Senior Notes due 2024 | | 575,000 | | | 575,000 | |
| 5.625% Senior Notes due 2026 | | 300,000 | | | 300,000 | |
| 4.75% Senior Notes due 2027 | | 950,000 | | | 950,000 | |
| 2.5% Convertible Senior Notes due 2023 | | — | | | 550,000 | |
| 2.0% Convertible Senior Notes due 2025 | | 400,000 | | | 400,000 | |
| 3.125% Convertible Senior Notes due 2029 | | 1,000,000 | | | — | |
| Other long-term debt | | 511,210 | | | 252,199 | |
| Total principal amount | | 6,643,113 | | | 5,955,343 | |
| Less: unamortized discounts and debt issuance costs | | (49,701) | | | (51,844) | |
| | | | |
| Total long-term debt, net of unamortized discounts and debt issuance costs | | 6,593,412 | | | 5,903,499 | |
| Less: current portion | | 1,134,386 | | | 620,032 | |
| Total long-term debt, net | | $ | 5,459,026 | | | $ | 5,283,467 | |
Future maturities of long-term debt at December 31, 20172023 are as follows: | | | | | |
| (in thousands) |
| 2024 | $ | 1,134,386 | |
| 2025 | 26,291 | |
| 2026 | 1,398,241 | |
| 2027 | 2,153,918 | |
| 2028 | 1,885,701 | |
| Thereafter | 44,576 | |
| Total | $ | 6,643,113 | |
|
| | | |
| | (in thousands) |
| 2018 | $ | 353,738 |
|
| 2019 | 42,240 |
|
| 2020 | 71,621 |
|
| 2021 | 114,546 |
|
| 2022 | 260,013 |
|
| Thereafter | 1,495,834 |
|
| Total | $ | 2,337,992 |
|
All long-term debt without a stated maturity date is considered current and is reflected as maturing in the earliest period shown in the table above. See Note 5—7 – Fair Value Measurements for discussion of the fair value measurement of the Company’sour long-term debt.
Amended Senior Secured Credit Facility
In June 2017,February 2023, we amended our senior secured credit facility. The amendments provide for, among other things: (i) replacement of the Companybenchmark reference rate of the Eurodollar Rate (as defined in the Credit Agreement) with the Term SOFR Rate for borrowings denominated in U.S. Dollars and for each Alternative Currency (as defined in the Credit Agreement), a corresponding reference rate, as set forth in the Amended Credit Agreement, (ii) deletion of the provisions regarding Canadian bankers’ acceptances, and (iii) the addition of our ability to draw letters of credit in Canadian Dollars.
In November 2023, we further amended its term loan B under theour senior secured credit facility reducing the applicable interest rate. At December 31, 2017, the Company’s senior securedand now have a $1.3 billion revolving credit facility consists of (i) a $190in addition to the existing $950 million term loan A facility, (ii) a $970 million term loan B facility. The new $1.3 billion revolving credit facility refinanced our existing $630 million revolving credit facilities and we drew down $370 million at closing to repay in full our outstanding principal of $367.5 million delayed draw term A loan facility and (iii) a $365 millionrelated accrued interest and fees. The delayed draw term A loan facility was permanently retired upon being repaid in full.
The new revolving credit facility. Subjectfacility provides for borrowings of up to $1.3 billion with a $250 million sublimit for the issuance of letters of credit and a $100 million for swingline borrowings. The new revolving credit facility allows for a $780 million sublimit for borrowings in U.S. Dollars, Euros, or Sterling, and a $260 million sublimit for borrowings in those or one or more other approved non-U.S. currencies. The new revolving credit facility will be available to us and, if designated in the future, certain of our foreign subsidiaries. The Amended Credit Agreement provides for the right, subject to certain conditions, the Company has the right to increase the facilityterm B loan and revolving facilities by an amount not to exceed an amount equal to the sum of $625 million and(x) $1.625 billion, (y) the aggregate principal amount of voluntary prepayments of the term B loans and permanent reductions of the revolving credit facility commitment,commitments, in each case, other than from proceeds of long-term indebtedness, and (z) additional amounts so long as the senior secured leverage ratio, calculated on a pro-forma basis (as defined in the credit agreement)after giving effect to such increase, is no greater than 3.25x. The revolving credit facility provides for borrowings up4.50x.
Our obligations under the Amended Credit Agreement will continue to be guaranteed by the amountmajority of our direct and indirect domestic subsidiaries, subject to certain exceptions, and the obligations of the facility with sublimitsforeign subsidiary borrowers, if any, will be guaranteed by us, the majority of upour direct and indirect domestic subsidiaries, and by certain of our wholly-owned foreign subsidiaries. The obligations under the Amended Credit Agreement and the guarantees will continue to (i) $150 million for the issuance of letters of credit, (ii) $50 million for swingline loans, (iii) $200 million for borrowings in Euros or British Pounds and (iv) $50 million for borrowings in one or more other approved currencies. The senior secured credit facility isbe secured by (i) a first priority lien on substantially all of theour tangible and intangible personal property ofand the Company’s domestic subsidiaries that are guarantors, and (ii)by a pledge of substantially all of the shares of stock, partnership interests and limited liability company interests of the Company’sour direct and indirect domestic subsidiaries and 65% of each class of capital stock of any first-tier foreign subsidiaries and, if there are any foreign borrowers, by certain of the assets of such foreign borrowers and certain foreign subsidiaries, subject to certainlimited exceptions.
The interest rates per annum applicable to the revolving credit facility loans andunder the term loan A under theamended senior secured credit facility are, at the Company’sour option, equal to either LIBORTerm SOFR plus 2.25%1.75% or a base rate (as defined in the Credit Agreement) plus 1.25%, subject to stepdowns based on the Company’s net leverage ratio. 0.75%.
The interest rates per annum applicable to the term loan B are, at the Company’s
our option, equal to either LIBORTerm Benchmark Loans or RFR Loans (as defined in the Credit Agreement) plus 2.25%1.75% or a base rate plus 1.25%0.75%. The Company is required to pay a commitment feeWe have an interest rate swap agreement that ensures the interest rate on $500 million principal amount of 0.5% per year on the undrawn portion available under the revolving credit facility, subject to a stepdown based on the Company’s net leverage ratio, and variable fees onour outstanding letters of credit.
term loan B does not exceed 3.445% through October 2026. For the term loan A, the Company isB, we are required to make quarterly payments increasing over time from $4.8of $2.4 million to $28.5 million, with the balance due at maturity in October 2021. For the term loan B, the Company is required to make quarterly payments of $2.4 million, with the balance due at maturity in October 2023. The revolving credit facility matures in October 2021. The Company is2026. We are also required to make mandatory prepayments of the loans under the credit agreement,loan, subject to specified exceptions, from excess cash flow and with the proceeds of asset sales, debt issuances and specified other specified events.
We are required to pay a commitment fee of 0.35% per year on the undrawn portion available under the revolving credit facility and variable fees on outstanding letters of credit. Based on the Company’sour outstanding letters of credit of $83.8$31.6 million, $281.2$898.4 million was available for future borrowings under thefrom our revolving credit facility atas of December 31, 2017.2023.
4.875%The revolving credit facility matures on November 16, 2028, provided, that if (x) any of the term loan B, our 6.5% Senior Secured Notes due 2027, or our 4.75% Senior Notes due 2027 remain outstanding on the date that is ninety-one days prior to the stated maturity thereof in an aggregate principal amount in excess of $500 million and (y) our consolidated free cash on such date is less than the sum of such outstanding principal amount plus $500 million, then the maturity date of the amended senior secured credit facility will instead be such date.
On February 9, 2024, we repaid $250 million of principal related to our revolving credit facility. No material gain or loss was recorded as a result of this repayment.
6.5% Senior Secured Notes Due 2027
At December 31, 2017, the Company2023, we had $575 million$1.2 billion principal amount of 4.875%6.5% senior secured notes due 2024.2027. Interest on the notes is payable semi-annually in cash in arrears on May 115 and November 115 of each year beginning on May 1, 2017, and the notes will mature on November 1, 2024.May 15, 2027. On or after May 15, 2023 we may redeem some or all of the notes at any time at redemption prices starting at 104.875% of their principal amount, plus any accrued and unpaid interest to the date of redemption. We must make an offer to redeem the notes at 101% of their aggregate principal amount, plus accrued and unpaid interest to the repurchase date, if we experience certain defined changes of control. The Companynotes are secured by a first priority lien on substantially all of the tangible and intangible personal property of LNE and LNE’s domestic subsidiaries that are guarantors, and by a pledge of substantially all of the shares of stock, partnership interests and limited liability company interests of our direct and indirect domestic subsidiaries and 65% of each class of capital stock of any first-tier foreign subsidiaries, subject to certain exceptions.
3.75% Senior Secured Notes due 2028
At December 31, 2023, we had $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 November 1, 2019,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. The CompanyWe may redeem up to 35% of the aggregate principal amount of the notes from the proceeds of certain equity offerings prior to November 1, 2019,January 15, 2024, at a price equal to 104.875%103.75% of the aggregate principal amount, plus accrued and unpaid interest thereon if any, to the date of redemption. In addition, on or after November 1, 2019, the CompanyJanuary 15, 2024 we may redeem some or all of the notes at any time at the redemption prices that start at 103.656% of their principal amount,specified in the notes indenture, plus any accrued and unpaid interest to the date of redemption. The Company
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 it experienceswe 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.
5.375%4.875% Senior Notes Due 2024
At December 31, 2017, the Company2023, we had $250$575 million principal amount of 5.375%4.875% senior notes due 2022 outstanding.2024. Interest on the notes is payable semiannually in cash in arrears on June 15May 1 and December 15,November 1 of each year, and the notes will mature on June 15, 2022. The CompanyNovember 1, 2024. On or after November 1, 2019, we may redeem at its option some or all of the notes at any time at redemption prices that startstarting at 104.0313%103.656% of their principal amount, plus any accrued and unpaid interest to the date of redemption. The CompanyWe must make an offer to redeem the notes at 101% of their aggregate principal amount, plus accrued and unpaid interest to the repurchase date, if we experience certain defined changes of control.
5.625% Senior Notes Due 2026
At December 31, 2023, we had $300 million principal amount of 5.625% senior notes due 2026. Interest on the notes is payable semiannually in cash in arrears on March 15 and September 15 of each year, and the notes will mature on March 15, 2026. On or after March 15, 2021, we may redeem some or all of the notes at any time at redemption prices that start at 104.219% of their principal amount, plus any accrued and unpaid interest to the date of redemption. We must make an offer to redeem the notes at 101% of their aggregate principal amount, plus any accrued and unpaid interest to the repurchase date, if it experienceswe experience certain defined changes of control.
2.5% Convertible4.75% Senior Notes Due 2027
At December 31, 2017, the Company2023, we had $275$950 million principal amount of 4.75% senior notes due 2027. Interest on the notes is payable semi-annually in cash in arrears on April 15 and October 15 of each year, and will mature on October 15, 2027. On or after October 15, 2022, we may redeem some or all of the notes at any time at redemption prices starting at 103.563% of their principal amount, plus any accrued and unpaid interest to the date of redemption. We must make an offer to redeem the notes at 101% of their aggregate principal amount, plus accrued and unpaid interest to the repurchase date, if we experience certain defined changes of control.
2.0% Convertible Senior Notes Due 2025
At December 31, 2023, we had $400 million principal amount of 2.0% convertible senior notes due 2019 outstanding. The2025. Interest on the notes pay interestis payable semiannually in arrears on MayFebruary 15 and NovemberAugust 15, at a rate of 2.5%2.0% per annum. The notes will mature on MayFebruary 15, 2019, and may not be redeemed by the Company prior to the maturity date.2025. The notes will be convertible, under certain circumstances, until November 15, 2018,2024, and on or after such date without condition, at an initial conversion rate of 28.83639.4469 shares of the Company’sour common stock per $1,000 principal amount of notes, subject to adjustment, which represents a 52.5%50.0% conversion premium based on the last reported sale price for the Company’sour common stock of $22.74$70.57 on May 19, 2014.January 29, 2020 prior to issuing the notes. Upon conversion, the notes may be settled in shares of common stock or, at the Company’sour election, cash or a combination of cash and shares of common stock. Assuming the Companywe fully settled the notes in shares, the maximum number of shares that could be issued to satisfy the conversion is currently 7.93.8 million.
We may redeem for cash all or a portion of the notes, at our option, on or after February 21, 2023 and before the 41st scheduled trading day before the maturity date, if the sales price of our common stock reaches specified targets as defined in the indenture. The redemption price will equal 100% of the principal amount of the notes plus accrued interest, if any.
If the Company experienceswe experience a fundamental change, as defined in the indenture governing the notes, the holders of the 2.5%notes may require us to purchase for cash all or a portion of their notes, subject to specified exceptions, at a price equal to 100% of the principal amount of the notes plus any accrued and unpaid interest.
As of December 31, 2023, the value of the notes, if converted and fully settled in shares, did not exceed the principal amount of the notes.
3.125% Convertible Senior Notes due 2029
In January 2023, we issued $1.0 billion principal amount of 3.125% convertible senior notes due 2029 (the “2029 Notes”). Interest on the 2029 Notes is payable semi-annually in arrears on January 15 and July 15, beginning July 15, 2023, at a rate of 3.125% per annum. The notes will mature on January 15, 2029. The notes will be convertible, under certain circumstances, until October 15, 2028, and on or after such date without condition, at an initial conversion rate of 9.2259 shares of our common stock per $1,000 principal amount of notes, subject to adjustment, which represents a 50% conversion premium based on the last reported sale price for our common stock of $72.26 on January 9, 2023 prior to issuing the debt. Upon conversion, the notes may be settled in, at our election, shares of common stock or cash or a combination of cash and shares of common stock. Assuming we fully settle the notes in shares, the maximum number of shares that could be issued to satisfy the conversion is 13.8 million as of December 31, 2023.
We may redeem for cash all or any portion of the notes, at our option, on or after January 21, 2026 and before the 41st scheduled trading day before the maturity date, if the sales price of our common stock reaches specified targets as defined in the indenture. The redemption price will equal 100% of the principal amount of the notes plus accrued interest, if any.
If we experience a fundamental change, as defined in the indenture governing the notes, the holders of the 2029 Notes may require the Companyus to purchase for cash all or a portion of their notes, subject to specified exceptions, at a price equal to 100% of the principal amount of the notes plus accrued and unpaid interest, if any.
The carrying amount of the equity component of the notes is $22.0 million and the principal amount of the liability component (face value of the notes) is $275 million. As of December 31, 2017,2023, the remaining period for the unamortized debt discountissuance costs balance of $13.3 million was approximately one yearfive years and the value of the notes, if converted and fully settled in shares, did not exceed the principal amount of the notes by $62.6 million.notes. As of December 31, 2017 and 2016,2023, the effective interest rate on the liability componentnotes was 3.4%.
In connection with the issuance of the notes2029 Notes, we entered into privately negotiated capped call transactions with several counterparties. The cap price of the capped call transactions is initially $144.52, which represents a premium of 100% over the last reported sale price of the Company’s common stock on January 9, 2023. The cost of the capped call transactions was 5.0%.$75.5 million and was charged to additional paid-in capital.
Interest Cost on Convertible Senior Notes
The following table summarizes the amount of pre-tax interest cost recognized on the convertible senior notes due 2025 and 2029 for the year ended December 31, 2023 and convertible senior notes due 2023 and 2025 for the years ended December 31, 2022 and 2021: | | | | | | | | | | | | | | | | | | | | | |
| | Year Ended December 31, |
| | 2023 | | 2022 | | 2021 | | | | |
| | (in thousands) |
| Interest cost recognized relating to: | | | | | | | | | |
| Contractual interest coupon | $ | 27,460 | | | $ | 21,750 | | | $ | 21,750 | | | | | |
Amortization of debt discount (1) | — | | | — | | | 20,883 | | | | | |
| Amortization of debt issuance costs | 3,912 | | | 3,710 | | | 3,330 | | | | | |
| Total interest cost recognized on the notes | $ | 31,372 | | | $ | 25,460 | | | $ | 45,963 | | | | | |
___________________
(1) There was no amortization of debt discount for the years ended December 31, 2023 and 2022 due to the adoption of ASU 2020-06 as of January 1, 2022.
Debt Extinguishment
In conjunction with the issuance of the 2029 Notes, we used approximately $485.8 million of the net proceeds to repurchase $440.0 million aggregate principal amount of the 2.5% convertible senior notes:notes due 2023 resulting in a loss on extinguishment of debt of $18.5 million and a charge to additional paid-in capital for the induced conversion of $27.3 million. On March 15, 2023, we redeemed the remaining $110.0 million aggregate principal amount of the 2.5% convertible senior notes and issued 156,750 common shares of stock.
|
| | | | | | | | | | | |
| | Year Ended December 31, |
| | 2017 | | 2016 | | 2015 |
| | (in thousands) |
| Interest cost recognized relating to: | | | | | |
| Contractual interest coupon | $ | 6,875 |
| | $ | 6,875 |
| | $ | 6,856 |
|
| Amortization of debt discount | 5,080 |
| | 4,833 |
| | 4,599 |
|
| Amortization of debt issuance costs | 1,358 |
| | 1,358 |
| | 1,355 |
|
| Total interest cost recognized on the notes | $ | 13,313 |
| | $ | 13,066 |
| | $ | 12,810 |
|
Other Long-term Debt
As of December 31, 2017,2023, other long-term debt includes capital leases$275.0 million for debt due in 2026 acquired as part of $14.2an acquisition of a controlling interest in a venue business in the United States during the first quarter of 2023, $126.7 million for a Euro denominated note due in 2024, debt to noncontrolling interest partners of $44.0$31.6 million and $17.8 millioncapital leases of a subsidiary’s term loan and revolving credit facility. Total notes payable consist primarily of 34 notes with$6.2 million. Our other long-term debt has a weighted average cost of debt of 4.3%4.2% and maturities of up to four years.
Debt Extinguishment
In October 2016, the Company issued $575 million principal amount of 4.875% senior notes due 2024 and amended its senior secured credit facility. The amendment to the senior secured credit facility provided the existing term loan A and term loan B lenders with an option to convert their outstanding principal amounts into the new term loans. Excluding the outstanding principal amounts for lenders who elected to convert their outstanding term loans, total proceeds of $858.5 million were used to repay $123.3 million outstanding principal amount of the Company’s borrowings under the senior secured credit facility, to repay the entire $425 million principal amount of the Company’s 7% senior notes due 2020 and to pay the related redemption premium of $14.9 million on the 7% senior notes and accrued interest and fees of $38.4 million, leaving $256.9 million in additional cash available for general corporate purposes. The Company recorded $14.0 million as a loss on extinguishment of debt related to this refinancing in 2016. There were no significant gains or losses on extinguishment of debt recorded in 2017 or 2015.at various dates through September 2050.
Debt Covenants
The Company’sOur amended senior secured credit facility contains a number of restrictions that, among other things, require the Companyus to satisfy a financial covenant and restrict the Company’sour and itsour subsidiaries’ ability to incur additional debt, make certain investments and acquisitions, repurchase itsour stock and prepay certain indebtedness, create liens, enter into agreements with affiliates, modify the nature of itsour 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 aone financial covenant, measured quarterly, that relates to totalnet leverage. The consolidated total leverage covenant requires the CompanyWe are required to maintain a ratio of consolidated total fundednet debt to consolidated EBITDA (both as defined in the credit agreement) of 5.25x overCredit Agreement) for the trailing four consecutive quarters of 6.75x through September 30, 2018. TheDecember 31, 2024 with step downs to 6.25x on March 31, 2025, 5.75x on March 31, 2026 and 5.25x on March 31, 2027 through maturity. For purposes of calculating consolidated total leverage ratio will reducenet debt, the amended senior credit facility permits us to 5.0x on December 31, 2018, 4.75x on December 31, 2019deduct the lesser of $500 million and 4.5x on December 31, 2020.our consolidated free cash from consolidated total funded debt (both as defined in the Credit Agreement).
The indentures governing the our 6.5% senior secured notes, 3.75% senior secured notes, 4.75% senior notes, 4.875% senior notes and the 5.375%5.625% senior notes contain covenants that limit, among other things, the Company’sour ability and the ability of itsour 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 the Company,us, merge, consolidate or sell all of the Company’sour assets, create certain liens, and engage in transactions with affiliates on terms that are not arms-length.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. The 4.875% senior notes and the 5.375% seniorAll of these notes contain two incurrence-based financial covenants, as defined, requiring a minimum fixed charge coverage ratio of 2.0x2.0x and a maximum secured indebtedness leverage ratio of 3.50x.3.5x.
Some of the Company’sour other subsidiary indebtedness includes restrictions on entering into various transactions, such as acquisitions and disposals, and prohibits payment of ordinary dividends. They also have financial covenants including minimum consolidated EBITDA to consolidated net interest payable, minimum consolidated cash flow to consolidated debt service, and maximum consolidated debt to consolidated EBITDA and minimum liquidity, all as defined in the applicable debt agreements.
As of December 31, 2017, the Company believes it was2023, we believe we were in compliance with all of itsour debt covenants. The Company expectscovenants 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 2018.2024.
NOTE 4—6—DERIVATIVE INSTRUMENTS
The CompanyWe primarily usesuse forward currency contracts and options to reduce itsour exposure to foreign currency risk associated with short-term artist fee commitments. The CompanyWe may also enter into forward currency contracts to minimize the risks and/or costs associated with changes in foreign currency rates on forecasted operating income. At December 31, 2017 and 2016, the Company had forward currency contracts and options outstanding with notional amounts of $72.4 million and $173.8 million, respectively. These instruments have not been designated as hedging instruments and any change in fair value is reported in earnings during the period of the change. The Company’sOur foreign currency derivative activity, including the related fair values, are not material to any period presented.
In January 2020, we entered into an interest rate swap agreement that is designated as a cash flow hedge for accounting purposes to effectively convert a portion of our floating-rate debt to a fixed-rate basis. The Companyswap agreement expires in October 2026, has a notional amount of $500 million and ensures that a portion of our floating-rate debt does not exceed 3.445%. The principal objective of this contract is to reduce the variability of the cash flow in our variable rate interest payments associated with our senior secured credit facility term loan B, thus reducing the impact of interest rate changes on future interest expense. Cash flows associated with the interest rate swap agreement are reflected as cash flows from operating activities within our consolidated statements of cash flows. As of December 31, 2023, there is no ineffective portion or amount excluded from effectiveness testing.
As a cash flow hedge, the effective portion of the loss on the derivative instrument was reported as a component of other comprehensive loss. Amounts are deferred in other comprehensive loss and reclassified into earnings in the same line item associated with the forecasted transaction in the period or periods during which the hedged transaction affects earnings.
We do not enter into derivative instruments for speculative or trading purposes and doesdo not anticipate any significant recognition of derivative activity through the income statement in the future related to the instruments currently held. See Note 5—7 – Fair Value Measurements for further discussion and disclosure of the fair values for the Company’sour derivative instruments.
NOTE 5—7—FAIR VALUE MEASUREMENTS
Recurring
The CompanyWe currently hashave various financial instruments carried at fair value, such as marketable securities, derivatives and contingent consideration, but doesdo not currently have nonfinancial assets and liabilities that are required to be measured at fair value on a recurring basis. The Company’sOur financial assets and liabilities are measured using inputs from all levels of the fair value hierarchy as defined in the FASB guidance for fair value. For this categorization, only inputs that are significant to the fair value are considered. The three levels are defined as follows:
Level 1—Inputs are unadjusted quoted prices in active markets for identical assets or liabilities that can be accessed at the measurement date.
Level 2—Inputs include quoted prices for similar assets and liabilities in active markets, quoted prices for identical or similar assets or liabilities in markets that are not active, inputs other than quoted prices that are observable for the asset or liability (i.e., interest rates, yield curves, etc.) and inputs that are derived principally from or corroborated by observable market data by correlation or other means (i.e., market corroborated inputs).
Level 3—Unobservable inputs that reflect assumptions about what market participants would use in pricing the asset or liability. These inputs would be based on the best information available, including the Company’sour own data.
In accordance with the fair value hierarchy described above, the following table shows the fair value of the Company’sour financial assets and liabilities that are required to be measured at fair value on a recurring basis, which are classified on the balance sheets as cash and cash equivalents, other current assets, other long-term assets, other current liabilities and other long-term liabilities:
|
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | Fair Value Measurements
at December 31, 2017 | | Fair Value Measurements
at December 31, 2016 |
| | Level 1 | | Level 2 | | Level 3 | | Total | | Level 1 | | Level 2 | | Level 3 | | Total |
| | | | (in thousands) | | | | | | (in thousands) | | |
| Assets: | | | | | | | | | | | | | | | |
| Cash equivalents | $ | 58,063 |
| | $ | — |
| | $ | — |
| | $ | 58,063 |
| | $ | 55,081 |
| | $ | — |
| | $ | — |
| | $ | 55,081 |
|
| Forward currency contracts | — |
| | 114 |
| | — |
| | 114 |
| | — |
| | 2,957 |
| | — |
| | 2,957 |
|
| Total | $ | 58,063 |
| | $ | 114 |
| | $ | — |
| | $ | 58,177 |
| | $ | 55,081 |
| | $ | 2,957 |
| | $ | — |
| | $ | 58,038 |
|
| Liabilities: | | | | | | | | | | | | | | | |
| Forward currency contracts | — |
| | 1,276 |
| | — |
| | 1,276 |
| | — |
| | 363 |
| | — |
| | 363 |
|
| Put option | — |
| | — |
| | 5,768 |
| | 5,768 |
| | — |
| | — |
| | 5,147 |
| | 5,147 |
|
| Contingent consideration | — |
| | — |
| | 70,039 |
| | 70,039 |
| | — |
| | — |
| | 44,195 |
| | 44,195 |
|
| Total | $ | — |
| | $ | 1,276 |
| | $ | 75,807 |
| | $ | 77,083 |
| | $ | — |
| | $ | 363 |
| | $ | 49,342 |
| | $ | 49,705 |
|
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | Fair Value Measurements
at December 31, 2023 | | Fair Value Measurements
at December 31, 2022 |
| | Level 1 | | Level 2 | | Level 3 | | Total | | Level 1 | | Level 2 | | Level 3 | | Total |
| | | | (in thousands) | | | | | | (in thousands) | | |
| Assets: | | | | | | | | | | | | | | | |
| Cash equivalents | $ | 580,126 | | | $ | — | | | $ | — | | | $ | 580,126 | | | $ | 503,964 | | | $ | — | | | $ | — | | | $ | 503,964 | |
| Interest rate swaps | — | | | 39,232 | | | — | | | 39,232 | | | — | | | 41,515 | | | — | | | 41,515 | |
| Forward currency contracts | — | | | 156 | | | — | | | 156 | | | — | | | 1,530 | | | — | | | 1,530 | |
| Investments in nonconsolidated affiliates | 865 | | | — | | | — | | | 865 | | | 3,873 | | | — | | | — | | | 3,873 | |
| Total | $ | 580,991 | | | $ | 39,388 | | | $ | — | | | $ | 620,379 | | | $ | 507,837 | | | $ | 43,045 | | | $ | — | | | $ | 550,882 | |
| Liabilities: | | | | | | | | | | | | | | | |
| Equity awards | $ | — | | | $ | — | | | $ | 5,938 | | | $ | 5,938 | | | $ | — | | | $ | — | | | $ | — | | | $ | — | |
| Forward currency contracts | — | | | 6,468 | | | — | | | 6,468 | | | — | | | 2,227 | | | — | | | 2,227 | |
| Put option | — | | | — | | | 2,980 | | | 2,980 | | | — | | | — | | | 11,826 | | | 11,826 | |
| Contingent consideration | — | | | — | | | 106,265 | | | 106,265 | | | — | | | — | | | 70,289 | | | 70,289 | |
| Total | $ | — | | | $ | 6,468 | | | $ | 115,183 | | | $ | 121,651 | | | $ | — | | | $ | 2,227 | | | $ | 82,115 | | | $ | 84,342 | |
Cash equivalents consist of money market funds. Fair values for cash equivalents are based on quoted prices in an active market. The fair value for our interest rate swap is based upon inputs corroborated by observable market data with similar tenors. Fair values for forward currency contracts are based on observable market transactions of spot and forward rates. The fair value of our investments in nonconsolidated affiliates are based quoted prices in an active market.
Certain equity awards are based on the Company’s annual performance goals and achievement criteria. These awards are accounted for as liability-classified awards under GAAP and have performance goals that, if met, are vested quarterly over a period of up to two years, with the number of shares of common stock determined based on the Company’s grant date stock price.
ACertain third party hasparties have a put option to sell itsto us their noncontrolling interest in one of the Company’sour subsidiaries to the Company and such put option is carried at fair value using Level 3 inputs because the redemption date and redemption amount are not fixed.inputs. The put option is triggered by the occurrence of specific events, one of which is certain to occur, andthat requires the Companyus to buy the noncontrolling interest. The redemption amountprice for thisthe put option is a variable amount based on a formula linked to historical earnings. The Company hasWe have recorded a current liability for thisthe put option which is valued based on the historic results of that subsidiary. Changes in the fair value are recorded in selling, general and administrative expenses.
The Company hasWe have certain contingent consideration obligations related to acquisitions which are measured at fair value using Level 3 inputs. The amounts due to the sellers are based on the achievement of agreed-upon financial performance metrics by the acquired companies where the contingent obligation is either earned or not earned. The Company recordsWe record the liability at the time of the acquisition based on the present value of management’s best estimates of the future results of the acquired companies compared to the agreed-upon metrics. Subsequent to the date of acquisition, the Company updateswe update the original valuation to reflect current projections of future results of the acquired companies and the passage of time. Accretion of, and changes in the valuations of, contingent consideration are reported in selling, general and administrative expenses. See Note 6—8 – Commitments and Contingent Liabilities for additional information related to the contingent payments.
Due to their short maturity, the carrying amounts of accounts receivable, accounts payable and accrued expenses approximated their fair values at December 31, 20172023 and 2016.2022.
The Company’sOur outstanding debt held by third-party financial institutions is carried at cost, adjusted for discounts or debt issuance costs. The Company’sOur debt is not publicly traded and the carrying amounts typically approximate fair value for debt that accrues interest at a variable rate, which are considered to be Level 2 inputs.
The following table presents the estimated fair values of the Company’s 5.375%our senior secured notes, 4.875% senior notes and the 2.5% convertible senior notes were $259.2 million, $592.3 million and $310.6 million, respectively, at December 31, 2017. The estimated fair values of the 5.375% senior notes, 4.875% senior notes2023 and the 2.5% convertible senior notes were $259.7 million, $578.5 million and $294.6 million, respectively, at December 31, 2016. 2022:
| | | | | | | | | | | |
| Estimated Fair Value at: |
| December 31, 2023 | | December 31, 2022 |
| Level 2 |
| (in thousands) |
| 6.5% Senior Secured Notes due 2027 | $ | 1,222,608 | | | $ | 1,175,460 | |
| 3.75% Senior Secured Notes due 2028 | $ | 469,515 | | | $ | 429,035 | |
| 4.875% Senior Notes due 2024 | $ | 570,412 | | | $ | 560,027 | |
| 5.625% Senior Notes due 2026 | $ | 297,606 | | | $ | 285,315 | |
| 4.75% Senior Notes due 2027 | $ | 913,653 | | | $ | 847,562 | |
| 2.5% Convertible Senior Notes due 2023 | $ | — | | | $ | 588,473 | |
| 2.0% Convertible Senior Notes due 2025 | $ | 423,668 | | | $ | 397,536 | |
| 3.125% Convertible Senior Notes due 2029 | $ | 1,136,160 | | | $ | — | |
The estimated fair value of the Company’sour third-party fixed-rate debt is based on quoted market prices in active markets for the same or similar debt, which are considered to be Level 2 inputs. The Company has fixed-rate debt held by noncontrolling interest partners with a face value of $44.0 million and $35.7 million at December 31, 2017 and 2016, respectively. The Company is unable to determine a fair value for this debt.
Non-recurring
The following table shows the fair value of the Company’s financial assets that have been adjusted to fair value on a non-recurring basis which had a significant impact on the Company’s results of operations for the years ended December 31, 2017During 2023 and 2016: |
| | | | | | | | | | | | | | | | | | | | |
| | | Fair Value | | Fair Value Measurements Using | | Loss |
| Description | | Measurement | | Level 1 | | Level 2 | | Level 3 | | (Gain) |
| | | (in thousands) |
| 2017 | | | | | | | | | | |
| Goodwill | | $ | 30,832 |
| | $ | — |
| | $ | — |
| | $ | 30,832 |
| | $ | 20,000 |
|
| 2016 | | | | | | | | | | |
| Investment in nonconsolidated affiliates | | $ | — |
| | $ | — |
| | $ | — |
| | $ | — |
| | $ | 16,455 |
|
During 2017, in conjunction with the Company’s annual impairment tests a goodwill impairment was recorded for the Artist Services (non-management) reporting unit in the Concerts segment in the amount of $20.0 million as a component of depreciation and amortization. The Company calculated these impairments using a combination of a discounted cash flow methodology, which uses both Level 2 and Level 3 inputs, and a market multiple methodology, which uses primarily Level 2 inputs. These key inputs include discount rates, market multiples, control premiums, revenue growth and estimates of future financial performance. See Note 1—The Company and Summary of Significant Accounting Policies and Note 2—Long-Lived Assets for further discussion of the Company’s methodology and this impairment.
As discussed in Note 2—Long-Lived Assets, during 2016, the Company believed certain of its investment balances were impaired based on financial information received regarding the bankruptcy or dissolution of two nonconsolidated affiliates, which are considered Level 3 inputs. There2022, there were no significant adjustments for the year ended December 31, 2017.non-recurring fair value measurements.
During 2015, the Company2021, we recorded gainsa gain related to investments in nonconsolidated affiliates of $9.1$23.7 million, as a component of other expense, (income), net. The gains weregain was related to the acquisitionsacquisition of a controlling interest in a festival promoter and an artist management business, and the remaining interest in a ticketing business of OCESA on December 6, 2021, which werewas previously accounted for under the equity method. Prior to consolidation,To calculate the Companygain, we remeasured these investmentsthis investment to fair value of $50 million using a discounted cash flowmarket multiple methodology. The key inputs in thesethe fair value measurementsmeasurement include a future cash flow projections,
projection, including revenue, and profit margins, market multiples and adjustment related to discount rates and attrition rates.for lack of marketability. The key inputs used for thesethis non-recurring fair value measurementsmeasurement are considered Level 3 inputs.
NOTE 6—8—COMMITMENTS AND CONTINGENT LIABILITIES
The Company leases office space, certain equipment and many of its concert venues. Some of the lease agreements contain renewal options and annual rental escalation clauses (generally tied to the consumer price index), as well as provisions for the payment of utilities and maintenance by the Company. The Company also hasWe have non-cancelable contracts related to minimum performance payments with various artists, other event-related costs and nonrecoupable ticketing contract advances. In addition, the Company hasWe also have commitments relating to additions to property, plant, and equipment under certain construction commitments for facilities and venues.
As of December 31, 2017, the Company’s2023, our future minimum rental commitments under non-cancelable operating lease agreements, minimum payments under non-cancelable contracts and capital expenditure commitments consist of the following:
| | | | | | | | | | | | | | | |
| | | | Non-cancelable Contracts | | Capital Expenditures |
| | | (in thousands) |
| 2024 | | | $ | 2,327,189 | | | $ | 21,463 | |
| 2025 | | | 798,680 | | | 6,719 | |
| 2026 | | | 724,992 | | | 3,929 | |
| 2027 | | | 253,528 | | | 1,986 | |
| 2028 | | | 355,079 | | | 2,063 | |
| Thereafter | | | 503,900 | | | 68,632 | |
| Total | | | $ | 4,963,368 | | | $ | 104,792 | |
|
| | | | | | | | | | | |
| | Non-cancelable Operating Leases | | Non-cancelable Contracts | | Capital Expenditures |
| | (in thousands) |
| 2018 | $ | 175,863 |
| | $ | 897,266 |
| | $ | 16,499 |
|
| 2019 | 170,751 |
| | 235,324 |
| | 3,889 |
|
| 2020 | 156,278 |
| | 76,546 |
| | 3,764 |
|
| 2021 | 126,317 |
| | 39,076 |
| | 4,181 |
|
| 2022 | 115,849 |
| | 27,204 |
| | 872 |
|
| Thereafter | 1,423,288 |
| | 96,985 |
| | 30,933 |
|
| Total | $ | 2,168,346 |
| | $ | 1,372,401 |
| | $ | 60,138 |
|
Commitment amounts for non-cancelable operating leases and non-cancelable contracts which stipulate an increase in the commitment amount based on an inflationary index have been estimated using an inflation factor of 1.8% for North America, 2.9% for the United Kingdom, 1.7% for Denmark and 1.6% for the Netherlands.
Aggregate minimum rentals of $47.7 million to be paid to the Company in years 2018 through 2032 under non-cancelable subleases are excluded from the commitment amounts in the above table.
Total rent expense charged to operations for 2017, 2016 and 2015 was $220.1 million, $196.0 million and $159.5 million, respectively. In addition to the minimum rental commitments included in the table above, the Company has leases that contain contingent payment requirements for which payments vary depending on revenue, tickets sold or other variables. Contingent rent expense charged to operations for 2017, 2016 and 2015 was $48.3 million, $49.0 million and $43.7 million, respectively. The above table above does not include contingent rent or rent expense for events in third-party venues.
In connection with asset and business disposals, the Company generally provides indemnifications to the buyers including claims resulting from employment matters, commercial claims and governmental actions that may be taken against the assets or businesses sold. Settlement of these claims is subject to various statutory limitations that are dependent upon the nature of the claim.
Certain agreements relating to acquisitions provide for deferred purchase consideration payments at future dates. A liability is established at the time of the acquisition for these fixed payments. For obligations payable at a date greater than twelve months from the acquisition date, the Company applieswe apply a discount rate to calculate the present value of the obligations. As of December 31, 2017, the Company has2023, we have accrued $109.6$14.9 million in other current liabilities and $6.1$6.8 million in other long-term liabilities and, as of December 31, 2016, the Company2022, we had accrued $18.1$5.3 million in other current liabilities and $7.2$8.3 million in other long-term liabilities, related to these deferred purchase consideration payments. The increase in other current liabilities during 2017 is primarily due to the timing of payment for the acquisition of the redeemable noncontrolling interest in a festival and concert promoter business located in the United States following the put redemption in December 2017.
The Company hasWe have contingent obligations related to acquisitions which are accounted for as business combinations. Contingent consideration associated with business combinations is recorded at fair value at the time of the acquisition and reflected at current fair value for each subsequent reporting period thereafter until settled. The Company recordsWe record these fair value changes in itsour statements of operations as selling, general and administrative expenses. The contingent consideration is generally subject to payout following the achievement of future performance targets and a portion is expected to be payable in the next twelve months. As of December 31, 2017, the Company has2023, we have accrued $34.2$83.9 million in other current liabilities and $35.8$22.3 million in other long-term liabilities and, as of December 31, 2016, the Company2022, we had accrued $5.2$22.6 million in other current liabilities and $39.0$47.7 million in other long-term liabilities, representing the fair value of these estimated payments. The last
contingency period for which the Company haswe have an outstanding contingent payment is for the period ending March 2026.July 2049. See Note 5—7 – Fair Value Measurements for further discussion related to the valuation of these contingent payments.
During 2006, in connection with the Company’s acquisitionAs of a theatrical business, the Company guaranteed obligations related to a lease agreement. In the event of default, the Company could be liable for obligations through the end of 2035 which have future lease payments (undiscounted) of approximately $15.3 million as of December 31, 2017. The scheduled future minimum rentals for this lease for the years 2018 through 2022 are $1.6 million each year. The venues under the lease agreement were included in the sale of the Company’s North American theatrical business in 2008. The buyer has assumed the Company’s obligations under the guaranty, however, the Company remains contingently liable to the lessor. The Company believes that the likelihood of a material liability being triggered under this lease is remote,2023 and no liability has been accrued for these contingent lease obligations as of December 31, 2017.
As of December 31, 2017 and 2016, the Company2022, we guaranteed the debt of third parties of approximately $18.3$19.4 million and $18.0$19.5 million, respectively, primarily related to maximum credit limits on employee and tour-related credit cards, obligations of a nonconsolidated affiliate and obligations under a venue management agreement.
Litigation
SongkickConsumer Class Actions
In December 2015, a company referred to as SongkickThe following putative class action lawsuits were filed an antitrust lawsuit against Live Nation and/or Ticketmaster in Canada: Thompson-Marcial and Smith v. Ticketmaster L.L.C.Canada Holdings ULC (Ontario Superior Court of Justice, filed September 2018); McPhee v. Live Nation Entertainment, Inc., et al. (Superior Court of Quebec, District of Montreal, filed September 2018); Crystal Watch v. Live Nation Entertainment, Inc., et al. (Court of Queen’s Bench for Saskatchewan, by amendments filed September 2018); and Gomel v. Live Nation Entertainment, Inc., et al. (Supreme Court of British Columbia, Vancouver Registry, filed October 2018). Similar putative class actions were filed in the United States during the same time period, but as of November 2020, each of the lawsuits filed in the United States has been dismissed with prejudice.
The Canadian lawsuits make similar factual allegations that Live Nation and/or Ticketmaster engage in conduct that is intended to encourage the resale of tickets on secondary ticket exchanges at elevated prices. Based on these allegations, each plaintiff asserts violations of different provincial and federal laws. Each plaintiff also seeks to represent a class of individuals who purchased tickets on a secondary ticket exchange, as defined in each plaintiff’s complaint. The Watch complaint also makes claims related to Ticketmaster’s fee display practices on the primary market. The complaints seek a variety of remedies, including unspecified compensatory damages, punitive damages, restitution, injunctive relief and attorneys’ fees and costs.
In April 2021, the court in the Gomel lawsuit declined to certify all claims other than those pled under British Columbia’s Business Practices and Consumer Protection Act and claims for punitive damages. The court did certify a class of British Columbia residents who purchased tickets to an event in Canada on any secondary market exchange from June 2015 through April 2021 that were initially purchased on Ticketmaster.ca. In May 2021, Ticketmaster and Live Nation filed a notice of appeal of the class certification ruling, and the plaintiff filed a cross-appeal shortly thereafter. The appeals were heard in early February 2023. In July 2023, the Court of Appeal for British Columbia issued its ruling, finding that the trial court erred by certifying common issues related to damages in the absence of any evidence supporting a plausible methodology to determine damages on a class-wide basis and remitted the matter back to the motion judge to reconsider his ruling. The Court of Appeal also allowed plaintiff’s cross-appeal in part, certified plaintiff’s proposed common issue regarding restoration, and remitted the plaintiff’s proposed common issues regarding his Competition Act and Unjust Enrichment claims to the motion judge for reconsideration. In September 2023, Ticketmaster and Live Nation filed an application for leave to appeal the Court of Appeal decision to the Supreme Court of Canada.
The court in the Watch matter issued its class certification ruling in November 2022. The court declined to certify and dismissed all claims other than those pled under provincial consumer protection statutes relating to drip pricing and certified a class of consumers who purchased tickets between September 2015 and June 2018 from Ticketmaster.ca on the primary market. In December 2022, the parties filed cross-motions with the Court of Appeal for Saskatchewan, seeking leave to appeal the court’s ruling. A hearing on the parties’ motions for leave to appeal took place in March 2023, and in July 2023, the Court of Appeal granted leave to appeal to both parties. The appeals are fully briefed, and a hearing is scheduled for April 2024.
The class certification hearing in the Thompson-Marcial matter has been scheduled for March 2024. The McPhee matter is stayed pending the outcome of the Watch matter.
Based on information presently known to management, we do not believe that a loss is probable of occurring at this time, and we believe that the potential liability, if any, will not have a material adverse effect on our financial position, cash flows or results of operations. Further, we do not currently believe that the claims asserted in these lawsuits have merit, and considerable uncertainty exists regarding any monetary damages that will be asserted against us. We continue to vigorously defend these actions.
Astroworld Litigation
On November 5, 2021, the Astroworld music festival was held in Houston, Texas. During the course of the festival, ten members of the audience sustained fatal injuries and others suffered non-fatal injuries. Following these events, at least 450 civil lawsuits have been filed against Live Nation Entertainment, Inc. and related entities, asserting insufficient crowd control and other theories, seeking compensatory and punitive damages. Pursuant to a February 2022 order of the state Multidistrict Litigation Panel, matter 21-1033, the civil cases have been assigned to Judge Kristen Hawkins of the 11th District Court of Harris County, Texas, for oversight of pretrial matters under Texas’s rules governing multidistrict litigation.
In June 2023, the Houston Police Department concluded its investigation, and a Grand Jury was empaneled to determine whether criminal charges should be brought against any persons or entities involved in the festival. The Grand Jury returned no indictments, and the criminal matter is now complete.
Discovery in the civil litigation is underway. Confidential settlements have been reached with the families of four of the deceased plaintiffs. Discovery is underway for the Central District of California. The suit alleged, among other complaints, thatcivil litigation, including for the defendants monopolized certain markets and engaged in certain exclusionary and anticompetitive conduct, ultimately causing harm to Songkick in a product market that it refers to as “artist presale ticketing services.” In the spring of 2016, Live Nation and Ticketmaster L.L.C. prevailed in a partial motion to dismiss, and shortly thereafter asserted counterclaims against Songkick, alleging that Songkick tortiously interfered with Ticketmaster’s venue contracts. In February 2017, Songkick filed an amended complaint, adding claims of trade secret misappropriation, statutory violations and related causes of action, arising from certain alleged conduct by a former Songkick employee who had gone to work for Ticketmaster.
In October 2017, the Court granted in part Live Nation’s motion to prevent Songkick’s damages expert from testifying, but declined to grant Live Nation’s motion for summary judgment. Following those rulings, Songkick was left with an antitrust claim (subject to treble damages) for lost profits and lost enterprise value, tort claims seeking the same, and a claim for unjust enrichment damages arising from alleged trade secret misappropriation. In January 2018, the Company and Songkick entered into a settlement agreement containing a mutual release of claims, thus resolving each party’s claims and counterclaims. Pursuant to the settlement agreement, in January 2018 the Company made a lump sum payment of $110.0 million, which has been accrued at December 31, 2017,remaining fatality cases, and the parties jointly filedfirst trial is scheduled to begin in May 2024.
We are currently unable to reliably predict the developments in, outcome of, and economic costs and other consequences of pending or future litigation related to these matters. We will continue to investigate the factual and legal defenses, and evaluate these matters based on subsequent events, new information and future circumstances. We currently expect that liability insurance can provide sufficient coverage, but at this time there are no assurances of such coverage. Given that these cases are in the early stages and in light of the uncertainties surrounding them, we do not currently possess sufficient information to determine a stipulationrange of dismissal underreasonably possible liability. Notwithstanding the foregoing, and without admitting liability or wrongdoing, we may incur material liabilities from the 2021 Astroworld event, which the parties dismissed with prejudice their respective claims and counterclaims. Incould have a separate, concurrent transaction, the Company additionally purchased certain assets from Songkick, including its anti-scalping algorithm, API applications and patent portfolio.material impact on our business, financial condition, results of operations and/or cash flows.
Other Litigation
From time to time, the Company iswe are involved in other legal proceedings arising in the ordinary course of itsour business, including proceedings and claims based upon purported violations of antitrust laws, intellectual property rights and tortious interference, which could cause the Companyus to incur significant expenses. The Company hasWe have also been the subject of personal injury and wrongful death claims relating to accidents at itsour venues in connection with itsour operations. As required, the Company haswe have accrued itsour estimate of the probable settlement or other losses for the resolution of any outstanding claims. These estimates have been developed in consultation with counsel and are based upon an analysis of potential results, including, in some cases, estimated redemption rates for the settlement offered, assuming a combination of litigation and settlement strategies. It is possible, however, that future results of operations for any particular period could be materially affected by changes in the Company’sour assumptions or the effectiveness of itsour strategies related to these proceedings.
NOTE 7—9—CERTAIN RELATIONSHIPS AND RELATED-PARTY TRANSACTIONS
Transactions Involving Related Parties
The following table provides details of the total revenue earned and expenses incurred from all related-party transactions:
|
| | | | | | | | | | | |
| | Year Ended December 31, |
| 2017 | | 2016 | | 2015 |
| | (in thousands) |
| Related-party revenue | $ | 135,996 |
| | $ | 123,521 |
| | $ | 109,720 |
|
| Related-party expenses | $ | 14,176 |
| | $ | 8,996 |
| | $ | 8,668 |
|
| Related-party acquisition related | $ | — |
| | $ | 2,145 |
| | $ | — |
|
Thewere no significant related-party transactions included in the table above are detailed below.
As of December 31, 2017 and 2016, the Company has payable balances of $23.1 million and $20.9 million, respectively, due tofor certain of the companies notedrelationships discussed below.
Liberty Media
Two current members of our board of directors were originally nominated by Liberty Media pursuant to a stockholder agreement. These directors receive directors’ fees and stock-based awards on the same basis as other non-employee members of the Company’sour board of directors.
The Company leasesAtlanta Braves
One current member of our board of directors is the Chairman of the Board, President and Chief Executive Officer of Atlanta Braves Holdings, Inc. (“Atlanta Braves”). We lease a venue from, and providesprovide ticketing services to a sports franchise owned by Liberty Mediathe Atlanta Braves and payspay royalty fees and non-recoupable ticketing contract advances to the sports franchise. The Companyadvances. We also receivesreceive transaction fees from the sports franchise for tickets the sports franchiseAtlanta Braves sells using the Company’sour ticketing software. From time to time,
Sirius XM
Our Chief Executive Officer is a member of the Company purchases advertising fromboard of directors of Sirius XM Holdings Inc. (“Sirius XM”), a satellite radio company that is a subsidiary of Liberty Media.
Legends
The Company’s Chief Executive Officer became a member of the board of directors of Legends Hospitality Holding Company, LLC (“Legends”) in February 2015. In 2017, the Company’s President assumed this role From time to time, we purchase advertising from the Chief Executive Officer. Legends provides concession services to certain of the Company’s owned or operated amphitheaters. The Company receives fees based on concession sales at each of the amphitheaters.
Senior Management
The Company conducts certain transactions in the ordinary course of business with companies that are owned, in part or in total, by certain members of senior management of the Company. These transactions primarily relate to ticketing services.Sirius XM.
Transactions Involving Equity Method Investees
The Company conductsWe conduct business with certain of itsour equity method investees in the ordinary course of business. Transactions primarily relate to venue rentals and ticketing services. Revenue of $2.8$27.9 million, $2.0$40.7 million and $2.0$5.0 million were earned in 2017, 20162023, 2022 and 2015,2021, respectively, and expenses of $1.8$6.3 million, $3.2$13.7 million and $1.5$2.9 million were incurred in 2017, 20162023, 2022 and 2015,2021, respectively, from these equity investees for services rendered or provided in relation to these business ventures.
As of December 31, 2023 and 2022, we had accounts receivable and notes receivable balances of $13.3 million and $2.6 million, respectively, due from certain of our equity investees.
NOTE 8—10—INCOME TAXES
Significant components of the provision for income tax expense (benefit) are as follows: | | | | | | | | | | | | | | | | | | | | |
| | Year Ended December 31, |
| | 2023 | | 2022 | | 2021 |
| | (in thousands) |
| Current: | | | | | | |
| Federal | | $ | 1,250 | | | $ | 658 | | | $ | — | |
| Foreign | | 179,824 | | | 83,633 | | | 8,713 | |
| State | | 23,171 | | | 4,764 | | | (1,555) | |
| Total current | | 204,245 | | | 89,055 | | | 7,158 | |
| Deferred: | | | | | | |
| Federal | | 5,982 | | | 6,223 | | | 7,451 | |
| Foreign | | (51,209) | | | (397) | | | (17,434) | |
| State | | 1,209 | | | 1,373 | | | 344 | |
| Total deferred | | (44,018) | | | 7,199 | | | (9,639) | |
| Income tax expense (benefit) | | $ | 160,227 | | | $ | 96,254 | | | $ | (2,481) | |
| | | | | | |
|
| | | | | | | | | | | | |
| | | Year Ended December 31, |
| | | 2017 | | 2016 | | 2015 |
| | | (in thousands) |
| Current: | | | | | | |
| Federal | | $ | (702 | ) | | $ | 564 |
| | $ | 543 |
|
| Foreign | | 50,970 |
| | 29,902 |
| | 23,811 |
|
| State | | 4,117 |
| | 5,454 |
| | 7,379 |
|
| Total current | | 54,385 |
| | 35,920 |
| | 31,733 |
|
| Deferred: | | | | | | |
| Federal | | (56,442 | ) | | 5,113 |
| | (355 | ) |
| Foreign | | (15,841 | ) | | (11,703 | ) | | (8,278 | ) |
| State | | 744 |
| | (1,301 | ) | | (978 | ) |
| Total deferred | | (71,539 | ) | | (7,891 | ) | | (9,611 | ) |
| Income tax expense (benefit) | | $ | (17,154 | ) | | $ | 28,029 |
| | $ | 22,122 |
|
| | | | | | | |
The domestic income (loss) before income taxes was $(132.6)$237.5 million, $1.1$217.0 millionand$(21.4) $(401.4) million for 20172023, 20162022 and2015 2021, respectively. Foreign income (loss) before income taxes was $123.2$657.0 million, $47.2$288.4 million and $27.8$(209.9) million for 2017, 20162023, 2022 and 2015,2021, respectively.
Significant components of the Company’sour deferred tax liabilities and assets are as follows: | | | | | | | | | | | | | | |
| | December 31, |
| | 2023 | | 2022 |
| | (in thousands) |
| Deferred tax liabilities: | | | | |
| Leases | | $ | 205,757 | | | $ | 217,919 | |
| Intangible assets | | 327,249 | | | 297,894 | |
| Prepaid expenses | | 3,494 | | | 12,490 | |
| Hedge investments | | 7,394 | | | 10,584 | |
| Other | | 38,132 | | | 19,086 | |
| Total deferred tax liabilities | | 582,026 | | | 557,973 | |
| Deferred tax assets: | | | | |
| Intangible assets | | 48,088 | | | 51,634 | |
| Accrued expenses | | 180,268 | | | 139,432 | |
| Net operating loss carryforwards | | 812,034 | | | 848,735 | |
| Foreign tax and other credit carryforwards | | 51,351 | | | 51,055 | |
| Equity compensation | | 11,504 | | | 9,452 | |
| Leases | | 239,503 | | | 250,183 | |
| Interest limitation | | 53,698 | | | 84,599 | |
| Capitalized R&D | | 67,516 | | | 35,149 | |
| Other | | 30,580 | | | 53,359 | |
| Total gross deferred tax assets | | 1,494,542 | | | 1,523,598 | |
| Valuation allowance | | 1,194,374 | | | 1,240,881 | |
| Total net deferred tax assets | | 300,168 | | | 282,717 | |
| Net deferred tax liabilities | | $ | (281,858) | | | $ | (275,256) | |
|
| | | | | | | | |
| | | December 31, |
| | | 2017 | | 2016 |
| | | (in thousands) |
| Deferred tax liabilities: | | | | |
| Intangible assets | | $ | 132,041 |
| | $ | 189,131 |
|
| Prepaid expenses | | 7,882 |
| | 8,770 |
|
| Long-term debt | | 1,229 |
| | 3,835 |
|
| Other | | 7,533 |
| | 6,077 |
|
| Total deferred tax liabilities | | 148,685 |
| | 207,813 |
|
| Deferred tax assets: | | | | |
| Accrued expenses | | 68,168 |
| | 45,839 |
|
| Net operating loss carryforwards | | 466,023 |
| | 563,461 |
|
| Foreign tax and other credit carryforwards | | 62,136 |
| | 59,977 |
|
| Equity compensation | | 20,549 |
| | 32,452 |
|
| Other | | 2,725 |
| | — |
|
| Total gross deferred tax assets | | 619,601 |
| | 701,729 |
|
| Valuation allowance | | 596,437 |
| | 681,566 |
|
| Total deferred tax assets | | 23,164 |
| | 20,163 |
|
| Net deferred tax liabilities | | $ | (125,521 | ) | | $ | (187,650 | ) |
Each reporting period, the Company evaluateswe evaluate the realizability of all of itsour deferred tax assets in each tax jurisdiction. As of December 31, 2017, the Company2023, we continued to maintain a full valuation allowance against itsour net deferred tax assets in certain jurisdictions due to sustainedcumulative pre-tax losses. As a result of the valuation allowances, no tax benefits have been recognized for losses incurred in those tax jurisdictions in 2017, 20162023, 2022 and 2015. The reduction in individual deferred tax liabilities and deferred tax assets in 2017 is primarily a result of revaluation of the federal deferred tax balances due to United States tax reform. The valuation allowance balance reduction in 2017 is primarily a result of the reduction in the net United States deferred tax assets revalued using the newly enacted federal tax rate of 21%.
2021.
During 20172023 and 2016, the Company2022, we recorded net deferred tax liabilities of $9.0$281.9 million and $15.9$275.3 million, respectively, due principally to differences in financial reporting and tax bases in assets acquired in business combinations.
As of December 31, 2017, the Company has2023, we have United States federal, state and foreign deferred tax assets related to net operating loss carryforwards of $123.1$268.5 million, $63.5$140.9 million and $279.4$402.6 million, respectively. Based on current statutory carryforward periods, these losses will expire on various dates beginning in 2025. The Company’s federalOur net operating loss ismay be subject to statutory limitations on the amount that can be used in any given year.
The reconciliation of income tax computed at the United States federal statutory rates to income tax expense (benefit) is:
|
| | | | | | | | | | | | |
| | | Year Ended December 31, |
| | | 2017 | | 2016 | | 2015 |
| | | (in thousands) |
| Income tax expense (benefit) at United States statutory rates | | $ | (3,283 | ) | | $ | 16,914 |
| | $ | 2,223 |
|
| State income taxes, net of federal tax benefits | | 1,544 |
| | 3,264 |
| | 3,959 |
|
| Differences between foreign and United States statutory rates | | (10,887 | ) | | (11,116 | ) | | (5,356 | ) |
| United States tax reform rate change | | (55,685 | ) | | — |
| | — |
|
| Non-United States income inclusions and exclusions | | 3,826 |
| | (2,749 | ) | | 655 |
|
| United States income inclusions and exclusions | | 11,347 |
| | (1,317 | ) | | 2,095 |
|
| Nondeductible items | | 11,380 |
| | 3,210 |
| | 4,736 |
|
| Tax contingencies | | 1,955 |
| | 2,390 |
| | 2,063 |
|
| Tax expense from acquired goodwill | | 4,489 |
| | 5,936 |
| | 4,483 |
|
| Change in valuation allowance | | 18,067 |
| | 11,820 |
| | 7,116 |
|
| Other, net | | 93 |
| | (323 | ) | | 148 |
|
| | | $ | (17,154 | ) | | $ | 28,029 |
| | $ | 22,122 |
|
| | | | | | | |
| | | | | | | | | | | | | | | | | | | | |
| | Year Ended December 31, |
| | 2023 | | 2022 | | 2021 |
| | (in thousands) |
| Income tax expense (benefit) at United States statutory rate of 21% | | $ | 187,854 | | | $ | 106,144 | | | $ | (128,366) | |
| State income taxes, net of federal tax benefits | | 22,889 | | | 4,893 | | | (1,267) | |
| Differences between foreign and United States statutory rates | | 37,288 | | | 14,898 | | | (11,237) | |
| | | | | | |
| Non-United States income inclusions and exclusions | | (63,691) | | | (30,783) | | | (1,677) | |
| United States income inclusions and exclusions | | 28,450 | | | (78,061) | | | (22,121) | |
| Nondeductible items | | 25,959 | | | 32,907 | | | 18,413 | |
| Tax contingencies | | 6,191 | | | 728 | | | 895 | |
| Tax expense from acquired goodwill | | 7,953 | | | 7,596 | | | 7,795 | |
| | | | | | |
| Change in valuation allowance | | (93,450) | | | 38,811 | | | 135,908 | |
| Other, net | | 784 | | | (879) | | | (824) | |
| | $ | 160,227 | | | $ | 96,254 | | | $ | (2,481) | |
| | | | | | |
Income tax expense (benefit) is principally attributable to the Company’sour earnings in foreign tax jurisdictions along with state income taxes.
Amounts included in differences between foreign and United States statutory rates are impacted by changes in the mix of international earnings subject to various tax rates which can differ greatly in their proximity to the United States statutory rate. In 2015, there was an increase
Amounts included in taxable foreign earningsnon-United States income inclusions and exclusions include the favorable inclusion of Mexico’s income from subsidiaries.
Amounts included in jurisdictions whose statutory rates are closerUnited States income inclusions and exclusions include unfavorable inclusions for GILTI under the provisions associated with the TCJA.
Nondeductible items for all years presented include the impact of increased nondeductible expenses pursuant to the United States statutory rate which reduced the amountprovisions of this difference as compared to other years. The differences between statutory rates is also impacted by the Company’s Luxembourg affiliates and tax rulings which include the application of a reduced Luxembourg effective rate to the net income before tax resulting from the Company’s financing activities in Luxembourg.
On December 22, 2017, the Tax Cuts and Jobs Act (“TCJA”) was enacted, which amends the Internal Revenue Code to reduce tax rates and modify policies, credits, and deductions for individuals and businesses. For businesses, the TCJA reduces the corporate federal tax rate from a maximum of 35% to a flat 21% rate. The rate reduction will take effect on January 1, 2018. The TCJA will cause the Company’s United States deferred tax assets and liabilities to be revalued. Deferred income taxes result from temporary differences between the tax bases of assets and liabilities and their reported amounts in the financial statements that will result in taxable or deductible amounts in future years. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in years in which those temporary differences are expected to be recovered or settled. As changes in tax laws or rates are enacted, deferred tax assets and liabilities are adjusted through income tax expense. The provisional amount recorded to revalue our United States net deferred tax liability balance was a $55.7 million income tax benefit in the Company’s consolidated statement of operations for the year ended December 31, 2017.including nondeductible executive compensation.
The change in the United States income exclusions and inclusions increased due to the one-time transition tax liability under the TCJA. The international provisions of the TCJA, which generally establish a territorial-style system for taxing foreign-sourced income of domestic multinational corporations, includes the requirement that companies pay a one-time transition tax on earnings of certain foreign-sourced subsidiaries that were previously tax-deferred and creates new taxes on certain foreign-sourced earnings. The Company recorded an estimated amount for the one-time transition liability for its foreign subsidiaries of approximately $25.8 million, which does not impact income tax expense for 2017 since the Company has reflected the transition tax liability as a reduction to existing fully-valued tax attribute carryforwards. Additional work is necessary for a more detailed analysis of the Company’s deferred tax assets and liabilities and its historical foreign earnings as well as potential correlative adjustments. Any subsequent adjustment to the amount will be recorded in the quarter of 2018 when the analysis is complete, but is not anticipated to impact tax expense due to the existence of the aforementioned fully-
valued tax attribute carryforwards. The transition tax inclusion was partially offset by an exclusion pertaining to tax deductions the Company receives for the vesting of restricted shares and non-qualified stock options.
Nondeductible items in 2017 include the Company’s goodwill impairment for Artist Services, which was not deductible for income tax purposes. There were no impairments of goodwill in 2016 or 2015.
The change in the valuation allowance in 2017 and 2016for each period presented resulted primarily from changes in the income (loss) within jurisdictions with full valuation allowances, including the United States.
The following table summarizes the activity related to the Company’sour unrecognized tax benefits: |
| | | | | | | | | | | | |
| | | Year Ended December 31, |
| | | 2017 | | 2016 | | 2015 |
| | | (in thousands) |
| Balance at January 1 | | $ | 15,117 |
| | $ | 14,022 |
| | $ | 12,619 |
|
| Additions: | | | | | | |
| Increase for current year positions | | 807 |
| | — |
| | 1,606 |
|
| Increase for prior year positions | | 15,498 |
| | 1,978 |
| | 274 |
|
| Decrease for prior year positions | | — |
| | (3 | ) | | — |
|
| Interest and penalties for prior years | | 2,745 |
| | 546 |
| | 525 |
|
| Reductions: | | | | | | |
| Expiration of applicable statute of limitations | | (1,233 | ) | | — |
| | — |
|
| Settlements for prior year positions | | (2,033 | ) | | (1,188 | ) | | (852 | ) |
| Foreign exchange | | (271 | ) | | (238 | ) | | (150 | ) |
| Balance at December 31 | | $ | 30,630 |
| | $ | 15,117 |
| | $ | 14,022 |
|
| | | | | | | |
| | | | | | | | | | | | | | | | | | | | |
| | Year Ended December 31, |
| | 2023 | | 2022 | | 2021 |
| | (in thousands) |
| Balance at January 1 | | $ | 22,996 | | | $ | 21,330 | | | $ | 21,732 | |
| Additions: | | | | | | |
| Increase for current year positions | | 2,333 | | | 751 | | | 524 | |
| Increase for prior year positions | | 4,453 | | | 896 | | | 335 | |
| | | | | | |
| Interest and penalties for prior years | | 1,063 | | | 160 | | | 36 | |
| Reductions: | | | | | | |
| | | | | | |
| | | | | | |
| Settlements for prior year positions | | (379) | | | (141) | | | (1,435) | |
| Foreign exchange | | — | | | — | | | 138 | |
| | | | | | |
| Balance at December 31 | | $ | 30,466 | | | $ | 22,996 | | | $ | 21,330 | |
| | | | | | |
If the Companywe were to prevail on all uncertain tax positions, the net effect would be a decrease to itsour income tax provision of approximately $16.8$6.5 million. The remaining $13.8$23.9 million is offset by deferred tax assets that represent tax benefits that would be received in the event that the Companywe did not prevail on all uncertain tax positions. ItAs of December 31, 2023, it is not expected that the total amounts of unrecognized tax benefits will increase or decrease materially within the next year.
We regularly assessesassess the likelihood of additional assessments in each taxing jurisdiction resulting from current and subsequent years’ examinations. Liabilities for income taxes are established for future income tax assessments when it is probable there will be future assessments and the amount can be reasonably estimated. Once established, liabilities for uncertain tax positions are adjusted only when there is more information available or when an event occurs necessitating a change to the liabilities. The Company believesAs of December 31, 2023, we believe that the resolution of income tax matters for open years will not have a material effect on itsour consolidated financial statements although the resolution of income tax matters could impact the Company’sour effective tax rate for a particular future period.
The tax years 2009 through 20172023 remain open to examination by the primary tax jurisdictions to which the company iswe are subject.
NOTE 9—11—EQUITY
Dividends
The Company currently intends to retain future earnings, if any, to finance the expansion of its business. Therefore, it does not expect to pay any cash dividends in the foreseeable future. Moreover, the terms of the Company’s senior secured credit facility limit the amount of funds that the Company will have available to declare and distribute as dividends on its common stock. Payment of future cash dividends, if any, will be at the discretion of the Company’s board of directors in accordance with applicable laws after taking into account various factors, including the financial condition, operating results, current and anticipated cash needs, plans for expansion and contractual restrictions with respect to the payment of dividends.
Common Stock
Issued shares ofThe following table reconciles common stock reported on the balance sheets include 1.6 million and 1.1 million, at December 31,2017 and 2016, respectively, of unvested restricted stock awards that have not been included in the common shares issued reported on theconsolidated statements of changes in equity. These sharesequity to the consolidated balance sheets. | | | | | | | | | | | | | | |
| | December 31, |
| | 2023 | | 2022 |
| Common shares issued as reported in the consolidated statement of changes in equity | | 229,785,241 | | | 228,498,102 | |
| Unissued retirement eligible restricted stock awards | | 4,125 | | | 18,250 | |
| Unvested restricted stock awards | | 1,472,906 | | | 995,691 | |
| Unvested deferred stock awards issued | | 2,448,904 | | | 2,159,604 | |
| Common shares issued as reported in the consolidated balance sheets | | 233,711,176 | | | 231,671,647 | |
Unvested restricted stock awards and unvested deferred stock awards issued will be reflected in the statements of changes in equity at the time of vesting.
In September 2021, we completed the public offering of 5,239,259 shares of common stock. A portion of the proceeds of $455.3 million were used to pay fees of $5.7 million, leaving approximately $449.6 million of net proceeds. We used the net proceeds to fund the acquisition of 51% of the capital stock of OCESA and any remaining proceeds for general corporate purposes.
During 2017, 20162023, 2022 and 2015, the Company2021, we issued 3.51.1 million, 1.46.5 million and 1.62.3 million shares, respectively, of common stock in connection with stock option exercises and vesting of restricted stock awards.
Common Stock Reserved for Future Issuance
Common stock of approximately 25.88.9 million shares as of December 31, 20172023 is reserved for future issuances under the stock incentive plan (including 14.22.4 million options, 1.61.5 million restricted stock awards and 2.52.4 million of deferred stock awards currently granted).
Noncontrolling Interests
Common securities held by the noncontrolling interests that do not include put arrangements exercisable outside of theour control of the Company are recorded in equity, separate from the Company’sour stockholders’ equity.
The purchase or sale of additional ownership in an already controlled subsidiary is recorded as an equity transaction with no gain or loss recognized in net income (loss) or comprehensive income (loss) as long as the subsidiary remains a controlled subsidiary. In 2017, the Company2023, 2022 and 2021, we acquired all or additional equity interests in several companies that did not have a significant impact to equity either on an individual basis or in the aggregate. In 2016, the Company acquired all or additional equity interests in two artist management businesses located in the United States along with other smaller companies. In 2015, a subsidiary of the Company exchanged its equity interest in a ticketing business for a noncontrolling interest in the Company’s subsidiary that acquired the remaining equity interest of that ticketing business. In addition, the Company acquired the remaining equity interest in an artist management business in the United Kingdom. The following schedule reflects the change in ownership interests for these transactions:
|
| | | | | | | | | | | |
| | Year Ended December 31, |
| | 2017 | | 2016 | | 2015 |
| | (in thousands) |
| Net income (loss) attributable to common stockholders of Live Nation | $ | (6,015 | ) | | $ | 2,942 |
| | $ | (32,508 | ) |
| Transfers of noncontrolling interest: | | | | | |
| Changes in Live Nation’s additional paid-in capital for purchases of noncontrolling interests, net of transaction costs | (3,616 | ) | | (49,111 | ) | | (6,555 | ) |
| Changes in Live Nation’s additional paid-in capital for sales of noncontrolling interests, net of transaction costs | — |
| | 1,424 |
| | 11,899 |
|
| Net transfers of noncontrolling interest | (3,616 | ) | | (47,687 | ) | | 5,344 |
|
| Change from net income (loss) attributable to common stockholders of Live Nation and net transfers of noncontrolling interests | $ | (9,631 | ) | | $ | (44,745 | ) | | $ | (27,164 | ) |
| | | | | | | | | | | | | | | | | |
| | Year Ended December 31, |
| | 2023 | | 2022 | | 2021 |
| | (in thousands) |
| Net income (loss) attributable to common stockholders of Live Nation | $ | 563,280 | | | $ | 295,986 | | | $ | (650,904) | |
| Transfers of noncontrolling interests: | | | | | |
| Changes in Live Nation’s additional paid-in capital for purchases of noncontrolling interests, net of transaction costs | (100,940) | | | (64,601) | | | (110) | |
| Changes in Live Nation’s additional paid-in capital for sales of noncontrolling interests, net of transaction costs | — | | | — | | | (289) | |
| Net transfers of noncontrolling interests | (100,940) | | | (64,601) | | | (399) | |
| Change from net income (loss) attributable to common stockholders of Live Nation and net transfers of noncontrolling interests | $ | 462,340 | | | $ | 231,385 | | | $ | (651,303) | |
Redeemable Noncontrolling Interests
The Company isWe are subject to put arrangements where the holders of the noncontrolling interests can require the Companyus to repurchase their shares at specified dates in the future or within specified periods in the future. Certain of these puts can be exercised earlier upon the occurrence of triggering events as specified in the agreements. The redemption amounts for these puts are either at a fixed amount, at fair value at the time of exercise or a variable amount based on a formula linked to earnings. In accordance with the FASB guidance for business combinations, the redeemable noncontrolling interests are recorded at their fair value at acquisition date. For put arrangements that are not currently redeemable, the Company accretes upwe accrete to the estimated redemption value over the period from the date of issuance to the earliest redemption date of the individual puts, with the offset recorded to additional paid-in capital. Decreases in accretion are only recognized to the extent that increases had been previously recognized. The estimated redemption values that are based on a formula linked to future earnings are computed each reporting period using projected cash flows, and the estimated redemption values that are based on fair value at the time of exercise are computed each reporting period by applying a multiple to projected earnings, both of which take into account the current expectations regarding profitability and the timing of revenue-generating events. The balances are reflected in the Company’sour balance sheets as redeemable noncontrolling interests outside of permanent equity. The decrease during the current year is primarily due to the acquisition of the remaining interest in a festival and concert promoter business located in the United States upon the exercise of the related put in December 2017.
The Company’sOur estimate of redemption amounts for puts that are redeemable at fixed or determinable prices on fixed or determinable dates for the years ended December 31, 2018, 2019, 2020, 20212024, 2025, 2026, 2027 and 20222028 are $1.5$65.9 million, $101.6$660.7 million, $87.6$633.3 million, $61.7$74.3 million and $25.6$77.7 million, respectively. The estimate for 2018 has decreased primarily due
Transactions with Noncontrolling Interest Partners
We have loaned or advanced money to noncontrolling interest partners under the terms of the partnership operating agreements, promissory notes or other arrangements. As of December 2017 put redemption noted above that was originally estimated to likely occur later31, 2023, we had outstanding notes receivable and prepayments of $1.9 million in the redemption period.other current assets and $50.0 million in other long-term assets, and as of December 31, 2022, we had outstanding notes receivable and prepayments of $17.9 million in other current assets and $50.0 million in other long-term assets.
Accumulated Other Comprehensive Income (Loss)
The following table presents changes in the components of AOCI, net of taxes, for the years ended December 31, 2017, 20162023, 2022 and 2015:2021: | | | | | | | | | | | | | | | | | | | | | | | | |
| | Cash Flow Hedges | | | | Foreign Currency Items | | | | Total |
| | (in thousands) |
| Balance at December 31, 2020 | | (31,587) | | | | | (145,422) | | | | | (177,009) | |
| Other comprehensive income before reclassifications | | 15,204 | | | | | 6,016 | | | | | 21,220 | |
| Amount reclassified from AOCI | | 7,825 | | | | | — | | | | | 7,825 | |
| Net other comprehensive income | | 23,029 | | | | | 6,016 | | | | | 29,045 | |
| Balance at December 31, 2021 | | (8,558) | | | | | (139,406) | | | | | (147,964) | |
| Other comprehensive income before reclassifications | | 49,529 | | | | | 8,047 | | | | | 57,576 | |
| Amount reclassified from AOCI | | 312 | | | | | — | | | | | 312 | |
| Net other comprehensive income | | 49,841 | | | | | 8,047 | | | | | 57,888 | |
| Balance at December 31, 2022 | | 41,283 | | | | | (131,359) | | | | | (90,076) | |
| Other comprehensive income before reclassifications | | 5,225 | | | | | 129,459 | | | | | 134,684 | |
| Amount reclassified from AOCI | | (17,158) | | | | | — | | | | | (17,158) | |
| Net other comprehensive income (loss) | | (11,933) | | | | | 129,459 | | | | | 117,526 | |
| Balance at December 31, 2023 | | $ | 29,350 | | | | | $ | (1,900) | | | | | $ | 27,450 | |
|
| | | | | | | | | | | | |
| | | Foreign Currency Items | | Other | | Total |
| | | (in thousands) |
| Balance at December 31, 2014 | | $ | (69,404 | ) | | $ | (606 | ) | | $ | (70,010 | ) |
| Other comprehensive income (loss) before reclassifications | | (41,895 | ) | | 223 |
| | (41,672 | ) |
| Amount reclassified from AOCI | | — |
| | 25 |
| | 25 |
|
| Net other comprehensive income (loss) | | (41,895 | ) | | 248 |
| | (41,647 | ) |
| Balance at December 31, 2015 | | (111,299 | ) | | (358 | ) | | (111,657 | ) |
| Other comprehensive loss before reclassifications | | (64,947 | ) | | (103 | ) | | (65,050 | ) |
| Amount reclassified from AOCI | | — |
| | — |
| | — |
|
| Net other comprehensive loss | | (64,947 | ) | | (103 | ) | | (65,050 | ) |
| Balance at December 31, 2016 | | (176,246 | ) | | (461 | ) | | (176,707 | ) |
| Other comprehensive income before reclassifications | | 67,704 |
| | — |
| | 67,704 |
|
| Amount reclassified from AOCI | | — |
| | 461 |
| | 461 |
|
| Net other comprehensive income | | 67,704 |
| | 461 |
| | 68,165 |
|
| Balance at December 31, 2017 | | $ | (108,542 | ) | | $ | — |
| | $ | (108,542 | ) |
The realized loss in other reclassified from AOCI during 2017 resulted fromSee Note 7 – Fair Value Measurements for further discussion and disclosure of the terminationfair value of a pension plan. The realized loss in other reclassified from AOCI during 2015 consists of oneour interest rate swap agreement that expired on June 30, 2015.has been designated as a cash flow hedge.
Earnings per Share
Basic net income (loss) per common share is computed by dividing the net income (loss) available to common stockholders by the weighted average number of common shares outstanding during the period. Diluted net income per common share adjusts basic net income per common share for the effects of stock options, restricted stock and other potentially dilutive financial instruments only in the periods in which such effect is dilutive. The Company’s convertible senior notes are considered in the calculation of diluted net income per common share, if dilutive.
The calculation of diluted net income(loss) per common share includes the effects of the assumed exercise of any outstanding stock options, the assumed vesting of shares of restricted and deferred stock awards and the assumed conversion of theour convertible senior notes, where dilutive. For
The following table sets forth the years ended December 31, 2017, 2016 and 2015 there were no reconciling items to thecomputation of weighted average common shares outstanding in the calculation of diluted net income per common share. outstanding:
| | | | | | | | | | | | | | | | | | | | |
| | Year Ended December 31, |
| | 2023 | | 2022 | | 2021 |
| Weighted average common shares—basic | | 228,628,390 | | | 224,809,558 | | | 217,190,862 | |
| Effect of dilutive shares: | | | | | | |
| Stock options and restricted stock | | 2,348,936 | | | 6,747,308 | | | — | |
| | | | | | |
| Weighted average common shares—diluted | | 230,977,326 | | | 231,556,866 | | | 217,190,862 | |
The following table shows securities excluded from the calculation of diluted net income per common share because such securities were anti-dilutive: | | | | | | | | | | | | | | | | | | | | |
| | Year Ended December 31, |
| | 2023 | | 2022 | | 2021 |
| Options to purchase shares of common stock | | 3,750 | | | 3,750 | | | 7,719,714 | |
| Restricted and deferred stock awards—unvested | | 2,527,463 | | | 2,218,563 | | | 3,052,244 | |
| | | | | | |
| Conversion shares related to convertible senior notes | | 13,004,660 | | | 11,864,035 | | | 11,864,035 | |
| Number of anti-dilutive potentially issuable shares excluded from diluted common shares outstanding | | 15,535,873 | | | 14,086,348 | | | 22,635,993 | |
|
| | | | | | | | | |
| | Year Ended December 31, |
| | 2017 | | 2016 | | 2015 |
| Options to purchase shares of common stock | | 14,238,589 |
| | 16,283,434 |
| | 16,308,739 |
|
| Restricted and deferred stock awards—unvested | | 4,106,956 |
| | 1,079,783 |
| | 860,646 |
|
| Conversion shares related to convertible senior notes | | 7,929,982 |
| | 7,929,982 |
| | 7,929,982 |
|
| Number of anti-dilutive potentially issuable shares excluded from diluted common shares outstanding | | 26,275,527 |
| | 25,293,199 |
| | 25,099,367 |
|
NOTE 12—SEGMENTS AND REVENUE RECOGNITION
Our reportable segments are Concerts, Ticketing and Sponsorship & Advertising. We use AOI to evaluate the performance of our operating segments and define AOI as operating income (loss) before certain acquisition expenses (including transaction costs, changes in the fair value of accrued acquisition-related contingent consideration obligations, and acquisition-related severance and compensation), amortization of non-recoupable ticketing contract advances, depreciation and amortization (including goodwill impairment), loss (gain) on disposal of operating assets, and stock-based compensation expense. 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.
Revenue and expenses earned and charged between segments are eliminated in consolidation. Our capital expenditures below include accruals for amounts incurred but not yet paid for, but are not reduced by reimbursements received from outside parties such as landlords and noncontrolling interest partners or replacements funded by insurance proceeds.
We manage our working capital on a consolidated basis. Accordingly, segment assets are not reported to, or used by, our management to allocate resources to or assess performance of our segments, and therefore, total segment assets and related depreciation and amortization have not been presented.
There were no customers that individually accounted for more than 10% of our consolidated revenue in any year.
Concerts
Our Concerts segment involves the promotion of live music events globally in our owned or operated venues and in rented third-party venues, the production of music festivals, the operation and management of music venues, the creation or streaming of associated content and the provision of management and other services to artists. This segment generates revenue from the promotion or production of live music events and festivals in our owned or operated venues and in rented third-party venues, artist management commissions and the sale of merchandise for music artists at events. As a promoter and venue operator, we earn revenue primarily from the sale of tickets, concessions, merchandise, parking, ticket rebates or service charges on tickets sold by Ticketmaster or third-party ticketing platforms, and rental of our owned or operated venues. As an artist manager, we earn commissions on the earnings of the artists and other clients we represent, primarily derived from clients’ earnings for concert tours. Over 96% of Concerts’ revenue, whether related to promotion, venue operations, artist management or artist event merchandising, is recognized on the day of the related event. The majority of consideration for our Concerts segment is collected in advance of or on the day of the event. Consideration received in advance of the event is recorded as deferred revenue or in long-term liabilities if the event is more than twelve months from the balance sheet date. Any consideration not collected by the day of the event is typically received within three months after the event date.
Ticketing
Our Ticketing segment involves the management of our global ticketing operations, including providing ticketing software and services to clients, and consumers with a marketplace, both online and mobile, for tickets and event information, and is responsible for our primary ticketing website, www.ticketmaster.com. Ticket fee revenue is generated from convenience and order processing fees, or service charges, charged at the time a ticket for an event is sold in either the primary or secondary markets. A significant portion of our service charges are payable to the venue and credit card vendors. The Ticketing segment is primarily an agency business that sells tickets for events on behalf of its clients, which include venues, concert promoters, professional sports franchises and leagues, college sports teams, theater producers and museums. This segment records revenue arising from convenience and order processing fees, regardless of whether these fees are related to tickets sold in the primary or secondary market, and regardless of whether these fees are associated with our concert events or third-party clients’ concert events. We do not record the face value of the tickets as revenue. Ticket fee revenue is recognized when the ticket is sold for third-party clients and secondary market sales, as we have no further obligation to our client’s customers following the sale of the ticket. For our concert events where our concert promoters control ticketing, ticket fee revenue is recognized when the event occurs because we also have the obligation to deliver the event to the fan. The delivery of the ticket to the fan is not considered a distinct performance obligation for our concert events because the fan cannot receive the benefits of the ticket unless we also fulfill our obligation to deliver the event. The majority of ticket fee revenue is collected within the month of the ticket sale. Revenue received from the sale of tickets in advance of our concert events is recorded as deferred revenue or in other long-term liabilities if the date of the event is more than twelve months from the balance sheet date. Reported revenue is net of any refunds made or committed to and also the impact of any cancellations of events that occurred during the period and up to the time of filing these consolidated financial statements.
Ticketing contract advances, which can be either recoupable or non-recoupable, represent amounts paid in advance to our clients pursuant to ticketing agreements and are reflected in prepaid expenses or in long-term advances if the amount is expected to be recouped or recognized over a period of more than twelve months. Recoupable ticketing contract advances are generally recoupable against future royalties earned by the client, based on the contract terms, over the life of the contract. Royalties are typically earned by the client when tickets are sold. Royalties paid to clients are recorded as a reduction to revenue when the tickets are sold and the corresponding service charge revenue is recognized. Non-recoupable ticketing contract advances, excluding those amounts paid to support clients’ advertising costs, are fixed additional incentives occasionally paid by us to certain clients to secure the contract and are typically amortized over the life of the contract on a straight-line basis as a reduction to revenue. At December 31, 2023 and 2022, we had ticketing contract advances of $143.9 million and $106.5 million, respectively, in prepaid expenses and $135.6 million and $105.0 million, respectively, in long-term advances. We amortized $83.7 million, $79.0 million and $74.4 million for the years ended December 31, 2023, 2022 and 2021 respectively, related to non-recoupable ticketing contract advances.
Sponsorship & Advertising
Our Sponsorship & Advertising segment manages the development of strategic sponsorship programs in addition to the sale of international, national and local sponsorships and placement of advertising such as signage, promotional programs, rich media offerings, including advertising associated with live streaming and music-related content, and ads across our distribution network of venues, events and websites. This segment generates revenue from sponsorship and marketing programs that provide its sponsors with strategic, international, national and local opportunities to reach customers through our venue, concert and ticketing assets, including advertising on our websites. These programs can also include custom events or programs for the sponsors’ specific brands, which are typically experienced exclusively by the sponsors’ customers. Sponsorship agreements may contain multiple elements, which provide several distinct benefits to the sponsor over the term of the agreement, and can be for a single or multi-year term. We also earn revenue from exclusive access rights provided to sponsors in various categories such as ticket pre-sales, beverage pouring rights, venue naming rights, media campaigns, signage within our venues, and advertising on our websites. Revenue from sponsorship agreements is allocated to the multiple elements based on the relative stand-alone selling price of each separate element, which are determined using vendor-specific evidence, third-party evidence or our best estimate of the fair value. Revenue is recognized over the term of the agreement or operating season as the benefits are provided to the sponsor unless the revenue is associated with a specific event, in which case it is recognized when the event occurs. Revenue is collected in installment payments during the year, typically in advance of providing the benefit or the event. Revenue received in advance of the event or the sponsor receiving the benefit is recorded as deferred revenue or in other long-term liabilities if the date of the event is more than twelve months from the balance sheet date.
At December 31, 2023, we had contracted sponsorship agreements with terms greater than one year that had approximately $1.5 billion of revenue related to future benefits to be provided by us. We expect to recognize, based on current projections, approximately 38%, 26%, 16% and 20% of this revenue in 2024, 2025, 2026 and thereafter, respectively.
The following table presents the results of Contentsoperations for our reportable segments for the years ending December 31, 2023, 2022 and 2021: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Concerts | | Ticketing | | Sponsorship
& Advertising | | | | Other & Eliminations | | Corporate | | Consolidated |
| | (in thousands) |
| 2023 | | | | | | | | | | | | | |
| Revenue | $ | 18,763,669 | | $ | 2,959,477 | | $ | 1,095,217 | | | | $ | (69,290) | | $ | — | | | $ | 22,749,073 | |
| | | | | | | | | | | | | |
| | | | | | | | | | | | | |
| | | | | | | | | | | | | |
| | | | | | | | | | | | | |
| | | | | | | | | | | | | |
| | | | | | | | | | | | | |
| % of Consolidated Revenue | 82.5% | | 13.0% | | 4.8% | | | | (0.3)% | | | | |
| Intersegment revenue | $ | 17,773 | | $ | 51,517 | | $ | — | | | | $ | (69,290) | | $ | — | | | $ | — | |
| AOI | $ | 325,497 | | $ | 1,116,303 | | $ | 675,137 | | | | $ | (39,574) | | $ | (214,974) | | | $ | 1,862,389 | |
| Capital expenditures | $ | 346,392 | | $ | 68,991 | | $ | 18,250 | | | | $ | — | | $ | 35,118 | | | $ | 468,751 | |
| | | | | | | | | | | | | |
| 2022 | | | | | | | | | | | | | |
| Revenue | $ | 13,494,100 | | $ | 2,238,618 | | $ | 968,146 | | | | $ | (19,610) | | $ | — | | | $ | 16,681,254 | |
| | | | | | | | | | | | | |
| | | | | | | | | | | | | |
| | | | | | | | | | | | | |
| | | | | | | | | | | | | |
| | | | | | | | | | | | | |
| | | | | | | | | | | | | |
| % of Consolidated Revenue | 80.9% | | 13.4% | | 5.8% | | | | (0.1)% | | | | |
| Intersegment revenue | $ | 12,821 | | $ | 8,643 | | $ | — | | | | $ | (21,464) | | $ | — | | | $ | — | |
| AOI | $ | 169,740 | | $ | 827,901 | | $ | 591,972 | | | | $ | (14,549) | | $ | (167,882) | | | $ | 1,407,182 | |
| | | | | | | | | | | | | |
| Capital expenditures | $ | 277,133 | | $ | 70,739 | | $ | 19,383 | | | | $ | (17) | | $ | 9,680 | | | $ | 376,918 | |
| | | | | | | | | | | | | |
| 2021 | | | | | | | | | | | | | |
| Revenue | $ | 4,722,190 | | $ | 1,134,268 | | $ | 411,910 | | | | $ | 79 | | $ | — | | | $ | 6,268,447 | |
| | | | | | | | | | | | | |
| | | | | | | | | | | | | |
| | | | | | | | | | | | | |
| | | | | | | | | | | | | |
| | | | | | | | | | | | | |
| | | | | | | | | | | | | |
| % of Consolidated Revenue | 75.3% | | 18.1% | | 6.6% | | | | $ | — | | | | |
| Intersegment revenue | $ | 2,505 | | $ | 404 | | $ | — | | | | $ | (2,909) | | $ | — | | | $ | — | |
| AOI | $ | (221,338) | | $ | 420,545 | | $ | 242,239 | | | | $ | (6,963) | | $ | (110,620) | | | $ | 323,863 | |
| Capital expenditures | $ | 92,132 | | $ | 49,004 | | $ | 12,299 | | | | $ | — | | $ | 23,036 | | | $ | 176,471 | |
The following table sets forth the reconciliation of consolidated AOI to operating income (loss) for the for the years ended December 31, 2023, 2022 and 2021:
| | | | | | | | | | | | | | | | | |
| 2023 | | 2022 | | 2021 |
| (in thousands) |
| AOI | $ | 1,862,389 | | | $ | 1,407,182 | | | $ | 323,863 | |
| | | | | |
| Acquisition expenses | 93,664 | | | 68,078 | | | 42,912 | |
| Amortization of non-recoupable ticketing contract advance | 83,693 | | | 79,043 | | | 74,406 | |
| Depreciation and amortization | 516,797 | | | 449,976 | | | 416,277 | |
| Gain on sale of operating assets | (13,927) | | | (32,082) | | | (1,211) | |
| Stock-based compensation expense | 115,959 | | | 110,049 | | | 209,337 | |
| Operating income (loss) | $ | 1,066,203 | | | $ | 732,118 | | | $ | (417,858) | |
Deferred Revenue
The majority of our deferred revenue is typically classified as current and is shown as a separate line item on the consolidated balance sheets. Deferred revenue that is not expected to be recognized within the next twelve months is classified as long-term and reflected in other long-term liabilities on the consolidated balance sheets. At December 31, 2023, 2022 and 2021, we had current deferred revenue of $3.4 billion, $3.1 billion and $2.8 billion, respectively.
The table below summarizes the amount of prior year current deferred revenue recognized during the years ended December 31, 2023 and 2022:
| | | | | | | | | | | |
| December 31, |
| 2023 | | 2022 |
| |
| (in thousands) |
| Concerts | $ | 2,757,149 | | | $ | 2,327,040 | |
| Ticketing | 142,940 | | | 134,966 | |
| Sponsorship & Advertising | 126,530 | | | 133,318 | |
| | | |
| $ | 3,026,619 | | | $ | 2,595,324 | |
NOTE 10—13—STOCK-BASED COMPENSATION
In December 2005, the Companywe adopted itsour 2005 Stock Incentive Plan, which has been amended and/or restated on several occasions. In connection with the Company’sour merger with Ticketmaster Entertainment LLC, the Companywe adopted the Amended and Restated Ticketmaster 2008 Stock & Annual Incentive Plan. The plans authorize the Companyus to grant stock option awards, director shares, stock appreciation rights, restricted stock and deferred stock awards, other equity-based awards and performance awards. The Company hasWe have granted restricted stock awards, options to purchase itsour common stock and deferred stock awards to employees, directors, consultants, and consultants of the Company and itsour affiliates under the stock incentive plans at no less than the fair market value of the underlying stock on the date of grant. The stock incentive plans contain anti-dilutive provisions that require the adjustment of the number of shares of the Company’sour common stock represented by, and the exercise price of, each option for any stock splits or stock dividends. The ten-year term of the Ticketmaster plan expired in August 2018; accordingly, no new awards may be granted under that plan but outstanding awards shall continue in full force and effect in accordance with their terms.
The following is a summary of stock-based compensation expense we recorded by the Company during the respective periods:
| | | | | | | | | | | | | | | | | | | | | |
| | | Year Ended December 31, |
| | | | | | 2023 | | 2022 | | 2021 |
| | | | | | (in thousands) |
| Selling, general and administrative expenses | | | | | $ | 40,751 | | | $ | 45,214 | | | $ | 161,849 | |
| Corporate expenses | | | | | 75,208 | | | 64,835 | | | 47,488 | |
| Total | | | | | $ | 115,959 | | | $ | 110,049 | | | $ | 209,337 | |
|
| | | | | | | | | | | |
| Year Ended December 31, |
| | 2017 | | 2016 | | 2015 |
| | (in thousands) |
| Selling, general and administrative expenses | $ | 24,364 |
| | $ | 15,687 |
| | $ | 16,380 |
|
| Corporate expenses | 18,391 |
| | 17,036 |
| | 16,981 |
|
| Total | $ | 42,755 |
| | $ | 32,723 |
| | $ | 33,361 |
|
The increase in stock-based compensation expense for the year endedAs of December 31, 2017 as compared to the prior year is due primarily to other equity awards granted to employees during 2017 that vested immediately. During 2017, the Company recorded stock-based compensation expense for these other awards of $10.0 million as a component of selling, general and administrative expenses.
As of December 31, 2017,2023, there was $116.2$139.8 million of total unrecognized compensation cost related to stock-based compensation arrangements for stock options, restricted stock and deferred stock awards. This cost is expected to be recognized over a weighted-average period of 4.13.1 years.
Stock Options
Stock options are granted for a term not exceeding ten years and the nonvestednon-vested options are generally forfeited in the event the employee, director or consultant terminates his or her employment or relationship with the Companyus or one of itsour affiliates. Any options that have vested at the time of termination are forfeited to the extent they are not exercised within the applicable post-employment exercise period provided in their option agreements. These options typically vest over twoone to fivefour years.
In 2023 and 2022, no stock options were granted. The following assumptions were used to calculate the fair value of the Company’sour options on the date of grant: |
| | | | | | | | |
| | Year Ended December 31, |
| | 2017 | | 2016 | | 2015 |
| Risk-free interest rate | 1.87% - 2.27% |
| | 1.24% - 1.49% |
| | 1.47% - 1.75% |
|
| Dividend yield | 0.0 | % | | 0.0 | % | | 0.0 | % |
| Volatility factors | 25.88% - 27.58% |
| | 29.42% - 36.11% |
| | 34.18% - 43.36% |
|
| Weighted average expected life (in years) | 5.78 |
| | 5.76 |
| | 5.94 |
|
| | | | | | | | | |
| | | Year Ended December 31, |
| | | 2021 | | |
| Risk-free interest rate | | | 1.01 | % | | |
| | | | | |
| Volatility factors | | | 42.61 | % | | |
| Weighted average expected life (in years) | | | 6.40 | | |
The following table presents a summary of the Company’sour stock options outstanding at the dates given, and stock option activity for the period between such dates (“Price” reflects the weighted average exercise price per share): | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Year Ended December 31, |
| | 2023 | | 2022 | | 2021 |
| | Options | | Price | | Options | | Price | | Options | | Price |
| | (in thousands, except per share data) |
| Outstanding January 1 | 3,257 | | | $ | 29.78 | | | 7,720 | | | $ | 18.24 | | | 9,323 | | | $ | 18.93 | |
| Granted | — | | | — | | | — | | | — | | | 9 | | | 89.81 | |
| Exercised | (891) | | | 21.63 | | | (4,461) | | | 9.79 | | | (1,603) | | | 22.32 | |
| Forfeited or expired | — | | | — | | | (2) | | | 70.26 | | | (9) | | | 75.57 | |
| Outstanding December 31 | 2,366 | | | $ | 32.85 | | | 3,257 | | | $ | 29.78 | | | 7,720 | | | $ | 18.24 | |
| | | | | | | | | | | |
| Exercisable December 31 | 2,362 | | | $ | 32.78 | | | 3,171 | | | $ | 29.02 | | | 7,702 | | | $ | 18.13 | |
| Weighted average fair value per option granted | | | $ | — | | | | | $ | — | | | | | $ | 38.55 | |
|
| | | | | | | | | | | | | | | | | | | | |
| | Year Ended December 31, |
| | 2017 | | 2016 | | 2015 |
| | Options | | Price | | Options | | Price | | Options | | Price |
| | (in thousands, except per share data) |
| Outstanding January 1 | 16,283 |
| | $ | 13.55 |
| | 16,309 |
| | $ | 13.54 |
| | 16,999 |
| | $ | 13.78 |
|
| Granted | 1,164 |
| | 33.48 |
| | 1,103 |
| | 19.53 |
| | 1,667 |
| | 25.32 |
|
| Exercised | (3,138 | ) | | 16.27 |
| | (1,063 | ) | | 19.10 |
| | (1,098 | ) | | 14.50 |
|
| Forfeited or expired | (70 | ) | | 24.05 |
| | (66 | ) | | 22.39 |
| | (1,259 | ) | | 31.58 |
|
| Outstanding December 31 | 14,239 |
| | $ | 14.52 |
| | 16,283 |
| | $ | 13.55 |
| | 16,309 |
| | $ | 13.54 |
|
| | | | | | | | | | | | |
| Exercisable December 31 | 11,906 |
| | $ | 12.00 |
| | 12,628 |
| | $ | 12.01 |
| | 11,177 |
| | $ | 11.54 |
|
| Weighted average fair value per option granted | | | $ | 10.18 |
| | | | $ | 6.98 |
| | |
| | $ | 9.93 |
|
The total intrinsic value of stock options exercised during the years ended December 31, 2017, 20162023, 2022 and 20152021 was $57.5$58.3 million, $8.5$390.9 million and $14.1$106.4 million, respectively. Cash received from stock option exercises for the years ended December 31, 2017, 20162023, 2022 and 20152021 was $51.1$19.3 million, $20.3$35.8 million and $16.3$30.6 million, respectively.
There were 7.42.6 million shares available for future grants under the stock incentive plansplan at December 31, 2017.2023. Upon share option exercise or vesting of restricted or deferred stock, the Company issueswe issue new shares or treasury shares to fulfill these grants. Vesting dates on the stock options range from January 2018February 2024 to December 2021,March 2025, and expiration dates range from January 20182025 to December 2027March 2031 at exercise prices and average contractual lives as follows: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Range of
Exercise
Prices | | Outstanding
as of
12/31/23 | | Weighted
Average
Remaining
Contractual
Life | | Weighted Average Exercise Price | | Exercisable
as of
12/31/23 | | Weighted
Average
Remaining
Contractual
Life | | Weighted
Average
Exercise
Price |
| | (in thousands) | | (in years) | | | | (in thousands) | | (in years) | | |
| | | | | | | | | | | | |
| $15.00 - $19.99 | | 634 | | | 2.1 | | $ | 19.36 | | | 634 | | | 2.1 | | $ | 19.36 | |
| $20.00 - $24.99 | | 40 | | | 1.4 | | $ | 24.77 | | | 40 | | | 1.4 | | $ | 24.77 | |
| $25.00 - $29.99 | | 954 | | | 2.4 | | $ | 27.63 | | | 954 | | | 2.4 | | $ | 27.63 | |
| $30.00 - $44.99 | | 325 | | | 4.1 | | $ | 43.95 | | | 325 | | | 4.1 | | $ | 43.95 | |
| $45.00 - $60.99 | | 395 | | | 5.2 | | $ | 56.82 | | | 392 | | | 5.2 | | $ | 56.80 | |
| $61.00 - $89.99 | | 19 | | | 7.0 | | $ | 74.05 | | | 17 | | | 7.0 | | $ | 72.36 | |
|
| | | | | | | | | | | | | | | | | | |
Range of Exercise Prices | | Outstanding as of 12/31/17 | | Weighted Average Remaining Contractual Life | | Weighted Average Exercise Price | | Exercisable as of 12/31/17 | | Weighted Average Remaining Contractual Life | | Weighted Average Exercise Price |
| | | (in thousands) | | (in years) | | | | (in thousands) | | (in years) | | |
| | | | | | | | | | | | | |
| $2.75 - $4.99 | | 1,713 |
| | 1.2 | | $ | 2.82 |
| | 1,713 |
| | 1.2 | | $ | 2.82 |
|
| $5.00 - $9.99 | | 4,455 |
| | 4.8 | | $ | 8.81 |
| | 4,455 |
| | 4.8 | | $ | 8.81 |
|
| $10.00 - $14.99 | | 2,540 |
| | 3.3 | | $ | 11.34 |
| | 2,540 |
| | 3.3 | | $ | 11.34 |
|
| $15.00 - $19.99 | | 1,269 |
| | 7.0 | | $ | 19.04 |
| | 745 |
| | 6.2 | | $ | 18.82 |
|
| $20.00 - $24.99 | | 1,842 |
| | 6.2 | | $ | 21.15 |
| | 1,467 |
| | 6.1 | | $ | 21.15 |
|
| $25.00 - $29.99 | | 2,061 |
| | 7.9 | | $ | 26.77 |
| | 986 |
| | 7.1 | | $ | 25.35 |
|
| $30.00 - $44.99 | | 359 |
| | 9.9 | | $ | 43.50 |
| | — |
| | 0.0 | | $ | — |
|
The total intrinsic value of options outstanding and options exercisable as of December 31, 20172023 was $606.1$143.8 million and $506.8$143.7 million, respectively.
Restricted Stock
The Company hasWe have granted restricted stock awards to itsour employees, directors and consultants under itsour stock incentive plans.plan. These common shares carry a legend which typically restricts their transferability for a term of one to five years and are forfeited in the event the recipient’s employment or relationship with the Companyus is terminated prior to the lapse of the restriction. In addition, certain restricted stock awards require the Companyus or the recipient to achieve minimum performance targets in order for these awards to vest.
In 2017, the Company granted 0.9 million shares of restricted stock and 0.2 million shares of performance-based awards, respectively, under the Company’s stock incentive plans. These awards will all vest over one or four years with the exception of the performance-based awards which will vest within one to two years if the performance criteria are met.
In 2016, the Company2023, we granted 0.4 million shares of restricted stock and 0.4 million shares of performance-based awards, respectively, under the Company’sour stock incentive plans.plan. These awards will all vest on the grant date or over one ora period of two months to four years with the exception of the performance-based awards which will generally vest within two years if the performance criteria are met. As of December 31, 2017, the performance-based criteria for these awards have been met unless otherwise forfeited.
In 2015, the Company2022, we granted 0.31.8 million shares of restricted stock and 0.2 million shares of performance-based awards, respectively, under the Company’sour stock incentive plans.plan. These awards will generally vest on the grant date or over a period of one or fourmonth to six years with the exception of the performance-based awards which will generally vest within two years if the performance criteria are met. As
In 2021, we granted 0.8 million shares of December 31, 2017,restricted stock under our stock incentive plan. These awards will all vest on the performance-based criteria for these awards have been met unless otherwise forfeited.grant date or over a period of six months to four years.
The following table presents a summary of the Company’sour unvested restricted stock awards outstanding at December 31, 2017, 20162023, 2022 and 20152021 (“Price” reflects the weighted average share price at the date of grant): | | | | | | | | | | | |
| | Restricted Stock |
| | Awards | | Price |
| | (in thousands, except per share data) |
| Unvested at December 31, 2020 | 1,589 | | | $ | 58.19 | |
| Granted | 758 | | | 86.57 | |
| Forfeited | (361) | | | 61.18 | |
| Vested | (1,126) | | | 61.25 | |
| Unvested at December 31, 2021 | 860 | | | $ | 78.48 | |
| Granted | 2,002 | | | 103.34 | |
| Forfeited | (22) | | | 80.57 | |
| Vested | (1,844) | | | 99.68 | |
| Unvested at December 31, 2022 | 996 | | | $ | 89.22 | |
| Granted | 841 | | | 70.51 | |
| Forfeited | (7) | | | 92.06 | |
| Vested | (357) | | | 89.93 | |
| Unvested at December 31, 2023 | 1,473 | | | $ | 78.34 | |
|
| | | | | | |
| | Restricted Stock |
| | Awards | | Price |
| | (in thousands, except per share data) |
| Unvested at December 31, 2014 | 1,171 |
| | $ | 16.18 |
|
| Granted | 456 |
| | 26.11 |
|
| Forfeited | (6 | ) | | 10.02 |
|
| Vested | (760 | ) | | 14.74 |
|
| Unvested at December 31, 2015 | 861 |
| | $ | 22.67 |
|
| Granted | 751 |
| | 20.65 |
|
| Forfeited | (50 | ) | | 21.63 |
|
| Vested | (482 | ) | | 21.73 |
|
| Unvested at December 31, 2016 | 1,080 |
| | $ | 21.67 |
|
| Granted | 1,132 |
| | 35.97 |
|
| Forfeited | (82 | ) | | 22.96 |
|
| Vested | (523 | ) | | 21.89 |
|
| Unvested at December 31, 2017 | 1,607 |
| | $ | 31.79 |
|
The total grant date fair market value of the shares issued upon the vesting of restricted stock awards during the years ended December 31, 2017, 20162023, 2022 and 20152021 was $11.5$32.2 million, $10.5$183.8 million and $11.2$69.2 million, respectively. As of December 31, 2017, there were 0.2 million restricted stock awards outstanding which require the Company or the recipient to achieve minimum performance targets in order for the awards to vest.
Deferred Stock
The Company hasWe granted deferred stock awards to itsour employees where the employees are entitled to receive shares of common stock in the future. Deferred stock can only be settled in stock as determined at the time of the grant. All of the deferred stock awards require the Companyus to achieve minimum market conditions in order for these awards to issue and vest.
In 2017, the Company2023, we granted 2.50.3 million shares of deferred stock awards with market conditions under the Company’s stock incentive plans. These awards will all vest over five years if specified stock prices are achieved over a specific number of days during the five years.
In 2022, we granted 2.2 million shares of deferred stock awards with market conditions under our stock incentive plans. These awards will vest over five to six years if specified stock prices are achieved over a specific number of days during the five to six years. As of December 31, 2023, there were no deferred stock awards outstanding for which the minimum market conditions have been met.
The following assumptions were used to calculate the fair value of the deferred stock awards with market conditions on the date of grant:
| | | | | | | | | | | |
| Year Ended December 31, |
| | 2023 | | 2022 |
| Risk-free interest rate | 4.47 | % | | 2.85% - 3.69% |
| Volatility factors | 39.33 | % | | 45.10% - 45.99% |
| Weighted average expected life (in years) | 5.22 | | 5.27 |
The following table presents a summary of the Company’sour unvested deferred stock awards outstanding at December 31, 20172023, 2022 and 20162021 (“Price” reflects the weighted average share price at thegrant date of grant)fair value): | | | | | | | | | | | |
| Deferred Stock |
| Awards | | Price |
| (in thousands, except per share data) |
| Unvested at December 31, 2020 | 2,367 | | | $ | 26.53 | |
| Awarded | — | | | — | |
| Forfeited | — | | | — | |
| Vested | (175) | | | 26.12 | |
| Unvested at December 31, 2021 | 2,192 | | | $ | 26.56 | |
| Awarded | 2,160 | | | 59.79 | |
| Forfeited | — | | | — | |
| Vested | (2,192) | | | 26.56 | |
| Unvested at December 31, 2022 | 2,160 | | | $ | 59.79 | |
| Awarded | 289 | | | 70.47 | |
| Forfeited | — | | | — | |
| Vested | — | | | — | |
| Unvested at December 31, 2023 | 2,449 | | | $ | 61.05 | |
|
| | | | | | |
| | Deferred Stock |
| | Awards | | Price |
| | (in thousands, except per share data) |
| Unvested at December 31, 2016 | — |
| | $ | — |
|
| Granted | 2,500 |
| | 26.69 |
|
| Forfeited | — |
| | — |
|
| Vested | — |
| | — |
|
| Unvested at December 31, 2017 | 2,500 |
| | $ | 26.69 |
|
As of December 31, 2017, there were 2.5 million deferred stock awards outstanding which require the Company to achieve minimum market conditions in order for the awards to issue and vest.
NOTE 11—OTHER INFORMATION |
| | | | | | | |
| | December 31, |
| | 2017 | | 2016 |
| | (in thousands) |
| The following details the components of “Other current assets”: | | | |
| Cash held in escrow | $ | 6,628 |
| | $ | 2,983 |
|
| Inventory | 17,467 |
| | 15,114 |
|
| Other | 31,308 |
| | 31,677 |
|
| Total other current assets | $ | 55,403 |
| | $ | 49,774 |
|
| | | | |
| The following details the components of “Other long-term assets”: | |
| | |
|
| Long-term advances | $ | 359,528 |
| | $ | 208,977 |
|
| Investments in nonconsolidated affiliates | 105,271 |
| | 82,032 |
|
| Other | 147,909 |
| | 120,285 |
|
| Total other long-term assets | $ | 612,708 |
| | $ | 411,294 |
|
| | | | |
| The following details the components of “Accrued expenses”: | |
| | |
|
| Accrued compensation and benefits | $ | 233,459 |
| | $ | 192,167 |
|
| Accrued event expenses | 247,380 |
| | 192,599 |
|
| Accrued insurance | 97,606 |
| | 65,941 |
|
| Accrued legal | 129,882 |
| | 22,904 |
|
| Collections on behalf of others | 48,099 |
| | 31,233 |
|
| Other | 352,820 |
| | 276,650 |
|
| Total accrued expenses | $ | 1,109,246 |
| | $ | 781,494 |
|
| | | | |
| The following details the components of “Other current liabilities”: | |
| | |
|
| Contingent and deferred purchase consideration | $ | 143,809 |
| | $ | 23,301 |
|
| Other | 16,829 |
| | 15,754 |
|
| Total other current liabilities | $ | 160,638 |
| | $ | 39,055 |
|
| | |
| | |
|
| The following details the components of “Other long-term liabilities”: | |
| | |
|
| Deferred revenue | 9,569 |
| | 5,506 |
|
| Contingent and deferred purchase consideration | 41,946 |
| | 46,228 |
|
| Other | 122,876 |
| | 98,057 |
|
| Total other long-term liabilities | $ | 174,391 |
| | $ | 149,791 |
|
NOTE 12—SEGMENT14—OTHER INFORMATION
| | | | | | | | | | | |
| | December 31, |
| | 2023 | | 2022 |
| | (in thousands) |
| The following details the components of “Other current assets”: | | | |
| | | |
| Inventory | $ | 45,141 | | | $ | 38,725 | |
| Notes receivable | 43,846 | | | 34,228 | |
| Other | 33,176 | | | 58,986 | |
| Total other current assets | $ | 122,163 | | | $ | 131,939 | |
| | | |
| The following details the components of “Other long-term assets”: | | | |
| | | |
| Investments in nonconsolidated affiliates | $ | 447,494 | | | $ | 408,789 | |
| Notes receivable | 176,133 | | | 92,630 | |
| Other | 311,222 | | | 223,570 | |
| Total other long-term assets | $ | 934,849 | | | $ | 724,989 | |
| | | |
| The following details the components of “Accrued expenses”: | | | |
| Accrued compensation and benefits | $ | 529,987 | | | $ | 540,018 | |
| Accrued event expenses | 1,154,861 | | | 802,460 | |
| Accrued insurance | 264,770 | | | 137,886 | |
| Accrued legal | 24,515 | | | 19,820 | |
| Collections on behalf of others | 82,253 | | | 53,886 | |
| Accrued ticket refunds | 21,196 | | | 31,095 | |
| Other | 928,699 | | | 783,269 | |
| Total accrued expenses | $ | 3,006,281 | | | $ | 2,368,434 | |
| | | |
| The following details the components of “Other current liabilities”: | | | |
| Contingent and deferred purchase consideration | $ | 98,835 | | | $ | 27,849 | |
| Other | 29,595 | | | 40,867 | |
| Total other current liabilities | $ | 128,430 | | | $ | 68,716 | |
| | | | |
| The following details the components of “Other long-term liabilities”: | | | |
| Deferred income taxes | $ | 324,698 | | | $ | 305,524 | |
| Deferred revenue | 60,555 | | | 56,953 | |
| Contingent and deferred purchase consideration | 29,161 | | | 55,981 | |
| Other | 73,745 | | | 37,513 | |
| Total other long-term liabilities | $ | 488,159 | | | $ | 455,971 | |
NOTE 15—GEOGRAPHIC DATA
For all periods presented, the Company’s reportable segments are Concerts, Sponsorship & Advertising and Ticketing. Prior to 2017, the Company reported an Artist Nation segment, which is now included in its Concerts segment based on the Company’s belief that the strategy behind artist management is to provide a full range of services related to concert promotion and to expand the Concerts line of business. In connection with this, there has been a change in the way the chief operating decision maker, as defined in the FASB guidance, makes decisions around allocations of resources and management responsibilities for this business.
The Concerts segment involves the promotion of live music events globally in the Company’s owned or operated venues and in rented third-party venues, the production of music festivals, the operation and management of music venues, the creation of associated content and the provision of management and other services to artist. The Sponsorship & Advertising segment manages the development of strategic sponsorship programs in addition to the sale of international, national and local sponsorships and placement of advertising such as signage, promotional programs, rich media offerings, including advertising associated with live streaming and music-related content, and ads across the Company’s distribution network of venues, events and websites. The Ticketing segment involves the management of the Company’s global ticketing operations, including providing ticketing software and services to clients, ticket resale services and online access for customers relating to ticket and event information, and is responsible for the Company’s primary ticketing website, www.ticketmaster.com.
Revenue and expenses earned and charged between segments are eliminated in consolidation. The Company’s capital expenditures below include accruals for amounts incurred but not yet paid for, but are not reduced by reimbursements received from outside parties such as landlords or replacements funded by insurance proceeds.
The Company manages its working capital on a consolidated basis. Accordingly, segment assets are not reported to, or used by, the Company’s management to allocate resources to or assess performance of the segments, and therefore, total segment assets have not been presented.
There were no customers that individually accounted for more than 10% of the Company’s consolidated revenue in any year.
The following table presents the results of operations for the Company’s reportable segments for the years ending December 31, 2017, 2016 and 2015: |
| | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | Concerts | | Sponsorship
& Advertising | | Ticketing | | Other | | Corporate | | Eliminations | | Consolidated |
| | (in thousands) |
| 2017 | | | | | | | | | | |
| Revenue | $ | 7,892,076 |
| | $ | 445,148 |
| | $ | 2,143,800 |
| | $ | 21,012 |
| | $ | — |
| | $ | (164,588 | ) | | $ | 10,337,448 |
|
| Direct operating expenses | 6,641,071 |
| | 78,725 |
| | 1,170,121 |
| | 18,746 |
| | — |
| | (159,872 | ) | | 7,748,791 |
|
| Selling, general and administrative expenses | 1,119,335 |
| | 87,268 |
| | 681,948 |
| | 19,172 |
| | — |
| | — |
| | 1,907,723 |
|
| Depreciation and amortization | 226,315 |
| | 27,669 |
| | 200,777 |
| | 432 |
| | 5,057 |
| | (4,716 | ) | | 455,534 |
|
| Loss (gain) on disposal of operating assets | (1,056 | ) | | — |
| | 49 |
| | — |
| | 38 |
| | — |
| | (969 | ) |
| Corporate expenses | — |
| | — |
| | — |
| | — |
| | 134,972 |
| | — |
| | 134,972 |
|
| Operating income (loss) | $ | (93,589 | ) | | $ | 251,486 |
| | $ | 90,905 |
| | $ | (17,338 | ) | | $ | (140,067 | ) | | $ | — |
| | $ | 91,397 |
|
| Intersegment revenue | $ | 148,125 |
| | $ | — |
| | $ | 16,463 |
| | $ | — |
| | $ | — |
| | $ | (164,588 | ) | | $ | — |
|
| Capital expenditures | $ | 109,801 |
| | $ | 6,701 |
| | $ | 105,317 |
| | $ | 149 |
| | $ | 25,926 |
| | $ | — |
| | $ | 247,894 |
|
| 2016 | | | | | | | | | | |
| Revenue | $ | 6,283,521 |
| | $ | 377,618 |
| | $ | 1,827,930 |
| | $ | 7,978 |
| | $ | — |
| | $ | (142,113 | ) | | $ | 8,354,934 |
|
| Direct operating expenses | 5,202,097 |
| | 60,218 |
| | 956,956 |
| | 2,902 |
| | — |
| | (139,465 | ) | | 6,082,708 |
|
|
| | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | Concerts | | Sponsorship
& Advertising | | Ticketing | | Other | | Corporate | | Eliminations | | Consolidated |
| | (in thousands) |
| Selling, general and administrative expenses | 950,060 |
| | 71,089 |
| | 510,490 |
| | 16,811 |
| | — |
| | — |
| | 1,548,450 |
|
| Depreciation and amortization | 194,715 |
| | 18,206 |
| | 185,925 |
| | 2,940 |
| | 4,433 |
| | (2,568 | ) | | 403,651 |
|
| Loss (gain) on disposal of operating assets | (61 | ) | | — |
| | 68 |
| | — |
| | 117 |
| | — |
| | 124 |
|
| Corporate expenses | — |
| | — |
| | — |
| | — |
| | 125,141 |
| | (80 | ) | | 125,061 |
|
| Operating income (loss) | $ | (63,290 | ) | | $ | 228,105 |
| | $ | 174,491 |
| | $ | (14,675 | ) | | $ | (129,691 | ) | | $ | — |
| | $ | 194,940 |
|
| Intersegment revenue | $ | 133,505 |
| | $ | — |
| | $ | 8,528 |
| | $ | 80 |
| | $ | — |
| | $ | (142,113 | ) | | $ | — |
|
| Capital expenditures | $ | 87,306 |
| | $ | 2,161 |
| | $ | 91,285 |
| | $ | 1,028 |
| | $ | 7,824 |
| | $ | — |
| | $ | 189,604 |
|
| 2015 | | | | | | | | | | | | | |
| Revenue | $ | 5,382,965 |
| | $ | 333,726 |
| | $ | 1,639,564 |
| | $ | 3,176 |
| | $ | — |
| | $ | (113,700 | ) | | $ | 7,245,731 |
|
| Direct operating expenses | 4,450,517 |
| | 47,760 |
| | 808,697 |
| | 1,068 |
| | — |
| | (111,569 | ) | | 5,196,473 |
|
| Selling, general and administrative expenses | 863,516 |
| | 57,681 |
| | 488,483 |
| | 2,175 |
| | — |
| | — |
| | 1,411,855 |
|
| Depreciation and amortization | 201,775 |
| | 9,932 |
| | 184,129 |
| | 46 |
| | 3,490 |
| | (2,131 | ) | | 397,241 |
|
| Loss on disposal of operating assets | 645 |
| | — |
| | 26 |
| | — |
| | 174 |
| | — |
| | 845 |
|
| Corporate expenses | — |
| | — |
| | — |
| | — |
| | 107,945 |
| | — |
| | 107,945 |
|
| Operating income (loss) | $ | (133,488 | ) | | $ | 218,353 |
| | $ | 158,229 |
| | $ | (113 | ) | | $ | (111,609 | ) | | $ | — |
| | $ | 131,372 |
|
| Intersegment revenue | $ | 104,571 |
| | $ | — |
| | $ | 9,129 |
| | $ | — |
| | $ | — |
| | $ | (113,700 | ) | | $ | — |
|
| Capital expenditures | $ | 41,977 |
| | $ | 4,836 |
| | $ | 93,323 |
| | $ | — |
| | $ | 5,011 |
| | $ | — |
| | $ | 145,147 |
|
The following table provides revenue and long-lived assets, including operating lease assets, for the Company’sour foreign operations included in the consolidated financial statements: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Europe | | Other Foreign | | Total Foreign | | Domestic | | Consolidated Total |
| (in thousands) |
| 2023 | | | | | | | | | |
| Revenue | $ | 4,425,854 | | | $ | 4,085,191 | | | $ | 8,511,045 | | | $ | 14,238,028 | | | $ | 22,749,073 | |
Long-lived assets, including operating lease assets | $ | 819,426 | | | $ | 306,725 | | | $ | 1,126,151 | | | $ | 2,581,701 | | | $ | 3,707,852 | |
| | | | | | | | | |
| 2022 | | | | | | | | | |
| Revenue | $ | 3,160,268 | | | $ | 2,474,495 | | | $ | 5,634,763 | | | $ | 11,046,491 | | | $ | 16,681,254 | |
Long-lived assets, including
operating lease assets | $ | 771,230 | | | $ | 226,752 | | | $ | 997,982 | | | $ | 2,061,076 | | | $ | 3,059,058 | |
| | | | | | | | | |
| 2021 | | | | | | | | | |
| Revenue | $ | 869,628 | | | $ | 316,462 | | | $ | 1,186,090 | | | $ | 5,082,357 | | | $ | 6,268,447 | |
Long-lived assets, including
operating lease assets | $ | 588,955 | | | $ | 194,777 | | | $ | 783,732 | | | $ | 1,847,108 | | | $ | 2,630,840 | |
|
| | | | | | | | | | | | | | | | | | | | |
| | | United Kingdom Operations | | Other Foreign Operations | | Total Foreign Operations | | Total Domestic Operations | | Consolidated Total |
| | | (in thousands) |
| 2017 | | | | | | | | | | |
| Revenue | | $ | 785,174 |
| | $ | 2,779,324 |
| | $ | 3,564,498 |
| | $ | 6,772,950 |
| | $ | 10,337,448 |
|
| Long-lived assets | | $ | 74,551 |
| | $ | 127,173 |
| | $ | 201,724 |
| | $ | 684,212 |
| | $ | 885,936 |
|
| | | | | | | | | | | |
| 2016 | | | | | | | | | | |
| Revenue | | $ | 683,464 |
| | $ | 1,882,583 |
| | $ | 2,566,047 |
| | $ | 5,788,887 |
| | $ | 8,354,934 |
|
| Long-lived assets | | $ | 69,380 |
| | $ | 104,780 |
| | $ | 174,160 |
| | $ | 577,376 |
| | $ | 751,536 |
|
| | | | | | | | | | | |
| 2015 | | | | | | | | | | |
| Revenue | | $ | 672,826 |
| | $ | 1,534,629 |
| | $ | 2,207,455 |
| | $ | 5,038,276 |
| | $ | 7,245,731 |
|
| Long-lived assets | | $ | 74,517 |
| | $ | 126,194 |
| | $ | 200,711 |
| | $ | 530,571 |
| | $ | 731,282 |
|
NOTE 13—QUARTERLY RESULTS OF OPERATIONS (Unaudited)
|
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | March 31, | | June 30, | | September 30, | | December 31, |
| | | 2017 | | 2016 | | 2017 | | 2016 | | 2017 | | 2016 | | 2017 | | 2016 |
| | | (in thousands) |
| Revenue | | $ | 1,413,181 |
| | $ | 1,207,716 |
| | $ | 2,818,693 |
| | $ | 2,179,258 |
| | $ | 3,559,418 |
| | $ | 3,170,416 |
| | $ | 2,546,156 |
| | $ | 1,797,544 |
|
| Operating income (loss) | | $ | (21,366 | ) | | $ | (33,290 | ) | | $ | 113,433 |
| | $ | 74,159 |
| | $ | 201,347 |
| | $ | 191,286 |
| | $ | (202,017 | ) | | $ | (37,215 | ) |
| Net income (loss) | | $ | (47,770 | ) | | $ | (55,954 | ) | | $ | 80,555 |
| | $ | 36,461 |
| | $ | 148,770 |
| | $ | 132,761 |
| | $ | (173,781 | ) | | $ | (92,971 | ) |
| Net income (loss) attributable to common stockholders of Live Nation | | $ | (32,993 | ) | | $ | (44,518 | ) | | $ | 81,478 |
| | $ | 37,741 |
| | $ | 136,393 |
| | $ | 111,079 |
| | $ | (190,893 | ) | | $ | (101,360 | ) |
| | | | | | | | | | | | | | | | | |
| Basic net income (loss) per common share available to common stockholders of Live Nation | | $ | (0.22 | ) | | $ | (0.29 | ) | | $ | 0.31 |
| | $ | 0.13 |
| | $ | 0.56 |
| | $ | 0.51 |
| | $ | (1.12 | ) | | $ | (0.58 | ) |
| Diluted net income (loss) per common share available to common stockholders of Live Nation | | $ | (0.22 | ) | | $ | (0.29 | ) | | $ | 0.29 |
| | $ | 0.13 |
| | $ | 0.53 |
| | $ | 0.49 |
| | $ | (1.12 | ) | | $ | (0.58 | ) |
| | | | | | | | | | | | | | | | | |
The following summarizes unusual or infrequent items effecting the quarterly results of operations:
2017
The Company accrued $110.0 million in the fourth quarter of 2017 in connection with a legal settlement entered into in January 2018. See Note 6—Commitments and Contingent Liabilities for further discussion of the settlement.
The Company recorded a goodwill impairment of $20.0 million in the fourth quarter of 2017 in connection with its annual impairment test. See Note 2—Long-Lived Assets and Note 5—Fair Value Measurements for further discussion.
The Company recorded a $55.7 million income tax benefit in connection with the 2017 tax reform. See Note 8—Income Taxes for further discussion of the impact of the 2017 tax reform.
The Company recorded net foreign exchange rate gains of $2.7 million and $4.4 million in the first and second quarters of 2017, respectively, and net foreign exchange rate losses of $4.2 million in the fourth quarter of 2017, as a component of other expense (income), net.
2016
In the third quarter of 2016, the Company recorded impairment charges of $15.1 million related to investments in a digital content company and an online merchandise company as a component of equity in losses (earnings) of nonconsolidated affiliates. See Note 5—Fair Value Measurements for further discussion of the inputs used to determine the fair values.
In the fourth quarter of 2016, the Company recorded a $14.0 million loss on extinguishment of debt related to the refinancing of certain of its debt. See Note 3—Long-Term Debt for further discussion.
The Company recorded net foreign exchange rate gains of $7.8 million in the first quarter of 2016 and net foreign exchange rate losses of $6.6 million, $1.9 million and $8.0 million in the second, third and fourth quarters of 2016, respectively, as a component of other expense (income), net.
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE
None.
ITEM 9A. CONTROLS AND PROCEDURES
Evaluation of Disclosure Controls and Procedures
We have established disclosure controls and procedures to ensure that material information relating to our company, including our consolidated subsidiaries, is made known to the officers who certify our financial reports and to other members of senior management and our board of directors.
Based on their evaluation as of December 31, 2017,2023, our Chief Executive Officer and Chief Financial Officer have concluded that our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended) are effective to ensure that (1) the information required to be disclosed by us in the reports that we file or submit under the Securities Exchange Act of 1934, as amended, is recorded, processed, summarized and reported within the time periods specified in SEC rules and forms, and (2) the information we are required to disclose in such reports is accumulated and communicated to management, including our Chief Executive Officer and Chief Financial Officer, as appropriate to allow timely decisions regarding required disclosure.
Our management, including our Chief Executive Officer and Chief Financial Officer, does not expect that our disclosure controls and procedures or internal controls will prevent all possible errors and fraud. Our disclosure controls and procedures are, however, designed to provide reasonable assurance of achieving their objectives, and our Chief Executive Officer and Chief Financial Officer have concluded that our disclosure controls and procedures are effective at that reasonable assurance level.
Management’s Report on Internal Control over Financial Reporting
Our management is responsible for establishing and maintaining adequate internal control over financial reporting as defined in Rule 13a-15(f) under the Securities Exchange Act of 1934, as amended. Our management conducted an evaluation of the effectiveness of our internal control over financial reporting based on the 2013 framework in Internal Control—Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (the COSO criteria). Based on its evaluation, our management concluded that our internal control over financial reporting was effective as of December 31, 2017.2023.
Ernst & Young LLP, an independent registered public accounting firm, has issued an attestation report on our internal control over financial reporting. The attestation report is included herein.
Changes in Internal Control Over Financial Reporting
There hashave been no changechanges in our internal control over financial reporting during the period covered by this reportfourth quarter of the fiscal year ended December 31, 2023 that hashave materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.
Report of Independent Registered Public Accounting Firm
TheTo the Stockholders and the Board of Directors and Stockholders of Live Nation Entertainment, Inc.
Opinion on Internal Control overOver Financial Reporting
We have audited Live Nation Entertainment, Inc.’s internal control over financial reporting as of December 31, 2017,2023, based on criteria established in Internal Control-lntegratedControl—Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (2013 framework) (the COSO criteria). In our opinion, Live Nation Entertainment, Inc. (the Company) maintained, in all material respects, effective internal control over financial reporting as of December 31, 2017,2023, based on the COSO criteria.
We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the 20172023 consolidated financial statements of the Company and our report dated February 27, 201822, 2024 expressed an unqualified opinion thereon.
Basis for Opinion
The Company’s management is responsible for maintaining effective internal control over financial reporting and for its assessment of the effectiveness of internal control over financial reporting included in the accompanying Management’s Report on Internal Control over Financial Reporting. Our responsibility is to express an opinion on the Company’s internal control over financial reporting based on our audit. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the US.U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audit in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether effective internal control over financial reporting was maintained in all material respects.
Our audit included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, testing and evaluating the design and operating effectiveness of internal control based on the assessed risk, and performing such other procedures as we considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion.
Definition and Limitations of Internal Control Over Financial Reporting
A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company’s internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements.
Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.
/s/ Ernst & Young LLP
Los Angeles, California
February 27, 2018
22, 2024
ITEM 9B. OTHER INFORMATION
None.No director or officer adopted or terminated any Rule 10b5-1 plan, or any other written trading arrangement that meets the requirements of a “non-Rule 10b5-1 trading arrangement” during the fourth quarter of the fiscal year ended December 31, 2023.
ITEM 9C. DISCLOSURE REGARDING FOREIGN JURISDICTIONS THAT PREVENT INSPECTIONS
Not applicable.
PART III
| | | | | | | | |
| ITEM 10. | | DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE |
Other than the information set forth under Item 1. Business—Information About Our Executive Officers, the information required by this Item is incorporated by reference to our Definitive Proxy Statement, expected to be filed within 120 days of our fiscal year end.
| | | | | | | | |
| ITEM 11. | | EXECUTIVE COMPENSATION |
The information required by this Item is incorporated by reference to our Definitive Proxy Statement, expected to be filed within 120 days of our fiscal year end.
| | | | | | | | |
| ITEM 12. | | SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS |
The information required by this Item is incorporated by reference to our Definitive Proxy Statement, expected to be filed within 120 days of our fiscal year end.
| | | | | | | | |
| ITEM 13. | | CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE |
The information required by this Item is incorporated by reference to our Definitive Proxy Statement, expected to be filed within 120 days of our fiscal year end.
| | | | | | | | |
| ITEM 14. | | PRINCIPAL ACCOUNTING FEES AND SERVICES |
The information required by this Item is incorporated by reference to our Definitive Proxy Statement, expected to be filed within 120 days of our fiscal year end.
PART IV
ITEM 15. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES
(a)1. Financial Statements.
The following consolidated financial statements are included in Item 8:
(a)2. Financial Statement Schedule.
The following financial statement schedule for the years ended December 31, 2017, 20162023, 2022 and 20152021 is filed as part of this report and should be read in conjunction with the consolidated financial statements.
Schedule II Valuation and Qualifying Accounts
All other schedules for which provision is made in the applicable accounting regulation of the SEC are not required under the related instructions or are inapplicable, and therefore have been omitted.
(a)3. Exhibits.
The information in the Exhibit Index of the Annual Report on Form 10-K is incorporated into this Item 15.(a)3 by reference.97
(c) Separate financial statements of subsidiaries not consolidated and fifty percent or less owned persons.
Under Rule 3-09 of Regulation S-X, we are required to file separate audited financial statements of Venta de Boletos por Computadora S.A. de C.V., for the years ended December 31, 2017 and 2016. We expect to file those financial statements by amendment to our Annual Report on Form10-K/A on or before June 30, 2018.
ITEM 16. FORM 10-K SUMMARY
Not applicable.
LIVE NATION ENTERTAINMENT, INC.
SCHEDULE II
VALUATION AND QUALIFYING ACCOUNTS
Allowance for Doubtful Accounts | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Description | | Balance at Beginning of Period | | Charges of Costs, Expenses and Other | | Write-off of Accounts Receivable | | Other | | Balance at End of Period |
| | (in thousands) |
| Year ended December 31, 2021 | | $ | 72,904 | | | $ | (17,658) | | | $ | (3,846) | | | $ | (909) | | | $ | 50,491 | |
| | | | | | | | | | |
| Year ended December 31, 2022 | | $ | 50,491 | | | $ | 29,281 | | | $ | (10,364) | | | $ | (6,114) | | | $ | 63,294 | |
| | | | | | | | | | |
| Year ended December 31, 2023 | | $ | 63,294 | | | $ | 32,645 | | | $ | (10,771) | | | $ | (2,818) | | | $ | 82,350 | |
|
| | | | | | | | | | | | | | | | | | | | |
| Description | | Balance at Beginning of Period | | Charges of Costs, Expenses and Other | | Write-off of Accounts Receivable | | Other | | Balance at End of Period |
| | | (in thousands) |
| Year ended December 31, 2015 | | $ | 17,489 |
| | $ | 19,525 |
| | $ | (18,703 | ) | | $ | (1,143 | ) | (1) | $ | 17,168 |
|
| | | | | | | | | | | |
| Year ended December 31, 2016 | | $ | 17,168 |
| | $ | 16,699 |
| | $ | (3,927 | ) | | $ | (306 | ) | (1) | $ | 29,634 |
|
| | | | | | | | | | | |
| Year ended December 31, 2017 | | $ | 29,634 |
| | $ | 16,664 |
| | $ | (14,846 | ) | | $ | 1,303 |
| (1) | $ | 32,755 |
|
_________________
(1) Foreign currency adjustments and acquisitions.
LIVE NATION ENTERTAINMENT, INC.
SCHEDULE II
VALUATION AND QUALIFYING ACCOUNTS
Deferred Tax Asset Valuation Allowance
|
| | | | | | | | | | | | | | | | | | | | |
| Description | | Balance at Beginning of Period | | Charges of Costs, Expenses and Other | | Deletions | | Other (1) | | Balance at End of Period |
| | | (in thousands) |
| Year ended December 31, 2015 | | $ | 593,305 |
| | $ | 7,116 |
| | $ | — |
| | $ | 57,683 |
| | $ | 658,104 |
|
| | | | | | | | | | | |
| Year ended December 31, 2016 | | $ | 658,104 |
| | $ | 11,820 |
| | $ | — |
| | $ | 11,642 |
| | $ | 681,566 |
|
| | | | | | | | | | | |
| Year ended December 31, 2017 | | $ | 681,566 |
| | $ | 18,067 |
| | $ | — |
| | $ | (103,196 | ) | | $ | 596,437 |
|
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Description | | Balance at Beginning of Period | | Charges of Costs, Expenses and Other | | Deletions | | Other (1) | | Balance at End of Period |
| | (in thousands) |
| Year ended December 31, 2021 | | $ | 1,100,407 | | | $ | 135,908 | | | $ | — | | | $ | (16,819) | | | $ | 1,219,496 | |
| | | | | | | | | | |
| Year ended December 31, 2022 | | $ | 1,219,496 | | | $ | 38,811 | | | $ | — | | | $ | (17,426) | | | $ | 1,240,881 | |
| | | | | | | | | | |
| Year ended December 31, 2023 | | $ | 1,240,881 | | | $ | (93,450) | | | $ | — | | | $ | 46,943 | | | $ | 1,194,374 | |
________________________
(1) During 2017, 20162023, 2022 and 2015,2021, the valuation allowance was adjusted for acquisitions, divestitures and foreign currency adjustments. The 20172021 valuation allowance was also reducedincreased primarily due to the reductionincreases in the federal income tax rate to 21%. This reduced the previouslycertain fully valued United States federal deferred tax asset.assets.
94
(a)3. Those exhibits required by Item 601 of Regulation S-K
| | | | | | | | | | | | | | | | | | | | | |
| | Incorporated by Reference | |
Exhibit
No. | Exhibit Description | Form | File No. | Exhibit
No. | Filing Date | | Filed
Herewith |
| | | | | | | |
| 3.1 | | 10-K | 001-32601 | 3.1 | 2/25/2010 | | |
| 3.2 | | 8-K | 001-32601 | 3.1 | 6/7/2013 | | |
| 3.3 | | 8-K | 001-32601 | 3.1 | 6/17/2022 | | |
| | | | | | | |
| 4.1 | | 8-K | 001-32601 | 4.2 | 12/23/2005 | | |
| | | | | | | |
| 4.2 | | 10-K | 001-32601 | 4.2 | 3/01/2021 | | |
| 10.1 | | 8-K | 001-32601 | 10.2 | 2/13/2009 | | |
| 10.2 | | 8-K | 001-32601 | 10.1 | 1/29/2010 | | |
| 10.3 | | 10-K | 001-32601 | 10.23 | 2/25/2010 | | |
| 10.4 § | | 8-K | 001-32601 | 10.2 | 6/11/2015 | | |
| 10.5 § | | S-8 | 333-164507 | 10.1 | 1/26/2010 | | |
| 10.6 § | | 10-Q | 001-32601 | 10.1 | 11/4/2010 | | |
| | | | | | | |
| | | | | | | |
| 10.7 § | | 10-Q | 001-32601 | 10.2 | 5/6/2021 | | |
| 10.8 § | | 10-Q | 001-32601 | 10.3 | 5/6/2021 | | |
| | | | | | | |
| | | | | | | |
| 10.9 § | | 10-Q | 001-32601 | 10.4 | 5/6/2021 | | |
| 10.10 § | | 10-Q | 001-32601 | 10.5 | 5/6/2021 | | |
| 10.11 § | | 8-K | 001-32601 | 10.3 | 12/23/2022 | | |
| 10.12 § | | 8-K | 001-32601 | 10.1 | 1/25/2010 | | |
| 10.13 § | | 8-K | 001-32601 | 10.1 | 7/6/2022 | | |
| 10.14 § | | 8-K | 001-32601 | 10.2 | 7/6/2022 | | |
| 10.15 § | | 8-K | 001-32601 | 10.1 | 12/23/2022 | | |
EXHIBIT INDEX
|
| | | | | | | |
| | | Incorporated by Reference | |
Exhibit
No. | Exhibit Description | Form | File No. | Exhibit
No. | Filing Date | Filed By | Filed
Herewith |
| 3.1 | | 10-K | 001-32601 | 3.1 | 2/25/2010 | Live Nation | |
| 3.2 | | 8-K | 001-32601 | 3.1 | 6/7/2013 | Live Nation | |
| 3.3 | | 8-K | 001-32601 | 3.2 | 6/7/2013 | Live Nation | |
| 4.1 | | 8-K | 001-32601 | 4.1 | 12/24/2015 | Live Nation | |
| 4.2 | | 8-K | 001-32601 | 4.2 | 12/23/2005 | Live Nation | |
| 4.3 | | 8-K | 001-32601 | 4.3 (Annex B) | 12/23/2005 | Live Nation | |
| 10.1 | | 8-K | 001-32601 | 10.2 | 2/13/2009 | Live Nation | |
| 10.2 | | 8-K | 001-32601 | 10.1 | 1/29/2010 | Live Nation | |
| 10.3 | | 10-K | 001-32601 | 10.23 | 2/25/2010 | Live Nation | |
| 10.4 § | | 8-K | 001-32601 | 10.2 | 6/11/2015 | Live Nation | |
| 10.5 § | | S-8 | 333-164507 | 10.1 | 1/26/2010 | Live Nation | |
| 10.6 § | | 10-Q | 001-32601 | 10.1 | 11/4/2010 | Live Nation | |
| 10.7 § | | 8-K | 001-32601 | 10.1 | 6/11/2015 | Live Nation | |
| 10.8 § | | 10-K | 001-32601 | 10.12 | 2/25/2016 | Live Nation | |
| 10.9 § | | 10-K | 001-32601 | 10.13 | 2/25/2016 | Live Nation | |
| 10.10 § | | 10-K | 001-32601 | 10.14 | 2/25/2016 | Live Nation | |
| | | | | | | | | | | | | | | | | | | | | |
| | Incorporated by Reference | |
Exhibit
No. | Exhibit Description | Form | File No. | Exhibit
No. | Filing Date | | Filed
Herewith |
| | | | | | | |
| 10.16 § | | 8-K | 001-32601 | 10.2 | 12/23/2022 | | |
| 10.17 § | | 10-Q | 001-32601 | 10.1 | 5/5/2022 | | |
| 10.18 § | | 8-K | 001-32601 | 10.1 | 10/13/2023 | | |
| 10.19 | Credit Agreement entered into as of May 6, 2010, among Live Nation Entertainment, Inc., the Foreign Borrowers party thereto, the Guarantors identified therein, the Lenders party thereto, JPMorgan Chase Bank, N.A., as Administrative Agent and Collateral Agent, JPMorgan Chase Bank, N.A., Toronto Branch, as Canadian Agent and J.P. Morgan Europe Limited, as London Agent. | 10-Q | 001-32601 | 10.4 | 8/5/2010 | | |
| 10.20 | Amendment No. 1, to the Credit Agreement, dated as of June 29, 2012, entered into by and among Live Nation Entertainment, Inc., the relevant Credit Parties identified therein, the Lenders party thereto, and JPMorgan Chase Bank, N.A., as administrative agent for the Lenders. | 10-Q | 001-32601 | 10.2 | 8/7/2012 | | |
| 10.21 | Amendment No. 2 to the Credit Agreement, dated as of August 16, 2013, entered into by and among Live Nation Entertainment, Inc., the Guarantors identified therein, JPMorgan Chase Bank, N.A., as administrative agent and collateral agent for the Lenders, JPMorgan Chase Bank, N.A., Toronto Branch, as Canadian agent and J.P. Morgan Europe Limited, as London agent. | 10-Q | 001-32601 | 10.2 | 5/6/2014 | | |
| 10.22 | Amendment No. 3 to the Credit Agreement, dated as of October 31, 2016, entered into by and among Live Nation Entertainment, Inc., the Guarantors identified therein, JPMorgan Chase Bank, N.A., as administrative agent and collateral agent, JPMorgan Chase Bank, N.A., Toronto Branch, as Canadian agent, J.P. Morgan Europe Limited, as London agent and the lenders from time to time party thereto. | 10-K | 001-32601 | 10.26 | 2/23/2017 | | |
| 10.23 | Amendment No. 4 to the Credit Agreement, dated June 27, 2017, entered into by Live Nation Entertainment, Inc., the Guarantors identified therein, JPMorgan Chase Bank, N.A., as administrative agent and collateral agent, JPMorgan Chase Bank, N.A., Toronto Branch, as Canadian agent, J. P. Morgan Europe Limited, as London agent and the lenders from time to time party thereto. | 10-Q | 001-32601 | 10.2 | 8/9/2017 | | |
| 10.24 | Amendment No. 5 to the Credit Agreement, dated as of March 28, 2018, among Live Nation Entertainment, Inc., the Guarantors identified therein, JPMorgan Chase Bank, N.A., as administrative agent and collateral agent, JPMorgan Chase Bank, N.A., Toronto Branch, as Canadian agent, J.P. Morgan Europe Limited, as London agent and the lenders from time to time party thereto. | 10-Q | 001-32601 | 10.3 | 5/3/2018 | | |
|
| | | | | | | |
| | Incorporated by Reference | |
Exhibit
No. | Exhibit Description | Form | File No. | Exhibit
No. | Filing Date | Filed By | Filed
Herewith |
10.11 § | | 10-K | 001-32601 | 10.15 | 2/25/2016 | Live Nation | |
10.12 § | | 8-K | 001-32601 | 10.1 | 1/25/2010 | Live Nation | |
10.13 § | | 8-K | 001-32601 | 10.1 | 10/22/2009 | Live Nation | |
10.14 § | | 8-K | 001-32601 | 10.29 | 2/26/2013 | Live Nation | |
10.15 § | | 8-K | 001-32601 | 10.1 | 12/18/2017 | Live Nation | |
10.16 § | | 10-K | 001-32601 | 10.2 | 12/18/2017 | Live Nation | |
10.17 § | | 10-K | 001-32601 | 10.24 | 2/24/2014 | Live Nation | |
10.18 § | | 8-K | 001-32601 | 10.1 | 12/20/2017 | Live Nation | |
10.19 § | | 8-K | 001-32601 | 10.2 | 12/20/2017 | Live Nation | |
10.20 § | | 10-K | 001-32601 | 10.17 | 2/24/2014 | Live Nation | |
10.21 § | | 8-K | 001-32601 | 10.3 | 12/20/2017 | Live Nation | |
10.22 § | | 10-K | 001-32601 | 10.19 | 2/24/2014 | Live Nation | |
10.23 § | | 8-K | 001-32601 | 10.4 | 12/20/2017 | Live Nation | |
10.24 § | | 10-Q | 001-32601 | 10.4 | 8/7/2008 | Live Nation | |
10.25 § | | 10-K | 001-32601 | 10.30 | 3/5/2009 | Live Nation | |
| | | | | | | | | | | | | | | | | | | | | |
| | Incorporated by Reference | |
Exhibit
No. | Exhibit Description | Form | File No. | Exhibit
No. | Filing Date | | Filed
Herewith |
| | | | | | | |
| 10.25 | Amendment No. 6 to the Credit Agreement, dated as of October 17, 2019, among Live Nation Entertainment, Inc., the Guarantors identified therein, JPMorgan Chase Bank, N.A., as administrative agent and collateral agent, JPMorgan Chase Bank, N.A., Toronto Branch, as Canadian agent, J.P. Morgan Europe Limited, as London agent and the lenders from time to time party thereto. | 10-K | 001-32601 | 10.28 | 2/27/2020 | | |
| 10.26 | Amendment No. 7 to the Credit Agreement, dated as of April 9, 2020, among Live Nation Entertainment, Inc., the Guarantors identified therein, JPMorgan Chase Bank, N.A., as administrative agent and collateral agent, JPMorgan Chase Bank, N.A., Toronto Branch as Canadian Agent, J.P. Morgan Europe Limited, as London Agent and the lenders from time to time party thereto. | 10-Q | 001-32601 | 10.1 | 8/5/2020 | | |
| 10.27 | Amendment No. 8 to the Credit Agreement, dated as of July 29, 2020, among Live Nation Entertainment, Inc., the Guarantors identified therein, JPMorgan Chase Bank, N.A., as administrative agent and collateral agent, JPMorgan Chase Bank, N.A., Toronto Branch as Canadian Agent, J.P. Morgan Europe Limited, as London Agent and the lenders from time to time party thereto. | 10-Q | 001-32601 | 10.1 | 11/5/2020 | | |
| 10.28 | Amendment No. 9 to the Credit Agreement, dated as of January 26, 2022, among Live Nation Entertainment, Inc., the Guarantors identified therein, JPMorgan Chase Bank, N.A., as administrative agent and collateral agent, JPMorgan Chase Bank, N.A., Toronto Branch as Canadian Agent, J.P. Morgan Europe Limited, as London Agent and the lenders from time to time party thereto. | 10-K | 001-32601 | 10.31 | 2/23/2022 | | |
| 10.29 | Amendment No. 10 to the Credit Agreement, dated as of February 8, 2023, among Live Nation Entertainment, Inc., the Guarantors identified therein, and JPMorgan Chase Bank, N.A., as administrative agent and collateral agent, JPMorgan Chase Bank, N.A., Toronto Branch as Canadian Agent, J.P. Morgan Europe Limited, as London Agent and the lenders from time to time party thereto. | 10-Q | 001-32601 | 10.4 | 5/4/2023 | | |
| 10.30 | Amendment No. 11 to the Credit Agreement, dated as of November 16, 2023, among Live Nation Entertainment, Inc., the Guarantors identified therein, and JPMorgan Chase Bank, N.A., as administrative agent and collateral agent, JPMorgan Chase Bank, N.A., Toronto Branch as Canadian Agent, J.P. Morgan Europe Limited, as London Agent and the lenders from time to time party thereto. | | | | | | X |
| 10.31 | | 10-Q | 001-32601 | 10.2 | 11/5/2012 | | |
| 10.32 | | 10-Q | 001-32601 | 10.1 | 7/31/2014 | | |
|
| | | | | | | |
| | | Incorporated by Reference | |
Exhibit
No. | Exhibit Description | Form | File No. | Exhibit
No. | Filing Date | Filed By | Filed
Herewith |
| 10.26 § | | 10-K | 001-32601 | 10.55 | 2/25/2010 | Live Nation | |
| 10.27 § | | 10-Q | 001-32601 | 10.1 | 8/9/2017 | Live Nation | |
| 10.28 | Credit Agreement entered into as of May 6, 2010, among Live Nation Entertainment, Inc., the Foreign Borrowers party thereto, the Guarantors identified therein, the Lenders party thereto, JPMorgan Chase Bank, N.A., as Administrative Agent and Collateral Agent, JPMorgan Chase Bank, N.A., Toronto Branch, as Canadian Agent and J.P. Morgan Europe Limited, as London Agent. | 10-Q | 001-32601 | 10.4 | 8/5/2010 | Live Nation | |
| 10.29 | Amendment No. 1, to the Credit Agreement, dated as of June 29, 2012, entered into by and among Live Nation Entertainment, Inc., the relevant Credit Parties identified therein, the Lenders party thereto, and JPMorgan Chase Bank, N.A., as administrative agent for the Lenders. | 10-Q | 001-32601 | 10.2 | 8/7/2012 | Live Nation | |
| 10.30 | Amendment No. 2 to the Credit Agreement, dated as of August 16, 2013, entered into by and among Live Nation Entertainment, Inc., the Guarantors identified therein, JPMorgan Chase Bank, N.A., as administrative agent and collateral agent for the Lenders, JPMorgan Chase Bank, N.A., Toronto Branch, as Canadian agent and J.P. Morgan Europe Limited, as London agent. | 10-Q | 001-32601 | 10.2 | 5/6/2014 | Live Nation | |
| 10.31 | Amendment No. 3 to the Credit Agreement, dated as of October 31, 2016, entered into by and among Live Nation Entertainment, Inc., the Guarantors identified therein, JPMorgan Chase Bank, N.A., as administrative agent and collateral agent, JPMorgan Chase Bank, N.A., Toronto Branch, as Canadian agent, J.P. Morgan Europe Limited, as London agent and the lenders from time to time party thereto. | 10-K | 001-32601 | 10.26 | 2/23/2017 | Live Nation | |
| 10.32 | Amendment No. 4 to the Credit Agreement, dated June 27, 2017, entered into by Live Nation Entertainment, Inc., the Guarantors identified therein, JPMorgan Chase Bank, N.A., as administrative agent and collateral agent, JPMorgan Chase Bank, N.A., Toronto Branch, as Canadian agent, J. P. Morgan Europe Limited, as London agent and the lenders from time to time party thereto. | 10-Q | 001-32601 | 10.2 | 8/9/2017 | Live Nation | |
| | | | | | | | | | | | | | | | | | | | | |
| | Incorporated by Reference | |
Exhibit
No. | Exhibit Description | Form | File No. | Exhibit
No. | Filing Date | | Filed
Herewith |
| | | | | | | |
| 10.33 | | 10-Q | 001-32601 | 10.1 | 10/30/2014 | | |
| 10.34 | Second Supplemental Indenture, dated as of October 31, 2014, among Live Nation Entertainment, Inc., EXMO, Inc., Artist Nation Management, Inc., Guyo Entertainment, Inc., the Existing Guarantors party thereto and The Bank of New York Mellon Trust Company, N.A., as trustee. | 10-K | 001-32601 | 10.33 | 2/26/2015 | | |
| 10.35 | | 10-Q | 001-32601 | 10.1 | 4/30/2015 | | |
| 10.36 | Fourth Supplemental Indenture, dated as of August 13, 2015, among Live Nation Entertainment, Inc., the guarantors listed in Appendix I thereto, FG Acquisition Co, LLC, Front Gate Holdings, LLC and Front Gate Ticketing Solutions, LLC and The Bank of New York Mellon Trust Company, N.A., as trustee. | 10-Q | 001-32601 | 10.2 | 10/29/2015 | | |
| 10.37 | | 10-K | 001-32601 | 10.42 | 2/23/2017 | | |
| 10.38 | | 10-Q | 001-32601 | 10.2 | 5/4/2017 | | |
| 10.39 | | 10-Q | 001-32601 | 10.5 | 5/3/2018 | | |
| 10.40 | | 10-K | 001-32601 | 10.38 | 2/27/2020 | | |
| 10.41 | | 10-Q | 001-32601 | 10.2 | 7/31/2014 | | |
| 10.42 | | 10-K | 001-32601 | 10.44 | 2/23/2017 | | |
| 10.43 | | 10-Q | 001-32601 | 10.1 | 5/4/2017 | | |
| 10.44 | | 10-Q | 001-32601 | 10.4 | 5/3/2018 | | |
| 10.45 | | 10-K | 001-32601 | 10.43 | 2/27/2020 | | |
|
| | | | | | | |
| | | Incorporated by Reference | |
Exhibit
No. | Exhibit Description | Form | File No. | Exhibit
No. | Filing Date | Filed By | Filed
Herewith |
| 10.33 | | 10-Q | 001-32601 | 10.2 | 11/5/2012 | Live Nation | |
| 10.34 | | 10-Q | 001-32601 | 10.1 | 7/31/2014 | Live Nation | |
| 10.35 | | 10-Q | 001-32601 | 10.1 | 10/30/2014 | Live Nation | |
| 10.36 | Second Supplemental Indenture, dated as of October 31, 2014, among Live Nation Entertainment, Inc., EXMO, Inc., Artist Nation Management, Inc., Guyo Entertainment, Inc., the Existing Guarantors party thereto and The Bank of New York Mellon Trust Company, N.A., as trustee. | 10-K | 001-32601 | 10.33 | 2/26/2015 | Live Nation | |
| 10.37 | | 10-Q | 001-32601 | 10.1 | 4/30/2015 | Live Nation | |
| 10.38 | Fourth Supplemental Indenture, dated as of August 13, 2015, among Live Nation Entertainment, Inc., the guarantors listed in Appendix I thereto, FG Acquisition Co, LLC, Front Gate Holdings, LLC and Front Gate Ticketing Solutions, LLC and The Bank of New York Mellon Trust Company, N.A., as trustee. | 10-Q | 001-32601 | 10.2 | 10/29/2015 | Live Nation | |
| 10.39 | | 10-K | 001-32601 | 10.42 | 2/23/2017 | Live Nation | |
| 10.40 | | 10-Q | 001-32601 | 10.2 | 5/4/2017 | Live Nation | |
| 10.41 | | 10-Q | 001-32601 | 10.2 | 7/31/2014 | Live Nation | |
| | | | | | | | | | | | | | | | | | | | | |
| | Incorporated by Reference | |
Exhibit
No. | Exhibit Description | Form | File No. | Exhibit
No. | Filing Date | | Filed
Herewith |
| | | | | | | |
| 10.46 | | 10-Q | 001-32601 | 10.3 | 8/5/2020 | | |
| 10.47 | | | | | | | X |
| 10.48 | | 10-Q | 001-32601 | 10.1 | 5/3/2018 | | |
| 10.49 | | 10-K | 001-32601 | 10.45 | 2/27/2020 | | |
| 10.50 | | 10-Q | 001-32601 | 10.4 | 8/5/2020 | | |
| 10.51 | | | | | | | X |
| 10.52 | | 10-Q | 001-32601 | 10.2 | 5/3/2018 | | |
| 10.53 | | 10-K | 001-32601 | 10.47 | 2/27/2020 | | |
| 10.54 | | 10-Q | 001-32601 | 10.5 | 8/5/2020 | | |
| 10.55 | | | | | | | X |
| 10.56 | | 10-Q | 001-32601 | 10.1 | 5/7/2020 | | |
| 10.57 | | 10-Q | 001-32601 | 10.2 | 8/5/2020 | | |
| 10.58 | | | | | | | X |
| 10.59 | | 10-Q | 001-32601 | 10.1 | 5/6/2021 | | |
|
| | | | | | | |
| | | Incorporated by Reference | |
Exhibit
No. | Exhibit Description | Form | File No. | Exhibit
No. | Filing Date | Filed By | Filed
Herewith |
| 10.42 | | 10-K | 001-32601 | 10.44 | 2/23/2017 | Live Nation | |
| 10.43 | | 10-Q | 001-32601 | 10.1 | 5/4/2017 | Live Nation | |
| 12.1 | | | | | | | X |
| 14.1 | | | | | | | X |
| 21.1 | | | | | | | X |
| 23.1 | | | | | | | X |
| 24.1 | Power of Attorney (see signature page). | | | | | | X |
| 31.1 | | | | | | | X |
| 31.2 | | | | | | | X |
| 32.1 | | | | | | | X |
| 32.2 | | | | | | | X |
| 101.INS | XBRL Instance Document. | | | | | | X |
| 101.SCH | XBRL Taxonomy Schema Document. | | | | | | X |
| 101.CAL | XBRL Taxonomy Calculation Linkbase Document. | | | | | | X |
| 101.DEF | XBRL Taxonomy Definition Linkbase Document. | | | | | | X |
| 101.LAB | XBRL Taxonomy Label Linkbase Document. | | | | | | X |
| 101.PRE | XBRL Taxonomy Presentation Linkbase Document. | | | | | | X |
104
| |
§ | Management contract or compensatory plan or arrangement. |
| | | | | | | | | | | | | | | | | | | | | |
| | Incorporated by Reference | |
Exhibit
No. | Exhibit Description | Form | File No. | Exhibit
No. | Filing Date | | Filed
Herewith |
| | | | | | | |
| 10.60 | | | | | | | X |
| 10.61 | | 10-Q | 001-32601 | 10.1 | 5/4/2023 | | |
| 10.62 | | 10-Q | 001-32601 | 10.2 | 5/4/2023 | | |
| 10.63 | | 10-Q | 001-32601 | 10.3 | 5/4/2023 | | |
| 14.1 | | 10-K | 001-32601 | 14.1 | 3/01/2021 | | |
| 21.1 | | | | | | | X |
| 23.1 | | | | | | | X |
| 24.1 | Power of Attorney (see signature page). | | | | | | X |
| 31.1 | | | | | | | X |
| 31.2 | | | | | | | X |
| 32.1 | | | | | | | X |
| 32.2 | | | | | | | X |
| 95 | | | | | | | X |
| 96 | | | | | | | X |
| 97 | | | | | | | X |
| 101.INS | XBRL Instance Document - The instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the inline XBRL document. | | | | | | X |
| 101.SCH | XBRL Taxonomy Schema Document. | | | | | | X |
| 101.CAL | XBRL Taxonomy Calculation Linkbase Document. | | | | | | X |
| 101.DEF | XBRL Taxonomy Definition Linkbase Document. | | | | | | X |
| 101.LAB | XBRL Taxonomy Label Linkbase Document. | | | | | | X |
| 101.PRE | XBRL Taxonomy Presentation Linkbase Document. | | | | | | X |
| 104 | Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101) | | | | | | X |
§ Management contract or compensatory plan or arrangement.
We have not filed long-term debt instruments of itsour subsidiaries where the total amount under such instruments is less than ten percent of the total assets of the Company and its subsidiaries on a consolidated basis. However, the Companywe will furnish a copy of such instruments to the Commission upon request.
ITEM 16. FORM 10-K SUMMARY
Not applicable.
99
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized, on February 27, 2018.22, 2024.
| | | | | |
| |
| LIVE NATION ENTERTAINMENT, INC. |
| |
| By: | /s/ Michael Rapino |
| Michael Rapino |
| President and Chief Executive Officer |
POWER OF ATTORNEY
KNOW ALL PERSONS BY THESE PRESENTS, that each person whose signature appears below constitutes and appoints, jointly and severally, Michael Rapino and Kathy Willard,Joe Berchtold, and each of them, as his or her true and lawful attorneys-in-fact and agents, with full power of substitution and resubstitution, for him or her and in his or her name, place and stead, in any and all capacities, to sign any and all amendments to this Annual Report on Form 10-K, and to file the same, with all exhibits thereto, and other documents in connection therewith, with the Securities and Exchange Commission, granting unto said attorneys-in-fact and agents, and each of them, full power and authority to do and perform each and every act and thing requisite and necessary to be done in connection therewith, as fully to all intents and purposes as he or she might or could do in person, hereby ratifying and confirming all that said attorneys-in-fact and agents, or any of them, or their or his or her substitute or substitutes, may lawfully do or cause to be done by virtue hereof.
Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.
| | | | | | | | | | | | | | |
| | | | |
| | | | |
Name | | Title | | Date |
| | | | |
/s/ Michael Rapino Michael Rapino | | President, Chief Executive Officer
and Director
| | February 27, 201822, 2024 |
| | | | |
/s/ Kathy WillardJoe Berchtold Kathy WillardJoe Berchtold
| | Chief Financial Officer | | February 27, 201822, 2024 |
| | | | |
/s/ Brian Capo Brian Capo | | Chief Accounting Officer | | February 27, 201822, 2024 |
| | | | |
/s/ Mark CarletonMaverick Carter Mark CarletonMaverick Carter
| | Director | | February 27, 201822, 2024 |
| | | | |
/s/ Jonathan DolgenPing Fu Jonathan DolgenPing Fu
| | Director | | Director | February 27, 201822, 2024 |
| | | | |
/s/ Ariel Emanuel
Ariel Emanuel
| | Director | | February 27, 2018 |
| | | | |
/s/ Robert Ted Enloe, III
Robert Ted Enloe, III
| | Director | | February 27, 2018 |
| | | | |
/s/ Jeffrey T. Hinson Jeffrey T. Hinson | | Director | | February 27, 201822, 2024 |
| | | | |
/s/ Chad Hollingsworth Chad Hollingsworth | | Director | | February 22, 2024 |
| | | | |
/s/ Jimmy Iovine Jimmy Iovine | | Director | | February 27, 201822, 2024 |
| | | | |
/s/ Margaret L. Johnson
Margaret L. Johnson
| | Director | | February 27, 2018 |
| | | | |
/s/ James S. Kahan James S. Kahan | | Director | | February 27, 201822, 2024 |
| | | | |
/s/ Gregory B. Maffei Gregory B. Maffei | | Director | | February 27, 201822, 2024 |
| | | | |
/s/ Randall T. Mays Randall T. Mays | | Director | | February 27, 201822, 2024 |
| | | | |
/s/ Mark S. ShapiroRichard A. Paul Mark S. ShapiroRichard A. Paul
| | Director | | DirectorFebruary 22, 2024 |
| | | | |
/s/ Latriece Watkins Latriece Watkins | | Director | | February 27, 201822, 2024 |