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

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

Special Note About Forward-Looking Statements

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

Forward-looking statements are not guarantees of future performance and are subject to risks and uncertainties that could cause actual results to differ materially from those in such statements. Factors that could cause actual results to differ from those discussed in the forward-looking statements include, but are not limited to, those set forth below under Part II—Other Information—Item 1A.—Risk Factors, in Part I—Item IA.—Risk Factors of our 2021 Annual Report on Form 10-K as well as other factors described herein or in our annual, quarterly and other reports we file with the SEC (collectively, “cautionary statements”). Based upon changing conditions, should any risk or uncertainty that has already materialized, such as, for example, the risks and uncertainties posed by the global COVID-19 pandemic, worsen in scope, impact or duration, or should one or more of the currently unrealized risks or uncertainties materialize, or should any underlying assumptions prove incorrect, actual results may vary materially from those described in any forward-looking statements. All subsequent written and oral forward-looking statements attributable to us or persons acting on our behalf are expressly qualified in their entirety by the applicable cautionary statements. You are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date on which they are made. We do not intend to update these forward-looking statements, except as required by applicable law.

Executive Overview

The first quarter of 2022 was a record start to the year for our company, a remarkable feat considering our position one year ago and the fact that many of our markets remained closed for at least some portion of the quarter. Despite some disruption caused by COVID-19 variants, the general trend has been towards re-opening business and re-starting shows as the prevalence of COVID-19 shifts from pandemic to endemic in our larger markets. Fan demand has never been stronger, which led to a record first quarter for our Ticketing segment and sets us up for a strong year across all three of our segments.

Even with the challenges associated with the pandemic, the conflict in Eastern Europe, supply chain issues, labor shortages and inflationary pressures, the supply and demand dynamic with artists and fans continues to strengthen. Live shows offer a unique and uplifting experience for people of all ages – perhaps even more powerful in these times than ever before. The appeal of live concerts and sporting events is evidenced by the ticket sales we have seen so far this year. The first quarter of 2022 was our second highest quarter ever for transacted GTV and two of our top three transacted volume months occurred in the first quarter.

Our overall revenue increased by nearly $1.5 billion for the quarter. All three of our segments had revenue growth in the quarter with the largest increase coming from our Concerts segment as a result of major markets re-opening for shows, most notably the United States and the United Kingdom. We had operating income of $27 million in the first quarter of 2022 compared to an operating loss of $303 million in the first quarter of 2021, an improvement of $330 million, resulting from shows and sponsorship restarting leading to notably improved ticketing sales. The impact of changes in foreign exchange rates did not materially impact our year-over-year variances.

Our Concerts segment revenue for the quarter increased by $968 million, from $239 million in the first quarter of 2021 to $1.2 billion in the first quarter of 2022. The revenue growth was a result of more shows and fans coming back to venues to enjoy their favorite artists. The number of events for the quarter was approximately 6,600 compared to approximately 670 in the first quarter of 2021. The number of fans for the quarter was 10.8 million compared to approximately 0.5 million last year. The growth was largely in the United States and United Kingdom. Concerts operating loss for the quarter increased by $4

million, from a loss of $145 million in the first quarter of 2021 to a loss of $150 million in the first quarter of 2022. While there were more shows and fans in the quarter, this activity was more than offset by the increase in expenses as we ramped up our staffing and infrastructure to prepare for what we expect will be our busiest summer ever. The first quarter is typically our lightest with respect to show count and fans, but even based on the limited activity we have, we saw improvements to profit per show in the arena, theater and club events in the quarter. So while we are seeing increases to some of our expenses such as labor and fuel, the ticket pricing and spend per fan has more than offset these cost increases.

Our Ticketing segment revenue for the quarter increased by $452 million, from $28 million in the first quarter of 2021 to $480 million in the first quarter of 2022. The improvement resulted from an increase in ticket sales, upward pricing momentum due to higher fan demand, and higher ancillary revenue streams. Excluding refunds, we sold 57 million fee-bearing tickets in the first quarter compared to 10 million tickets in the same period of the prior year. The increase was largely driven by sales in the United States, the United Kingdom and the addition of OCESA. We also started to see sales pick up in some of our other major European markets. Pricing on our fee-bearing tickets increased by double-digits, reflecting strong consumer demand, particularly for premium seats and VIP experiences. Platinum sales volumes and GTV have more than doubled compared to the first quarter of 2019 this quarter. Our resale business continued its pronounced rebound in the first quarter, with our second highest resale quarter ever, and double our sales from the first quarter of 2019. Ticketing operating income for the quarter improved by $275 million, from a $121 million loss in the first quarter of 2021 to income of $155 million in the first quarter of 2022. The growth in operating results was largely driven by increased ticket sales, upward pricing momentum due to higher fan demand and higher ancillary revenue streams.

Our Sponsorship & Advertising segment revenue for the quarter increased by $93 million, from $23 million in the first quarter of 2021 to $116 million in the first quarter of 2022. The improvement was due to higher activations with our marketing partners driven by more events going on sale, venues re-opening and supplying more advertising content to our clients. Operating income for the quarter increased by $65 million, from a loss of $6 million in the first quarter of 2021 to income of $59 million in the first quarter of 2022. The improvement was due to more sponsor and online advertising resulting from the restart of live events and rapidly increasing ticket sales, particularly in the United States.

As ticket sales and events scale up in key markets, we are balancing our ramp-up with the cost-savings initiatives we implemented across the organization and are also protecting our liquidity by managing cash outflows associated with all our major expenditures: operating expenses, capital expenditures, acquisitions, and advances in both our ticketing and concert businesses. We are optimistic about the long-term potential of our company and are focused on the key elements of our business model: expanding our concerts platform and improving the on-site experience for our fans, driving conversion of ticket sales through development of innovative products to sell more tickets, and developing unique marketing and content programs for top brands.

Impact of the Global COVID-19 Pandemic

The global COVID-19 pandemic significantly impacted the business of our Concerts, Ticketing and Sponsorship & Advertising segments from mid-March 2020 through the first half of 2021. In the third quarter of 2021, we saw a meaningful restart of our operations with outdoor amphitheater events and festivals taking place in both the United States and United Kingdom. As we moved into 2022, more of our larger markets began resuming shows with the exception of some of our Asia-Pacific markets which continued to experience disruptions from COVID-19 variants. As discussed above and in our segment operating results below, the impact of the resumption of shows has resulted in significant improvement in both revenue and operating income in the first quarter of 2022 when compared to the same period of the prior year.

We believe the measures we took in 2020 and 2021 to expand our liquidity along with the cost-savings initiatives implemented during the global COVID-19 pandemic provided us the flexibility to manage our business through the disruption that we experienced while our operations were shut down. We will continue to evaluate future financing opportunities to further expand liquidity at a reasonable cost as we continue to resume concerts across all our markets and pursue growth opportunities through strategic acquisitions or investments.

Segment Overview

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

Concerts

Revenue and related costs for events are generally deferred and recognized when the event occurs. All advertising costs incurred during the year for shows in future years are expensed at the end of the year. If a current year event is rescheduled into a future year, all advertising costs incurred to date are expensed in the period when the event is rescheduled.

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

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

Ticketing

Revenue related to ticketing service charges is recognized when the ticket is sold for our third-party clients. For our own events, where our concert promoters control ticketing, revenue is deferred and recognized when the event occurs. GTV represents the total amount of the transaction related to a ticket sale and includes the face value of the ticket as well as the service charge. We use GTV to evaluate changes in ticket fee revenue that are driven by the pricing of our service charges.

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

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

Sponsorship & Advertising

Revenue related to sponsorship and advertising programs 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.

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

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

Key Operating Metrics

									Three Months Ended March 31,
															2022						2021
															(in thousands except estimated events)
Concerts (1)
Estimated events:
North America															4,716						304
International															1,891						364
Total estimated events															6,607						668
Estimated fans:
North America															6,780						69
International															4,020						429
Total estimated fans															10,800						498
Ticketing (2)
Estimated number of fee-bearing tickets sold															51,380						6,593
Estimated number of non-fee-bearing tickets sold															59,912						10,558
Total estimated tickets sold															111,292						17,151

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

(2)The fee-bearing tickets estimated above include primary and secondary tickets that are sold using our Ticketmaster systems or that we issue through affiliates. This includes primary tickets sold during the year regardless of event timing, except for our own events where our concert promoters control ticketing which are reported when the events occur. The non-fee-bearing tickets estimated above include primary tickets sold using our Ticketmaster systems, through season seat packages and our venue clients’ box offices, along with tickets sold on our “do it yourself” platform. These metrics are net of any refunds requested and any cancellations that occurred during the period, which may result in a negative number. Fee-bearing tickets sold above are net of refunds of 5.2 million and 3.0 million tickets for the three months ended March 31, 2022 and 2021, respectively.

Non-GAAP Measures

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

			Operating income (loss)						Stock- based compensation expense						Loss (gain) on disposal of operating assets						Depreciation and amortization						Amortization of non-recoupable ticketing contract advances						Acquisition expenses						AOI
			(in thousands)
Three Months Ended March 31, 2022
Concerts			$	(149,601)					$	25,675					$	1,868					$	61,163					$	—					$	11,729					$	(49,166)
Ticketing			154,788						2,371						(203)						28,052						21,212						—						206,220
Sponsorship & Advertising			59,007						2,468						—						8,225						—						—						69,700
Other and Eliminations			(1,746)						—						—						51						(2,685)						—						(4,380)
Corporate			(35,388)						18,727						—						2,978						—						348						(13,335)
Total			$	27,060					$	49,241					$	1,665					$	100,469					$	18,527					$	12,077					$	209,039
Three Months Ended March 31, 2021
Concerts			$	(145,359)					$	17,475					$	138					$	62,886					$	—					$	(9,679)					$	(74,539)
Ticketing			(120,656)						7,806						—						36,478						12,423						1,197						(62,752)
Sponsorship & Advertising			(6,441)						2,793						—						7,164						—						—						3,516
Other and Eliminations			(431)						—						—						11						(1,802)						—						(2,222)
Corporate			(30,285)						11,943						—						2,337						—						258						(15,747)
Total			$	(303,172)					$	40,017					$	138					$	108,876					$	10,621					$	(8,224)					$	(151,744)

Adjusted Operating Income (Loss)

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

AOI Margin

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

Constant Currency

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

Segment Operating Results

Concerts

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

															Three Months Ended March 31,												% Change
																					2022						2021
															(in thousands)
Revenue																					$	1,207,825					$	239,416					*
Direct operating expenses																					910,277						113,904						*
Selling, general and administrative expenses																					384,118						207,847						85%
Depreciation and amortization																					61,163						62,886						(3)%
Loss on disposal of operating assets																					1,868						138						*
Operating loss																					$	(149,601)					$	(145,359)					(3)%
Operating margin																					(12.4		%)				(60.7		%)
AOI **																					$	(49,166)					$	(74,539)					34%
AOI margin **																					(4.1		%)				(31.1		%)

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

Three Months

Revenue

Concerts revenue increased $968.4 million during the three months ended March 31, 2022 as compared to the same period of the prior year primarily due to the resumption of shows and festivals in major markets including the United States and United Kingdom as compared to the lack of events during the same period in 2021 driven by the global COVID-19 pandemic. Concerts had incremental revenue of $131.0 million during the three months ended March 31, 2022 from acquisitions, including OCESA.

Operating results

Concerts operating loss increased $4.2 million during the three months ended March 31, 2022 as compared to the same period of the prior year primarily driven by an increase in selling, general and administrative expenses due to higher compensation costs resulting from increased headcount and higher venue-related costs as shows and festivals resumed in 2022. This decline was partially offset by improved results from the resumption of shows and festivals discussed above. Concerts operating results during the three months ended March 31, 2022 include net operating losses of $25.2 million related to acquisitions and new venues.

Ticketing

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

															Three Months Ended March 31,												% Change
																					2022						2021
															(in thousands)
Revenue																					$	480,399					$	28,322					*
Direct operating expenses																					150,306						17,832						*
Selling, general and administrative expenses																					147,456						94,668						56%
Depreciation and amortization																					28,052						36,478						(23)%
Gain on disposal of operating assets																					(203)						—						*
Operating income (loss)																					$	154,788					$	(120,656)					*
Operating margin																					32.2		%				*
AOI **																					$	206,220					$	(62,752)					*
AOI margin **																					42.9		%				*

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

Three Months

Revenue

Ticketing revenue increased $452.1 million during the three months ended March 31, 2022 as compared to the same period of the prior year primarily due to an increase in North America primary and secondary ticket fees driven by more events on sale due to the resumption of concerts and sporting events starting in the second quarter of 2021 and upward pricing momentum due to higher fan demand. Ticketing had incremental revenue of $27.5 million during three months ended March 31, 2022 due to the OCESA acquisition.

Operating results

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

Sponsorship & Advertising

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

															Three Months Ended March 31,												% Change
																					2022						2021
															(in thousands)
Revenue																					$	115,689					$	22,647					*
Direct operating expenses																					12,357						2,821						*
Selling, general and administrative expenses																					36,100						19,103						89%
Depreciation and amortization																					8,225						7,164						15%
Operating income (loss)																					$	59,007					$	(6,441)					*
Operating margin																					51.0		%				(28.4)		%
AOI **																					$	69,700					$	3,516					*
AOI margin **																					60.2		%				15.5		%

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

Three Months

Revenue

Sponsorship & Advertising revenue increased $93.0 million during the three months ended March 31, 2022 as compared to the same period of the prior year primarily due to increased activity in national and local sponsorship programs, festival sponsorships and online advertising in North America due to the resumption of concert events and festivals starting in the second quarter of 2021. Sponsorship & Advertising had incremental revenue of $24.0 million during three months ended March 31, 2022 from acquisitions, including OCESA.

Operating results

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

Consolidated Results of Operations

Three Months

			Three Months Ended March 31,																								% Change
			2022																		2021
			As Reported						Currency Impacts						At Constant Currency**						As Reported						As Reported						At Constant Currency**
			(in thousands)
Revenue			$	1,802,808					$	14,020					$	1,816,828					$	290,609					*						*
Operating expenses:
Direct operating expenses			1,071,022						7,841						1,078,863						133,966						*						*
Selling, general and administrative expenses			570,182						7,310						577,492						322,853						77%						79%
Depreciation and amortization			100,469						950						101,419						108,876						(8)%						(7)%
Loss on disposal of operating assets			1,665						(2)						1,663						138						*						*
Corporate expenses			32,410						20						32,430						27,948						16%						16%
Operating income (loss)			27,060						$	(2,099)					$	24,961					(303,172)						*						*
Operating margin			1.5		%										1.4		%				*
Interest expense			66,773																		70,830
Interest income			(7,564)																		(1,149)
Equity in earnings of nonconsolidated affiliates			(4,288)																		(581)
Loss (gain) from sale of investments in nonconsolidated affiliates			132																		(55,933)
Other expense (income), net			9,267																		(6)
Loss before income taxes			(37,260)																		(316,333)
Income tax expense			11,696																		6,389
Net loss			(48,956)																		(322,722)
Net income (loss) attributable to noncontrolling interests			1,226																		(15,529)
Net loss attributable to common stockholders of Live Nation			$	(50,182)																	$	(307,193)

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

Loss (gain) from sale of investments in nonconsolidated affiliates

Loss (gain) from sale of investments in nonconsolidated affiliates during the three months ended March 31, 2022 was a loss of $0.1 million as compared to a gain of $55.9 million for the same period of the prior year primarily due to the sale of certain cost basis investments during the first three months of 2021.

Income tax expense

For the three months ended March 31, 2022, we had a net tax expense of $11.7 million on a loss before income taxes of $37.3 million compared to a net tax expense of $6.4 million on a loss before income taxes of $316.3 million for the three months ended March 31, 2021. For the three months ended March 31, 2022, the income tax expense consisted of $9.5 million related to foreign entities, $1.9 million related to United States federal taxes, and $0.3 million related to state and local income taxes. The net increase in tax expense of $5.3 million was primarily due to profits in certain non-United States jurisdictions.

Liquidity and Capital Resources

Our cash is centrally managed on a worldwide basis. Our primary short-term liquidity needs are to fund general working capital requirements, capital expenditures and debt service requirements while our long-term liquidity needs are primarily related to acquisitions and debt repayment. Our primary sources of funds for our short-term liquidity needs will be cash flows from operations and borrowings under our amended senior secured credit facility, while our long-term sources of funds will be from cash flows from operations, long-term bank borrowings and other debt or equity financings. We may from time to time engage in open market purchases of our outstanding debt securities or redeem or otherwise repay such debt.

Our balance sheet reflects cash and cash equivalents of $5.9 billion at March 31, 2022 and $4.9 billion at December 31, 2021. Included in the March 31, 2022 and December 31, 2021 cash and cash equivalents balances are $1.5 billion and $1.3 billion, respectively, of cash received that includes the face value of tickets sold on behalf of our ticketing clients and their share of service charges, which we refer to as client cash. We generally do not utilize client cash for our own financing or investing activities as the amounts are payable to clients on a regular basis. Our foreign subsidiaries held approximately $1.8 billion in cash and cash equivalents, excluding client cash, at March 31, 2022. We generally do not repatriate these funds, but if we did, we would need to accrue and pay United States state income taxes as well as any applicable foreign withholding or transaction taxes on future repatriations. We may from time to time enter into borrowings under our revolving credit facility. If the original maturity of these borrowings is 90 days or less, we present the borrowings and subsequent repayments on a net basis in the statement of cash flows to better represent our financing activities. Our balance sheet reflects total net debt of $5.8 billion and $5.7 billion at March 31, 2022 and December 31, 2021, respectively. Our weighted-average cost of debt, excluding unamortized debt discounts and debt issuance costs on our term loans and notes, was 4.3% at March 31, 2022.

Our cash and cash equivalents are held in accounts managed by third-party financial institutions and consist of cash in our operating accounts and invested cash. Cash held in non-interest-bearing and interest-bearing operating accounts in many cases exceeds the Federal Deposit Insurance Corporation insurance limits. The invested cash is in interest-bearing funds consisting primarily of bank deposits and money market funds. While we monitor cash and cash equivalents balances in our operating accounts on a regular basis and adjust the balances as appropriate, these balances could be impacted if the underlying financial institutions fail. To date, we have experienced no loss or lack of access to our cash and cash equivalents; however, we can provide no assurances that access to our cash and cash equivalents will not be impacted by adverse conditions in the financial markets, including those resulting from the global COVID-19 pandemic.

For our Concerts segment, we often receive cash related to ticket revenue in advance of the event, which is recorded in deferred revenue until the event occurs. In the United States, this cash is largely associated with events in our owned or operated venues, notably amphitheaters, festivals, theaters and clubs. Internationally, this cash is from a combination of both events in our owned or operated venues, as well as events in third-party venues associated with our promoter’s share of tickets in allocation markets. With the exception of some upfront costs and artist advances, which are recorded in prepaid expenses until the event occurs, we pay the majority of event-related expenses at or after the event. Artists are paid when the event occurs under one of several different formulas, which may include fixed guarantees and/or a percentage of ticket sales or event profits, net of any advance they have received. When an event is cancelled, any cash held in deferred revenue is reclassified to accrued expenses as those funds are typically refunded to the fan within 30 days of event cancellation. When a show is rescheduled, fans have the ability to request a refund if they do not want to attend the event on the new date, although historically we have had low levels of refund requests for rescheduled events.

We view our available cash as cash and cash equivalents, less ticketing-related client cash, less event-related deferred revenue, less accrued expenses due to artists and cash collected on behalf of others, plus event-related prepaid expenses. This is essentially our cash available to, among other things, repay debt balances, make acquisitions, pay artist advances and finance capital expenditures.

Our intra-year cash fluctuations are impacted by the seasonality of our various businesses. Examples of seasonal effects include our Concerts segment, which reports the majority of its revenue in the second and third quarters. Cash inflows and outflows depend on the timing of event-related payments but the majority of the inflows generally occur prior to the event. See “—Seasonality” below. We believe that we have sufficient financial flexibility to fund these fluctuations and to access the global capital markets on satisfactory terms and in adequate amounts, although there can be no assurance that this will be the case, and capital could be less accessible and/or more costly given current economic conditions, including those resulting from the global COVID-19 pandemic. We expect cash flows from operations and borrowings under our amended senior secured credit facility, along with other financing alternatives, to satisfy working capital requirements, capital expenditures and debt service requirements for at least the succeeding year.

We may need to incur additional debt or issue equity to make other strategic acquisitions or investments. There can be no assurance that such financing will be available to us on acceptable terms or at all. We may make significant acquisitions in the near term, subject to limitations imposed by our financing agreements and market conditions.

The lenders under our revolving loans and counterparty to our interest rate hedge agreement consists of banks and other third-party financial institutions. While we currently have no indications or expectations that such lenders will be unable to fund their commitments as required, we can provide no assurances that future funding availability will not be impacted by adverse conditions in the financial markets, including those resulting from the global COVID-19 pandemic. Should an individual lender default on its obligations, the remaining lenders would not be required to fund the shortfall, resulting in a reduction in the total amount available to us for future borrowings, but would remain obligated to fund their own commitments. Should the counterparty to our interest rate hedge agreement default on its obligation, we could experience higher interest rate volatility during the period of any such default.

Sources of Cash

In January 2021, we issued $500 million principal amount of 3.75% senior secured notes due 2028. The proceeds were used to pay fees of $7.7 million and repay $75.0 million aggregate principal amount of our senior secured term loan B facility, leaving approximately $417.3 million for general corporate purposes, including acquisitions and organic investment opportunities.

In September 2021, we elected to draw down the $400 million term loan A under the amended senior secured credit facility prior to expiration of the drawdown period on October 17, 2021. We intend to use the proceeds from the drawdown for general corporate purposes. We also completed the public offering of 5,239,259 shares of common stock. A portion of the gross proceeds of $455.3 million were used to pay fees of $5.7 million, leaving $449.6 million of net proceeds. We used the net proceeds to fund the acquisition of 51% of the capital stock of OCESA and any remaining proceeds for general corporate purposes.

Amended Senior Secured Credit Facility

At March 31, 2022, our senior secured credit facility consists of (i) a $400 million term loan A facility, (ii) a $950 million term loan B facility, (iii) a $500 million revolving credit facility and (iv) a $130 million incremental revolving credit facility. In addition, subject to certain conditions, we have the right to increase such facilities by an amount equal to the sum of (x) $855 million, (y) the aggregate principal amount of voluntary prepayments of the term loan A and term loan B and permanent reductions of the revolving credit facility commitments, in each case, other than from proceeds of long-term indebtedness, and (z) additional amounts so long as the senior secured leverage ratio calculated on a pro-forma basis (as defined in the agreement) is no greater than 3.75x. The combined revolving credit facilities provide for borrowings up to $630 million with sublimits of up to (i) $150 million for the issuance of letters of credit, (ii) $50 million for swingline loans, (iii) $300 million for borrowings in Dollars, Euros or British Pounds and (iv) $100 million for borrowings in those or one or more other approved currencies. The amended senior secured credit facility is secured by a first priority lien on substantially all of the tangible and intangible personal property of LNE and LNE’s domestic subsidiaries that are guarantors, and by a pledge of substantially all of the shares of stock, partnership interests and limited liability company interests of our direct and indirect domestic subsidiaries and 65% of each class of capital stock of any first-tier foreign subsidiaries, subject to certain exceptions.

The interest rates per annum applicable to revolving credit facility loans and term loan A under the amended senior secured credit facility are, at our option, equal to either Eurodollar plus 2.25% or a base rate plus 1.25%. 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 have an interest rate swap agreement that ensures the interest rate on $500.0 million principal amount of our outstanding term loan B does not exceed 3.397% through October 2026. The interest rates per annum applicable to the incremental revolving credit facility are, at our option, equal to either Eurodollar plus 2.5% or a base rate plus 1.5%. We are required to pay a commitment fee of 0.5% per year on the undrawn portion available under the revolving credit facility and delayed draw term loan A, 1.75% per year on the undrawn portion available under the incremental revolving credit facility and variable fees on outstanding letters of credit.

For the term loan A, we are required to make quarterly payments increasing over time from $2.5 million to $5.0 million 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. Both the existing and incremental revolving credit facilities mature in October 2024. We are also required to make mandatory prepayments of the loans under the amended credit agreement, subject to specified exceptions, from excess cash flow and with the proceeds of asset sales, debt issuances and specified other events.

There were no borrowings under the revolving credit facilities as of March 31, 2022. Based on our outstanding letters of credit of $66.9 million, $563.1 million was available for future borrowings from revolving credit facilities.

3.75% Senior Secured Notes Due 2028

In January 2021, we issued $500 million principal amount of 3.75% senior secured notes due 2028. Interest on the notes is payable semi-annually in cash in arrears on January 15 and July 15 of each year and began on July 15, 2021, and the notes will mature on January 15, 2028. We may redeem some or all of the notes, at any time prior to January 15, 2024, at a price equal to 100% of the aggregate principal amount, plus any accrued and unpaid interest to the date of redemption, plus a ‘make-whole’ premium. We may redeem up to 35% of the aggregate principal amount of the notes from the proceeds of certain equity offerings prior to January 15, 2024, at a price equal to 103.75% of the aggregate principal amount, plus accrued and unpaid interest thereon to the date of redemption. In addition, on or after January 15, 2024 we may redeem some or all of the notes at any time at redemption prices specified in the notes indenture, plus any accrued and unpaid interest to the date of redemption.

We must make an offer to redeem the notes at 101% of their aggregate principal amount, plus accrued and unpaid interest to the repurchase date, if we experience certain defined changes of control. The notes are secured by a first priority lien on substantially all of the tangible and intangible personal property of LNE and LNE’s domestic subsidiaries that are guarantors, and by a pledge of substantially all of the shares of stock, partnership interests and limited liability company interests of our direct and indirect domestic subsidiaries.

Debt Covenants

Our amended senior secured credit facility contains a number of restrictions that, among other things, require us to satisfy a financial covenant and restrict our and our subsidiaries’ ability to incur additional debt, make certain investments and acquisitions, repurchase our stock and prepay certain indebtedness, create liens, enter into agreements with affiliates, modify the nature of our business, enter into sale-leaseback transactions, transfer and sell material assets, merge or consolidate, and pay dividends and make distributions (with the exception of subsidiary dividends or distributions to the parent company or other subsidiaries on at least a pro-rata basis with any noncontrolling interest partners). Non-compliance with one or more of the covenants and restrictions could result in the full or partial principal balance of the credit facility becoming immediately due and payable. The amended senior secured credit facility agreement has one covenant, measured quarterly, that relates to net leverage. We are required to maintain a ratio of consolidated total net debt to consolidated EBITDA (both as defined in the amended credit agreement) for the trailing four consecutive quarters of 6.75x through September 30, 2022 with step downs to 6.25x on December 31, 2022, 5.75x on December 31, 2023, 5.50x on December 31, 2024 and 5.25x on June 30, 2025 through maturity, except that calculations of consolidated EBITDA (as defined in the agreement) will be substituted with an annualized consolidated EBITDA (as defined in the agreement) through June 30, 2022.

The indentures governing our 6.5% senior secured notes, 3.75% senior secured notes, 4.75% senior notes, 4.875% senior notes and 5.625% senior notes contain covenants that limit, among other things, our ability and the ability of our restricted subsidiaries to incur certain additional indebtedness and issue preferred stock, make certain distributions, investments and other restricted payments, sell certain assets, agree to any restrictions on the ability of restricted subsidiaries to make payments to us, merge, consolidate or sell all of our assets, create certain liens, and engage in transactions with affiliates on terms that are not on an arms-length basis. Certain covenants, including those pertaining to incurrence of indebtedness, restricted payments, asset sales, mergers, and transactions with affiliates will be suspended during any period in which the notes are rated investment grade by both rating agencies and no default or event of default under the indenture has occurred and is continuing. All of these notes contain two incurrence-based financial covenants, as defined, requiring a minimum fixed charge coverage ratio of 2.0x and a maximum secured indebtedness leverage ratio of 3.5x.

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

As of March 31, 2022, we believe we were in compliance with all of our debt covenants related to our senior secured credit facility and our corporate senior secured notes, senior notes and convertible senior notes. We expect to remain in compliance with all of these covenants throughout 2022.

Uses of Cash

Acquisitions

When we make acquisitions, the acquired entity may have cash on its balance sheet at the time of acquisition. All amounts related to the use of cash for acquisitions discussed in this section are presented net of any cash acquired. During the three months ended March 31, 2022, we used $14.0 million of cash primarily for the acquisition of a venue management business in the United States.

During the three months ended March 31, 2021, we used $6.1 million of cash primarily for the acquisition of a venue in the United Kingdom.

Capital Expenditures

Venue and ticketing operations are capital intensive businesses, requiring continual investment in our existing venues and ticketing systems in order to address fan and artist expectations, technological industry advances and various federal, state and/or local regulations.

We categorize capital outlays between maintenance capital expenditures and revenue generating capital expenditures. Maintenance capital expenditures are associated with the renewal and improvement of existing venues and technology systems, web development and administrative offices. Revenue generating capital expenditures generally relate to the construction of new venues, major renovations to existing buildings or buildings that are being added to our venue network, the development of new ticketing tools and technology enhancements. Revenue generating capital expenditures can also include smaller projects whose purpose is to increase revenue and/or improve operating income. Capital expenditures typically increase during periods when our venues are not in operation since that is the time that such improvements can be completed.

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

			Three Months Ended March 31,
			2022						2021
			(in thousands)
Maintenance			$	13,761					$	5,657
Revenue generating			33,127						11,438
Total capital expenditures			$	46,888					$	17,095

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

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

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

Cash Flows

			Three Months Ended March 31,
			2022						2021
			(in thousands)
Cash provided by (used in):
Operating activities			$	1,198,300					$	74,574
Investing activities			$	(114,953)					$	10,108
Financing activities			$	(75,041)					$	417,017

Operating Activities

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

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

Investing Activities

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

Financing Activities

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

Seasonality

Information regarding the seasonality of our business can be found in Part I—Financial Information—Item 1.—Financial Statements—Note 1—Basis of Presentation and Other Information.

Market Risk

We are exposed to market risks arising from changes in market rates and prices, including movements in foreign currency exchange rates and interest rates.

Foreign Currency Risk

We have operations in countries throughout the world. The financial results of our foreign operations are measured in their local currencies. Our foreign subsidiaries also carry certain net assets or liabilities that are denominated in a currency other than that subsidiary’s functional currency. As a result, our financial results could be affected by factors such as changes in foreign currency exchange rates or weak economic conditions in the foreign markets in which we have operations. Currently, we do not have significant operations in hyper-inflationary countries. Our foreign operations reported an operating loss of $45.4 million for the three months ended March 31, 2022. We estimate that a 10% change in the value of the United States dollar relative to foreign currencies would change our operating loss for the three months ended March 31, 2022 by $4.5 million. As of March 31, 2022, our most significant foreign exchange exposure included the Euro, British Pound, Australian Dollar, Canadian Dollar and Mexican Peso. This analysis does not consider the implication such currency fluctuations could have on the overall economic conditions of the United States or other foreign countries in which we operate or on the results of operations of our foreign entities. In addition, the reported carrying value of our assets and liabilities, including the total cash and cash equivalents held by our foreign operations, will also be affected by changes in foreign currency exchange rates.

We primarily use forward currency contracts, in addition to options, to reduce our exposure to foreign currency risk associated with short-term artist fee commitments. We also may enter into forward currency contracts to minimize the risks and/or costs associated with changes in foreign currency rates on forecasted operating income. At March 31, 2022, we had forward currency contracts outstanding with a notional amount of $93.0 million.

Interest Rate Risk

Our market risk is also affected by changes in interest rates. We had $5.8 billion of total debt, excluding unamortized debt discounts and issuance costs, outstanding as of March 31, 2022. Of the total amount, we had $5.0 billion of fixed-rate debt and $0.8 billion of floating-rate debt.

Based on the amount of our floating-rate debt as of March 31, 2022, each 25-basis point increase or decrease in interest rates would increase or decrease our annual interest expense and cash outlay by approximately $1.9 million. This potential increase or decrease is based on the simplified assumption that the level of floating-rate debt remains constant with an immediate across-the-board increase or decrease as of March 31, 2022 with no subsequent change in rates for the remainder of the period.

In January 2020, we entered into an interest rate swap agreement that is designated as a cash flow hedge for accounting purposes to effectively convert a portion of our floating-rate debt to a fixed-rate basis. The swap agreement expires in October 2026, has a notional amount of $500.0 million and ensures that a portion of our floating-rate debt does not exceed 3.397%.

Accounting Pronouncements

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

Critical Accounting Policies and Estimates

The preparation of our financial statements in conformity with GAAP requires management to make estimates, judgments and assumptions that affect the reported amounts of assets and liabilities, disclosure of contingent assets and liabilities at the date of the financial statements and the reported amount of revenue and expenses during the reporting period. On an ongoing basis, we evaluate our estimates that are based on historical experience and on various other assumptions that are believed to be reasonable under the circumstances. The result of these evaluations forms the basis for making judgments about the carrying values of assets and liabilities and the reported amount of revenue and expenses that are not readily apparent from other sources. Because future events and their effects cannot be determined with certainty, actual results could differ from our assumptions and estimates, and such difference could be material.

Management believes that the accounting estimates involved in business combinations, impairment of long-lived assets and goodwill, revenue recognition, and income taxes are the most critical to aid in fully understanding and evaluating our reported financial results, and they require management’s most difficult, subjective or complex judgments, resulting from the need to make estimates about the effect of matters that are inherently uncertain. These critical accounting estimates, the judgments and assumptions and the effect if actual results differ from these assumptions are described in Part II—Financial Information**—**Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations of our 2021 Annual Report on Form 10-K filed with the SEC on February 23, 2022.

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