Item 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

Report of Independent Registered Public Accounting Firm

The Board of Directors and Stockholders of Live Nation Entertainment, Inc.

Opinion on the Financial Statements

We have audited the accompanying consolidated balance sheets of Live Nation Entertainment, Inc. (the Company) as of December 31, 2019 and 2018, the related consolidated statements of operations, comprehensive income (loss), changes in equity and cash flows for each of the three years in the period ended December 31, 2019, and the related notes and financial statement schedule listed in the index at Item 15(a)2 (collectively referred to as the “consolidated financial statements”). In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company at December 31, 2019 and 2018, and the results of its operations and its cash flows for each of the three years in the period ended December 31, 2019, in conformity with U.S. generally accepted accounting principles.

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the Company's internal control over financial reporting as of December 31, 2019, based on criteria established in Internal Control-Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (2013 framework), and our report dated February 27, 2020, expressed an unqualified opinion thereon.

Adoption of New Accounting Standard

As discussed in Note 1 to the consolidated financial statements, the Company changed its method of accounting for leases in 2019.

Basis for Opinion

These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on the Company’s financial statements based on our audits. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion.

Critical Audit Matter

The critical audit matter communicated below is a matter arising from the current period audit of the financial statements that was communicated or required to be communicated to the audit committee and that: (1) relates to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective or complex judgments. The communication of the critical audit matter does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on the account or disclosures to which it relates.

			Goodwill - Artist Management Reporting Unit
Description of the Matter			At December 31, 2019, the goodwill recorded in the Artist Management reporting unit was $309 million. As discussed in Note 2 to the consolidated financial statements, goodwill is tested by the Company’s management for impairment at least annually at the reporting unit level. Auditing the Company’s annual goodwill impairment test was complex due to the significant judgment in estimating the fair value of the reporting units when a quantitative assessment of fair value is performed and the fair value is at or near carrying value. In particular, the Artist Management reporting unit was evaluated using a quantitative assessment to determine whether or not goodwill was impaired. The fair value estimate for this reporting unit was sensitive to assumptions including the discount rate and revenue growth rates which are affected by expectations about future market or economic conditions.
How We Addressed the Matter in Our Audit			We obtained an understanding, evaluated the design and tested the operating effectiveness of controls over the Company’s goodwill impairment review process. This includes controls over management’s review of the significant assumptions described above. To test the estimated fair value of the Company’s Artist Management reporting unit, we performed audit procedures with the assistance of our valuation specialists that included, among others, assessing methodologies and testing the significant assumptions discussed above and the underlying data used by the Company in its analysis. We compared the significant assumptions used by management to current industry and economic trends. We assessed the historical accuracy of management’s estimates and performed sensitivity analyses of significant assumptions to evaluate the changes in the fair value of the Artist Management reporting unit that would result from changes in the assumptions.

/s/ Ernst & Young LLP

We have served as the Company‘s auditor since 2005.

Los Angeles, California

February 27, 2020

LIVE NATION ENTERTAINMENT, INC.

CONSOLIDATED BALANCE SHEETS

			December 31,
			2019						2018
			(in thousands, except share data)
ASSETS
Current assets
Cash and cash equivalents			$	2,470,362					$	2,371,540
Accounts receivable, less allowance of $50,516 and $34,225, respectively			994,606						829,320
Prepaid expenses			667,044						597,866
Restricted cash			3,880						6,663
Other current assets			57,007						42,685
Total current assets			4,192,899						3,848,074
Property, plant and equipment, net			1,117,932						946,593
Operating lease assets			1,402,019						—
Intangible assets
Definite-lived intangible assets, net			870,141						661,451
Indefinite-lived intangible assets			368,954						368,854
Goodwill			1,998,498						1,822,943
Long-term advances			593,699						420,891
Other long-term assets			431,473						428,080
Total assets			$	10,975,615					$	8,496,886
LIABILITIES AND EQUITY
Current liabilities
Accounts payable, client accounts			$	1,005,888					$	1,037,162
Accounts payable			100,237						90,253
Accrued expenses			1,391,486						1,245,465
Deferred revenue			1,391,032						1,227,797
Current portion of long-term debt, net			37,795						82,142
Current portion of operating lease liabilities			121,950						—
Other current liabilities			59,211						67,047
Total current liabilities			4,107,599						3,749,866
Long-term debt, net			3,271,262						2,732,878
Long-term operating lease liabilities			1,374,481						—
Long-term deferred income taxes			178,173						137,067
Other long-term liabilities			130,648						204,977
Commitments and contingent liabilities
Redeemable noncontrolling interests			449,498						329,355
Stockholders’ equity
Preferred stock—Series A Junior Participating, $0.01 par value; 20,000,000 shares authorized; no shares issued and outstanding			—						—
Preferred stock, $0.01 par value; 30,000,000 shares authorized; no shares issued and outstanding			—						—
Common stock, $0.01 par value; 450,000,000 shares authorized; 214,117,644 and 210,734,762 shares issued and 213,709,620 and 210,326,738 shares outstanding in 2019 and 2018, respectively			2,113						2,091
Additional paid-in capital			2,245,619						2,268,209
Accumulated deficit			(949,334)						(1,019,223)
Cost of shares held in treasury (408,024 shares)			(6,865)						(6,865)
Accumulated other comprehensive loss			(145,713)						(145,231)
Total Live Nation stockholders’ equity			1,145,820						1,098,981
Noncontrolling interests			318,134						243,762
Total equity			1,463,954						1,342,743
Total liabilities and equity			$	10,975,615					$	8,496,886

See Notes to Consolidated Financial Statements

LIVE NATION ENTERTAINMENT, INC.

CONSOLIDATED STATEMENTS OF OPERATIONS

						Year Ended December 31,
						2019						2018						2017
			(in thousands except share and per share data)
Revenue						$	11,547,969					$	10,787,800					$	9,687,222
Operating expenses:
Direct operating expenses						8,467,182						7,967,932						7,181,898
Selling, general and administrative expenses						2,145,486						1,997,028						1,907,723
Depreciation and amortization						443,991						386,529						372,201
Loss (gain) on disposal of operating assets						(2,373)						10,369						(969)
Corporate expenses						168,839						153,406						134,972
Operating income						324,844						272,536						91,397
Interest expense						157,521						140,976						107,770
Interest income						(14,406)						(8,961)						(5,717)
Equity in earnings of nonconsolidated affiliates						(5,457)						(2,747)						(1,161)
Other expense (income), net						2,082						12,163						(115)
Income (loss) before income taxes						185,104						131,105						(9,380)
Income tax expense (benefit)						66,892						40,765						(17,154)
Net income						118,212						90,340						7,774
Net income attributable to noncontrolling interests						48,323						30,091						13,789
Net income (loss) attributable to common stockholders of Live Nation						$	69,889					$	60,249					$	(6,015)
Basic and diluted net loss per common share available to common stockholders of Live Nation						$	(0.02)					$	(0.09)					$	(0.48)
Weighted average common shares outstanding:
Basic and diluted						210,082,696						207,441,468						204,923,740
Reconciliation to net loss available to common stockholders of Live Nation:
Net income (loss) attributable to common stockholders of Live Nation						$	69,889					$	60,249					$	(6,015)
Accretion of redeemable noncontrolling interests						(74,771)						(77,900)						(91,631)
Basic and diluted net loss available to common stockholders of Live Nation						$	(4,882)					$	(17,651)					$	(97,646)

See Notes to Consolidated Financial Statements

LIVE NATION ENTERTAINMENT, INC.

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

						Year Ended December 31,
						2019						2018						2017
						(in thousands)
Net income						$	118,212					$	90,340					$	7,774
Other comprehensive income (loss), net of tax:
Foreign currency translation adjustments						(482)						(36,689)						67,704
Other						—						—						461
Comprehensive income						117,730						53,651						75,939
Comprehensive income attributable to noncontrolling interests						48,323						30,091						13,789
Comprehensive income attributable to common stockholders of Live Nation						$	69,407					$	23,560					$	62,150

See Notes to Consolidated Financial Statements

LIVE NATION ENTERTAINMENT, INC.

CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY

						Live Nation Stockholders’ Equity
						Common Shares Issued						Common Stock						Additional Paid-In Capital						Accumulated Deficit						Cost of Shares Held in Treasury						Accumulated Other Comprehensive Income (Loss)						Noncontrolling Interests						Total Equity						Redeemable Noncontrolling Interests
			(in thousands, except share data)																																																																																																(in thousands)
Balances at December 31, 2016						203,396,066						$	2,034					$	2,381,011					$	(1,073,457)					$	(6,865)					$	(176,707)					$	223,500					$	1,349,516					$	347,068
Non-cash and stock-based compensation						—						—						42,755						—						—						—						—						42,755						—
Common stock issued under stock plans, net of shares withheld for employee taxes						342,974						4						(5,456)						—						—						—						—						(5,452)						—
Exercise of stock options						3,137,997						31						51,038						—						—						—						—						51,069						—
Acquisitions						—						—						—						—						—						—						9,159						9,159						6,640
Purchases of noncontrolling interests						—						—						(3,616)						—						—						—						(2,836)						(6,452)						(165,227)
Redeemable noncontrolling interests fair value adjustments						—						—						(91,631)						—						—						—						—						(91,631)						91,631
Contributions received						—						—						—						—						—						—						10,671						10,671						1,875
Cash distributions						—						—						—						—						—						—						(24,715)						(24,715)						(28,994)
Other						—						—						(95)						—						—						—						212						117						(1,099)
Comprehensive income (loss):
Net income (loss)						—						—						—						(6,015)						—						—						20,957						14,942						(7,167)
Foreign currency translation adjustments						—						—						—						—						—						67,704						—						67,704						—
Other						—						—						—						—						—						461						—						461						—
Balances at December 31, 2017						206,877,037						2,069						2,374,006						(1,079,472)						(6,865)						(108,542)						236,948						1,418,144						244,727
Non-cash and stock-based compensation						—						—						45,715						—						—						—						—						45,715						—
Common stock issued under stock plans, net of shares withheld for employee taxes						434,707						4						(12,460)						—						—						—						—						(12,456)						—
Exercise of stock options, net of shares withheld for option cost and employee taxes						1,823,809						18						(24,345)						—						—						—						—						(24,327)						—
Fair value of convertible debt conversion feature, net of issuance costs						—						—						62,639						—						—						—						—						62,639						—
Repurchase of convertible debt conversion feature						28						—						(92,641)						—						—						—						—						(92,641)						—
Acquisitions						—						—						—						—						—						—						33,564						33,564						25,542
Divestitures						—						—						—						—						—						—						(6,684)						(6,684)						—
Purchases of noncontrolling interests						—						—						(8,210)						—						—						—						(4,877)						(13,087)						(10,356)
Sales of noncontrolling interests						—						—						1,410						—						—						—						(958)						452						—
Redeemable noncontrolling interests fair value adjustments						—						—						(77,799)						—						—						—						—						(77,799)						77,799
Contributions received						—						—						—						—						—						—						7,501						7,501						1,806
Cash distributions						—						—						—						—						—						—						(43,346)						(43,346)						(15,840)
Other						—						—						(106)						—						—						—						(1,969)						(2,075)						(831)
Comprehensive income (loss):
Net income						—						—						—						60,249						—						—						23,583						83,832						6,508
Foreign currency translation adjustments						—						—						—						—						—						(36,689)						—						(36,689)						—
Other						—						—						—						—						—						—						—						—						—
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						—						—						48,887						—						—						—						—						48,887						—
Common stock issued under stock plans, net of shares withheld for employee taxes						392,147						5						(15,357)						—						—						—						—						(15,352)						—
Exercise of stock options						910,006						9						14,095						—						—						—						—						14,104						—
Conversion of convertible debt						824,328						8						28,578						—						—						—						—						28,586						—
Acquisitions						—						—						—						—						—						—						137,981						137,981						52,373
Purchases of noncontrolling interests						—						—						(23,878)						—						—						—						(24,867)						(48,745)						(1,459)
Redeemable noncontrolling interests fair value adjustments						—						—						(74,771)						—						—						—						—						(74,771)						74,771
Contributions received						—						—						—						—						—						—						14,285						14,285						—
Cash distributions						—						—						—						—						—						—						(84,115)						(84,115)						(23,362)
Other						—						—						(144)						—						—						—						(2,179)						(2,323)						2,764
Comprehensive income (loss):
Net income						—						—						—						69,889						—						—						33,267						103,156						15,056
Foreign currency translation adjustments						—						—						—						—						—						(482)						—						(482)						—
Balances at December 31, 2019						211,262,062						$	2,113					$	2,245,619					$	(949,334)					$	(6,865)					$	(145,713)					$	318,134					$	1,463,954					$	449,498

See Notes to Consolidated Financial Statements

LIVE NATION ENTERTAINMENT, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS

			Year Ended December 31,
			2019						2018						2017
			(in thousands)
CASH FLOWS FROM OPERATING ACTIVITIES
Net income			$	118,212					$	90,340					$	7,774
Reconciling items:
Depreciation			220,459						185,376						149,634
Amortization			223,532						201,153						222,567
Amortization of non-recoupable ticketing contract advances			80,302						80,087						83,334
Deferred income tax benefit			(465)						(6,247)						(71,539)
Amortization of debt issuance costs and discounts			24,116						20,219						13,174
Provision for uncollectible accounts receivable			27,926						26,321						20,295
Non-cash compensation expense			48,785						45,582						42,755
Unrealized changes in fair value of contingent consideration			6,698						14,125						18,011
Loss (gain) on disposal of operating assets			(2,373)						10,369						(969)
Equity in earnings of nonconsolidated affiliates, net of distributions			14,152						11,693						6,898
Other, net			(3,654)						(3,760)						2,083
Changes in operating assets and liabilities, net of effects of acquisitions and dispositions:
Increase in accounts receivable			(159,792)						(135,429)						(133,020)
Increase in prepaid expenses and other assets			(170,486)						(266,241)						(238,549)
Increase (decrease) in accounts payable, accrued expenses and other liabilities			(45,920)						323,459						474,301
Increase in deferred revenue			88,291						344,539						26,773
Net cash provided by operating activities			469,783						941,586						623,522
CASH FLOWS FROM INVESTING ACTIVITIES
Advances of notes receivable			(50,035)						(90,705)						(19,120)
Collections of notes receivable			13,216						33,914						9,657
Investments made in nonconsolidated affiliates			(57,280)						(46,497)						(25,170)
Purchases of property, plant and equipment			(323,566)						(239,833)						(238,435)
Cash paid for acquisitions, net of cash acquired			(235,071)						(120,228)						(47,946)
Purchases of intangible assets			(42,261)						(35,630)						(10,977)
Other, net			3,997						2,070						4,405
Net cash used in investing activities			(691,000)						(496,909)						(327,586)
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from long-term debt, net of debt issuance costs			937,400						858,667						60,912
Payments on long-term debt including extinguishment costs			(437,267)						(400,396)						(110,855)
Contributions from noncontrolling interests			14,285						4,900						10,671
Distributions to noncontrolling interests			(107,476)						(59,187)						(46,036)
Purchases and sales of noncontrolling interests, net			(50,267)						(159,634)						(71,509)
Proceeds from exercise of stock options			14,104						22,568						51,069
Taxes paid for net share settlement of equity awards			(15,353)						(55,005)						(5,452)
Payments for deferred and contingent consideration			(26,537)						(18,784)						(15,883)
Other, net			—						(4,345)						—
Net cash provided by (used in) financing activities			328,889						188,784						(127,083)
Effect of exchange rate changes on cash, cash equivalents and restricted cash			(11,633)						(84,080)						130,394
Net increase in cash, cash equivalents and restricted cash			96,039						549,381						299,247
Cash, cash equivalents and restricted cash at beginning of period			2,378,203						1,828,822						1,529,575
Cash, cash equivalents and restricted cash at end of period			$	2,474,242					$	2,378,203					$	1,828,822
SUPPLEMENTAL DISCLOSURE
Cash paid during the year for:
Interest, net of interest income			$	103,915					$	100,278					$	87,111
Income taxes, net of refunds			$	66,937					$	60,016					$	44,871

See Notes to Consolidated Financial Statements

LIVE NATION ENTERTAINMENT, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 1—THE COMPANY AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

History

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

On January 25, 2010, 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.

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.

Basis of Presentation and Principles of Consolidation

Our consolidated financial statements include all of our accounts, including our majority owned and controlled subsidiaries and VIEs for which we are the primary beneficiary. Intercompany accounts among the consolidated businesses have been eliminated in consolidation. Net income (loss) attributable to noncontrolling interests is reflected in the statements of operations.

Typically, we consolidate entities in which we own more than 50% of the voting common stock and control operations and also VIEs for which we are the primary beneficiary. Investments in nonconsolidated affiliates in which we own more than 20% of the voting common stock or otherwise exercise significant influence over operating and financial policies but not control of the nonconsolidated affiliate are accounted for using the equity method of accounting. Investments in nonconsolidated affiliates in which we own less than 20% of the voting common stock and do not exercise significant influence over operating and financial policies are accounted for at fair value unless the investment does not have a readily determinable fair value in which case the investment is accounted for at cost less any impairment.

All of our cash flow activity reflected on the consolidated statements of cash flows is presented net of any non-cash transactions so the amounts reflected may be different than amounts shown in other places in our financial statements that are based on accrual accounting and therefore include non-cash amounts. For example, purchases of property, plant and equipment reflected on the consolidated statements of cash flows reflect the amount of cash paid during the year for these purchases and does not include the impact of the changes in accrued expenses related to capital expenditures during the year.

Variable Interest Entities

In the normal course of business, we enter into joint ventures or make investments in companies that will allow us to expand our core business and enter new markets. In certain instances, such ventures or investments may be considered a VIE because the equity at risk is insufficient to permit it to carry on its activities without additional financial support from its equity owners. In determining whether we are the primary beneficiary of a VIE, we assess whether we have the power to direct activities that most significantly impact the economic performance of the entity and have the obligation to absorb losses or the right to receive benefits from the entity that could potentially be significant to the VIE. The activities we believe most significantly impact the economic performance of our VIEs include the unilateral ability to approve the annual budget, the unilateral ability to terminate key management and the unilateral ability to approve entering into agreements with artists, among others. We have certain rights and obligations related to our involvement in the VIEs, including the requirement to provide operational cash flow funding. As of December 31, 2019 and 2018, excluding intercompany balances and allocated goodwill and intangible assets, there were approximately $410 million and $265 million of assets and $260 million and $140 million of liabilities, respectively, related to VIEs included in our balance sheets. None of our VIEs are significant on an individual basis.

Cash, Cash Equivalents and Restricted Cash

Cash and cash equivalents include all highly liquid investments with an original maturity of three months or less. Our cash and cash equivalents include domestic and foreign bank accounts as well as interest-bearing accounts consisting primarily of bank deposits and money market accounts managed by third-party financial institutions. These balances are stated at cost, which approximates fair value.

Restricted cash primarily consists of cash held in escrow accounts to fund capital improvements of certain leased or operated venues. The cash is held in these accounts pursuant to the related lease or operating agreement.

Included in the December 31, 2019 and 2018 cash and cash equivalents balance is $837.7 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 (“client cash”), which amounts are to be remitted to these clients. We generally do not utilize client cash for our own financing or investing activities as the amounts are payable to our clients on a regular basis. These amounts due to our clients are included in accounts payable, client accounts.

Cash held in interest-bearing operating accounts in many cases exceeds the Federal Deposit Insurance Corporation insurance limits. To reduce our credit risk, we monitor the credit standing of the financial institutions that hold our cash and cash equivalents; however, these balances could be impacted in the future if the underlying financial institutions fail. To date, we have experienced no loss of or lack of access to our cash or cash equivalents; however, we can provide no assurances that access to our cash and cash equivalents will not be impacted in the future by adverse conditions in the financial markets.

Allowance for Doubtful Accounts

We evaluate the collectability of our accounts receivable based on a combination of factors. Generally, we record specific reserves to reduce the amounts recorded to what we believe will be collected when a customer’s account ages beyond typical collection patterns, or we become aware of a customer’s inability to meet its financial obligations.

We believe that the credit risk with respect to trade receivables is limited due to the large number and the geographic diversification of our customers.

Prepaid Expenses

The majority of our prepaid expenses relate to event expenses including show advances and deposits and other costs directly related to future concert events. For advances that are expected to be recouped over a period of more than twelve months, the long-term portion of the advance is classified as long-term advances. These prepaid costs are charged to operations upon completion of the related events.

Ticketing contract advances, which can be either recoupable or non-recoupable, represent amounts paid in advance to 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 our clients, based on the contract terms, over the life of the contract. Non-recoupable ticketing contract advances, excluding those amounts paid to support clients’ advertising costs, are fixed additional incentives occasionally paid by us to secure the contract with certain clients and are typically amortized over the life of the contract on a straight-line basis.

Business Combinations

During 2019, 2018 and 2017, we completed several acquisitions that were accounted for as business combinations under the acquisition method of accounting. When we make these acquisitions, we often acquire a controlling interest without buying 100% of the business. These acquisitions and the related results of operations were not significant on either an individual basis or in the aggregate.

We account for our business combinations under the acquisition method of accounting. Identifiable assets acquired, liabilities assumed and any noncontrolling interest in the acquiree are recognized and measured as of the acquisition date at fair value. Additionally, any contingent consideration is recorded at fair value on the acquisition date and classified as a liability. Goodwill is recognized to the extent by which the aggregate of the acquisition-date fair value of the consideration transferred and any noncontrolling interest in the acquiree exceeds the recognized basis of the identifiable assets acquired, net of assumed liabilities. Determining the fair value of assets acquired, liabilities assumed and noncontrolling interests requires management’s judgment and often involves the use of significant estimates and assumptions, including assumptions with respect to future cash flows, discount rates and asset lives among other items.

Property, Plant and Equipment

Property, plant and equipment are stated at cost or fair value at the date of acquisition. Depreciation is computed using the straight-line method over their estimated useful lives, which are typically as follows:

Buildings and improvements - 10 to 50 years

Computer equipment and capitalized software - 3 to 10 years

Furniture and other equipment - 3 to 10 years

Leasehold improvements are depreciated over the shorter of the economic life or associated lease term. Expenditures for maintenance and repairs are charged to operations as incurred, whereas expenditures for asset renewal and improvements are capitalized.

We test for possible impairment of property, plant and equipment whenever events or circumstances change, such as a current period operating cash flow loss combined with a history of, or projections of, operating cash flow losses or a significant adverse change in the manner in which the asset is intended to be used, which could indicate that the carrying amount of the asset may not be recoverable. If indicators exist, we compare the estimated undiscounted future cash flows related to the asset to the carrying value of the asset. If the carrying value is greater than the estimated undiscounted future cash flow amount, an impairment charge is recorded based on the difference between the fair value and the carrying value. Any such impairment charge is recorded in depreciation and amortization in the statements of operations. The impairment loss calculations require management to apply judgment in estimating future cash flows and the discount rates that reflect the risk inherent in future cash flows.

Intangible Assets

We classify intangible assets as definite-lived or indefinite-lived. Definite-lived intangibles include revenue-generating contracts, client/vendor relationships, trademarks and naming rights, technology, non-compete agreements, and venue management and leasehold agreements, all of which are amortized either on a straight-line basis over the respective lives of the agreements, typically 3 to 10 years, or on a basis more representative of the time pattern over which the benefit is derived. We periodically review the appropriateness of the amortization periods related to our definite-lived intangible assets. These assets are stated at cost or fair value at the date of acquisition. Indefinite-lived intangibles consist of trade names which are not subject to amortization.

We test for possible impairment of definite-lived intangible assets whenever events or circumstances change, such as a current period operating cash flow loss combined with a history of, or projections of, operating cash flow losses or a significant adverse change in the manner in which the asset is intended to be used, which could indicate that the carrying amount of the asset may not be recoverable. If indicators exist, we compare the estimated undiscounted future cash flows related to the asset to the carrying value of the asset. If the carrying value is greater than the estimated undiscounted future cash flow amount, an impairment charge is recorded based on the difference between the fair value and the carrying value. Any such impairment charge is recorded in depreciation and amortization in the statements of operations.

We test for possible impairment of indefinite-lived intangible assets at least annually. Depending on facts and circumstances, qualitative factors may first be assessed to determine whether the existence of events and circumstances indicate that it is more likely than not that an indefinite-lived intangible asset is impaired. If it is concluded that it is more likely than not impaired, we perform a quantitative impairment test by comparing the fair value with the carrying amount. If the qualitative assessment is not performed first, we perform only this quantitative test. When specific assets are determined to be impaired, the cost basis of the asset is reduced to reflect the current fair value. Any such impairment charge is recorded in depreciation and amortization in the statements of operations. The impairment loss calculations require management to apply judgment in estimating future cash flows, expected future revenue, discount rates and royalty rates that reflect the risk inherent in future cash flows.

Goodwill

We review goodwill for impairment annually, as of October 1, using a two-step process. We also test goodwill for impairment in other periods if an event occurs or circumstances change that would more likely than not reduce the fair value of a reporting unit below its carrying amount or when we change our reporting units.

The first step is a qualitative evaluation as to whether it is more likely than not that the fair value of any of our reporting units is less than its carrying value using an assessment of relevant events and circumstances. Examples of such events and circumstances include historical financial performance, industry and market conditions, macroeconomic conditions, reporting unit-specific events, historical results of goodwill impairment testing and the timing of the last performance of a quantitative assessment.

If any reporting units are concluded to be more likely than not impaired, or if that conclusion cannot be determined qualitatively, a second step is performed for that reporting unit. Regardless, all reporting units undergo a second step at least once every five years to support our annual qualitative first step. This second step, used to quantitatively screen for potential impairment and measure the impairment, if any, compares the fair value of the reporting unit with its carrying amount, including goodwill. Inherent in such fair value determinations are certain judgments and estimates relating to future cash flows, including our interpretation of current economic indicators and market valuations, and assumptions about our strategic plans with regard to our operations. Due to the uncertainties associated with such estimates, actual results could differ from such estimates. If the reporting unit’s carrying value exceeds its fair value, the excess of the carrying value over the fair value is recorded as an impairment to goodwill. If a reporting unit’s carrying value is negative, the reporting unit passes the impairment test. In this case, we will disclose the amount of goodwill allocated to that reporting unit and disclose which reportable segment the reporting unit is included in. In both steps, discount rates, market multiples, and sensitivity tests are derived and/or computed with the assistance of external valuation consultants.

In developing fair values for our reporting units, we employ a discounted cash flow or a market multiple methodology, or a combination thereof. The discounted cash flow methodology establishes fair value by estimating the present value of the projected future cash flows to be generated from the reporting unit. The discount rate applied to the projected future cash flows to arrive at the present value is intended to reflect all risks of ownership and the associated risks of realizing the stream of projected future cash flows. The discounted cash flow methodology uses our estimates of future financial performance. The most significant assumptions used in the discounted cash flow methodology are the discount rate and expected future revenue, which vary among reporting units.

The market multiple methodology compares us to similar companies on the basis of risk characteristics to determine our risk profile relative to those companies as a group. This analysis generally focuses on both quantitative considerations, which include financial performance and other quantifiable data, and qualitative considerations, which include any factors which are expected to impact future financial performance. The most significant assumptions affecting the market multiple methodology are the market multiples used on projected future cash flows and market participant acquisition premium. A market participant acquisition premium represents the additional value a buyer would pay to obtain control of the respective reporting unit because having control would lead to higher cash flows, lower cost of capital or both.

Nonconsolidated Affiliates

In general, nonconsolidated investments in which we own more than 20% of the common stock or otherwise exercise significant influence over an affiliate are accounted for under the equity method. We review the value of equity method investments and record impairment charges in the statements of operations for any decline in value that is determined to be other-than-temporary. If we obtain control of a nonconsolidated affiliate through the purchase of additional ownership interest or changes in the governing agreements, we remeasure our investment to fair value first and then apply the accounting guidance for business combinations. Any gain or loss resulting from the remeasurement to fair value is recorded as a component of other expense (income), net in the statements of operations.

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 non-lease 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 lease asset or 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.

Accounts Payable, Client Accounts

Accounts payable, client accounts consists of contractual amounts due to our ticketing clients which includes the face value of tickets sold and the clients’ share of service charges.

Income Taxes

We account for income taxes using the liability method which results in deferred tax assets and liabilities based on differences between financial reporting bases and tax bases of assets and liabilities and are measured using the enacted tax rates expected to apply to taxable income in the periods in which the deferred tax asset or liability is expected to be realized or settled. Deferred tax assets are reduced by valuation allowances if we believe it is more likely than not that some portion of or the entire asset will not be realized. As almost all earnings from our continuing foreign operations are permanently reinvested and not distributed, our income tax provision does not include additional United States state and foreign withholding or transaction taxes on those foreign earnings that would be incurred if they were distributed. It is not practicable to determine the amount of state and foreign income taxes, if any, that might become due in the event that any remaining available cash associated with these earnings were distributed.

The FASB guidance for income taxes prescribes a recognition threshold and a measurement attribute for the financial statement recognition and measurement of tax positions taken or expected to be taken in a tax return. For those benefits to be recognized, a tax position must be more likely than not to be sustained upon examination by taxing authorities. The amount recognized is measured as the largest amount of benefit that is more likely than not to be realized upon ultimate settlement.

We have established a policy of including interest related to tax loss contingencies in income tax expense (benefit) in the statements of operations.

The Tax Cuts and Jobs Act (“TCJA”) enacted in December 2017 subjects a United States corporation to tax on its Global Intangible Low-Taxed Income (“GILTI”). We have established a policy of treating the taxes due on future GILTI inclusions in United States taxable income as a current-period expense when incurred.

Revenue Recognition

Revenue from the promotion or production of an event in our Concerts segment is recognized when the show occurs. Revenue collected in advance of the event is recorded as deferred revenue until the event occurs. Revenue collected from sponsorship agreements, which is not related to a single event, is classified as deferred revenue and recognized over the term of the agreement or operating season as the benefits are provided to the sponsor.

Revenue from our ticketing operations primarily consists of service fees charged at the time a ticket for an event is sold in either the primary or secondary markets. For primary tickets sold to our concert and festival events, where our concert promoters control ticketing, the revenue for the associated ticket service charges collected in advance of the event is recorded as deferred revenue until the event occurs and these service charges are shared between our Ticketing and Concerts segments. For primary tickets sold for events of third-party clients and secondary market sales, the revenue is recognized at the time of the sale and is recorded by our Ticketing segment.

We account for taxes that are externally imposed on revenue producing transactions on a net basis.

Gross versus Net Revenue Recognition

We report revenue on a gross or net basis based on management’s assessment of whether we act as a principal or agent in the transaction. To the extent we act as the principal, revenue is reported on a gross basis. The determination of whether we act as a principal or an agent in a transaction is based on an evaluation of whether we have control of the good or service before it is transferred to the customer. Our Ticketing segment’s revenue, which primarily consists of service fees from its ticketing operations, is recorded net of the face value of the ticket as we generally act as an agent in these transactions.

Foreign Currency

Results of operations for foreign subsidiaries and foreign equity investees are translated into United States dollars using the average exchange rates during the year. The assets and liabilities of those subsidiaries and investees are translated into United States dollars using the exchange rates at the balance sheet date. The related translation adjustments are recorded in a separate component of stockholders’ equity in AOCI. Foreign currency transaction gains and losses are included in the statements of operations and include the impact of revaluation of certain foreign currency denominated net assets or liabilities held internationally. For the years ended December 31, 2019 and December 31, 2017, we recorded net foreign currency transaction gains of $3.2 million and $3.1 million, respectively. For the year ended December 31, 2018, we recorded net foreign currency transaction losses of $11.6 million. We do not currently have significant operations in highly inflationary countries.

Advertising Expense

We record advertising expense in the year that it is incurred. Throughout the year, general advertising expenses are recognized as they are incurred, but event-related advertising for concerts is recognized once the show occurs. However, all advertising costs incurred during the year and not previously recognized are expensed at the end of the year. Advertising expenses of $452.7 million, $443.2 million and $378.1 million for the years ended December 31, 2019, 2018 and 2017, respectively, were recorded as a component of direct operating expenses. Advertising expenses of $27.8 million, $30.9 million and $40.3 million for the years ended December 31, 2019, 2018 and 2017, respectively, were recorded as a component of selling, general and administrative expenses.

Direct Operating Expenses

Direct operating expenses include artist fees, show-related marketing and advertising expenses, rent expense for events in third-party venues, credit card fees, telecommunication and data communication costs associated with our call centers, commissions paid on tickets distributed through independent sales outlets away from the box office, and salaries and wages related to seasonal employees at our venues along with other costs, including ticket stock and shipping. These costs are primarily variable in nature.

Selling, General and Administrative Expenses

Selling, general and administrative expenses include salaries and other compensation costs related to full-time employees, fixed rent, travel and entertainment, legal expenses and consulting along with other costs.

Depreciation and Amortization

Our depreciation and amortization is presented as a separate line item in the statements of operations. There is no depreciation or amortization included in direct operating expenses, selling, general and administrative expenses or corporate expenses. Amortization of nonrecoupable ticketing contract advances is recorded as a reduction to revenue.

Non-cash and Stock-based Compensation

We follow the fair value recognition provisions in the FASB guidance for stock compensation. Stock-based compensation expense recognized includes compensation expense for all share-based payments using the estimated grant date fair value. Stock-based compensation expense is adjusted for forfeitures as they occur.

The fair value for options in Live Nation stock is estimated on the date of grant using the Black-Scholes option-pricing model. The fair value of the options is amortized to expense on a straight-line basis over the options’ vesting period. We use an expected volatility based on an even weighting of our own traded options and historical volatility. We use a weighted-average expected life based on historical experience calculated with the assistance of outside consultants. The risk-free rate for periods within the expected life of the option is based on the United States Treasury note rate.

The fair value of restricted stock awards and deferred stock awards, which is generally the stock price on the date of grant, is amortized to expense on a straight-line basis over the vesting period except for restricted stock awards and deferred stock awards with minimum performance or market targets as their vesting condition. The performance-based awards are amortized to expense on a graded basis over the vesting period to the extent that it is probable that the performance criteria will be met. Market-based award fair values are estimated using a Monte Carlo simulation model and are then amortized to expense on a graded basis over the derived service period, which is estimated as the median weighted average vesting period from the Monte Carlo simulation models. However, unlike awards with a service or performance condition, the expense for market-based awards will not be reversed solely because the market condition is not satisfied.

Use of Estimates

The preparation of financial statements in conformity with GAAP requires management to make estimates, judgments, and assumptions that affect the amounts reported in the financial statements and accompanying notes including, but not limited to, legal, tax and insurance accruals, acquisition accounting and impairments. We base our estimates on historical experience and on various other assumptions that are believed to be reasonable under the circumstances. Actual results could differ from those estimates.

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 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 June 2016, the FASB issued guidance that replaces the current incurred loss impairment model of recognizing credit losses with an expected loss model for financial assets measured at amortized cost. The guidance is effective for annual periods beginning after December 15, 2019 and interim periods within that year. Early adoption is permitted for fiscal periods after December 15, 2018 and interim periods within that year. The guidance is to be applied through a cummulative-effect adjustment to the balance sheet as of the beginning of the fiscal year of adoption. We will adopt this standard on January 1, 2020, and the adoption will not have a material effect on our financial position or results of operations.

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 will adopt this guidance on January 1, 2020, and will apply it prospectively. Adoption of this guidance will result in expense previously reported as depreciation and amortization to be reported as selling, general and administrative expenses or corporate expenses within our statements of operations. In addition, implementation cost previously reported as property, plant and equipment, net will now be reported as prepaid expenses and other long-term assets on our balance sheets.

NOTE 2—LONG-LIVED ASSETS

Property, Plant and Equipment, Net

Property, plant and equipment, net includes expenditures for the construction of new venues, major renovations to existing buildings or buildings that are being added to our venue network, the development of new ticketing tools and technology enhancements along with the renewal and improvement of existing venues and technology systems, web development and administrative offices.

Property, plant and equipment, net, consisted of the following:

			December 31,
			2019						2018
			(in thousands)
Land, buildings and improvements			$	1,181,876					$	984,558
Computer equipment and capitalized software			800,990						742,737
Furniture and other equipment			380,174						329,607
Construction in progress			176,275						160,028
			2,539,315						2,216,930
Less accumulated depreciation			1,421,383						1,270,337
			$	1,117,932					$	946,593

Definite-lived Intangible Assets

The following table presents the changes in the gross carrying amount and accumulated amortization of definite-lived intangible assets for the years ended December 31, 2019 and 2018:

			Revenue- generating contracts						Client / vendor relationships						Trademarks and naming rights						Venue management & Leaseholds						Technology																		Other (1)						Total
			(in thousands)
Balance as of December 31, 2017:
Gross carrying amount			$	789,363					$	341,449					$	126,331					$	63,135					$	63,666																	$	72,096					$	1,456,040
Accumulated amortization			(410,011)						(186,357)						(32,681)						(35,953)						(22,745)																		(39,028)						(726,775)
Net			379,352						155,092						93,650						27,182						40,921																		33,068						729,265
Gross carrying amount:
Acquisitions—current year			6,128						84,146						2,067						15,402						30,029																		—						137,772
Acquisitions—prior year			4,447						—						—						1,900						—																		—						6,347
Dispositions			—						(11,812)						—						—						—																		(18,754)						(30,566)
Foreign exchange			(14,426)						(7,378)						(1,756)						(1,989)						(1,626)																		(1,220)						(28,395)
Other (2)			(92,549)						(12,633)						(2,935)						(8,400)						(6,658)																		(2,007)						(125,182)
Net change			(96,400)						52,323						(2,624)						6,913						21,745																		(21,981)						(40,024)
Accumulated amortization:
Amortization			(81,291)						(52,879)						(12,633)						(7,185)						(23,727)																		(12,938)						(190,653)
Dispositions			—						8,146						—						—						—																		13,238						21,384
Foreign exchange			7,526						4,813						536						1,235						973																		744						15,827
Other (2)			92,774						12,678						2,970						8,396						6,673																		2,161						125,652
Net change			19,009						(27,242)						(9,127)						2,446						(16,081)																		3,205						(27,790)
Balance as of December 31, 2018:
Gross carrying amount			692,963						393,772						123,707						70,048						85,411																		50,115						1,416,016
Accumulated amortization			(391,002)						(213,599)						(41,808)						(33,507)						(38,826)																		(35,823)						(754,565)
Net			301,961						180,173						81,899						36,541						46,585																		14,292						661,451
Gross carrying amount:
Acquisitions—current year			94,464						209,398						29,061						80,643						13,839																		8,075						435,480
Acquisitions—prior year			—						—						—						43						—																		—						43
Foreign exchange			(4,713)						90						91						896						356																		(208)						(3,488)
Other (2)			(82,157)						(75,770)						76						(2,044)						(12,268)																		(32,763)						(204,926)
Net change			7,594						133,718						29,228						79,538						1,927																		(24,896)						227,109
Accumulated amortization:
Amortization			(94,439)						(65,059)						(14,513)						(10,683)						(27,512)																		(11,326)						(223,532)
Foreign exchange			1,331						(473)						(96)						(553)						(152)																		122						179
Other (2)			82,088						75,770						1						2,044						12,270																		32,761						204,934
Net change			(11,020)						10,238						(14,608)						(9,192)						(15,394)																		21,557						(18,419)
Balance as of December 31, 2019:
Gross carrying amount			700,557						527,490						152,935						149,586						87,338																		25,219						1,643,125
Accumulated amortization			(402,022)						(203,361)						(56,416)						(42,699)						(54,220)																		(14,266)						(772,984)
Net			$	298,535					$	324,129					$	96,519					$	106,887					$	33,118																	$	10,953					$	870,141

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(1) Other primarily includes intangible assets for non-compete agreements.

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

Included in the current year acquisitions amount above for 2019 are definite-lived intangible assets primarily associated with the acquisitions of concert promotion businesses located in Canada and Chile, venue management businesses located in the United States and Belgium and a festival promotion business located in Brazil that had been accounted for as an equity investment.

Included in the current year acquisitions amount above for 2018 are definite-lived intangible assets primarily associated with the acquisitions of various concert and festival promotion business and artist management businesses that are all located in the United States, and the acquisition of certain software assets from a business located in the United States.

The 2019 and 2018 additions to definite-lived intangible assets from acquisitions have weighted-average lives as follows:

			Weighted- Average Life
			2019						2018
			(in years)
Revenue-generating contracts			8						7
Client/vendor relationships			9						7
Trademarks and naming rights			8						3
Technology			2						3
Venue management and leaseholds			10						12
Other			5						—
All categories			8						7

During all years presented, we reviewed the carrying value of certain definite-lived intangible assets that management determined would not be renewed or that had an indicator that future operating cash flows may not support their carrying value. It was determined that certain assets were impaired since the estimated undiscounted future cash flows associated with those assets were less than their carrying value. For the year ended December 31, 2019, we recorded impairment charges of $26.8 million as a component of depreciation and amortization primarily related to intangible assets for revenue-generating contracts in the Concerts and Sponsorship & Advertising segments. See Note 6—Fair Value Measurements for further discussion of the inputs used to determine the fair values. There were no significant impairment charges recorded in 2018 and 2017.

Amortization of definite-lived intangible assets for the years ended December 31, 2019, 2018 and 2017 was $223.5 million, $190.7 million and $202.6 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 December 31, 2019:

			(in thousands)
2020			$	219,927
2021			$	153,233
2022			$	122,808
2023			$	103,253
2024			$	85,218

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

Indefinite-lived Intangibles

We have indefinite-lived intangible assets which consist of trade names. These indefinite-lived intangible assets had a carrying value of $369.0 million and $368.9 million as of December 31, 2019 and 2018, respectively.

Goodwill

We currently have seven reporting units with goodwill balances: International Concerts, North America Concerts, Artist Management and Artist Services (non-management) within the Concerts segment; Sponsorship & Advertising; and International Ticketing and North America Ticketing within the Ticketing segment. We review goodwill for impairment annually, as of October 1, using a two-step process: a qualitative review and a quantitative analysis. In 2019, as part of our annual test for impairment of goodwill, five reporting units were assessed under the initial qualitative evaluation and did not require a quantitative analysis. These reporting units account for approximately 85% of our goodwill at December 31, 2019. Considerations included (a) excess of fair values over carrying values in the most recent quantitative analysis performed, (b) market multiples, (c) discount rates, (d) financial results and (e) sensitivity analyses.

Finally, for two reporting units that account for approximately 15% of our goodwill at December 31, 2019, the qualitative analysis was inconclusive due to varied factors such as lower than expected financial results in the current year, mixed changes in market multiples, and a decrease in discount rate. As such, quantitative analysis was performed for these reporting units.

We performed the quantitative analysis using a combination of a discounted cash flows methodology, which uses both market-based and internal assumptions, and a market multiple methodology, which uses primarily market-based assumptions applied to our projections of future cash flows.

No impairment charges were recorded in 2019 as a result of our annual test. Based upon the results of the annual tests for 2018 and 2017, we recorded impairment charges of $10.5 million and $20.0 million, respectively, related to our Artist Services (non-management) reporting unit. See Note 6—Fair Value Measurements for discussion of the impairment calculation.

The following table presents the changes in the carrying amount of goodwill in each of our reportable segments for the years ended December 31, 2019 and 2018:

			Concerts						Ticketing						Sponsorship & Advertising						Total
			(in thousands)
Balance as of December 31, 2017:
Goodwill			$	1,015,913					$	761,786					$	401,753					$	2,179,452
Accumulated impairment losses			(424,863)						—						—						(424,863)
Net			591,050						761,786						401,753						1,754,589
Acquisitions—current year			42,841						5,875						3,902						52,618
Acquisitions—prior year			53,541						—						1,697						55,238
Dispositions			(7,053)						—						—						(7,053)
Impairment			(10,500)						—						—						(10,500)
Foreign exchange			(10,638)						(4,708)						(6,603)						(21,949)
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			121,355						4,017						38,421						163,793
Acquisitions—prior year			8,428						—						—						8,428
Foreign exchange			1,670						(707)						2,371						3,334
Balance as of December 31, 2019:
Goodwill			1,226,057						766,263						441,541						2,433,861
Accumulated impairment losses			(435,363)						—						—						(435,363)
Net			$	790,694					$	766,263					$	441,541					$	1,998,498

Included in the current year acquisitions amount above for 2019 is goodwill associated with the acquisitions of a concert promotion business located in Canada, venue management businesses located in Belgium and the United States and a festival promotion business located in Brazil that had been accounted for as an equity method investment.

Included in the current year acquisitions amount above for 2018 is goodwill associated with the acquisitions of various concert and festival promotion businesses and various artist management businesses that are all located in the United States.

Included in the prior year acquisitions amount above for 2018 is a purchase price adjustment recognized in connection with contingent consideration paid during 2018 related to an acquisition that occurred prior to our adoption of the current FASB guidance for business combinations. Under the previous guidance, which was in place at the time of this acquisition, such contingent payments were recognized when it was determinable that the applicable financial targets were met.

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

Investments in Nonconsolidated Affiliates

We have investments in various affiliates which are not consolidated and are accounted for under the equity method of accounting. We record our investments in these entities in the balance sheet as investments in nonconsolidated affiliates reported as part of other long-term assets. Our interests in these operations are recorded in the statements of operations as equity in losses (earnings) of nonconsolidated affiliates. For the year ended December 31, 2019, certain of our investments are considered significant on an aggregate basis. Summarized balance sheet and income statement information for these entities is as follows (at 100%):

						December 31,
						2019						2018
						(in thousands)
Current assets						$	40,937					$	71,685
Noncurrent assets						$	6,845					$	4,074
Current liabilities						$	35,662					$	42,470
Noncontrolling interests						$	1,624					$	1,095

						Year Ended December 31,
						2019						2018						2017
						(in thousands)
Revenue						$	54,173					$	56,857					$	56,078
Operating income						$	30,262					$	34,841					$	29,684
Net income						$	23,969					$	28,554					$	24,116
Net income attributable to the common stockholders of the equity investees						$	23,440					$	27,935					$	23,995

NOTE 3—LEASES

The significant components of operating lease expense are as follows:

						Year Ended December 31, 2019
						(in thousands)
Operating lease cost						$	201,344
Variable and short-term lease cost						133,526
Sublease income						(17,235)
Net lease cost						$	317,635

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

			Year Ended December 31, 2019
			(in thousands)
Cash paid for amounts included in the measurement of lease liabilities			$	183,723
Lease assets obtained in exchange for lease obligations, net of terminations			$	417,394

Future maturities of our operating lease liabilities at December 31, 2019 are as follows:

			(in thousands)
2020			$	194,811
2021			185,273
2022			180,865
2023			178,322
2024			161,583
Thereafter			1,370,772
Total lease payments			2,271,626
Less: Interest			775,195
Present value of lease liabilities			$	1,496,431

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

			December 31, 2019
Weighted average remaining lease term (in years)			13.9
Weighted average discount rate			5.88		%

As of December 31, 2019, we have additional operating leases that have not yet commenced with total lease payments of $218.2 million. These operating leases, which are not included on our consolidated balance sheets, have commencement dates ranging from January 2020 to December 2021 with lease terms ranging from 1 to 21 years.

NOTE 4—LONG-TERM DEBT

Long-term debt, which includes capital leases, consisted of the following:

															December 31,
															2019						2018
															(in thousands)
Senior Secured Credit Facility:
			Term loan A																		$	—					$	156,750
			Term loan B																		947,625						953,148
4.75% Senior Notes due 2027																								950,000						—
4.875% Senior Notes due 2024																								575,000						575,000
5.625% Senior Notes due 2026																								300,000						300,000
5.375% Senior Notes due 2022																								—						250,000
2.5% Convertible Senior Notes due 2023																								550,000						550,000
2.5% Convertible Senior Notes due 2019																								—						28,673
Other long-term debt																								80,642						96,308
Total principal amount																								3,403,267						2,909,879
Less unamortized discounts and debt issuance costs																								(94,210)						(94,859)
Total long-term debt, net of unamortized discounts and debt issuance costs																								3,309,057						2,815,020
Less: current portion																								37,795						82,142
Total long-term debt, net																								$	3,271,262					$	2,732,878

Future maturities of long-term debt at December 31, 2019 are as follows:

			(in thousands)
2020			$	37,795
2021			36,221
2022			568,817
2023			17,487
2024			586,445
Thereafter			2,156,502
Total			$	3,403,267

All long-term debt without a stated maturity date is considered current and is reflected as maturing in the earliest period shown in the table above. See Note 6—Fair Value Measurements for discussion of the fair value measurement of our long-term debt.

Senior Secured Credit Facility

In October 2019, we amended our senior secured credit facility and now have (i) a five-year $400 million delayed 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 the facility 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 credit 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. This 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 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 range 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 credit agreement, subject to specified exceptions, from excess cash flow and with the proceeds of asset sales, debt issuances and other specified events.

Based on our outstanding letters of credit of $83.5 million, $416.5 million was available for future borrowings under the revolving credit facility at December 31, 2019.

4.75% Senior Notes

In October 2019, we issued $950 million principal amount of 4.75% senior notes due 2027. Interest on the notes is payable semi-annually in cash in arrears on April 15 and October 15 of each year 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.

4.875% Senior Notes

At December 31, 2019, we had $575 million principal amount of 4.875% senior notes due 2024. Interest on the notes is payable semiannually in cash in arrears on May 1 and November 1 of each year, and the notes will mature on November 1, 2024. In addition, on or after November 1, 2019, we may redeem some or all of the notes at any time at the redemption prices that start at 103.656% of their principal amount, 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.

5.625% Senior Notes

In March 2018, we issued $300 million principal amount of 5.625% senior notes due 2026. Interest on the notes is payable semiannually in cash in arrears on March 15 and September 15 of each year, and the notes will mature on March 15, 2026. We may redeem some or all of the notes at any time prior to March 15, 2021 at a price equal to 100% of the 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 proceeds of certain equity offerings prior to March 15, 2021, at a price equal to 105.625% of the aggregate principal amount being redeemed, plus any accrued and unpaid interest thereon to the date of redemption. In addition, on or after March 15, 2021, we may redeem some or all of the notes at any time at redemption prices that start at 104.219% of their principal amount, plus any accrued and unpaid interest to the date of redemption. We must make an offer to redeem the notes at 101% of their aggregate principal amount, plus any accrued and unpaid interest to the repurchase date, if we experience certain defined changes of control.

2.5% Convertible Senior Notes Due 2023

In March 2018, we issued $550 million principal amount of 2.5% convertible senior notes due 2023. The notes pay interest semiannually in arrears on March 15 and September 15 of each year, at a rate of 2.5% per annum. The notes will mature on March 15, 2023, and may not be redeemed by us prior to the maturity date. The notes will be convertible, under certain circumstances, until December 15, 2022, and on or after such date without condition, at an initial conversion rate of 14.7005 shares of our common stock per $1,000 principal amount of notes, subject to adjustment, which represents a 54.4% conversion premium based on the last reported sale price for our common stock of $44.05 on March 19, 2018 prior to issuing the debt. Upon conversion, the notes may be settled in shares of common stock or, at our election, cash or a combination of cash and shares of common stock. Assuming we fully settled the notes in shares, the maximum number of shares that could be issued to satisfy the conversion is currently 8.1 million.

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

The carrying amount of the equity component of the notes is $64.0 million, which is treated as a debt discount and the principal amount of the liability component (face value of the notes) is $550 million. As of December 31, 2019, the remaining period for the unamortized debt discount balance of $42.4 million was approximately three years and the value of the notes, if converted and fully settled in shares, exceed the principal amount of the notes by $27.9 million. As of December 31, 2019, the effective interest rate on the liability component of the notes was 5.7%.

The following table summarizes the amount of pre-tax interest cost recognized on the 2.5% convertible senior notes due 2023 and 2019:

			Year Ended December 31,
			2019						2018						2017
			(in thousands)
Interest cost recognized relating to:
Contractual interest coupon			$	14,015					$	12,894					$	6,875
Amortization of debt discount			2,134						10,746						5,080
Amortization of debt issuance costs			12,599						1,940						1,358
Total interest cost recognized on the notes			$	28,748					$	25,580					$	13,313

Other Long-term Debt

As of December 31, 2019, other long-term debt includes capital leases of $5.2 million, debt to noncontrolling interest partners of $34.5 million and $27.5 million of a subsidiary’s term loan and revolving credit facility. Our other long-term debt has a weighted average cost of debt of 4.6% and maturities at various dates through July 2046.

Debt Extinguishment

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 draw down of $950 million principal amount under the new term loan B facility. The proceeds were used to repay the $1.1 billion principal balance outstanding on the term loans A and B under our then existing senior secured credit facility, to repay the entire $250 million principal amount of the 5.375% senior notes due 2022, to repay the related redemption premium of $3.4 million on the senior notes and accrued interest and fees of $30.8 million, leaving $527.5 million for general corporate purposes, including acquisitions. We recorded a $4.5 million loss on extinguishment of debt related to this refinancing.

In March 2018, we issued $300 million principal amount of 5.625% senior notes due 2026, issued $550 million principal amount of 2.5% convertible senior notes due 2023 and amended our senior secured credit facility to reduce the applicable interest rate for the term loan B. Total gross proceeds of $850.0 million from the issuance of the notes were used to repay $246.3 million of the outstanding principal amount of our 2.5% convertible senior notes due 2019, the related repurchase premium of $90.4 million on those convertible senior notes and accrued interest and fees of $20.8 million, leaving $492.5 million in additional cash available for general corporate purposes. We recorded a $2.5 million loss on extinguishment of debt related to this refinancing.

Debt Covenants

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

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

As of December 31, 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 covenants throughout 2020.

NOTE 5—DERIVATIVE INSTRUMENTS

We primarily use forward currency contracts and options to reduce our exposure to foreign currency risk associated with short-term artist fee commitments. We may also enter into forward currency contracts to minimize the risks and/or costs associated with changes in foreign currency rates on forecasted operating income. At December 31, 2019 and 2018, we had forward currency contracts and options outstanding with notional amounts of $66.3 million and $89.4 million, respectively. These instruments have not been designated as hedging instruments and any change in fair value is reported in earnings during the period of the change. Our foreign currency derivative activity, including the related fair values, are not material to any period presented.

We do not enter into derivative instruments for speculative or trading purposes and do not anticipate any significant recognition of derivative activity through the income statement in the future related to the instruments currently held. See Note 6—Fair Value Measurements for further discussion and disclosure of the fair values for our derivative instruments.

NOTE 6—FAIR VALUE MEASUREMENTS

Recurring

We currently have various financial instruments carried at fair value, such as marketable securities, derivatives and contingent consideration, but do not currently have nonfinancial assets and liabilities that are required to be measured at fair value on a recurring basis. Our financial assets and liabilities are measured using inputs from all levels of the fair value hierarchy as defined in the FASB guidance for fair value. For this categorization, only inputs that are significant to the fair value are considered. The three levels are defined as follows:

Level 1—Inputs are unadjusted quoted prices in active markets for identical assets or liabilities that can be accessed at the measurement date.

Level 2—Inputs include quoted prices for similar assets and liabilities in active markets, quoted prices for identical or similar assets or liabilities in markets that are not active, inputs other than quoted prices that are observable for the asset or liability (i.e., interest rates, yield curves, etc.) and inputs that are derived principally from or corroborated by observable market data by correlation or other means (i.e., market corroborated inputs).

Level 3—Unobservable inputs that reflect assumptions about what market participants would use in pricing the asset or liability. These inputs would be based on the best information available, including our own data.

In accordance with the fair value hierarchy described above, the following table shows the fair value of our financial assets and liabilities that are required to be measured at fair value on a recurring basis, which are classified on the balance sheets as cash and cash equivalents, other current assets, other current liabilities and other long-term liabilities:

			Fair Value Measurements at December 31, 2019																																										Fair Value Measurements at December 31, 2018
			Level 1						Level 2						Level 3						Total						Level 1						Level 2						Level 3						Total
									(in thousands)																														(in thousands)
Assets:
Cash equivalents			$	177,159					$	—					$	—					$	177,159					$	86,046					$	—					$	—					$	86,046
Forward currency contracts			—						11						—						11						—						779						—						779
Total			$	177,159					$	11					$	—					$	177,170					$	86,046					$	779					$	—					$	86,825
Liabilities:
Forward currency contracts			$	—					$	1,159					$	—					$	1,159					$	—					$	260					$	—					$	260
Put option			—						—						8,006						8,006						—						—						8,002						8,002
Subsidiary equity awards			—						—						7,661						7,661						—						—						3,571						3,571
Contingent consideration			—						—						64,892						64,892						—						—						62,475						62,475
Total			$	—					$	1,159					$	80,559					$	81,718					$	—					$	260					$	74,048					$	74,308

Cash equivalents consist of money market funds. Fair values for cash equivalents are based on quoted prices in an active market. Fair values for forward currency contracts are based on observable market transactions of spot and forward rates.

Certain third parties have a put option to sell their noncontrolling interest in one of our subsidiaries to us and such put option is carried at fair value using Level 3 inputs because either (i) the put option is triggered by the occurrence of specific events, one of which is certain to occur, that requires us to buy the noncontrolling interest or (ii) the redemption price is not at fair value and the equity holder does not bear the risk and rewards of ownership. The redemption price for these put options are a variable amount based on a formula linked to historical earnings. We have recorded a current liability for these put options which are valued based on the historic results of that subsidiary. Changes in the fair value are recorded in selling, general and administrative expenses.

We have certain contingent consideration obligations related to acquisitions which are measured at fair value using Level 3 inputs. The amounts due to the sellers are based on the achievement of agreed-upon financial performance metrics by the acquired companies where the contingent obligation is either earned or not earned. We record the liability at the time of the acquisition based on the present value of management’s best estimates of the future results of the acquired companies compared to the agreed-upon metrics. Subsequent to the date of acquisition, we update the original valuation to reflect current projections of future results of the acquired companies and the passage of time. Accretion of, and changes in the valuations of, contingent consideration are reported in selling, general and administrative expenses. See Note 7—Commitments and Contingent Liabilities for additional information related to the contingent payments.

Due to their short maturity, the carrying amounts of accounts receivable, accounts payable and accrued expenses approximated their fair values at December 31, 2019 and 2018.

Our outstanding debt held by third-party financial institutions is carried at cost, adjusted for 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.

The following table presents the estimated fair values of our senior notes and convertible senior notes at December 31, 2019 and 2018:

			Estimated Fair Value at:
			December 31, 2019						December 31, 2018
			Level 2
			(in thousands)
4.75% Senior Notes Due 2027			$	983,735					$	—
4.875% Senior Notes due 2024			$	596,137					$	552,368
5.625% Senior Notes due 2026			$	320,553					$	302,097
5.375% Senior Notes due 2022			$	—					$	251,390
2.5% Convertible Senior Notes due 2023			$	675,664					$	561,699
2.5% Convertible Senior Notes due 2019			$	—					$	40,710

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 years ended December 31, 2019 and 2018:

						Fair Value						Fair Value Measurements Using																														Loss
Description						Measurement						Level 1						Level 2						Level 3						(Gain)
						(in thousands)
2019
Definite-lived intangible assets, net						$	—					$	—					$	—					$	—					$	26,751
2018
Goodwill						$	20,332					$	—					$	—					$	20,332					$	10,500

During 2019, we recorded impairment charges related to definite-lived intangible assets of $26.8 million as a component of depreciation and amortization. The impairment charges are primarily related to intangible assets for revenue-generating contracts in the Concerts and Sponsorship & Advertising segments. 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.

During 2018 and 2017, in conjunction with our annual impairment tests, goodwill impairments were recorded for the Artist Services (non-management) reporting unit in the Concerts segment in the amount of $10.5 million and $20.0 million, respectively, as a component of depreciation and amortization. We calculated these impairments using a combination of a discounted cash flow methodology, which uses both Level 2 and Level 3 inputs, and a market multiple methodology, which uses primarily Level 2 inputs. The key inputs include discount rates, market multiples, control premiums, revenue growth and estimates of future financial performance. See Note 1—The Company and Summary of Significant Accounting Policies and Note 2—Long-Lived Assets for further discussion of our methodology and these impairments.

NOTE 7—COMMITMENTS AND CONTINGENT LIABILITIES

We have non-cancelable contracts related to minimum performance payments with various artists, other event-related costs and nonrecoupable ticketing contract advances. We also have commitments relating to additions to property, plant, and equipment under certain construction commitments for facilities and venues.

As of December 31, 2019, our future minimum payments under non-cancelable contracts and capital expenditure commitments consist of the following:

									Non-cancelable Contracts						Capital Expenditures
						(in thousands)
2020									$	1,191,773					$	21,520
2021									473,417						4,160
2022									290,753						1,236
2023									153,129						1,020
2024									56,361						985
Thereafter									120,008						27,502
Total									$	2,285,441					$	56,423

In connection with asset and business disposals, we generally provide indemnifications to the buyers including claims resulting from employment matters, commercial claims and governmental actions that may be taken against the assets or businesses sold. Settlement of these claims is subject to various statutory limitations that are dependent upon the nature of the claim.

Certain agreements relating to acquisitions provide for deferred purchase consideration payments at future dates. A liability is established at the time of the acquisition for these fixed payments. For obligations payable at a date greater than twelve months from the acquisition date, we apply a discount rate to calculate the present value of the obligations. As of December 31, 2019, we have accrued $7.1 million in other current liabilities and $9.1 million in other long-term liabilities and, as of December 31, 2018, we had accrued $5.5 million in other current liabilities and $7.3 million in other long-term liabilities, related to these deferred purchase consideration payments.

We have contingent obligations related to acquisitions which are accounted for as business combinations. Contingent consideration associated with business combinations is recorded at fair value at the time of the acquisition and reflected at current fair value for each subsequent reporting period thereafter until settled. We record these fair value changes in our statements of operations as selling, general and administrative expenses. The contingent consideration is generally subject to payout following the achievement of future performance targets and a portion is expected to be payable in the next twelve months. As of December 31, 2019, we have accrued $6.0 million in other current liabilities and $58.9 million in other long-term liabilities and, as of December 31, 2018, we had accrued $39.5 million in other current liabilities and $23.0 million in other long-term liabilities, representing the fair value of these estimated payments. The last contingency period for which we have an outstanding contingent payment is for the period ending March 2026. See Note 6—Fair Value Measurements for further discussion related to the valuation of these contingent payments.

As of December 31, 2019 and 2018, we guaranteed the debt of third parties of approximately $16.5 million and $15.6 million, respectively, primarily related to maximum credit limits on employee and tour-related credit cards, obligations of a nonconsolidated affiliate and obligations under a venue management agreement.

Litigation

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 was thereafter dismissed with prejudice. 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 plaintiff in April 2019. The Ameri lawsuit was dismissed in May 2019 in light of the parties’ agreement to arbitrate the matter and was subsequently settled and dismissed with prejudice in December 2019. 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.

Other Litigation

From time to time, we are involved in other legal proceedings arising in the ordinary course of our business, including proceedings and claims based upon purported violations of antitrust laws, intellectual property rights and tortious interference, which could cause us to incur significant expenses. We have also been the subject of personal injury and wrongful death claims relating to accidents at our venues in connection with our operations. As required, we have accrued our estimate of the probable settlement or other losses for the resolution of any outstanding claims. These estimates have been developed in consultation with counsel and are based upon an analysis of potential results, including, in some cases, estimated redemption rates for the settlement offered, assuming a combination of litigation and settlement strategies. It is possible, however, that future results of operations for any particular period could be materially affected by changes in our assumptions or the effectiveness of our strategies related to these proceedings.

NOTE 8—CERTAIN RELATIONSHIPS AND RELATED-PARTY TRANSACTIONS

Transactions Involving Related Parties

The following table provides details of the total revenue earned and expenses incurred from all related-party transactions:

															Year Ended December 31,
															2019						2018						2017
															(in thousands)
Related-party revenue															$	131,909					$	157,834					$	125,802
Related-party expenses															$	1,711					$	4,300					$	4,430
Related-party acquisition related															$	3,000					$	—					$	—

The significant related-party transactions included in the table above are detailed below.

Liberty Media

Two current members of our board of directors were originally nominated by Liberty Media pursuant to a stockholder agreement. These directors receive directors’ fees and stock-based awards on the same basis as other non-employee members of our board of directors.

We lease a venue from, and provide ticketing services to, a sports franchise owned by Liberty Media and pay royalty fees and non-recoupable ticketing contract advances to the sports franchise. We also receive transaction fees from the sports franchise for tickets the sports franchise sells using our ticketing software. From time to time, we purchase advertising from a Sirius XM, a satellite radio company that is a subsidiary of Liberty Media.

Legends

Our Chief Executive Officer became a member of the board of directors of Legends Hospitality Holding Company, LLC (“Legends”) in February 2015. In 2017, our President assumed this role from the Chief Executive Officer. Legends provides concession services to certain of our owned or operated amphitheaters. We receive fees based on concession sales at each of the amphitheaters.

Sirius XM

In January 2018, our Chief Executive Officer became a member of the board of directors of Sirius XM Holdings Inc. (“Sirius XM”), a satellite radio company that is a subsidiary of Liberty Media. From time to time, we purchase advertising from Sirius XM.

Transactions Involving Equity Method Investees

We conduct business with certain of our equity method investees in the ordinary course of business. Transactions primarily relate to venue rentals and ticketing services. Revenue of $2.7 million, $2.7 million and $2.9 million were earned in 2019, 2018 and 2017, respectively, and expenses of $1.0 million, $1.1 million and $1.4 million were incurred in 2019, 2018 and 2017, respectively, from these equity investees for services rendered or provided in relation to these business ventures.

As of December 31, 2019 and 2018, we had accounts receivable and notes receivable balances of $21.1 million and $10.4 million, respectively, due from certain of our equity investees.

NOTE 9—INCOME TAXES

Significant components of the provision for income tax expense (benefit) are as follows:

						Year Ended December 31,
						2019						2018						2017
						(in thousands)
Current:
Federal						$	—					$	(55)					$	(702)
Foreign						61,834						40,239						50,970
State						5,523						6,828						4,117
Total current						67,357						47,012						54,385
Deferred:
Federal						5,314						2,246						(56,442)
Foreign						(6,345)						(8,697)						(15,841)
State						566						204						744
Total deferred						(465)						(6,247)						(71,539)
Income tax expense (benefit)						$	66,892					$	40,765					$	(17,154)

The domestic income (loss) before income taxes was $36.1 million, $43.5 million and $(132.6) million for 2019, 2018 and 2017, respectively. Foreign income before income taxes was $149.0 million, $87.6 million and $123.2 million for 2019, 2018 and 2017, respectively.

Significant components of our deferred tax liabilities and assets are as follows:

						December 31,
						2019						2018
						(in thousands)
Deferred tax liabilities:
Leases						$	192,870					$	—
Intangible assets						161,843						118,275
Prepaid expenses						5,876						2,534
Other						19,186						5,865
Total deferred tax liabilities						379,775						126,674
Deferred tax assets:
Intangible assets						40,926						25,981
Accrued expenses						60,479						40,989
Net operating loss carryforwards						488,081						388,459
Foreign tax and other credit carryforwards						47,215						38,919
Equity compensation						22,503						24,211
Leases						211,206						—
Other						12,751						15,703
Total gross deferred tax assets						883,161						534,262
Valuation allowance						667,242						530,642
Total deferred tax assets						215,919						3,620
Net deferred tax liabilities						$	(163,856)					$	(123,054)

Each reporting period, we evaluate the realizability of all of our deferred tax assets in each tax jurisdiction. As of December 31, 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 in those tax jurisdictions in 2019, 2018 and 2017. The leases deferred tax liabilities and leases deferred tax assets were recorded in 2019 pursuant to the new lease accounting standard. See Note 1—The Company and Summary of Significant Accounting Policies for a discussion of the new lease standard.

During 2019 and 2018, we recorded net deferred tax liabilities of $43.3 million and $4.0 million, respectively, due principally to differences in financial reporting and tax bases in assets acquired in business combinations. This is the primary reason for the increase in intangible assets deferred tax liability

As of December 31, 2019, we have United States federal, state and foreign deferred tax assets related to net operating loss carryforwards of $99.9 million, $61.6 million and $326.6 million, respectively. The increase in net operating loss carryforwards is primarily attributed to loss carryforwards as reported in our most recently filed tax returns. The majority of the increase in net operating loss carryforwards are in jurisdictions for which we maintain a full valuation allowance against net deferred tax assets. Based on current statutory carryforward periods, the operating loss carryforwards will expire on various dates beginning in 2025. Our federal net operating loss may be subject to statutory limitations on the amount that can be used in any given year.

The reconciliation of income tax computed at the United States federal statutory rates to income tax expense (benefit) is:

						Year Ended December 31,
						2019						2018						2017
						(in thousands)
Income tax expense (benefit) at United States statutory rates (21%, 21% and 35%, respectively)						$	38,872					$	27,532					$	(3,283)
State income taxes, net of federal tax benefits						3,137						4,860						1,544
Differences between foreign and United States statutory rates						6,384						2,650						(10,887)
United States tax reform rate change						—						—						(55,685)
Non-United States income inclusions and exclusions						(3,222)						(3,425)						3,826
United States income inclusions and exclusions						(2,582)						(13,790)						11,347
Nondeductible items						10,118						26,376						11,380
Tax contingencies						(1,340)						389						1,955
Tax expense from acquired goodwill						6,107						4,353						4,489
Change in valuation allowance						8,536						(8,845)						18,067
Other, net						882						665						93
						$	66,892					$	40,765					$	(17,154)

Income tax expense is principally attributable to our earnings in foreign tax jurisdictions along with state income taxes.

Amounts included in differences between foreign and United States statutory rates are impacted by changes in the mix of international earnings subject to various tax rates which can differ greatly in their proximity to the United States statutory rate. The differences between statutory rates is also impacted by our Luxembourg affiliates and tax rulings which include the application of a reduced Luxembourg effective rate to the net income before tax resulting from our financing activities in Luxembourg.

The United States tax reform change amount in 2017 pertains to the impact of the provisions associated with the Tax Cuts and Jobs Act (“TCJA”).

Amounts included in United States income inclusions and exclusions for 2019 and 2018 include the favorable impact of tax deductions for vesting of restricted stock awards and exercises of stock options partially offset by unfavorable inclusions for global intangible low-taxed income (“GILTI”) under the provisions associated with the TCJA.

Nondeductible items in 2019 and 2018 include the impact of increased nondeductible expenses pursuant to the provisions of the TCJA including nondeductible executive compensation. Nondeductible items in 2018 and 2017 include our goodwill impairment for Artist Services (non-managment) which was not deductible for income tax purposes.

The change in valuation allowance for each period presented resulted primarily from changes in the income within jurisdictions with full valuation allowances, including the United States.

The following table summarizes the activity related to the Company’s unrecognized tax benefits:

						Year Ended December 31,
						2019						2018						2017
						(in thousands)
Balance at January 1						$	34,071					$	30,630					$	15,117
Additions:
Increase for current year positions						2,215						1,531						807
Increase for prior year positions						1,898						2,995						15,498
Interest and penalties for prior years						458						106						2,745
Reductions:
Decrease for prior year positions						(3,272)						—						—
Expiration of applicable statute of limitations						—						(730)						(1,233)
Settlements for prior year positions						(13,852)						(9)						(2,033)
Foreign exchange						205						(452)						(271)
Balance at December 31						$	21,723					$	34,071					$	30,630

In February 2019, the Company reached a settlement agreement with the Canadian taxing authority regarding existing uncertain tax positions. The gross liability for unrecognized tax benefits primarily decreased in 2019 due to this settlement.

If we were to prevail on all uncertain tax positions, the net effect would be a decrease to our income tax provision of approximately $1.8 million. The remaining $19.9 million is offset by deferred tax assets that represent tax benefits that would be received in the event that we did not prevail on all uncertain tax positions. As of December 31, 2019, it is not expected that the total amounts of unrecognized tax benefits will increase or decrease materially within the next year.

We regularly assesses the likelihood of additional assessments in each taxing jurisdiction resulting from current and subsequent years’ examinations. Liabilities for income taxes are established for future income tax assessments when it is probable there will be future assessments and the amount can be reasonably estimated. Once established, liabilities for uncertain tax positions are adjusted only when there is more information available or when an event occurs necessitating a change to the liabilities. As of December 31, 2019, we believe that the resolution of income tax matters for open years will not have a material effect on our consolidated financial statements although the resolution of income tax matters could impact our effective tax rate for a particular future period.

The tax years 2009 through 2019 remain open to examination by the primary tax jurisdictions to which we are subject.

NOTE 10—EQUITY

Dividends

We currently intend to retain future earnings, if any, to finance the expansion of our business. Therefore, we do not expect to pay any cash dividends in the foreseeable future. Moreover, the terms of our senior secured credit facility limit the amount of funds that we will have available to declare and distribute as dividends on our common stock. Payment of future cash dividends, if any, will be at the discretion of our board of directors in accordance with applicable laws after taking into account various factors, including the financial condition, operating results, current and anticipated cash needs, plans for expansion and contractual restrictions with respect to the payment of dividends.

Common Stock

The following table reconciles common stock reported in the consolidated statements of changes in equity to the consolidated balance sheets.

						December 31,
						2019						2018
Common shares issued as reported in the consolidated statement of changes in equity						211,262,062						209,135,581
Unvested restricted stock awards						1,169,582						1,399,181
Unvested deferred stock awards issued						1,686,000						200,000
Common shares issued as reported in the consolidated balance sheets						214,117,644						210,734,762

Unvested restricted stock awards and unvested deferred stock awards issued will be reflected in the statements of changes in equity at the time of vesting.

During 2019, 2018 and 2017, we issued 1.3 million, 2.3 million and 3.5 million shares, respectively, of common stock in connection with stock option exercises and vesting of restricted stock awards.

During 2019, we issued 0.8 million shares of common stock to holders of our 2.5% convertible senior notes due 2019 upon conversion of $28.6 million of the principal amount of the notes.

Common Stock Reserved for Future Issuance

Common stock of approximately 22.1 million shares as of December 31, 2019 is reserved for future issuances under the stock incentive plan (including 11.3 million options, 1.2 million restricted stock awards and 2.5 million of deferred stock awards currently granted).

Noncontrolling Interests

Common securities held by the noncontrolling interests that do not include put arrangements exercisable outside of our control are recorded in equity, separate from our stockholders’ equity.

The purchase or sale of additional ownership in an already controlled subsidiary is recorded as an equity transaction with no gain or loss recognized in net income (loss) or comprehensive income (loss) as long as the subsidiary remains a controlled subsidiary. In 2019, 2018 and 2017, we acquired all or additional equity interests in several companies that did not have a significant impact to equity either on an individual basis or in the aggregate. The following schedule reflects the change in ownership interests for these transactions:

			Year Ended December 31,
			2019						2018						2017
			(in thousands)
Net income (loss) attributable to common stockholders of Live Nation			$	69,889					$	60,249					$	(6,015)
Transfers of noncontrolling interests:
Changes in Live Nation’s additional paid-in capital for purchases of noncontrolling interests, net of transaction costs			(23,878)						(8,210)						(3,616)
Changes in Live Nation’s additional paid-in capital for sales of noncontrolling interests, net of transaction costs			—						1,410						—
Net transfers of noncontrolling interests			(23,878)						(6,800)						(3,616)
Change from net income (loss) attributable to common stockholders of Live Nation and net transfers of noncontrolling interests			$	46,011					$	53,449					$	(9,631)

Redeemable Noncontrolling Interests

We are subject to put arrangements where the holders of the noncontrolling interests can require us to repurchase their shares at specified dates in the future or within specified periods in the future. Certain of these puts can be exercised earlier upon the occurrence of triggering events as specified in the agreements. The redemption amounts for these puts are either at a fixed amount, at fair value at the time of exercise or a variable amount based on a formula linked to earnings. In accordance with the FASB guidance for business combinations, the redeemable noncontrolling interests are recorded at their fair value at acquisition date. For put arrangements that are not currently redeemable, we accrete up to the estimated redemption value over the period from the date of issuance to the earliest redemption date of the individual puts, with the offset recorded to additional paid-in capital. Decreases in accretion are only recognized to the extent that increases had been previously recognized. The estimated redemption values that are based on a formula linked to future earnings are computed each reporting period using projected cash flows, and the estimated redemption values that are based on fair value at the time of exercise are computed each reporting period by applying a multiple to projected earnings, both of which take into account the current expectations regarding profitability and the timing of revenue-generating events. The balances are reflected in our balance sheets as redeemable noncontrolling interests outside of permanent equity.

Our estimate of redemption amounts for puts that are redeemable at fixed or determinable prices on fixed or determinable dates for the years ended December 31, 2020, 2021, 2022, 2023 and 2024 are $238.3 million, $27.5 million, $114.1 million, $99.0 million and $29.5 million, respectively.

Transactions with Noncontrolling Interest Partners

We have loaned or advanced money to noncontrolling interest partners under the terms of the partnership operating agreements, promissory notes or other arrangements. As of December 31, 2019, we had outstanding notes receivable and prepayments of $6.5 million in other current assets and $97.5 million in other long-term assets, and as of December 31, 2018, we had outstanding notes receivable and prepayments of $8.9 million in other current assets and $86.9 million in other long-term assets.

Accumulated Other Comprehensive Income (Loss)

The following table presents changes in the components of AOCI, net of taxes, for the years ended December 31, 2019, 2018 and 2017:

																		Foreign Currency Items						Other						Total
																		(in thousands)
Balance at December 31, 2016																		$	(176,246)					$	(461)					$	(176,707)
Other comprehensive income before reclassifications																		67,704						—						67,704
Amount reclassified from AOCI																		—						461						461
Net other comprehensive income																		67,704						461						68,165
Balance at December 31, 2017																		(108,542)						—						(108,542)
Other comprehensive loss before reclassifications																		(36,689)						—						(36,689)
Amount reclassified from AOCI																		—						—						—
Net other comprehensive loss																		(36,689)						—						(36,689)
Balance at December 31, 2018																		(145,231)						—						(145,231)
Other comprehensive loss before reclassifications																		(482)						—						(482)
Amount reclassified from AOCI																		—						—						—
Net other comprehensive loss																		(482)						—						(482)
Balance at December 31, 2019																		$	(145,713)					$	—					$	(145,713)

The realized loss in other reclassified from AOCI during 2017 resulted from the termination of a pension plan.

Earnings per Share

Basic net income (loss) per common share is computed by dividing the net income (loss) available to common stockholders by the weighted average number of common shares outstanding during the period. Diluted net income per common share adjusts basic net income per common share for the effects of stock options, restricted stock and other potentially dilutive financial instruments only in the periods in which such effect is dilutive. Our convertible senior notes are considered in the calculation of diluted net income per common share, if dilutive.

The calculation of diluted net income per common share includes the effects of the assumed exercise of any outstanding stock options, the assumed vesting of shares of restricted and deferred stock awards and the assumed conversion of the convertible senior notes where dilutive. For the years ended December 31, 2019, 2018 and 2017 there were no reconciling items to the weighted average common shares outstanding in the calculation of diluted net income per common share. The following table shows securities excluded from the calculation of diluted net income per common share because such securities were anti-dilutive:

						Year Ended December 31,
						2019						2018						2017
Options to purchase shares of common stock						11,347,305						11,784,023						14,238,589
Restricted and deferred stock awards—unvested						3,655,582						3,899,181						4,106,956
Conversion shares related to convertible senior notes						8,374,536						8,912,099						7,929,982
Number of anti-dilutive potentially issuable shares excluded from diluted common shares outstanding						23,377,423						24,595,303						26,275,527

NOTE 11—REVENUE RECOGNITION

Concerts

Concerts revenue, including intersegment revenue, for the years ended December 31, 2019, 2018 and 2017 are as follows:

															Year Ended December 31,
															2019						2018						2017
															(in thousands)
Total Concert Revenue															$	9,428,094					$	8,770,031					$	7,892,076
Percentage of consolidated revenue															81.6		%				81.3		%				81.5		%

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 agreements, 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.

Ticketing

Ticketing revenue, including intersegment revenue, for the years ended December 31, 2019, 2018 and 2017 are as follows:

															Year Ended December 31,
															2019						2018						2017
															(in thousands)
Total Ticketing Revenue															$	1,545,189					$	1,529,566					$	1,346,510
Percentage of consolidated revenue															13.4		%				14.2		%				13.9		%

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 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 December 31, 2019 and 2018, we had ticketing contract advances of $100.9 million and $75.5 million, respectively, in prepaid expenses and $105.7 million and $78.5 million, respectively, in long-term advances. We amortized $80.3 million, $80.1 million and $83.3 million for the years ended December 31, 2019, 2018 and 2017 respectively, related to non-recoupable ticketing contract advances.

Sponsorship & Advertising

Sponsorship & Advertising revenue, including intersegment revenue, for the years ended December 31, 2019, 2018 and 2017 are as follows:

															Year Ended December 31,
															2019						2018						2017
															(in thousands)
Total Sponsorship & Advertising Revenue															$	590,274					$	503,968					$	445,148
Percentage of consolidated revenue															5.1		%				4.7		%				4.6		%

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 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 December 31, 2019, we had contracted sponsorship agreements with terms greater than one year that had approximately $1.1 billion of revenue related to future benefits to be provided by us. We expect to recognize approximately 33%, 26%, 17% and 24% of this revenue in 2020, 2021, 2022 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 years ended December 31, 2019 and 2018:

			December 31,
			2019						2018
			(in thousands)
Concerts			$	1,121,945					$	839,897
Ticketing			62,088						42,512
Sponsorship & Advertising			20,220						21,279
Other & Corporate			3,069						1,591
			$	1,207,322					$	905,279

NOTE 12—STOCK-BASED COMPENSATION

In December 2005, we adopted our 2005 Stock Incentive Plan, which has been amended and/or restated on several occasions. In connection with our merger with Ticketmaster Entertainment LLC, we adopted the Amended and Restated Ticketmaster 2008 Stock & Annual Incentive Plan. The plans authorize us to grant stock option awards, director shares, stock appreciation rights, restricted stock and deferred stock awards, other equity-based awards and performance awards. We have granted restricted stock awards, options to purchase our common stock and deferred stock awards to employees, directors, consultants, and our affiliates under the stock incentive plans at no less than the fair market value of the underlying stock on the date of grant. The stock incentive plans contain anti-dilutive provisions that require the adjustment of the number of shares of our common stock represented by, and the exercise price of, each option for any stock splits or stock dividends. The ten-year term of the Ticketmaster plan expired in August 2018; accordingly, no new awards may be granted under that plan but outstanding awards shall continue in full force and effect in accordance with their terms.

The following is a summary of stock-based compensation expense we recorded during the respective periods:

															Year Ended December 31,
															2019						2018						2017
															(in thousands)
Selling, general and administrative expenses															$	21,947					$	18,621					$	24,364
Corporate expenses															26,838						26,961						18,391
Total															$	48,785					$	45,582					$	42,755

As of December 31, 2019, there was $88.9 million of total unrecognized compensation cost related to stock-based compensation arrangements for stock options, restricted stock and deferred stock awards. This cost is expected to be recognized over a weighted-average period of 2.6 years.

Stock Options

Stock options are granted for a term not exceeding ten years and the non-vested options are generally forfeited in the event the employee, director or consultant terminates his or her employment or relationship with us or one of our affiliates. Any options that have vested at the time of termination are forfeited to the extent they are not exercised within the applicable post-employment exercise period provided in their option agreements. These options vest over two to five years.

The following assumptions were used to calculate the fair value of our options on the date of grant:

			Year Ended December 31,
			2019						2018						2017
Risk-free interest rate			1.89% - 2.53%						2.68% - 2.70%						1.87% - 2.27%
Dividend yield			0.0		%				0.0		%				0.0		%
Volatility factors			27.63% - 28.12%						27.66% - 28.00%						25.88% - 27.58%
Weighted average expected life (in years)			6.08						5.74						5.78

The following table presents a summary of our stock options outstanding at the dates given, and stock option activity for the period between such dates (“Price” reflects the weighted average exercise price per share):

			Year Ended December 31,
			2019																		2018																		2017
			Options						Price						Options						Price						Options						Price
			(in thousands, except per share data)
Outstanding January 1			11,784						$	16.55					14,239						$	14.52					16,283						$	13.55
Granted			487						57.00						255						44.05						1,164						33.48
Exercised			(910)						15.50						(2,694)						8.38						(3,138)						16.27
Forfeited or expired			(14)						10.82						(16)						28.57						(70)						24.05
Outstanding December 31			11,347						$	18.36					11,784						$	16.55					14,239						$	14.52
Exercisable December 31			10,493						$	15.77					10,693						$	14.61					11,906						$	12.00
Weighted average fair value per option granted									$	18.50											$	14.05											$	10.18

The total intrinsic value of stock options exercised during the years ended December 31, 2019, 2018 and 2017 was $39.6 million, $28.1 million and $57.5 million, respectively. Cash received from stock option exercises for the years ended December 31, 2019, 2018 and 2017 was $14.1 million, $22.6 million and $51.1 million, respectively.

There were 7.1 million shares available for future grants under the stock incentive plans at December 31, 2019. Upon share option exercise or vesting of restricted or deferred stock, we issue new shares or treasury shares to fulfill these grants. Vesting dates on the stock options range from February 2020 to June 2023, and expiration dates range from January 2020 to June 2029 at exercise prices and average contractual lives as follows:

Range of Exercise Prices						Outstanding as of 12/31/19						Weighted Average Remaining Contractual Life						Weighted Average Exercise Price						Exercisable as of 12/31/19						Weighted Average Remaining Contractual Life						Weighted Average Exercise Price
						(in thousands)						(in years)												(in thousands)						(in years)
$5.00 - $9.99						4,325						2.8						$	8.80					4,325						2.8						$	8.80
$10.00 - $14.99						1,754						1.7						$	11.39					1,754						1.7						$	11.39
$15.00 - $19.99						921						6.0						$	19.31					921						6.0						$	19.31
$20.00 - $24.99						1,596						4.1						$	21.14					1,595						4.1						$	21.13
$25.00 - $29.99						1,663						6.0						$	26.99					1,607						6.0						$	26.92
$30.00 - $44.99						601						8.1						$	43.76					291						8.0						$	43.75
$45.00 - $60.99						487						9.2						$	56.77					—						0.0						$	—

The total intrinsic value of options outstanding and options exercisable as of December 31, 2019 was $811.0 million and $749.9 million, respectively.

Restricted Stock

We have granted restricted stock awards to our employees, directors and consultants under our stock incentive plans. These common shares carry a legend which restricts their transferability for a term of one to five years and are forfeited in the event the recipient’s employment or relationship with us is terminated prior to the lapse of the restriction. In addition, certain restricted stock awards require us or the recipient to achieve minimum performance targets in order for these awards to vest.

In 2019, we granted 0.2 million shares of restricted stock and 0.2 million shares of performance-based awards, respectively, under our stock incentive plans. These awards will all vest over one or four years with the exception of the performance-based awards which will vest within two years if the performance criteria are met.

In 2018, we granted 0.3 million shares of restricted stock and 0.2 million shares of performance-based awards, respectively, under our stock incentive plans. These awards will all vest over one or four years with the exception of the performance-based awards which will vest within one to two years if the performance criteria are met. As of December 31, 2019, the performance-based criteria for these awards have been met unless otherwise forfeited.

In 2017, we granted 0.9 million shares of restricted stock and 0.2 million shares of performance-based awards, respectively, under our stock incentive plans. These awards will vest over one or four years with the exception of the performance-based awards which will generally vest within one to two years if the performance criteria are met. As of December 31, 2019, the performance-based criteria for these awards have been met unless otherwise forfeited.

The following table presents a summary of our unvested restricted stock awards outstanding at December 31, 2019, 2018 and 2017 (“Price” reflects the weighted average share price at the date of grant):

			Restricted Stock
			Awards						Price
			(in thousands, except per share data)
Unvested at December 31, 2016			1,080						$	21.67
Granted			1,132						35.97
Forfeited			(82)						22.96
Vested			(523)						21.89
Unvested at December 31, 2017			1,607						$	31.79
Granted			535						44.54
Forfeited			(37)						30.38
Vested			(706)						28.35
Unvested at December 31, 2018			1,399						$	38.13
Granted			415						57.58
Forfeited			(26)						38.45
Vested			(618)						36.54
Unvested at December 31, 2019			1,170						$	45.80

The total grant date fair market value of the shares issued upon the vesting of restricted stock awards during the years ended December 31, 2019, 2018 and 2017 was $22.6 million, $20.0 million and $11.5 million, respectively. As of December 31, 2019, there were 0.2 million restricted stock awards outstanding which require us or the recipient to achieve minimum performance targets in order for the awards to vest.

Deferred Stock

We have granted deferred stock awards to our employees where the employees are entitled to receive shares of common stock in the future. Deferred stock can only be settled in stock as determined at the time of the grant. All of the deferred stock awards require us to achieve minimum market conditions in order for these awards to issue and vest.

In 2017, we granted 2.5 million shares of deferred stock awards with market conditions under our incentive plans. These awards will all vest over one to five years if specified stock prices are achieved over a specific number of days during the five years.

In 2019 and 2018, we achieved minimum market conditions resulting in the issuance of 1.5 million shares and 0.2 million shares of restricted stock, respectively, subject to vesting over one to four years. As of December 31, 2019, there were 0.8 million deferred stock awards outstanding which require us to achieve minimum market conditions in order for the awards to issue subject to further vesting conditions.

The following table presents a summary of the Company’s unvested deferred stock awards outstanding at December 31, 2019, 2018 and 2017 (“Price” reflects the weighted average grant date fair value):

			Deferred Stock
			Awards						Price
			(in thousands, except per share data)
Unvested at December 31, 2016			—						0.00
Awarded			2,500						26.69
Forfeited			—						0.00
Vested			—						0.00
Unvested at December 31, 2017			2,500						26.69
Awarded			—						0.00
Forfeited			—						0.00
Vested			—						0.00
Unvested at December 31, 2018			2,500						26.69
Awarded			—						0.00
Forfeited			—						0.00
Vested			(14)						36.08
Unvested at December 31, 2019			2,486						26.63

NOTE 13—OTHER INFORMATION

			December 31,
			2019						2018
			(in thousands)
The following details the components of “Other current assets”:
Inventory			$	16,106					$	12,575
Notes receivable			34,842						15,200
Other			6,059						14,910
Total other current assets			$	57,007					$	42,685
The following details the components of “Other long-term assets”:
Investments in nonconsolidated affiliates			$	167,603					$	137,211
Notes receivable			128,725						112,276
Other			135,145						178,593
Total other long-term assets			$	431,473					$	428,080
The following details the components of “Accrued expenses”:
Accrued compensation and benefits			$	276,417					$	265,068
Accrued event expenses			394,257						369,843
Accrued insurance			165,071						126,015
Accrued legal			16,978						16,295
Collections on behalf of others			48,467						43,981
Other			490,296						424,263
Total accrued expenses			$	1,391,486					$	1,245,465
The following details the components of “Other current liabilities”:
Contingent and deferred purchase consideration			$	13,165					$	44,929
Other			46,046						22,118
Total other current liabilities			$	59,211					$	67,047
The following details the components of “Other long-term liabilities”:
Deferred revenue			$	34,390					$	27,504
Contingent and deferred purchase consideration			67,979						30,333
Other			28,279						147,140
Total other long-term liabilities			$	130,648					$	204,977

NOTE 14—SEGMENT DATA

For all periods presented, 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 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 our segments, and therefore, total segment assets have not been presented.

There were no customers that individually accounted for more than 10% of our consolidated revenue in any year.

The following table presents the results of operations for our reportable segments for the years ending December 31, 2019, 2018 and 2017:

			Concerts						Ticketing						Sponsorship & Advertising												Other						Corporate						Eliminations						Consolidated
			(in thousands)
2019
Revenue			$	9,428,094					$	1,545,189					$	590,274											$	3,162					$	—					$	(18,750)					$	11,547,969
Direct operating expenses			7,857,437						514,169						114,326												—						—						(18,750)						8,467,182
Selling, general and administrative expenses			1,386,928						642,052						112,594												3,912						—						—						2,145,486
Depreciation and amortization			239,682						156,894						33,084												364						13,967						—						443,991
Loss (gain) on disposal of operating assets			(2,490)						116						—												—						1						—						(2,373)
Corporate expenses			—						—						—												—						168,839						—						168,839
Operating income (loss)			$	(53,463)					$	231,958					$	330,270											$	(1,114)					$	(182,807)					$	—					$	324,844
Intersegment revenue			$	6,672					$	12,078					$	—											$	—					$	—					$	(18,750)					$	—
Capital expenditures			$	186,819					$	105,246					$	10,261											$	—					$	35,252					$	—					$	337,578
2018
Revenue			$	8,770,031					$	1,529,566					$	503,968											$	3,724					$	—					$	(19,489)					$	10,787,800
Direct operating expenses			7,340,757						549,265						92,494												4,905						—						(19,489)						7,967,932
Selling, general and administrative expenses			1,248,346						634,829						97,540												16,313						—						—						1,997,028
Depreciation and amortization			206,772						143,551						30,779												817						4,610						—						386,529
Loss (gain) on disposal of operating assets			10,361						7						2												—						(1)						—						10,369
Corporate expenses			—						—						—												—						153,406						—						153,406
Operating income (loss)			$	(36,205)					$	201,914					$	283,153											$	(18,311)					$	(158,015)					$	—					$	272,536
Intersegment revenue			$	5,193					$	14,296					$	—											$	—					$	—					$	(19,489)					$	—
Capital expenditures			$	129,129					$	110,202					$	7,541											$	169					$	15,273					$	—					$	262,314
2017
Revenue			$	7,892,076					$	1,346,510					$	445,148											$	21,012					$	—					$	(17,524)					$	9,687,222
Direct operating expenses			6,641,071						460,881						78,725												18,746						—						(17,525)						7,181,898
Selling, general and administrative expenses			1,119,335						681,948						87,268												19,172						—						—						1,907,723
Depreciation and amortization			226,315						112,727						27,669												432						5,057						1						372,201
Loss (gain) on disposal of operating assets			(1,056)						49						—												—						38						—						(969)
Corporate expenses			—						—						—												—						134,972						—						134,972
Operating income (loss)			$	(93,589)					$	90,905					$	251,486											$	(17,338)					$	(140,067)					$	—					$	91,397
Intersegment revenue			$	1,061					$	16,643					$	—											$	—					$	—					$	(17,524)					$	—
Capital expenditures			$	109,801					$	105,317					$	6,701											$	149					$	25,926					$	—					$	247,894

The following table provides revenue and long-lived assets for our foreign operations included in the consolidated financial statements:

															Total Foreign Operations						Total Domestic Operations						Consolidated Total
															(in thousands)
2019
Revenue															$	3,915,426					$	7,632,543					$	11,547,969
Long-lived assets															$	263,349					$	854,583					$	1,117,932
2018
Revenue															$	3,661,222					$	7,126,578					$	10,787,800
Long-lived assets															$	199,299					$	747,294					$	946,593
2017
Revenue															$	3,408,661					$	6,278,561					$	9,687,222
Long-lived assets															$	201,724					$	684,212					$	885,936

NOTE 15—QUARTERLY RESULTS OF OPERATIONS (Unaudited)

						March 31,																		June 30,																		September 30,																		December 31,
						2019						2018						2019						2018						2019						2018						2019						2018
						(in thousands)
Revenue						$	1,727,828					$	1,482,384					$	3,157,009					$	2,868,315					$	3,773,684					$	3,835,246					$	2,889,448					$	2,601,855
Operating income (loss)						$	(23,863)					$	(6,030)					$	171,586					$	134,725					$	260,041					$	234,219					$	(82,920)					$	(90,378)
Net income (loss)						$	(55,241)					$	(41,028)					$	116,120					$	83,356					$	193,972					$	183,197					$	(136,639)					$	(135,185)
Net income (loss) attributable to common stockholders of Live Nation						$	(52,444)					$	(33,906)					$	103,355					$	69,359					$	178,925					$	172,683					$	(159,947)					$	(147,887)
Basic net income (loss) available to common stockholders of Live Nation						$	(64,756)					$	(50,291)					$	89,840					$	52,187					$	155,345					$	151,894					$	(185,311)					$	(171,441)
Diluted net income (loss) available to common stockholders of Live Nation						$	(64,756)					$	(50,291)					$	89,926					$	52,187					$	155,345					$	152,213					$	(185,311)					$	(171,441)
Basic net income (loss) per common share available to common stockholders of Live Nation						$	(0.31)					$	(0.24)					$	0.43					$	0.25					$	0.74					$	0.73					$	(0.88)					$	(0.82)
Diluted net income (loss) per common share available to common stockholders of Live Nation						$	(0.31)					$	(0.24)					$	0.41					$	0.24					$	0.71					$	0.70					$	(0.88)					$	(0.82)

The following summarizes unusual or infrequent items affecting the quarterly results of operations:

2019

We recorded impairment charges of $19.4 million in the third quarter of 2019 primarily related to intangible assets for revenue-generating contracts in the Concerts and Sponsorship & Advertising segments. See Note 2—Long-Lived Assets and Note 6—Fair Value Measurements for further discussion.

2018

We recorded a goodwill impairment of $10.5 million in the fourth quarter of 2018 in connection with our annual impairment test. See Note 2—Long-Lived Assets and Note 6—Fair Value Measurements for further discussion.

We recorded a net foreign exchange rate loss of $8.4 million in the second quarter of 2018, as a component of other expense (income), net.

NOTE 16—SUBSEQUENT EVENT

In February 2020, we issued $400 million principal amount of 2.0% convertible senior notes due 2025. The proceeds will be used to pay estimated fees of $6.5 million, leaving approximately $393.5 million for general corporate purposes, including acquisitions.

Interest on the notes is payable semiannually in arrears on February 15 and August 15, beginning August 15, 2020, at a rate of 2.0% per annum. The notes will mature on February 15, 2025. The notes will be convertible, under certain circumstances, until November 15, 2024, and on or after such date without condition, at an initial conversion rate of 9.4469 shares of our common stock per $1,000 principal amount of notes, subject to adjustment, which represents a 50.0% conversion premium based on the last reported sale price for our common stock of $70.57 on January 29, 2020 prior to issuing the debt. Upon conversion, the notes may be settled in shares of common stock or, at our election, cash or a combination of cash and shares of common stock. Assuming we fully settled the notes in shares, the maximum number of shares that could be issued to satisfy the conversion is currently 3.8 million.

We may redeem for cash all or a portion of the notes, at our option, on or after February 21, 2023 and before the 41st scheduled trading day before the maturity date, if the sales price of our common stock reaches specified targets as defined in the indenture. The redemption price will equal 100% of the principal amount of the notes plus accrued interest, if any.

If we experience a fundamental change, as defined in the indenture governing the notes, the holders of the 2.0% convertible senior notes due 2025 may require us to purchase for cash all or a portion of their notes, subject to specified exceptions, at a price equal to 100% of the principal amount of the notes plus accrued and unpaid interest, if any.