UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

____________________________________ 

Form 10-Q

____________________________________ 

☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended September 30, 2019

or

☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from                  to                

Commission File Number 001-32601

____________________________________ 

LIVE NATION ENTERTAINMENT, INC.

(Exact name of registrant as specified in its charter)

____________________________________

Delaware	20-3247759
(State of Incorporation)	(I.R.S. Employer Identification No.)

9348 Civic Center Drive

Beverly Hills, CA 90210

(Address of principal executive offices, including zip code)

(310) 867-7000

(Registrant’s telephone number, including area code)

______________________________________________________________ 

Securities registered pursuant to Section 12(b) of the Act:
Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Common stock, $.01 Par Value Per Share	LYV	New York Stock Exchange
(Includes Preferred Stock Purchase Rights)

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.    x  Yes    ¨  No

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).    Yes  x    No  ¨

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large Accelerated Filer	x	Accelerated Filer	¨
Non-accelerated Filer	¨	Smaller Reporting Company	☐
		Emerging Growth Company	☐
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.			¨

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).    ☐  Yes    x  No

On October 24, 2019, there were 213,715,534 outstanding shares of the registrant’s common stock, $0.01 par value per share, including 2,988,582 shares of unvested restricted stock awards and excluding 408,024 shares held in treasury.

LIVE NATION ENTERTAINMENT, INC.

INDEX TO FORM 10-Q

		Page
PART I—FINANCIAL INFORMATION
Item 1.	Financial Statements	2
	Consolidated Balance Sheets (Unaudited) as of September 30, 2019 and December 31, 2018	2
	Consolidated Statements of Operations (Unaudited) for the three and nine months ended September 30, 2019 and 2018	3
	Consolidated Statements of Comprehensive Income (Unaudited) for the three and nine months ended September 30, 2019 and 2018	4
	Consolidated Statements of Changes in Equity (Unaudited) for the three and nine months ended September 30, 2019 and 2018	5
	Consolidated Statements of Cash Flows (Unaudited) for the nine months ended September 30, 2019 and 2018	9
	Notes to Consolidated Financial Statements (Unaudited)	10
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	23
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	40
Item 4.	Controls and Procedures	40
PART II—OTHER INFORMATION
Item 1.	Legal Proceedings	41
Item 1A.	Risk Factors	41
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	41
Item 3.	Defaults Upon Senior Securities	41
Item 5.	Other Information	41
Item 6.	Exhibits	41

GLOSSARY OF KEY TERMS
AOCI	Accumulated other comprehensive income (loss)
AOI	Adjusted operating income (loss)
FASB	Financial Accounting Standards Board
GAAP	United States Generally Accepted Accounting Principles
Live Nation	Live Nation Entertainment, Inc. and subsidiaries
SEC	United States Securities and Exchange Commission
Ticketmaster	Our ticketing business

PART I—FINANCIAL INFORMATION

Item 1. Financial Statements

LIVE NATION ENTERTAINMENT, INC.

CONSOLIDATED BALANCE SHEETS (UNAUDITED)

	September 30, 2019		December 31, 2018
	(in thousands)
ASSETS
Current assets
Cash and cash equivalents	$	1,795,166	$	2,371,540
Accounts receivable, less allowance of $41,932 and $34,225, respectively	1,215,465		829,320
Prepaid expenses	772,196		597,866
Restricted cash	13,628		6,663
Other current assets	53,268		42,685
Total current assets	3,849,723		3,848,074
Property, plant and equipment
Land, buildings and improvements	1,116,305		984,558
Computer equipment and capitalized software	787,966		742,737
Furniture and other equipment	362,978		329,607
Construction in progress	163,470		160,028
	2,430,719		2,216,930
Less accumulated depreciation	1,382,580		1,270,337
	1,048,139		946,593
Operating lease assets	1,145,487		—
Intangible assets
Definite-lived intangible assets, net	678,790		661,451
Indefinite-lived intangible assets	368,756		368,854
Goodwill	1,915,215		1,822,943
Long-term advances	563,815		420,891
Other long-term assets	397,208		428,080
Total assets	$	9,967,133	$	8,496,886
LIABILITIES AND EQUITY
Current liabilities
Accounts payable, client accounts	$	985,214	$	1,037,162
Accounts payable	119,910		90,253
Accrued expenses	1,511,883		1,245,465
Deferred revenue	1,115,874		1,227,797
Current portion of long-term debt, net	64,274		82,142
Current portion of operating lease liabilities	122,299		—
Other current liabilities	39,918		67,047
Total current liabilities	3,959,372		3,749,866
Long-term debt, net	2,694,934		2,732,878
Long-term operating lease liabilities	1,092,538		—
Deferred income taxes	166,305		137,067
Other long-term liabilities	112,336		204,977
Commitments and contingent liabilities
Redeemable non-controlling interests	418,816		329,355
Stockholders' equity
Common stock	2,111		2,091
Additional paid-in capital	2,262,461		2,268,209
Accumulated deficit	(789,387)		(1,019,223)
Cost of shares held in treasury	(6,865)		(6,865)
Accumulated other comprehensive loss	(181,047)		(145,231)
Total Live Nation stockholders' equity	1,287,273		1,098,981
Non-controlling interests	235,559		243,762
Total stockholders' equity	1,522,832		1,342,743
Total liabilities and stockholders' equity	$	9,967,133	$	8,496,886

See Notes to Consolidated Financial Statements

2

LIVE NATION ENTERTAINMENT, INC.

CONSOLIDATED STATEMENTS OF OPERATIONS

(UNAUDITED)

	Three Months Ended September 30,				Nine Months Ended September 30,
	2019		2018		2019		2018
	(in thousands except share and per share data)
Revenue	$	3,773,684	$	3,835,246	$	8,658,521	$	8,185,945
Operating expenses:
Direct operating expenses	2,800,429		2,924,356		6,279,447		5,991,547
Selling, general and administrative expenses	542,547		524,654		1,520,910		1,435,703
Depreciation and amortization	126,306		99,606		329,044		277,262
Loss (gain) on disposal of operating assets	(305)		10,318		(553)		10,464
Corporate expenses	44,666		42,093		121,909		108,055
Operating income	260,041		234,219		407,764		362,914
Interest expense	36,587		35,993		109,894		104,196
Interest income	(5,863)		(2,260)		(12,229)		(6,148)
Equity in loss (earnings) of nonconsolidated affiliates	2,681		(4)		(6,291)		(3,406)
Other expense, net	5,384		262		1,551		7,033
Income before income taxes	221,252		200,228		314,839		261,239
Income tax expense	27,280		17,031		59,988		35,714
Net income	193,972		183,197		254,851		225,525
Net income attributable to noncontrolling interests	15,047		10,514		25,015		17,389
Net income attributable to common stockholders of Live Nation	$	178,925	$	172,683	$	229,836	$	208,136
Basic net income per common share available to common stockholders of Live Nation	$	0.74	$	0.73	$	0.86	$	0.74
Diluted net income per common share available to common stockholders of Live Nation	$	0.71	$	0.70	$	0.83	$	0.71
Weighted average common shares outstanding:
Basic	210,621,971		207,614,413		209,849,058		207,228,034
Diluted	218,957,376		216,788,983		218,485,494		215,406,201
Reconciliation to net income available to common stockholders of Live Nation:
Net income attributable to common stockholders of Live Nation	$	178,925	$	172,683	$	229,836	$	208,136
Accretion of redeemable noncontrolling interests	(23,580)		(20,789)		(49,407)		(54,347)
Net income available to common stockholders of Live Nation—basic	155,345		151,894		180,429		153,789
Convertible debt interest, net of tax	—		319		265		—
Net income available to common stockholders of Live Nation—diluted	$	155,345	$	152,213	$	180,694	$	153,789

See Notes to Consolidated Financial Statements

3

LIVE NATION ENTERTAINMENT, INC.

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(UNAUDITED)

	Three Months Ended September 30,				Nine Months Ended September 30,
	2019		2018		2019		2018
	(in thousands)
Net income	$	193,972	$	183,197	$	254,851	$	225,525
Other comprehensive loss, net of tax:
Foreign currency translation adjustments	(32,256)		(9,081)		(35,816)		(26,376)
Comprehensive income	161,716		174,116		219,035		199,149
Comprehensive income attributable to noncontrolling interests	15,047		10,514		25,015		17,389
Comprehensive income attributable to common stockholders of Live Nation	$	146,669	$	163,602	$	194,020	$	181,760

See Notes to Consolidated Financial Statements

4

LIVE NATION ENTERTAINMENT, INC.

CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY

(UNAUDITED)

	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 June 30, 2019	210,910,143	$	2,101	$	2,296,010	$	(968,312)	$	(6,865)	$	(148,791)	$	233,613	$	1,407,756	$	385,328
Non-cash and stock-based compensation	—	—		12,030		—		—		—		—		12,030		—
Common stock issued under stock plans, net of shares withheld for employee taxes	9,457	—		(319)		—		—		—		—		(319)		—
Exercise of stock options, net of shares withheld for option cost and employee taxes	206,456	2		3,039		—		—		—		—		3,041		—
Conversion of convertible debt	—	8		(8)		—		—		—		—		—		—
Acquisitions	—	—		—		—		—		—		4,790		4,790		—
Purchases of noncontrolling interests	—	—		(24,846)		—		—		—		(2,695)		(27,541)		—
Redeemable noncontrolling interests fair value adjustments	—	—		(23,580)		—		—		—		—		(23,580)		23,580
Contributions received	—	—		—		—		—		—		4,800		4,800		—
Cash distributions	—	—		—		—		—		—		(8,185)		(8,185)		(1,624)
Other	—	—		135		—		—		—		(279)		(144)		—
Comprehensive income (loss):
Net income	—	—		—		178,925		—		—		3,515		182,440		11,532
Foreign currency translation adjustments	—	—		—		—		—		(32,256)		—		(32,256)		—
Balances at September 30, 2019	211,126,056	$	2,111	$	2,262,461	$	(789,387)	$	(6,865)	$	(181,047)	$	235,559	$	1,522,832	$	418,816

See Notes to Consolidated Financial Statements

5

	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, 2018	209,135,581	$	2,091	$	2,268,209	$	(1,019,223)	$	(6,865)	$	(145,231)	$	243,762	$	1,342,743	$	329,355
Non-cash and stock-based compensation	—	—		37,022		—		—		—		—		37,022		—
Common stock issued under stock plans, net of shares withheld for employee taxes	322,314	3		(10,581)		—		—		—		—		(10,578)		—
Exercise of stock options, net of shares withheld for option cost and employee taxes	843,833	9		13,231		—		—		—		—		13,240		—
Conversion of convertible debt	824,328	8		28,578		—		—		—		—		28,586		—
Acquisitions	—	—		—		—		—		—		30,958		30,958		39,303
Purchases of noncontrolling interests	—	—		(24,576)		—		—		—		(2,965)		(27,541)		(1,459)
Redeemable noncontrolling interests fair value adjustments	—	—		(49,407)		—		—		—		—		(49,407)		49,407
Contributions received	—	—		—		—		—		—		13,124		13,124		—
Cash distributions	—	—		—		—		—		—		(60,300)		(60,300)		(12,882)
Other	—	—		(15)		—		—		—		(1,540)		(1,555)		2,597
Comprehensive income (loss):
Net income	—	—		—		229,836		—		—		12,520		242,356		12,495
Foreign currency translation adjustments	—	—		—		—		—		(35,816)		—		(35,816)		—
Balances at September 30, 2019	211,126,056	$	2,111	$	2,262,461	$	(789,387)	$	(6,865)	$	(181,047)	$	235,559	$	1,522,832	$	418,816

See Notes to Consolidated Financial Statements

6

	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 June 30, 2018	207,869,835	$	2,079	$	2,337,691	$	(1,044,019)	$	(6,865)	$	(125,837)	$	242,471	$	1,405,520	$	293,194
Non-cash and stock-based compensation	—	—		11,095		—		—		—		—		11,095		—
Common stock issued under stock plans, net of shares withheld for employee taxes	5,685	—		(83)		—		—		—		—		(83)		—
Exercise of stock options, net of shares withheld for option cost and employee taxes	383,982	4		5,589		—		—		—		—		5,593		—
Acquisitions	—	—		—		—		—		—		(634)		(634)		(959)
Divestitures	—	—		—		—		—		—		(6,684)		(6,684)		—
Purchases of noncontrolling interests	—	—		(6,493)		—		—		—		110		(6,383)		(10,000)
Sales of noncontrolling interests	—	—		1,410		—		—		—		(980)		430		—
Redeemable noncontrolling interests fair value adjustments	—	—		(20,790)		—		—		—		—		(20,790)		20,790
Contributions received	—	—		—		—		—		—		2,601		2,601		1,806
Cash distributions	—	—		—		—		—		—		(10,212)		(10,212)		4
Other	—	—		6		—		—		—		19		25		(50)
Comprehensive income (loss):
Net income	—	—		—		172,683		—		—		6,849		179,532		3,665
Foreign currency translation adjustments	—	—		—		—		—		(9,081)		—		(9,081)		—
Balances at September 30, 2018	208,259,502	$	2,083	$	2,328,425	$	(871,336)	$	(6,865)	$	(134,918)	$	233,540	$	1,550,929	$	308,450

See Notes to Consolidated Financial Statements

7

	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, 2017	206,877,037	$	2,069	$	2,374,006	$	(1,079,472)	$	(6,865)	$	(108,542)	$	236,948	$	1,418,144	$	244,727
Non-cash and stock-based compensation	—	—		34,415		—		—		—		—		34,415		—
Common stock issued under stock plans, net of shares withheld for employee taxes	365,502	4		(8,689)		—		—		—		—		(8,685)		—
Exercise of stock options, net of shares withheld for option cost and employee taxes	1,016,963	10		16,437		—		—		—		—		16,447		—
Fair value of convertible debt conversion feature, net of issuance costs	—	—		62,624		—		—		—		—		62,624		—
Repurchase of convertible debt conversion feature	—	—		(92,641)		—		—		—		—		(92,641)		—
Acquisitions	—	—		—		—		—		—		21,770		21,770		20,911
Divestitures	—	—		—		—		—		—		(6,684)		(6,684)		—
Purchases of noncontrolling interests	—	—		(4,784)		—		—		—		(1,526)		(6,310)		(10,356)
Sales of noncontrolling interests	—	—		1,410		—		—		—		(980)		430		—
Redeemable noncontrolling interests fair value adjustments	—	—		(54,246)		—		—		—		—		(54,246)		54,246
Contributions received	—	—		—		—		—		—		7,501		7,501		1,806
Cash distributions	—	—		—		—		—		—		(33,481)		(33,481)		(7,870)
Other	—	—		(107)		—		—		—		(2,439)		(2,546)		28
Comprehensive income (loss):
Net income	—	—		—		208,136		—		—		12,431		220,567		4,958
Foreign currency translation adjustments	—	—		—		—		—		(26,376)		—		(26,376)		—
Balances at September 30, 2018	208,259,502	$	2,083	$	2,328,425	$	(871,336)	$	(6,865)	$	(134,918)	$	233,540	$	1,550,929	$	308,450

See Notes to Consolidated Financial Statements

8

LIVE NATION ENTERTAINMENT, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS

(UNAUDITED)

	Nine Months Ended September 30,
	2019		2018
	(in thousands)
CASH FLOWS FROM OPERATING ACTIVITIES
Net income	$	254,851	$	225,525
Reconciling items:
Depreciation	163,004		133,718
Amortization	166,040		143,544
Amortization of non-recoupable ticketing contract advances	54,120		55,893
Amortization of debt issuance costs and discounts, net	16,300		14,765
Non-cash compensation expense	36,924		34,315
Unrealized changes in fair value of contingent consideration	7,372		11,609
Loss (gain) on disposal of operating assets	(553)		10,464
Equity in earnings of nonconsolidated affiliates, net of distributions	6,526		10,024
Provision for uncollectible accounts receivable and advances	14,413		16,898
Other, net	(9,632)		(6,525)
Changes in operating assets and liabilities, net of effects of acquisitions and dispositions:
Increase in accounts receivable	(392,065)		(545,872)
Increase in prepaid expenses and other assets	(257,268)		(332,254)
Increase in accounts payable, accrued expenses and other liabilities	135,672		484,432
Decrease in deferred revenue	(162,782)		(960)
Net cash provided by operating activities	32,922		255,576
CASH FLOWS FROM INVESTING ACTIVITIES
Advances of notes receivable	(24,110)		(71,578)
Collections of notes receivable	10,142		29,104
Investments made in nonconsolidated affiliates	(34,742)		(42,580)
Purchases of property, plant and equipment	(225,822)		(163,714)
Cash paid for acquisitions, net of cash acquired	(108,075)		(98,288)
Purchases of intangible assets	(22,953)		(33,175)
Other, net	2,203		1,375
Net cash used in investing activities	(403,357)		(378,856)
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from long-term debt, net of debt issuance costs	604		857,121
Payments on long-term debt	(30,491)		(391,096)
Contributions from noncontrolling interests	13,124		4,900
Distributions to noncontrolling interests	(73,182)		(41,351)
Purchases and sales of noncontrolling interests, net	(29,005)		(152,971)
Proceeds from exercise of stock options	13,240		16,447
Taxes paid for net share settlement of equity awards	(10,578)		(8,685)
Payments for deferred and contingent consideration	(23,322)		(16,239)
Net cash provided by (used in) financing activities	(139,610)		268,126
Effect of exchange rate changes on cash, cash equivalents, and restricted cash	(59,364)		(63,870)
Net increase (decrease) in cash, cash equivalents, and restricted cash	(569,409)		80,976
Cash, cash equivalents, and restricted cash at beginning of period	2,378,203		1,828,822
Cash, cash equivalents, and restricted cash at end of period	$	1,808,794	$	1,909,798

See Notes to Consolidated Financial Statements

9

LIVE NATION ENTERTAINMENT, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)

NOTE 1—BASIS OF PRESENTATION AND OTHER INFORMATION

Preparation of Interim Financial Statements

The accompanying unaudited consolidated financial statements have been prepared in accordance with GAAP for interim financial information and the instructions to Form 10-Q and Article 10 of Regulation S-X issued by the SEC. Accordingly, they do not include all of the information and footnotes required by GAAP for complete financial statements. In the opinion of management, they include all normal and recurring accruals and adjustments necessary to present fairly the results of the interim periods shown.

The financial statements should be read in conjunction with the consolidated financial statements and notes thereto included in our 2018 Annual Report on Form 10-K filed with the SEC on February 28, 2019, as amended by the Form 10-K/A filed with the SEC on June 28, 2019.

Seasonality

Due to the seasonal nature of shows at outdoor amphitheaters and festivals, which primarily occur from May through October, our Concerts and Sponsorship & Advertising segments experience higher revenue during the second and third quarters. Our Ticketing segment’s revenue is impacted by fluctuations in the availability of events for sale to the public, which vary depending upon scheduling by its clients. 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. Therefore, the results to date are not necessarily indicative of the results expected for the full year.

Cash, Cash Equivalents and Restricted Cash

Included in the September 30, 2019 and December 31, 2018 cash and cash equivalents balance is $747.4 million and $859.1 million, respectively, of cash received that includes the face value of tickets sold on behalf of ticketing clients and their share of service charges, which amounts are to be remitted to these clients.

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.

Acquisitions

During the first nine months of 2019, we completed several acquisitions that were accounted for as business combinations under the acquisition method of accounting. When we make these acquisitions, we often acquire a controlling interest without buying 100% of the business. These acquisitions were not significant either on an individual basis or in the aggregate.

Income Taxes

Each reporting period, we evaluate the realizability of all of our deferred tax assets in each tax jurisdiction. As of September 30, 2019, we continued to maintain a full valuation allowance against our net deferred tax assets in certain jurisdictions due to cumulative pre-tax losses. As a result of the valuation allowances, no tax benefits have been recognized for losses incurred, if any, in those tax jurisdictions for the first nine months of 2019 and 2018.

Accounting Pronouncements - Recently Adopted

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 asset, and to disclose key information about leasing arrangements. The guidance should be applied on a modified retrospective basis.

We adopted this standard on January 1, 2019, applying the transitional provisions of the standard to the beginning of the period of adoption and elected the package of practical expedients available under the transition guidance within the new guidance which, among other things, allowed us to carry forward the historical lease classification. We also made an accounting policy election to keep leases with an initial term of twelve months or less off the balance sheet, recognizing those lease payments in our statements of operations generally on a straight-line basis over the term of the lease. We have implemented third-party lease software, and corresponding internal controls, to account for our leases and facilitate compliance with the new guidance.

The new guidance had a material impact on our balance sheet, but did not have a material impact on our statements of operations or an impact on our compliance with the debt covenant requirements under our senior secured credit facility and

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other debt arrangements. Upon adoption, we recognized operating lease assets and liabilities of $1.1 billion and $1.2 billion, respectively. The initial operating lease assets and liabilities were based on the present value of the remaining minimum lease payments, discounted using our secured incremental borrowing rate which varies based on geographical region and term of the underlying lease. The operating lease assets were also reduced by $85.3 million for prepaid rent, straight-line rent accruals and lease incentives.

Accounting Pronouncements - Not Yet Adopted

In August 2018, the FASB issued guidance that aligns the requirements for capitalizing implementation costs incurred in a hosting arrangement that is a service contract with the requirements for capitalizing implementation costs incurred to develop or obtain internal-use software. The amortization period of these implementation costs would include periods covered under renewal options that are reasonably certain to be exercised. The expense related to the capitalized implementation costs also would be presented in the same financial statement line item as the hosting fees. The guidance is effective for annual periods beginning after December 15, 2019 and interim periods within that year, and early adoption is permitted. The guidance should be applied either retrospectively or prospectively to all implementation costs incurred after the date of adoption. We expect to adopt this guidance on January 1, 2020, and are currently assessing which implementation method we will apply and the impact that adoption will have on our financial position and results of operations.

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 nine months ended September 30, 2019:

	Revenue- generating contracts		Client / vendor relationships		Trademarks and naming rights		Technology		Other (1)		Total
	(in thousands)
Balance as of December 31, 2018:
Gross carrying amount	$	692,963	$	393,772	$	123,707	$	85,411	$	120,163	$	1,416,016
Accumulated amortization	(391,002)		(213,599)		(41,808)		(38,826)		(69,330)		(754,565)
Net	301,961		180,173		81,899		46,585		50,833		661,451
Gross carrying amount:
Acquisitions—current year	100,416		25,639		1,632		7,794		60,145		195,626
Acquisitions—prior year	—		—		—		—		43		43
Foreign exchange	(14,694)		(3,937)		(845)		(419)		(2,160)		(22,055)
Other (2)	(71,601)		(37,748)		76		(8,530)		(19,413)		(137,216)
Net change	14,121		(16,046)		863		(1,155)		38,615		36,398
Accumulated amortization:
Amortization	(75,596)		(43,999)		(10,097)		(19,957)		(16,391)		(166,040)
Foreign exchange	5,560		2,483		362		377		976		9,758
Other (2)	71,580		37,747		(54)		8,529		19,421		137,223
Net change	1,544		(3,769)		(9,789)		(11,051)		4,006		(19,059)
Balance as of September 30, 2019:
Gross carrying amount	707,084		377,726		124,570		84,256		158,778		1,452,414
Accumulated amortization	(389,458)		(217,368)		(51,597)		(49,877)		(65,324)		(773,624)
Net	$	317,626	$	160,358	$	72,973	$	34,379	$	93,454	$	678,790

______________

⁽¹⁾ Other primarily includes intangible assets for non-compete, venue management and leasehold agreements.  

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

Included in the current year acquisitions amounts above are definite-lived intangible assets primarily associated with the acquisitions of a festival promotion business located in Brazil that had been accounted for as an equity method investment, venue management businesses located in Belgium, the United States and Canada, festival promotion businesses located in the United States and Finland, a ticketing business located in Australia and an artist management business located in the United States.

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The 2019 additions to definite-lived intangible assets from acquisitions have weighted-average lives as follows:

	Weighted- Average Life (years)
Revenue-generating contracts	8
Client/vendor relationships	4
Trademarks and naming rights	3
Technology	2
Other	9
All categories	7

We test for possible impairment of definite-lived intangible assets whenever events or circumstances change, such as a significant reduction in operating cash flow or a change in the manner in which the asset is intended to be used, which may indicate that the carrying amount of the asset may not be recoverable. During the nine months ended September 30, 2019, we reviewed the carrying value of certain definite-lived intangible assets that management determined had an indicator that future operating cash flows may not support their carrying value, and it was determined that those assets were impaired since the estimated undiscounted operating cash flows associated with those assets were less than their carrying value. For the nine months ended September 30, 2019, we recorded impairment charges related to definite-lived intangible assets of $19.4 million as a component of depreciation and amortization. These impairment charges primarily related to intangible assets for revenue-generating contracts in the Concerts segment. See Note 4—Fair Value Measurements for further discussion of the inputs used to determine the fair value. There were no significant impairment charges recorded during the nine months ended September 30, 2018.

Amortization of definite-lived intangible assets for the three months ended September 30, 2019 and 2018 was $69.3 million and $51.4 million, respectively, and for the nine months ended September 30, 2019 and 2018 was $166.0 million and $143.5 million, respectively.

The following table presents our estimate of amortization expense for each of the five succeeding fiscal years for definite-lived intangible assets that exist at September 30, 2019:

	(in thousands)
October 1 - December 31, 2019	$	48,212
2020	$	164,235
2021	$	125,521
2022	$	97,365
2023	$	81,030

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

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Goodwill

The following table presents the changes in the carrying amount of goodwill in each of our reportable segments for the nine months ended September 30, 2019:

	Concerts		Ticketing		Sponsorship & Advertising		Total
	(in thousands)
Balance as of December 31, 2018:
Goodwill	$	1,094,604	$	762,953	$	400,749	$	2,258,306
Accumulated impairment losses	(435,363)		—		—		(435,363)
Net	659,241		762,953		400,749		1,822,943
Acquisitions—current year	46,648		4,017		51,237		101,902
Acquisitions—prior year	8,827		—		—		8,827
Foreign exchange	(10,889)		(3,458)		(4,110)		(18,457)
Balance as of September 30, 2019:
Goodwill	1,139,190		763,512		447,876		2,350,578
Accumulated impairment losses	(435,363)		—		—		(435,363)
Net	$	703,827	$	763,512	$	447,876	$	1,915,215

Included in the current year acquisitions amounts above are goodwill primarily associated with the acquisition of a festival promotion business located in Brazil that had been accounted for as an equity method investment and venue management businesses located in Belgium and Canada.

We are in various stages of finalizing our acquisition accounting for recent acquisitions, which may include the use of external valuation consultants, and the completion of this accounting could result in a change to the associated purchase price allocations, including goodwill and our allocation between segments.

NOTE 3—LEASES

We lease office space, many of our concert venues, festival sites and certain equipment. We do not recognize an operating lease asset or liability on our consolidated balance sheets 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 less 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 well as provisions for us to pay the related utilities and maintenance. We have elected to account for the lease components (i.e., fixed payments including rent, parking and real estate taxes) and nonlease components (i.e., common-area maintenance costs) as a single lease component.

Many of our lease agreements contain renewal options that can extend the lease for additional terms typically ranging from one to ten years. Renewal options at the 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 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 prevailing inflationary index or market rental rates. Contingent rent obligations are not included in the initial measurement of the right of use asset or lease liability and are recognized as rent expense in the period that the contingency 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 lease depending on geographical location and length of the lease.

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The significant components of operating lease expense are as follows:

	Three Months Ended September 30, 2019		Nine Months Ended September 30, 2019
	(in thousands)
Operating lease cost	$	43,412	$	139,251
Variable and short-term lease cost	48,318		96,147
Sublease income	(4,040)		(12,669)
Net lease cost	$	87,690	$	222,729

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

	Nine Months Ended September 30, 2019
	(in thousands)
Cash paid for amounts included in the measurement of lease liabilities	$	146,953
Lease assets obtained in exchange for lease obligations, net of terminations	$	130,011

Future maturities of our operating lease liabilities at September 30, 2019 are as follows:

	(in thousands)
October 1 - December 31, 2019	$	37,520
2020	184,023
2021	157,624
2022	151,277
2023	143,784
Thereafter	1,134,584
Total lease payments	1,808,812
Less: Interest	593,975
Present value of lease liabilities	$	1,214,837

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

	September 30, 2019
Weighted average remaining lease term (in years)	13.4
Weighted average discount rate	5.78	%

As of September 30, 2019, we have additional operating leases that have not yet commenced with total lease payments of $298.5 million. These operating leases, which are not included on our consolidated balance sheets, have commencement dates ranging from October 2019 to May 2021 with lease terms ranging from 1 to 25 years.

NOTE 4—FAIR VALUE MEASUREMENTS

Recurring

Our outstanding debt held by third-party financial institutions is carried at cost, adjusted for any discounts or debt issuance costs. Our 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 as defined in the FASB guidance.

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The following table presents the estimated fair values of our senior notes and convertible senior notes:

	Estimated Fair Value at
	September 30, 2019		December 31, 2018
	Level 2
	(in thousands)
4.875% Senior Notes due 2024	$	596,517	$	552,368
5.625% Senior Notes due 2026	$	320,310	$	302,097
5.375% Senior Notes due 2022	$	253,693	$	251,390
2.5% Convertible Senior Notes due 2023	$	645,100	$	561,699
2.5% Convertible Senior Notes due 2019	$	—	$	40,710

See Note 9—Subsequent Event for discussion of the October 2019 refinancing of the 5.375% senior notes.

The estimated fair value of our 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.

Non-recurring

The following table shows the fair value of our financial assets that have been adjusted to fair value on a non-recurring basis, which had a significant impact on our results of operations for the nine months ended September 30, 2019.

			Fair Value Measurements Using
Description	Fair Value Measurement		Level 1		Level 2		Level 3		Loss (Gain)
2019			(in thousands)
Definite-lived intangible assets, net	$	—	$	—	$	—	$	—	$	19,372

During the nine months ended September 30, 2019, we recorded impairment charges related to definite-lived intangible assets of $19.4 million as a component of depreciation and amortization. The impairment charges are primarily related to intangible assets for revenue-generating contracts in the Concerts segment. It was determined that these assets were impaired since the most recent estimated undiscounted future cash flows associated with these assets were less than their carrying value. These impairments were calculated using operating cash flows, which were discounted to approximate fair value. The key inputs in these calculations include future cash flow projections, including revenue profit margins, and, for the fair value computation, a discount rate. The key inputs used for these non-recurring fair value measurements are considered Level 3 inputs.

NOTE 5—COMMITMENTS AND CONTINGENT LIABILITIES

Litigation

Consumer Class Actions

The following putative class action lawsuits were filed against Live Nation and/or Ticketmaster in the United States and Canada: Vaccaro v. Ticketmaster LLC (Northern District of Illinois, filed September 2018); Ameri v. Ticketmaster LLC (Northern District of California, filed September 2018); Lee v. Ticketmaster LLC, et al. (Northern District of California, filed September 2018); Thompson-Marcial v. Ticketmaster 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); Gaetano v. Live Nation Entertainment, Inc., et al. (Northern District of New York, filed October 2018); Dickey v. Ticketmaster LLC, et al. (Central District of California, filed October 2018); Gomel v. Live Nation Entertainment, Inc., et al. (Supreme Court of British Columbia, Vancouver Registry, filed October 2018); Smith v. Live Nation Entertainment, Inc., et al. (Ontario Superior Court of Justice, filed October 2018); Messing v. Ticketmaster LLC, et al. (Central District of California, filed November 2018); and Niedbalski v. Ticketmaster LLC, et al. (Central District of California, filed December 2018).

In March 2019, the court granted the defendants’ motion to compel arbitration of the Dickey lawsuit and stayed the matter. The parties reached a settlement in October 2019, and the case will be dismissed with prejudice shortly. In April 2019, the court granted the defendants’ motion to compel arbitration of the Lee lawsuit and dismissed the case. Lee subsequently appealed the District Court’s ruling to the Ninth Circuit. The Gaetano lawsuit was voluntarily dismissed with prejudice by the

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plaintiff in April 2019. The Ameri lawsuit was dismissed in May 2019 in light of the parties’ agreement to arbitrate the matter, and the Vaccaro lawsuit was settled and dismissed in June 2019. The Messing and Niedbalski lawsuits are stayed pending the outcome of the appeal in the Lee matter.

The remaining lawsuits make similar factual allegations that Live Nation and/or Ticketmaster LLC engage in conduct that is intended to encourage the resale of tickets on secondary ticket exchanges at elevated prices. Based on these allegations, each plaintiff asserts violations of different state/provincial and federal laws. 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 complaints seek a variety of remedies, including unspecified compensatory damages, punitive damages, restitution, injunctive relief and attorneys’ fees and costs. Based on information presently known to management, we do not believe that a loss is probable of occurring at this time, and believe that the potential liability, if any, will not have a material adverse effect on our financial condition, cash flows or results of operations. Further, we do not currently believe that the claims asserted in these lawsuits have merit, and considerable uncertainty exists regarding any monetary damages that will be asserted against us. We intend to vigorously defend these actions.

NOTE 6—EQUITY

Common Stock

During 2019, we issued 824,328 shares of common stock to holders of our 2.5% convertible senior notes due 2019 upon conversion of $28.6 million of the outstanding principal amount of the notes.

Accumulated Other Comprehensive Loss

The following table presents changes in the components of AOCI, net of taxes, for the nine months ended September 30, 2019:

	Total
	(Foreign Currency Items)
	(in thousands)
Balance at December 31, 2018	$	(145,231)
Other comprehensive loss before reclassifications	(35,816)
Net other comprehensive loss	(35,816)
Balance at September 30, 2019	$	(181,047)

Earnings Per Share

Basic net income (loss) per common share is computed by dividing the net income (loss) available to common stockholders by the weighted average number of common shares outstanding during the period. The calculation of diluted net income (loss) per common share includes the effects of the assumed exercise of any outstanding stock options, the assumed vesting of shares of restricted stock and the assumed conversion of our convertible senior notes, where dilutive.

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

	Three Months Ended September 30,		Nine Months Ended September 30,
	2019	2018	2019	2018
Weighted average common shares—basic	210,621,971	207,614,413	209,849,058	207,228,034
Effect of dilutive securities:
Stock options and restricted stock	8,335,405	8,347,718	8,249,695	8,178,167
Convertible senior notes	—	826,852	386,741	—
Weighted average common shares—diluted	218,957,376	216,788,983	218,485,494	215,406,201

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

	Three Months Ended September 30,		Nine Months Ended September 30,
	2019	2018	2019	2018
Options to purchase shares of common stock	311,500	604,781	486,849	604,781
Restricted stock and deferred stock—unvested	959,089	2,483,572	959,089	2,498,072
Conversion shares related to the convertible senior notes	8,085,275	8,085,275	8,085,275	8,912,127
Number of anti-dilutive potentially issuable shares excluded from diluted common shares outstanding	9,355,864	11,173,628	9,531,213	12,014,980

NOTE 7—REVENUE RECOGNITION

Concerts

Concerts revenue, including intersegment revenue, for the three and nine months ended September 30, 2019 and 2018 are as follows:

	Three Months Ended September 30,						Nine Months Ended September 30,
	2019			2018			2019			2018
	(in thousands)
Total Concert Revenue	$	3,173,843		$	3,297,257		$	7,131,491		$	6,716,914
Percentage of consolidated revenue	84.1		%	86.0		%	82.4		%	82.1		%

Our Concerts 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 companies, 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 95% 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. Any consideration not collected by the day of the event is typically received within three months after the event date.

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Ticketing

Ticketing revenue, including intersegment revenue, for the three and nine months ended September 30, 2019 and 2018 are as follows:

	Three Months Ended September 30,						Nine Months Ended September 30,
	2019			2018			2019			2018
	(in thousands)
Total Ticketing Revenue	$	388,458		$	368,312		$	1,096,865		$	1,091,880
Percentage of consolidated revenue	10.3		%	9.6		%	12.7		%	13.3		%

Ticket fee revenue is generated from convenience and order processing fees, or service charges, charged at the time a ticket for an event is sold in either the primary or secondary markets. Our Ticketing segment is primarily an agency business that sells tickets for events on behalf of its clients, which include venues, concert promoters, professional sports franchises and leagues, college sports teams, theater producers and museums. Our Ticketing segment is acting as an agent on behalf of its clients and records revenue arising from convenience and order processing fees, regardless of whether these fees are related to tickets sold in the primary or secondary market, and regardless of whether these fees are associated with our concert events or third-party clients’ concert events. Our Ticketing segment does not record the face value of the tickets sold 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.

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 September 30, 2019 and December 31, 2018, we had ticketing contract advances of $97.0 million and $75.5 million, respectively, recorded in prepaid expenses and $104.7 million and $78.5 million, respectively, recorded in long-term advances on the consolidated balance sheets. We amortized $19.9 million and $19.6 million for the three months ended September 30, 2019 and 2018, respectively, and $54.1 million and $55.9 million for the nine months ended September 30, 2019 and 2018, respectively, related to non-recoupable ticketing contract advances.

Sponsorship & Advertising

Sponsorship & Advertising revenue, including intersegment revenue, for the three and nine months ended September 30, 2019 and 2018 are as follows:

	Three Months Ended September 30,						Nine Months Ended September 30,
	2019			2018			2019			2018
	(in thousands)
Total Sponsorship & Advertising Revenue	$	215,247		$	171,178		$	441,862		$	385,674
Percentage of consolidated revenue	5.7		%	4.5		%	5.1		%	4.7		%

Our Sponsorship & Advertising 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

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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.

At September 30, 2019, we had contracted sponsorship agreements with terms greater than one year that had approximately $1.0 billion of revenue related to future benefits to be provided by us. We expect to recognize approximately 8%, 31%, 23% and 38% of this revenue in the remainder of 2019, 2020, 2021 and thereafter, respectively.

Deferred Revenue

The majority of our deferred revenue is 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. We had current deferred revenue of $1.2 billion and $925.2 million at December 31, 2018 and 2017, respectively.

The table below summarizes the amount of deferred revenue recognized during the three and nine months ended September 30, 2019 and 2018:

	Three Months Ended September 30,				Nine Months Ended September 30,
	2019		2018		2019		2018
	(in thousands)
Concerts	$	260,907	$	166,381	$	1,093,890	$	809,930
Ticketing	11,538		7,820		59,284		39,559
Sponsorship & Advertising	2,436		3,062		19,188		20,350
Other & Corporate	562		200		2,730		1,591
	$	275,443	$	177,463	$	1,175,092	$	871,430

NOTE 8—SEGMENT DATA

Our reportable segments are Concerts, Ticketing and Sponsorship & Advertising. 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 of associated content and the provision of management and other services to artists. 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. 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 original content, and ads across our distribution network of venues, events and websites.

Revenue and expenses earned and charged between segments are eliminated in consolidation. Our capital expenditures below include accruals for amounts incurred but not yet paid for, but are not reduced by reimbursements received from outside parties such as landlords or replacements funded by insurance proceeds.

We manage our working capital on a consolidated basis. Accordingly, segment assets are not reported to, or used by, our management to allocate resources to or assess performance of the segments, and therefore, total segment assets have not been presented.

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The following table presents the results of operations for our reportable segments for the three and nine months ended September 30, 2019 and 2018:

	Concerts		Ticketing		Sponsorship & Advertising		Other		Corporate		Eliminations		Consolidated
	(in thousands)
Three Months Ended September 30, 2019
Revenue	$	3,173,843	$	388,458	$	215,247	$	791	$	—	$	(4,655)	$	3,773,684
Direct operating expenses	2,636,344		127,123		41,617		—		—		(4,655)		2,800,429
Selling, general and administrative expenses	355,198		157,590		29,055		704		—		—		542,547
Depreciation and amortization	71,247		39,562		11,332		145		4,020		—		126,306
Loss (gain) on disposal of operating assets	(320)		15		—		—		—		—		(305)
Corporate expenses	—		—		—		—		44,666		—		44,666
Operating income (loss)	$	111,374	$	64,168	$	133,243	$	(58)	$	(48,686)	$	—	$	260,041
Intersegment revenue	$	2,092	$	2,563	$	—	$	—	$	—	$	(4,655)	$	—
Three Months Ended September 30, 2018
Revenue	$	3,297,257	$	368,312	$	171,178	$	932	$	—	$	(2,433)	$	3,835,246
Direct operating expenses	2,767,949		133,050		23,191		2,599		—		(2,433)		2,924,356
Selling, general and administrative expenses	343,250		151,064		25,325		5,015		—		—		524,654
Depreciation and amortization	54,404		34,677		8,871		212		1,442		—		99,606
Loss (gain) on disposal of operating assets	10,317		2		—		—		(1)		—		10,318
Corporate expenses	—		—		—		—		42,093		—		42,093
Operating income (loss)	$	121,337	$	49,519	$	113,791	$	(6,894)	$	(43,534)	$	—	$	234,219
Intersegment revenue	$	268	$	2,165	$	—	$	—	$	—	$	(2,433)	$	—
Nine Months Ended September 30, 2019
Revenue	$	7,131,491	$	1,096,865	$	441,862	$	2,372	$	—	$	(14,069)	$	8,658,521
Direct operating expenses	5,853,380		359,502		80,634		—		—		(14,069)		6,279,447
Selling, general and administrative expenses	989,017		449,862		79,661		2,370		—		—		1,520,910
Depreciation and amortization	176,827		116,465		24,780		404		10,568		—		329,044
Loss (gain) on disposal of operating assets	(675)		122		—		—		—		—		(553)
Corporate expenses	—		—		—		—		121,909		—		121,909
Operating income (loss)	$	112,942	$	170,914	$	256,787	$	(402)	$	(132,477)	$	—	$	407,764
Intersegment revenue	$	5,032	$	9,037	$	—	$	—	$	—	$	(14,069)	$	—
Capital expenditures	$	127,818	$	78,414	$	5,529	$	—	$	17,374	$	—	$	229,135

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	Concerts		Ticketing		Sponsorship & Advertising		Other		Corporate		Eliminations		Consolidated
	(in thousands)
Nine Months Ended September 30, 2018
Revenue	$	6,716,914	$	1,091,880	$	385,674	$	2,886	$	—	$	(11,409)	$	8,185,945
Direct operating expenses	5,554,368		377,121		68,142		3,325		—		(11,409)		5,991,547
Selling, general and administrative expenses	906,360		447,997		68,534		12,812		—		—		1,435,703
Depreciation and amortization	146,458		103,299		23,613		599		3,293		—		277,262
Loss (gain) on disposal of operating assets	10,452		13		—		—		(1)		—		10,464
Corporate expenses	—		—		—		—		108,055		—		108,055
Operating income (loss)	$	99,276	$	163,450	$	225,385	$	(13,850)	$	(111,347)	$	—	$	362,914
Intersegment revenue	$	268	$	11,141	$	—	$	—	$	—	$	(11,409)	$	—
Capital expenditures	$	88,338	$	71,336	$	4,241	$	149	$	8,839	$	—	$	172,903

NOTE 9—SUBSEQUENT EVENT

In October 2019, we issued $950 million principal amount of 4.75% senior notes due 2027 and further amended our senior secured credit facility, including the issuance of $950 million principal amount for the term loan B facility, as set forth below. The proceeds will be used to repay the $1.1 billion principal balance outstanding on the term loans A and B under our existing senior secured credit facility, to repay the entire $250 million principal amount of our 5.375% senior notes due 2022 and to pay the related redemption premium of $3.4 million on the senior notes and estimated accrued interest and fees of $31.1 million, leaving approximately $527.2 million for general corporate purposes, including acquisitions. We expect the loss on extinguishment of debt related to this refinancing to be between $3.0 million and $5.0 million.

Amended Senior Secured Credit Facility

The amended senior secured credit facility provides for (i) a five-year $400 million delayed draw term loan A facility, (ii) a seven-year $950 million term loan B facility and (iii) a five-year $500 million revolving credit facility. The delayed draw term loan A facility is available to be drawn for the first two years following the amendment. In addition, subject to certain conditions, we have the right to increase such facilities by an amount equal to the sum of (x) $985 million, (y) the aggregate principal amount of voluntary prepayments of the delayed draw term loan A and term loan B and permanent reductions of the revolving credit facility commitments, in each case, other than from proceeds of long-term indebtedness, and (z) additional amounts so long as the senior secured leverage ratio calculated on a pro-forma basis (as defined in the agreement) is no greater than 3.75x. The revolving credit facility provides for borrowings up to $500 million with sublimits of up to (i) $150 million for the issuance of letters of credit, (ii) $50 million for swingline loans, (iii) $300 million for borrowings in Euros or British Pounds and (iv) $100 million for borrowings in those or one or more other approved currencies. The amended senior secured credit facility is secured by a first priority lien on substantially all of our tangible and intangible personal property and our domestic subsidiaries that are guarantors, and by a pledge of substantially all of the shares of stock, partnership interests and limited liability company interests of our direct and indirect domestic subsidiaries and 65% of each class of capital stock of any first-tier foreign subsidiaries, subject to certain exceptions.

The interest rates per annum applicable to revolving credit facility loans and the delayed draw term loan A under the amended senior secured credit facility are, at our option, equal to either Eurodollar plus 1.75% or a base rate plus 0.75%, subject to stepdowns based on our net leverage ratio. The interest rates per annum applicable to the term loan B are, at our option, equal to either Eurodollar plus 1.75% or a base rate plus 0.75%. We are required to pay a commitment fee of 0.35% per year on the undrawn portion available under the revolving credit facility and delayed draw term loan A, subject to a stepdown based on our net leverage ratio, and variable fees on outstanding letters of credit.

For the term loan A, we are required to make quarterly payments at a rate ranging from 0.625% of the original principal amount during the first three years to 1.25% during the last two years with the balance due at maturity in October 2024. For the term loan B, we are required to make quarterly payments of $2.4 million with the balance due at maturity in October 2026. We are also required to make mandatory prepayments of the loans under the amended credit agreement, subject to specified exceptions, from excess cash flow and with the proceeds of asset sales, debt issuances and specified other events.

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4.75% Senior Notes

The $950 million principal amount of senior notes due 2027 bear interest at 4.75%, which is payable semi-annually in cash in arrears on April 15 and October 15 of each year beginning on April 15, 2020, and will mature on October 15, 2027. We may redeem some or all of the notes, at any time prior to October 15, 2022, at a price equal to 100% of the aggregate principal amount, plus any accrued and unpaid interest to the date of redemption, plus a ‘make-whole’ premium. We may redeem up to 35% of the aggregate principal amount of the notes from the proceeds of certain equity offerings prior to October 15, 2022, at a price equal to 104.750% of the aggregate principal amount, plus accrued and unpaid interest thereon, if any, to the date of redemption. In addition, 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.

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Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

“Live Nation” (which may be referred to as the “Company,” “we,” “us” or “our”) means Live Nation Entertainment, Inc. and its subsidiaries, or one of our segments or subsidiaries, as the context requires. You should read the following discussion of our financial condition and results of operations together with the unaudited consolidated financial statements and notes to the financial statements included elsewhere in this quarterly report.

Special Note About Forward-Looking Statements

Certain statements contained in this quarterly report (or otherwise made by us or on our behalf from time to time in other reports, filings with the SEC, news releases, conferences, internet postings or otherwise) that are not statements of historical fact constitute “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Exchange Act of 1934, as amended, notwithstanding that such statements are not specifically identified. Forward-looking statements include, but are not limited to, statements about our financial position, business strategy, competitive position, potential growth opportunities, potential operating performance improvements, the effects of competition, the effects of future legislation or regulations and plans and objectives of our management for future operations. We have based our forward-looking statements on our beliefs and assumptions considering the information available to us at the time the statements are made. Use of the words “may,” “should,” “continue,” “plan,” “potential,” “anticipate,” “believe,” “estimate,” “expect,” “intend,” “outlook,” “could,” “target,” “project,” “seek,” “predict,” or variations of such words and similar expressions are intended to identify forward-looking statements but are not the exclusive means of identifying such statements.

Forward-looking statements are not guarantees of future performance and are subject to risks and uncertainties that could cause actual results to differ materially from those in such statements. Factors that could cause actual results to differ from those discussed in the forward-looking statements include, but are not limited to, those set forth below under Part II—Other Information—Item 1A.—Risk Factors, in Part I—Item IA.—Risk Factors of our 2018 Annual Report on Form 10-K, as well as other factors described herein or in our annual, quarterly and other reports we file with the SEC (collectively, “cautionary statements”). Based upon changing conditions, should any one or more of these risks or uncertainties materialize, or should any underlying assumptions prove incorrect, actual results may vary materially from those described in any forward-looking statements. All subsequent written and oral forward-looking statements attributable to us or persons acting on our behalf are expressly qualified in their entirety by the applicable cautionary statements. We do not intend to update these forward-looking statements, except as required by applicable law.

Executive Overview

In the third quarter of 2019, our year-over-year operating income growth continued as we executed on our core strategy and expanded our geographic footprint. Without currency impacts, our revenue for the quarter was essentially flat due to some timing impacts that favorably impacted us in the second quarter. While our Sponsorship and Ticketing revenue grew in the quarter, the timing of our stadium events and one of our major European festivals shifted into the second quarter in 2019. Despite this, operating income for the quarter increased by 11% as compared to the third quarter of 2018, largely as a result of stronger results in our Sponsorship & Advertising and Ticketing segments. For the first nine months of 2019, our total revenue grew $473 million, or 6%, on a reported basis as compared to last year, or $632 million, an 8% increase, without currency impacts. Concerts, the center of our flywheel, drove the revenue growth through the first nine months of the year. Our number of events increased 11% and fans increased 3% for the first nine months of 2019 as compared to last year. As the leading global live event and ticketing company, we believe that we are well-positioned to provide the best service to artists, teams, fans and venues and therefore drive growth across all our businesses. We believe that by leveraging our leadership position in the entertainment industry to reach fans through the live concert experience, we will sell more tickets and uniquely engage more advertising partners. By advancing innovation in ticketing technology, we will continue to improve the fan experience by offering increased and more diversified choices in an expanded ticketing marketplace. This gives us a compelling opportunity to continue to grow our fan base and our results.

Our Concerts segment revenue for the quarter decreased by $123 million, or 4%, on a reported basis as compared to last year, or $83 million, a 3% decrease, without currency impacts. As discussed above, this decrease was largely due to the timing of certain events which shifted to the second quarter this year. Some of the larger tours in the third quarter of 2019 included the Backstreet Boys, Ariana Grande and John Mayer. The number of events for the quarter was up 12% compared to last year, driven by substantial growth in our theater and club business globally with over 31 million fans in attendance. For the first nine months, our Concerts segment revenue grew by $415 million, or 6%, on a reported basis as compared to last year, or $548 million, an 8% increase, without currency impacts. Higher revenue was largely due to an increase in the number of stadium shows in Europe, arena events in the United States and more theater and club shows globally. Over 73 million fans have attended our shows so far this year, a 3% increase as compared to the first nine months of 2018. And as a result of our strategy to expand our theater and club business, our show count is up nearly three thousand year-over-year, an increase of 11%. Our amphitheater onsite initiatives continued to generate per fan growth over last year. Increased food and beverage offerings, premium parking, and other upsell programs have driven our spend per head up by approximately $2.50 per fan compared to

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last year. We have continued to focus on platinum and premium ticket opportunities for fans and improving the sell-through on our best seats. Operating income for the first nine months of the year was up 14% due to the higher number of events and fans as well as our pricing and onsite initiatives. We will continue to drive global show and fan volume by extending our geographic footprint, expanding our premium ticket pricing programs, and growing our onsite revenue through elevated consumer offerings. Longer term, we continue to look for expansion opportunities in concerts, both domestically and internationally, as well as ways to market our events more effectively in order to continue to grow our fan base and geographic reach and to sell more tickets.

Our Ticketing segment revenue for the third quarter increased by $20 million, or 5%, on a reported basis as compared to last year, or $25 million, a 7% increase, without currency impacts. Our fee-bearing ticket sales were up 4% in the quarter with strong growth coming from international ticket sales. For the first nine months, Ticketing revenue increased $5 million on a reported basis as compared to last year, or up $22 million, or 2%, without currency impacts. We have sold 159 million fee-bearing tickets worldwide for the first nine months, a 3% increase over last year. We have also made strides in 2019 in growing some of our ticket-adjacent revenue streams, implementing tools to reduce costly fraudulent activity, and more efficiently managing our marketing budgets. All of these factors have driven better operating income results. Operating income for the first nine months is up 5% compared to last year. We also continue to see strong growth in our mobile ticket sales with an increase of 13% in the third quarter of the year, with mobile now representing 46% of our total ticket sales. This has been a key component of our rollout of SafeTix™ which benefits our fans, our artists and our clients. Our continued focus on new artist and fan tools has resulted in key new client signings that will generate growth in the years ahead. We will continue to implement new features to drive further expansion of mobile ticket transactions and invest in initiatives aimed at improving the ticket search, purchase and transfer process which we expect will attract more ticket buyers and enhance the overall fan and venue client experience.

Our Sponsorship & Advertising segment revenue for the quarter was up $44 million, or 26%, on a reported basis as compared to last year, or $47 million, a 28% increase, without currency impacts. Higher revenue largely resulted from new clients and increased festival sponsorship, including our first weekend of the Rock in Rio event in Brazil that will occur every two years. For the first nine months, Sponsorship & Advertising revenue was up $56 million, or 15%, on a reported basis as compared to last year, or $65 million, a 17% increase, without currency impacts. Renewals of our key existing clients are pacing on plan and we are seeing growth from expanding into new categories such as consumer packaged goods, fashion and insurance. The investment we have made over the past few years in premium inventory products including viewing decks, VIP clubs and social moments are also generating sponsorship growth at our owned and operated venues. The growth in festival, venue and online sponsorship revenue has driven operating income for the first nine months up 14%. Our extensive onsite and online reach, global venue distribution network, artist relationships and ticketing operations are the keys to securing long-term sponsorship and advertising agreements with major brands, and we plan to expand these assets while extending our sales reach further into new international markets.

We continue to be optimistic about the long-term potential of our company and are focused on the key elements of our business model: expand our concert platform, sell more tickets for our Ticketmaster clients, grow our sponsorship and online revenue, and drive cost efficiencies.

Our History

We were incorporated in Delaware on August 2, 2005 in preparation for the contribution and transfer by Clear Channel Communications, Inc. of substantially all of its entertainment assets and liabilities to us. We completed the separation on December 21, 2005, and became a publicly traded company on the New York Stock Exchange trading under the symbol “LYV.”

On January 25, 2010, we merged with Ticketmaster Entertainment LLC and it became a wholly-owned subsidiary of Live Nation. Effective with the merger, Live Nation, Inc. changed its name to Live Nation Entertainment, Inc.

Recent Events

In July 2019, we entered into agreements to acquire an aggregate 51% interest in OCESA Entretenimiento, S.A. de C.V. and certain other related subsidiaries of Corporación Interamericana de Entretenimiento, S.A.B. de C.V. (“CIE”). We made our initial concentration notice filings with the regulatory authorities in Mexico in late August and are in the process of responding to their requests for additional information in connection with their review of our filings. CIE shareholders approved the acquisition in September 2019. The acquisition is anticipated to close in late 2019 or early 2020.

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Segment Overview

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

Concerts

Our Concerts segment principally involves the global promotion of live music events in our owned or operated venues and in rented third-party venues, the operation and management of music venues, the production of music festivals, the creation of associated content and the provision of management and other services to artists. While our Concerts segment operates year-round, we experience higher revenue during the second and third quarters due to the seasonal nature of shows at our outdoor amphitheaters and festivals, which primarily occur from May through October. Revenue and related costs for events are generally deferred and recognized when the event occurs. All advertising costs incurred during the year for shows in future years are expensed at the end of the year.

Concerts direct operating expenses include artist fees, event production costs, show-related marketing and advertising expenses, along with other costs.

To judge the health of our Concerts segment, we primarily monitor the number of confirmed events and fan attendance in our network of owned or operated and third-party venues, talent fees, average paid attendance, market ticket pricing, advance ticket sales and the number of major artist clients under management. In addition, at our owned or operated venues and festivals, we monitor ancillary revenue per fan and premium ticket sales. For business that is conducted in foreign markets, we also compare the operating results from our foreign operations to prior periods without the impact of changes in foreign exchange rates.

Ticketing

Our Ticketing segment is primarily an agency business that sells tickets for events on behalf of its clients and retains a portion of the service charges as its fee. Gross transaction value (“GTV”) represents the total amount of the transaction related to a ticket sale and includes the face value of the ticket as well as the service charge. Service charges are generally based on a percentage of the face value or a fixed fee. We sell tickets through websites, mobile apps, ticket outlets and telephone call centers. Our ticketing sales are impacted by fluctuations in the availability of events for sale to the public, which may vary depending upon scheduling by our clients. We also offer ticket resale services, sometimes referred to as secondary ticketing, principally through our integrated inventory platform, league/team platforms and other platforms internationally. Our Ticketing segment manages our online activities including enhancements to our ticketing websites and product offerings. Through our websites, we sell tickets to our own events as well as tickets for our clients and provide event information. Revenue related to ticketing service charges is recognized when the ticket is sold for our third-party clients. For our own events, where our concert promoters control ticketing, revenue is deferred and recognized when the event occurs.

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

To judge the health of our Ticketing segment, we primarily review GTV and the number of tickets sold through our ticketing operations, the number of clients renewed or added and the average royalty rate paid to clients who use our ticketing services. In addition, we review the number of visits to our websites, marketing spend effectiveness, the purchase conversion rate, the overall number of customers in our database, the number and percentage of tickets sold via mobile and the number of app installs. For business that is conducted in foreign markets, we also compare the operating results from our foreign operations to prior periods without the impact of changes in foreign exchange rates.

Sponsorship & Advertising

Our Sponsorship & Advertising segment employs a sales force that creates and maintains relationships with sponsors through a combination of strategic, international, national and local opportunities that allow businesses to reach customers through our concert, festival, venue and ticketing assets, including advertising on our websites. We drive increased advertising scale to further monetize our concerts platform through rich media offerings including advertising associated with live streaming and music-related original content. We work with our corporate clients to help create marketing programs that support their business goals and connect their brands directly with fans and artists. We also develop, book and produce custom events or programs for our clients’ specific brands, which are typically experienced exclusively by the clients’ consumers. These custom events can involve live music events with talent and media, using both online and traditional outlets. We typically experience higher revenue in the second and third quarters, as a large portion of sponsorships are associated with shows at our outdoor amphitheaters and festivals, which primarily occur from May through October.

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

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To judge the health of our Sponsorship & Advertising segment, we primarily review the revenue generated through sponsorship arrangements and online advertising, and the percentage of expected revenue under contract. For business that is conducted in foreign markets, we also compare the operating results from our foreign operations to prior periods without the impact of changes in foreign exchange rates.

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Key Operating Metrics

	Three Months Ended September 30,		Nine Months Ended September 30,
	2019	2018	2019	2018
	(in thousands except estimated events)
Concerts (1)
Events:
North America	6,796	5,922	19,256	17,055
International	1,885	1,812	7,457	6,952
Total estimated events	8,681	7,734	26,713	24,007
Fans:
North America	22,414	24,036	47,041	46,934
International	8,843	9,168	25,979	23,758
Total estimated fans	31,257	33,204	73,020	70,692
Ticketing (2)
Fee-bearing tickets	55,348	53,458	158,558	154,627
Non-fee-bearing tickets	61,664	62,499	182,529	182,062
Total estimated tickets	117,012	115,957	341,087	336,689

 _________

⁽¹⁾Events generally represent a single performance by an artist. Fans generally represent the number of people who attend an event. Festivals are counted as one event in the quarter in which the festival begins, but the number of fans is based on the days the fans were present at the festival and thus can be reported across multiple quarters. Events and fan attendance metrics are estimated each quarter.

⁽²⁾The fee-bearing tickets estimated above include primary and secondary tickets that are sold using our Ticketmaster systems or that we issue through affiliates. This metric includes primary tickets sold during the period regardless of event timing, except for our own events where our concert promoters control ticketing which are reported when the events occur. The non-fee-bearing tickets estimated above include primary tickets sold using our Ticketmaster systems, through season seat packages and our venue clients’ box offices, along with tickets sold on our ‘do it yourself’ platform.

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Non-GAAP Measures

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

	Operating income (loss)		Stock- based compensation expense		Loss (gain) on disposal of operating assets		Depreciation and amortization		Amortization of non-recoupable ticketing contract advances		Acquisition expenses		AOI
	(in thousands)
Three Months Ended September 30, 2019
Concerts	$	111,374	$	3,195	$	(320)	$	71,247	$	—	$	9,028	$	194,524
Ticketing	64,168		1,570		15		39,562		21,783		228		127,326
Sponsorship & Advertising	133,243		718		—		11,332		—		—		145,293
Other and Eliminations	(58)		—		—		145		(1,930)		—		(1,843)
Corporate	(48,686)		6,515		—		4,020		—		(1)		(38,152)
Total	$	260,041	$	11,998	$	(305)	$	126,306	$	19,853	$	9,255	$	427,148
Three Months Ended September 30, 2018
Concerts	$	121,337	$	3,166	$	10,317	$	54,404	$	—	$	11,100	$	200,324
Ticketing	49,519		1,261		2		34,677		20,793		265		106,517
Sponsorship & Advertising	113,791		472		—		8,871		—		—		123,134
Other and Eliminations	(6,894)		—		—		212		(1,184)		—		(7,866)
Corporate	(43,534)		6,470		(1)		1,442		—		3		(35,620)
Total	$	234,219	$	11,369	$	10,318	$	99,606	$	19,609	$	11,368	$	386,489
Nine Months Ended September 30, 2019
Concerts	$	112,942	$	9,826	$	(675)	$	176,827	$	—	$	33,774	$	332,694
Ticketing	170,914		4,675		122		116,465		58,680		678		351,534
Sponsorship & Advertising	256,787		2,027		—		24,780		—		—		283,594
Other and Eliminations	(402)		—		—		404		(4,560)		—		(4,558)
Corporate	(132,477)		20,396		—		10,568		—		—		(101,513)
Total	$	407,764	$	36,924	$	(553)	$	329,044	$	54,120	$	34,452	$	861,751
Nine Months Ended September 30, 2018
Concerts	$	99,276	$	9,049	$	10,452	$	146,458	$	—	$	18,973	$	284,208
Ticketing	163,450		3,534		13		103,299		59,340		737		330,373
Sponsorship & Advertising	225,385		1,180		—		23,613		—		—		250,178
Other and Eliminations	(13,850)		—		—		599		(3,447)		—		(16,698)
Corporate	(111,347)		20,552		(1)		3,293		—		3		(87,500)
Total	$	362,914	$	34,315	$	10,464	$	277,262	$	55,893	$	19,713	$	760,561

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Adjusted Operating Income (Loss)

AOI is a non-GAAP financial measure that we define as operating income (loss) before certain stock-based compensation expense, loss (gain) on disposal of operating assets, depreciation and amortization (including goodwill impairment), amortization of non-recoupable ticketing contract advances and acquisition expenses (including transaction costs, changes in the fair value of accrued acquisition-related contingent consideration obligations, and acquisition-related severance and compensation). We use AOI to evaluate the performance of our operating segments. We believe that information about AOI assists investors by allowing them to evaluate changes in the operating results of our portfolio of businesses separate from non-operational factors that affect net income (loss), thus providing insights into both operations and the other factors that affect reported results. AOI is not calculated or presented in accordance with GAAP. A limitation of the use of AOI as a performance measure is that it does not reflect the periodic costs of certain amortizing assets used in generating revenue in our business. Accordingly, AOI should be considered in addition to, and not as a substitute for, operating income (loss), net income (loss), and other measures of financial performance reported in accordance with GAAP. Furthermore, this measure may vary among other companies; thus, AOI as presented herein may not be comparable to similarly titled measures of other companies.

AOI Margin

AOI margin is a non-GAAP financial measure that we calculate by dividing AOI by revenue. We use AOI margin to evaluate the performance of our operating segments. We believe that information about AOI margin assists investors by allowing them to evaluate changes in the operating results of our portfolio of businesses separate from non-operational factors that affect net income (loss), thus providing insights into both operations and the other factors that affect reported results. AOI margin is not calculated or presented in accordance with GAAP. A limitation of the use of AOI margin as a performance measure is that it does not reflect the periodic costs of certain amortizing assets used in generating revenue in our business. Accordingly, AOI margin should be considered in addition to, and not as a substitute for, operating income (loss) margin, and other measures of financial performance reported in accordance with GAAP. Furthermore, this measure may vary among other companies; thus, AOI margin as presented herein may not be comparable to similarly titled measures of other companies.

Constant Currency

Constant currency is a non-GAAP financial measure. We calculate currency impacts as the difference between current period activity translated using the current period’s currency exchange rates and the comparable prior period’s currency exchange rates. We present constant currency information to provide a framework for assessing how our underlying businesses performed excluding the effect of foreign currency rate fluctuations.

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Segment Operating Results

Concerts

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

	Three Months Ended September 30,						% Change	Nine Months Ended September 30,						% Change
	2019			2018				2019			2018
	(in thousands)							(in thousands)
Revenue	$	3,173,843		$	3,297,257		(4)%	$	7,131,491		$	6,716,914		6%
Direct operating expenses	2,636,344			2,767,949			(5)%	5,853,380			5,554,368			5%
Selling, general and administrative expenses	355,198			343,250			3%	989,017			906,360			9%
Depreciation and amortization	71,247			54,404			31%	176,827			146,458			21%
Loss (gain) on disposal of operating assets	(320)			10,317			*	(675)			10,452			*
Operating Income	$	111,374		$	121,337		(8)%	$	112,942		$	99,276		14%
Operating margin	3.5		%	3.7		%		1.6		%	1.5		%
AOI **	$	194,524		$	200,324		(3)%	$	332,694		$	284,208		17	%
AOI margin **	6.1		%	6.1		%		4.7		%	4.2		%

_______

*	Percentages are not meaningful.
**	See “—Non-GAAP Measures” above for the definition and reconciliation of AOI and AOI margin.

Three Months

Revenue

Concerts revenue decreased $123.4 million during the three months ended September 30, 2019 as compared to the same period of the prior year. Excluding the decrease of $40.9 million related to currency impacts, revenue decreased $82.5 million, or 3%, primarily due to fewer shows in our North America stadiums and international arenas partially offset by more shows in our North America arenas, increased theater and club activity globally and higher average ticket prices. Concerts had incremental revenue of $76.1 million from the acquisitions of concert and festival promotion and venue management businesses.

Operating results

The decrease in operating income for Concerts for the three months ended September 30, 2019 was primarily driven by increased depreciation and amortization related to a $19.4 million impairment charge recorded in the third quarter of 2019 along with higher compensation costs associated with salary increases and headcount growth. These increases were partially offset by improved overall operating results from our events. The impairment charge recorded during the three months ended September 30, 2019 was associated with revenue-generating contract intangible assets as it was determined that the estimated undiscounted cash flows associated with the respective intangible assets were less than their carrying value. There were no significant impairments of intangible assets recorded for the three months ended September 30, 2018. Included in selling, general and administrative expenses for the three months ended September 30, 2019 is $23.7 million of expenses related to new acquisitions and new venues in the Concerts segment.

Nine Months

Revenue

Concerts revenue increased $414.6 million during the nine months ended September 30, 2019 as compared to the same period of the prior year. Excluding the decrease of $133.6 million related to currency impacts, revenue increased $548.2 million, or 8%, primarily due to more shows in our North America arenas and theaters globally along with higher average attendance and ticket prices, more shows in our international stadiums and increased festival activity globally. These increases were partially offset by fewer shows in our North America stadiums and amphitheaters. Concerts had incremental revenue of $178.2 million from the acquisitions of concert and festival promotion and venue management businesses.

Operating results

The increase in Concerts operating income for the nine months ended September 30, 2019 was primarily driven by improved operating results from our events discussed above partially offset by higher compensation costs associated with salary increases and headcount growth along with increased depreciation and amortization associated with the impairment charge

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recorded in the third quarter of 2019 discussed above. Included in selling, general and administrative expenses for the nine months ended September 30, 2019 is $61.9 million of expenses related to new acquisitions and new venues in the Concerts segment.

Ticketing

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

	Three Months Ended September 30,						% Change	Nine Months Ended September 30,						% Change
	2019			2018				2019			2018
	(in thousands)							(in thousands)
Revenue	$	388,458		$	368,312		5%	$	1,096,865		$	1,091,880		—%
Direct operating expenses	127,123			133,050			(4)%	359,502			377,121			(5)%
Selling, general and administrative expenses	157,590			151,064			4%	449,862			447,997			—%
Depreciation and amortization	39,562			34,677			14%	116,465			103,299			13%
Loss on disposal of operating assets	15			2			*	122			13			*
Operating income	$	64,168		$	49,519		30%	$	170,914		$	163,450		5%
Operating margin	16.5		%	13.4		%		15.6		%	15.0		%
AOI **	$	127,326		$	106,517		20%	$	351,534		$	330,373		6%
AOI margin **	32.8		%	28.9		%		32.0		%	30.3		%

_______

*	Percentages are not meaningful.
**	See “—Non-GAAP Measures” above for the definition and reconciliation of AOI and AOI margin.

Three Months

Revenue

Ticketing revenue increased $20.1 million during the three months ended September 30, 2019 as compared to the same period of the prior year. Excluding the decrease of $4.4 million related to currency impacts, revenue increased $24.5 million, or 7%, primarily due to increased international primary ticket fees, driven by higher volume for concert events, along with higher North America resale volume and increased ancillary revenue.

Operating results

The increase in Ticketing operating income for the three months ended September 30, 2019 was primarily due to increased operating results from the increased ticketing activity discussed above along with lower marketing and credit card related costs.

Nine Months

Revenue

Ticketing revenue increased $5.0 million during the nine months ended September 30, 2019 as compared to the same period of the prior year. Excluding the decrease of $17.5 million related to currency impacts, revenue increased $22.5 million, or 2%, primarily due to increased international primary ticket fees, driven by higher volume for concert events, along with higher North America ancillary revenue.

Operating results

The increase in Ticketing operating income for the nine months ended September 30, 2019 was primarily due to improved operating results from the increased ticketing activity discussed above along with lower marketing and credit card related costs partially offset by increased depreciation and amortization associated with technology enhancements.

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Sponsorship & Advertising

Our Sponsorship & Advertising segment operating results were, and discussions of significant variances are, as follows:

	Three Months Ended September 30,						% Change	Nine Months Ended September 30,						% Change
	2019			2018				2019			2018
	(in thousands)							(in thousands)
Revenue	$	215,247		$	171,178		26%	$	441,862		$	385,674		15%
Direct operating expenses	41,617			23,191			79%	80,634			68,142			18%
Selling, general and administrative expenses	29,055			25,325			15%	79,661			68,534			16%
Depreciation and amortization	11,332			8,871			28%	24,780			23,613			5%
Operating income	$	133,243		$	113,791		17%	$	256,787		$	225,385		14%
Operating margin	61.9		%	66.5		%		58.1		%	58.4		%
AOI **	$	145,293		$	123,134		18%	$	283,594		$	250,178		13%
AOI margin **	67.5		%	71.9		%		64.2		%	64.9		%

_______

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

Three Months

Revenue

Sponsorship & Advertising revenue increased $44.1 million during the three months ended September 30, 2019 as compared to the same period of the prior year. Excluding the decrease of $3.4 million related to currency impacts, revenue increased $47.5 million, or 28%, primarily due to growth in our national sponsorship programs in North America along with increased sponsorship for our festivals and higher online activity globally. Sponsorship & Advertising had incremental revenue of $12.9 million from the acquisitions of festival promotion businesses.

Operating results

The increase in Sponsorship & Advertising operating income for the three months ended September 30, 2019 was primarily driven by the increase in sponsorship activity discussed above partially offset by higher fulfillment costs on certain sponsorship programs.

Nine Months

Revenue

Sponsorship & Advertising revenue increased $56.2 million during the nine months ended September 30, 2019 as compared to the same period of the prior year. Excluding the decrease of $8.5 million related to currency impacts, revenue increased $64.7 million, or 17%, primarily due increased sponsorship for our festivals and higher online activity globally along with growth in our sponsorship programs in North America. Sponsorship & Advertising had incremental revenue of $14.7 million from the acquisitions of festival promotion businesses.

Operating results

The increase in Sponsorship & Advertising operating income for the nine months ended September 30, 2019 was primarily driven by the higher sponsorship activity discussed above partially offset by higher fulfillment costs on certain sponsorship programs and increased compensation costs driven by headcount growth.

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Consolidated Results of Operations

Three Months

	Three Months Ended September 30,											% Change
	2019								2018
	As Reported			Currency Impacts		At Constant Currency**			As Reported			As Reported	At Constant Currency**
	(in thousands)
Revenue	$	3,773,684		$	48,694	$	3,822,378		$	3,835,246		(2)%	—%
Operating expenses:
Direct operating expenses	2,800,429			37,105		2,837,534			2,924,356			(4)%	(3)%
Selling, general and administrative expenses	542,547			8,026		550,573			524,654			3%	5%
Depreciation and amortization	126,306			1,207		127,513			99,606			27%	28%
Loss (gain) on disposal of operating assets	(305)			40		(265)			10,318			*	*
Corporate expenses	44,666			6		44,672			42,093			6%	6%
Operating income	260,041			$	2,310	$	262,351		234,219			11%	12%
Operating margin	6.9		%			6.9		%	6.1		%
Interest expense	36,587								35,993
Interest income	(5,863)								(2,260)
Equity in loss (earnings) of nonconsolidated affiliates	2,681								(4)
Other expense, net	5,384								262
Income before income taxes	221,252								200,228
Income tax expense	27,280								17,031
Net income	193,972								183,197
Net income attributable to noncontrolling interests	15,047								10,514
Net income attributable to common stockholders of Live Nation	$	178,925							$	172,683

_______

*	Percentages are not meaningful.
**	See “—Non-GAAP Measures” above for the definition of constant currency.

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Nine Months

	Nine Months Ended September 30,											% Change
	2019								2018
	As Reported			Currency Impacts		At Constant Currency**			As Reported			As Reported	At Constant Currency**
	(in thousands)
Revenue	$	8,658,521		$	159,569	$	8,818,090		$	8,185,945		6%	8%
Operating expenses:
Direct operating expenses	6,279,447			120,381		6,399,828			5,991,547			5%	7%
Selling, general and administrative expenses	1,520,910			28,345		1,549,255			1,435,703			6%	8%
Depreciation and amortization	329,044			4,409		333,453			277,262			19%	20%
Loss (gain) on disposal of operating assets	(553)			(1)		(554)			10,464			*	*
Corporate expenses	121,909			24		121,933			108,055			13%	13%
Operating income	407,764			$	6,411	$	414,175		362,914			12%	14%
Operating margin	4.7		%			4.7		%	4.4		%
Interest expense	109,894								104,196
Interest income	(12,229)								(6,148)
Equity in earnings of nonconsolidated affiliates	(6,291)								(3,406)
Other expense, net	1,551								7,033
Income before income taxes	314,839								261,239
Income tax expense	59,988								35,714
Net income	254,851								225,525
Net income attributable to noncontrolling interests	25,015								17,389
Net income attributable to common stockholders of Live Nation	$	229,836							$	208,136

____________

*	Percentages are not meaningful.
**	See “—Non-GAAP Measures” above for the definition of constant currency.

Income tax expense

For the nine months ended September 30, 2019, we had net tax expense of $60.0 million on income before income taxes of $314.8 million compared to net tax expense of $35.7 million on income before income taxes of $261.2 million for the nine months ended September 30, 2018. For the nine months ended September 30, 2019, income tax expense consisted of $51.3 million related to foreign entities, $3.3 million related to United States federal income taxes and $5.4 million related to state and local income taxes. The net increase in tax expense of $24.3 million is due primarily to an increase in earnings in certain non-United States jurisdictions.

Liquidity and Capital Resources

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.

Our balance sheet reflects cash and cash equivalents of $1.8 billion at September 30, 2019 and $2.4 billion at December 31, 2018. Included in the September 30, 2019 and December 31, 2018 cash and cash equivalents balances are $747.4 million and $859.1 million, respectively, of cash received that includes the face value of tickets sold on behalf of our ticketing clients and their share of service charges, which we refer to as client cash. We generally do not utilize client cash for our own

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financing or investing activities as the amounts are payable to clients on a regular basis. Our foreign subsidiaries held approximately $750.8 million in cash and cash equivalents, excluding client cash, at September 30, 2019. We generally do not repatriate these funds, but if we did, we would need to accrue and pay United States state income taxes as well as any applicable foreign withholding or transaction taxes on future repatriations. 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 $2.8 billion at each of September 30, 2019 and December 31, 2018. Our weighted-average cost of debt, excluding unamortized debt discounts and debt issuance costs on our term loans and notes, was 4.2% at September 30, 2019.

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.

For our Concerts segment, we generally receive cash related to ticket revenue at our owned or operated venues in advance of the event, which is recorded in deferred revenue until the event occurs. With the exception of some upfront costs and artist deposits, which are recorded in prepaid expenses until the event occurs, we pay the majority of event-related expenses at or after the event.

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, pay artist advances 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 given current economic 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.

The lenders under our revolving loans consist of banks and other third-party financial institutions. While we currently have no indications or expectations that such lenders will be unable to fund their commitments as required, we can provide no assurances that future funding availability will not be impacted by adverse conditions in the financial markets. Should an individual lender default on its obligations, the remaining lenders would not be required to fund the shortfall, resulting in a reduction in the total amount available to us for future borrowings, but would remain obligated to fund their own commitments.

Sources of Cash

In October 2019, we issued $950 million principal amount of 4.75% senior notes due 2027 and further amended our senior secured credit facility, including the issuance of $950 million principal amount for the term loan B facility, as set forth below. The proceeds will be used to repay the $1.1 billion principal balance outstanding on the term loans A and B under our existing senior secured credit facility, to repay the entire $250 million principal amount of our 5.375% senior notes due 2022 and to pay the related redemption premium of $3.4 million on the senior notes and estimated accrued interest and fees of $31.1 million, leaving approximately $527.2 million for general corporate purposes, including acquisitions. We expect the loss on extinguishment of debt related to this refinancing to be between $3.0 million and $5.0 million.

Amended Senior Secured Credit Facility

The amended senior secured credit facility provides for (i) a five-year $400 million delayed draw term loan A facility, (ii) a seven-year $950 million term loan B facility and (iii) a five-year $500 million revolving credit facility. The delayed draw term loan A facility is available to be drawn for the first two years following the amendment. In addition, subject to certain conditions, we have the right to increase such facilities by an amount equal to the sum of (x) $985 million, (y) the aggregate

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principal amount of voluntary prepayments of the delayed draw term loan A and term loan B and permanent reductions of the revolving credit facility commitments, in each case, other than from proceeds of long-term indebtedness, and (z) additional amounts so long as the senior secured leverage ratio calculated on a pro-forma basis (as defined in the agreement) is no greater than 3.75x. The revolving credit facility provides for borrowings up to $500 million with sublimits of up to (i) $150 million for the issuance of letters of credit, (ii) $50 million for swingline loans, (iii) $300 million for borrowings in Euros or British Pounds and (iv) $100 million for borrowings in those or one or more other approved currencies. The amended senior secured credit facility is secured by a first priority lien on substantially all of our tangible and intangible personal property and our domestic subsidiaries that are guarantors, and by a pledge of substantially all of the shares of stock, partnership interests and limited liability company interests of our direct and indirect domestic subsidiaries and 65% of each class of capital stock of any first-tier foreign subsidiaries, subject to certain exceptions.

The interest rates per annum applicable to revolving credit facility loans and the delayed draw term loan A under the amended senior secured credit facility are, at our option, equal to either Eurodollar plus 1.75% or a base rate plus 0.75%, subject to stepdowns based on our net leverage ratio. The interest rates per annum applicable to the term loan B are, at our option, equal to either Eurodollar plus 1.75% or a base rate plus 0.75%. We are required to pay a commitment fee of 0.35% per year on the undrawn portion available under the revolving credit facility and delayed draw term loan A, subject to a stepdown based on our net leverage ratio, and variable fees on outstanding letters of credit.

For the term loan A, we are required to make quarterly payments at a rate ranging from 0.625% of the original principal amount during the first three years to 1.25% during the last two years with the balance due at maturity in October 2024. For the term loan B, we are required to make quarterly payments of $2.4 million with the balance due at maturity in October 2026. We are also required to make mandatory prepayments of the loans under the amended credit agreement, subject to specified exceptions, from excess cash flow and with the proceeds of asset sales, debt issuances and specified other events.

4.75% Senior Notes

The $950 million principal amount of senior notes due 2027 bear interest at 4.75%, which is payable semi-annually in cash in arrears on April 15 and October 15 of each year beginning on April 15, 2020, and will mature on October 15, 2027. We may redeem some or all of the notes, at any time prior to October 15, 2022, at a price equal to 100% of the aggregate principal amount, plus any accrued and unpaid interest to the date of redemption, plus a ‘make-whole’ premium. We may redeem up to 35% of the aggregate principal amount of the notes from the proceeds of certain equity offerings prior to October 15, 2022, at a price equal to 104.750% of the aggregate principal amount, plus accrued and unpaid interest thereon, if any, to the date of redemption. In addition, 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.

Debt Covenants

Our amended senior secured credit facility contains a number of restrictions that, among other things, require us to satisfy a financial covenant and restrict our and our subsidiaries’ ability to incur additional debt, make certain investments and acquisitions, repurchase our stock and prepay certain indebtedness, create liens, enter into agreements with affiliates, modify the nature of our business, enter into sale-leaseback transactions, transfer and sell material assets, merge or consolidate, and pay dividends and make distributions (with the exception of subsidiary dividends or distributions to the parent company or other subsidiaries on at least a pro-rata basis with any noncontrolling interest partners). Non-compliance with one or more of the covenants and restrictions could result in the full or partial principal balance of the credit facility becoming immediately due and payable. The amended senior secured credit facility agreement has one covenant, measured quarterly, that relates to net leverage. The consolidated net leverage covenant requires us to maintain a ratio of consolidated total net debt to consolidated EBITDA (both as defined in the credit agreement) of 5.75x over the trailing four consecutive quarters through September 30, 2020. The consolidated total leverage ratio will reduce to 5.50x on December 31, 2020 and 5.25x on December 31, 2021.

The indentures governing our 4.75% senior notes, 4.875% senior notes, 5.375% senior notes and 5.625% senior notes contain covenants that limit, among other things, our ability and the ability of our restricted subsidiaries to incur certain additional indebtedness and issue preferred stock, make certain distributions, investments and other restricted payments, sell certain assets, agree to any restrictions on the ability of restricted subsidiaries to make payments to us, merge, consolidate or sell all of our assets, create certain liens, and engage in transactions with affiliates on terms that are not on an arms-length basis. Certain covenants, including those pertaining to incurrence of indebtedness, restricted payments, asset sales, mergers, and transactions with affiliates will be suspended during any period in which the notes are rated investment grade by both rating agencies and no default or event of default under the indenture has occurred and is continuing. All of these notes contain two incurrence-based financial covenants, as defined, requiring a minimum fixed charge coverage ratio of 2.0x and a maximum secured indebtedness leverage ratio of 3.5x.

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Some of our other subsidiary indebtedness includes restrictions on entering into various transactions, such as acquisitions and disposals, and prohibits payment of ordinary dividends. They also have financial covenants including minimum consolidated EBITDA to consolidated net interest payable, minimum consolidated cash flow to consolidated debt service and maximum consolidated debt to consolidated EBITDA, all as defined in the applicable debt agreements.

As of September 30, 2019, we believe we were in compliance with all of our debt covenants related to our senior secured credit facility and our corporate senior notes and convertible senior notes. We expect to remain in compliance with all of these debt covenants throughout 2019.

Uses of Cash

Acquisitions

When we make acquisitions, the acquired entity may have cash on its balance sheet at the time of acquisition. All amounts related to the use of cash for acquisitions discussed in this section are presented net of any cash acquired. During the nine months ended September 30, 2019, we used $108.1 million of cash primarily for acquisitions of a venue management business located in Belgium, a festival promotion business located in the United States and a controlling interest in a venue management business located in the United States. As of the date of acquisition, the acquired businesses had a total of $67.3 million of cash on their balance sheets, primarily related to deferred revenue for future events.

During the nine months ended September 30, 2018, we used $98.3 million of cash primarily for the payment of contingent consideration related to an acquisition in the Netherlands that occurred prior to the current accounting guidance for business combinations along with the acquisitions of controlling interests in various concert promotion and artist management businesses located in the United States. As of the date of acquisition, the acquired businesses had a total of $18.3 million of cash on their balance sheets, primarily related to deferred revenue for future events.

Purchases and Sales of Noncontrolling Interests, net

During the nine months ended September 30, 2018, we used $153.0 million of cash primarily for the final payment due in connection with the 2017 acquisition of the remaining interests in a concert and festival promotion business located in the United States. There were no significant purchases and sales of noncontrolling interests during the nine months ended September 30, 2019.

Capital Expenditures

Venue and ticketing operations are capital intensive businesses, requiring continual investment in our existing venues and ticketing systems in order to address fan 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, major renovations to existing venues or venues 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. Capital expenditures typically increase during periods when venues are not in operation since that is the time that such improvements can be completed.

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

	Nine Months Ended September 30,
	2019		2018
	(in thousands)
Maintenance capital expenditures	$	105,431	$	80,025
Revenue generating capital expenditures	119,725		88,712
Total capital expenditures	$	225,156	$	168,737

Maintenance capital expenditures during the first nine months of 2019 increased from the same period of the prior year primarily associated with leasehold improvements of certain office facilities and venue-related projects.

Revenue generating capital expenditures during the first nine months of 2019 increased from the same period of the prior year primarily due to enhancements at our North America amphitheaters and higher investment in technology enhancements.

We currently expect capital expenditures to be approximately $325 million for the full year of 2019.

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Cash Flows

	Nine Months Ended September 30,
	2019		2018
	(in thousands)
Cash provided by (used in):
Operating activities	$	32,922	$	255,576
Investing activities	$	(403,357)	$	(378,856)
Financing activities	$	(139,610)	$	268,126

Operating Activities

Cash provided by operating activities decreased $222.7 million for the nine months ended September 30, 2019 as compared to the same period of the prior year. During the first nine months of 2019, our accounts payable and accrued liabilities had a lower increase based on the timing of payments. In addition, we received less cash for future events resulting in a larger decrease in deferred revenue as compared to the same period of the prior year. Partially offsetting these decreases to operating cash flows were lower increases in our accounts receivable and prepaid expenses due to the timing of collections and payment of event-related costs when compared to the same period of the prior year as well as higher cash related net income.

Investing Activities

Cash used in investing activities increased $24.5 million for the nine months ended September 30, 2019 as compared to the same period of the prior year primarily due to to higher purchases of property, plant and equipment partially offset by fewer notes receivable advances. See “—Uses of Cash” above for further discussion.

Financing Activities

Cash used in financing activities was $139.6 million for the nine months ended September 30, 2019 as compared to cash provided by financing activities of $268.1 million in the same period of the prior year primarily due to higher net proceeds in 2018 from debt refinancing partially offset by a decrease in purchases of noncontrolling interests in 2019.

Seasonality

Our Concerts and Sponsorship & Advertising segments typically experience higher operating income in the second and third quarters as our outdoor venues and festivals are primarily used in or occur from May through October. In addition, the timing of when tickets are sold and the tours of top-grossing acts can impact comparability of quarterly results year-over-year, although annual results may not be impacted. Our Ticketing segment revenue is impacted by fluctuations in the availability of events for sale to the public, which vary depending upon scheduling by our clients.

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.

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 have significant operations in hyper-inflationary countries. Our foreign operations reported operating income of $164.9 million for the nine months ended September 30, 2019. 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 nine months ended September 30, 2019 by $16.5 million. As of September 30, 2019, our most significant foreign exchange exposure included the Euro, British Pound, Australian Dollar and Canadian Dollar. This analysis does not consider the implication such currency fluctuations could have on the overall economic conditions of the United States or other foreign countries in which we operate or on the results of operations of our foreign entities. 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.

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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 September 30, 2019, we had forward currency contracts outstanding with a notional amount of $45.3 million.

Interest Rate Risk

Our market risk is also affected by changes in interest rates. We had $2.8 billion of total debt, excluding debt discounts and issuance costs, outstanding as of September 30, 2019, of which $1.7 billion was fixed-rate debt and $1.1 billion was floating-rate debt.

Based on the amount of our floating-rate debt as of September 30, 2019, each 25-basis point increase or decrease in interest rates would increase or decrease our annual interest expense and cash outlay by approximately $2.8 million. This potential increase or decrease is based on the simplified assumption that the level of floating-rate debt remains constant with an immediate across-the-board increase or decrease as of September 30, 2019 with no subsequent change in rates for the remainder of the period.

Accounting Pronouncements

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

Critical Accounting Policies and Estimates

The preparation of our 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 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 accounting estimates involved in business combinations, impairment of long-lived assets and goodwill, revenue recognition, and income taxes are the most critical to aid in fully understanding and evaluating our reported financial results, and they require management’s most difficult, subjective or complex judgments, resulting from the need to make estimates about the effect of matters that are inherently uncertain. These critical accounting estimates, the judgments and assumptions and the effect if actual results differ from these assumptions are described in Part II Financial Information—Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations of our 2018 Annual Report on Form 10-K filed with the SEC on February 28, 2019.

There have been no changes to our critical accounting policies during the nine months ended September 30, 2019.

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Item 3. Quantitative and Qualitative Disclosures About Market Risk

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

Item 4. 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 September 30, 2019, 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.

Changes in Internal Control Over Financial Reporting

There has been no change in our internal control over financial reporting during the period covered by this report that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

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PART II—OTHER INFORMATION

Item 1. Legal Proceedings

Information regarding our legal proceedings can be found in Part I—Financial Information—Item 1. Financial Statements—Note 5—Commitments and Contingent Liabilities.

Item 1A. Risk Factors

While we attempt to identify, manage and mitigate risks and uncertainties associated with our business to the extent practical under the circumstances, some level of risk and uncertainty will always be present. Part I—Item 1A.—Risk Factors of our 2018 Annual Report on Form 10-K filed with the SEC on February 28, 2019, describes some of the risks and uncertainties associated with our business which have the potential to materially affect our business, financial condition or results of operations. We do not believe that there have been any material changes to the risk factors previously disclosed in our 2018 Annual Report on Form 10-K.

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds

None.

Item 3. Defaults Upon Senior Securities

None.

Item 5. Other Information

None.

Item 6. Exhibits

	Exhibit Description	Incorporated by Reference				Filed Here with
Exhibit No.		Form	File No.	Exhibit No.	Filing Date
2.1	Stock Purchase Agreement dated July 24, 2019, by and among Corporación Interamericana de Entretenimiento, S.A.B. de C.V. as Seller, Ticketmaster New Ventures, S. de R.L. de C.V. as Purchaser, Live Nation Entertainment, Inc. as joint obligor of Purchaser, and OCESA Entretenimiento, S.A. de C.V.					X
2.2	Stock Purchase Agreement dated July 24, 2019, by and among Grupo Televisa, S.A.B. and Promo-Industrias Metropolitanas, S.A. de C.V.the Sellers, Ticketmaster New Ventures, S. de R.L. de C.V. and Ticketmaster New Ventures Holdings, Inc. the Purchasers, Live Nation Entertainment, Inc. as joint obligor of Purchasers, and OCESA Entretenimiento, S.A. de C.V.					X
31.1	Certification of Chief Executive Officer.					X
31.2	Certification of Chief Financial Officer.					X
32.1	Section 1350 Certification of Chief Executive Officer.					X
32.2	Section 1350 Certification of Chief Financial Officer.					X
101.INS	XBRL Instance Document - this 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

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SIGNATURES

Pursuant to the requirements 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 October 31, 2019.

LIVE NATION ENTERTAINMENT, INC.
By:	/s/ Brian Capo
	Brian Capo
	Chief Accounting Officer (Duly Authorized Officer)

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