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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
____________________________________ 
Form 10-Q
____________________________________ 
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended June 30, 2019
or
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from                  to                
Commission File Number 001-32601
____________________________________ 
LIVE NATION ENTERTAINMENT, INC.
(Exact name of registrant as specified in its charter)
____________________________________
Delaware
 
20-3247759
(State of Incorporation)
 
(I.R.S. Employer Identification No.)

9348 Civic Center Drive
Beverly Hills, CA 90210
(Address of principal executive offices, including zip code)
(310) 867-7000
(Registrant’s telephone number, including area code)
______________________________________________________________ 
Securities registered pursuant to Section 12(b) of the Act:
Title of each class
 
Trading Symbol(s)
 
Name of each exchange on which registered
Common stock, $.01 Par Value Per Share
 
LYV
 
New York Stock Exchange
(Includes Preferred Stock Purchase Rights)
 
 
 
 
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.    x  Yes    ¨  No
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).    Yes  x    No  ¨
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
Large Accelerated Filer
x
 
Accelerated Filer
 
¨
 
 
 
 
 
 
Non-accelerated Filer
¨
 
Smaller Reporting Company
 
 
 
 
Emerging Growth Company
 
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.
 
¨
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).      Yes    x  No
On July 18, 2019, there were 213,147,303 outstanding shares of the registrant’s common stock, $0.01 par value per share, including 2,642,564 shares of unvested restricted stock awards and excluding 408,024 shares held in treasury.
 


Table of Contents

LIVE NATION ENTERTAINMENT, INC.
INDEX TO FORM 10-Q

 
 
Page
PART I—FINANCIAL INFORMATION
 
 
 
 
 
 
 
PART II—OTHER INFORMATION
 



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



Table of Contents

PART I—FINANCIAL INFORMATION
Item 1. Financial Statements
LIVE NATION ENTERTAINMENT, INC.
CONSOLIDATED BALANCE SHEETS (UNAUDITED)
 
June 30,
2019
 
December 31,
2018
 
(in thousands)
ASSETS
 
 
 
Current assets
 
 
 
Cash and cash equivalents
$
2,270,341

 
$
2,371,540

Accounts receivable, less allowance of $35,215 and $34,225, respectively
1,096,754

 
829,320

Prepaid expenses
858,469

 
597,866

Restricted cash
14,638

 
6,663

Other current assets
44,685

 
42,685

Total current assets
4,284,887

 
3,848,074

Property, plant and equipment
 
 
 
Land, buildings and improvements
1,101,316

 
984,558

Computer equipment and capitalized software
782,994

 
742,737

Furniture and other equipment
356,597

 
329,607

Construction in progress
129,418

 
160,028

 
2,370,325

 
2,216,930

Less accumulated depreciation
1,344,857

 
1,270,337

 
1,025,468

 
946,593

Operating lease assets
1,186,909

 

Intangible assets
 
 
 
Definite-lived intangible assets, net
753,490

 
661,451

Indefinite-lived intangible assets
368,846

 
368,854

Goodwill
1,925,725

 
1,822,943

Long-term advances
575,787

 
420,891

Other long-term assets
408,275

 
428,080

Total assets
$
10,529,387

 
$
8,496,886

LIABILITIES AND EQUITY
 
 
 
Current liabilities
 
 
 
Accounts payable, client accounts
$
989,570

 
$
1,037,162

Accounts payable
170,274

 
90,253

Accrued expenses
1,339,881

 
1,245,465

Deferred revenue
1,890,997

 
1,227,797

Current portion of long-term debt, net
55,409

 
82,142

Current portion of operating lease liabilities
120,065

 

Other current liabilities
39,527

 
67,047

Total current liabilities
4,605,723

 
3,749,866

Long-term debt, net
2,708,642

 
2,732,878

Long-term operating lease liabilities
1,138,893

 

Deferred income taxes
169,985

 
137,067

Other long-term liabilities
113,060

 
204,977

Commitments and contingent liabilities


 


Redeemable noncontrolling interests
385,328

 
329,355

Stockholders’ equity
 
 
 
Common stock
2,101

 
2,091

Additional paid-in capital
2,296,010

 
2,268,209

Accumulated deficit
(968,312
)
 
(1,019,223
)
Cost of shares held in treasury
(6,865
)
 
(6,865
)
Accumulated other comprehensive loss
(148,791
)
 
(145,231
)
Total Live Nation stockholders’ equity
1,174,143

 
1,098,981

Noncontrolling interests
233,613

 
243,762

Total equity
1,407,756

 
1,342,743

Total liabilities and equity
$
10,529,387

 
$
8,496,886


See Notes to Consolidated Financial Statements
2

Table of Contents

LIVE NATION ENTERTAINMENT, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED)
 
Three Months Ended 
 June 30,
 
Six Months Ended 
 June 30,
 
 
2019
 
2018
 
2019
 
2018
 
 
(in thousands except share and per share data)
 
Revenue
$
3,157,009

 
$
2,868,315

 
$
4,884,837

 
$
4,350,699

 
Operating expenses:
 
 
 
 
 
 
 
 
Direct operating expenses
2,327,414

 
2,135,107

 
3,479,018

 
3,067,191

 
Selling, general and administrative expenses
513,497

 
476,438

 
978,363

 
911,049

 
Depreciation and amortization
103,826

 
89,785

 
202,738

 
177,656

 
Loss (gain) on disposal of operating assets
(101
)
 
108

 
(248
)
 
146

 
Corporate expenses
40,787

 
32,152

 
77,243

 
65,962

 
Operating income
171,586

 
134,725

 
147,723

 
128,695

 
Interest expense
36,792

 
35,519

 
73,307

 
68,203

 
Interest income
(3,818
)
 
(2,705
)
 
(6,366
)
 
(3,888
)
 
Equity in loss (earnings) of nonconsolidated affiliates
(5,828
)
 
313

 
(8,972
)
 
(3,402
)
 
Other expense (income), net
(430
)
 
6,443

 
(3,833
)
 
6,771

 
Income before income taxes
144,870

 
95,155

 
93,587

 
61,011

 
Income tax expense
28,750

 
11,799

 
32,708

 
18,683

 
Net income
116,120

 
83,356

 
60,879

 
42,328

 
Net income attributable to noncontrolling interests
12,765

 
13,997

 
9,968

 
6,875

 
Net income attributable to common stockholders of Live Nation
$
103,355

 
$
69,359

 
$
50,911

 
$
35,453

 
 
 
 
 
 
 
 
 
 
Basic net income per common share available to common stockholders of Live Nation
$
0.43

 
$
0.25

 
$
0.12

 
$
0.01

 
Diluted net income per common share available to common stockholders of Live Nation
$
0.41

 
$
0.24

 
$
0.11

 
$
0.01

 
 
 
 
 
 
 
 
 
 
Weighted average common shares outstanding:
 
 
 
 
 
 
 
 
Basic
209,998,048

 
207,331,781

 
209,456,196

 
207,031,642

 
Diluted
219,977,612

 
215,105,119

 
219,107,351

 
215,075,203

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Reconciliation to net loss available to common stockholders of Live Nation:
 
 
 
Net income attributable to common stockholders of Live Nation
$
103,355

 
$
69,359

 
$
50,911

 
$
35,453

 
Accretion of redeemable noncontrolling interests
(13,515
)
 
(17,172
)
 
(25,827
)
 
(33,557
)
 
Net income available to common stockholders of Live Nation—basic
89,840

 
52,187

 
25,084

 
1,896

 
Convertible debt interest, net of tax
86

 

 

 

 
Net income available to common stockholders of Live Nation—diluted
$
89,926

 
$
52,187

 
$
25,084

 
$
1,896

 
 
 
 
 
 
 
 
 
 

See Notes to Consolidated Financial Statements
3

Table of Contents

LIVE NATION ENTERTAINMENT, INC.
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
(UNAUDITED)

 
Three Months Ended 
 June 30,
 
Six Months Ended 
 June 30,
 
2019
 
2018
 
2019
 
2018
 
(in thousands)
Net income
$
116,120

 
$
83,356

 
$
60,879

 
$
42,328

Other comprehensive loss, net of tax:
 
 
 
 
 
 
 
Foreign currency translation adjustments
(671
)
 
(33,557
)
 
(3,560
)
 
(17,295
)
Comprehensive income
115,449

 
49,799

 
57,319

 
25,033

Comprehensive income attributable to noncontrolling interests
12,765

 
13,997

 
9,968

 
6,875

Comprehensive income attributable to common stockholders of Live Nation
$
102,684

 
$
35,802

 
$
47,351

 
$
18,158


See Notes to Consolidated Financial Statements
4

Table of Contents


LIVE NATION ENTERTAINMENT, INC.
CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY
(UNAUDITED)

 
 
Live Nation Stockholders’ Equity
 
 
 
 
 
 
 
 
Common Shares Issued
 
Common Stock
 
Additional Paid-In Capital
 
Accumulated Deficit
 
Cost of Shares Held in Treasury
 
Accumulated Other Comprehensive Income (Loss)
 
Noncontrolling Interests
 
Total Equity
 
Redeemable Noncontrolling Interests
 
 
(in thousands, except share data)
 
(in thousands)
Balances at March 31, 2019
 
209,857,816

 
$
2,099

 
$
2,267,761

 
$
(1,071,667
)
 
$
(6,865
)
 
$
(148,120
)
 
$
197,186

 
$
1,240,394

 
$
343,029

Non-cash and stock-based compensation
 

 

 
11,754

 

 

 

 

 
11,754

 

Common stock issued under stock plans, net of shares withheld for employee taxes
 
60,223

 

 
(959
)
 

 

 

 

 
(959
)
 

Exercise of stock options, net of shares withheld for option cost and employee taxes
 
167,776

 
2

 
2,525

 

 

 

 

 
2,527

 

Conversion of convertible debt
 
824,328

 

 
28,586

 

 

 

 

 
28,586

 

Acquisitions
 

 

 

 

 

 

 
25,194

 
25,194

 
32,322

Purchases of noncontrolling interests
 

 

 

 

 

 

 

 

 

Redeemable noncontrolling interests fair value adjustments
 

 

 
(13,515
)
 

 

 

 

 
(13,515
)
 
13,515

Contributions received
 

 

 

 

 

 

 
8,324

 
8,324

 

Cash distributions
 

 

 

 

 

 

 
(6,172
)
 
(6,172
)
 
(7,317
)
Other
 

 

 
(142
)
 

 

 

 
(77
)
 
(219
)
 
172

Comprehensive income (loss):
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
    Net income
 

 

 

 
103,355

 

 

 
9,158

 
112,513

 
3,607

Foreign currency translation adjustments
 

 

 

 

 

 
(671
)
 

 
(671
)
 

Balances at June 30, 2019
 
210,910,143

 
$
2,101

 
$
2,296,010

 
$
(968,312
)
 
$
(6,865
)
 
$
(148,791
)
 
$
233,613

 
$
1,407,756

 
$
385,328





See Notes to Consolidated Financial Statements
5

Table of Contents

 
 
Live Nation Stockholders’ Equity
 
 
 
 
 
 
 
 
Common Shares Issued
 
Common Stock
 
Additional Paid-In Capital
 
Accumulated Deficit
 
Cost of Shares Held in Treasury
 
Accumulated Other Comprehensive Income (Loss)
 
Noncontrolling Interests
 
Total Equity
 
Redeemable Noncontrolling Interests
 
 
(in thousands, except share data)
 
(in thousands)
Balances at December 31, 2018
 
209,135,581

 
$
2,091

 
$
2,268,209

 
$
(1,019,223
)
 
$
(6,865
)
 
$
(145,231
)
 
$
243,762

 
$
1,342,743

 
$
329,355

Non-cash and stock-based compensation
 

 

 
24,992

 

 

 

 

 
24,992

 

Common stock issued under stock plans, net of shares withheld for employee taxes
 
312,857

 
3

 
(10,262
)
 

 

 

 

 
(10,259
)
 

Exercise of stock options, net of shares withheld for option cost and employee taxes
 
637,377

 
7

 
10,192

 

 

 

 

 
10,199

 

Conversion of convertible debt
 
824,328

 

 
28,586

 

 

 

 

 
28,586

 

Acquisitions
 

 

 

 

 

 

 
26,168

 
26,168

 
39,303

Purchases of noncontrolling interests
 

 

 
270

 

 

 

 
(270
)
 

 
(1,459
)
Redeemable noncontrolling interests fair value adjustments
 

 

 
(25,827
)
 

 

 

 

 
(25,827
)
 
25,827

Contributions received
 

 

 

 

 

 

 
8,324

 
8,324

 

Cash distributions
 

 

 

 

 

 

 
(52,115
)
 
(52,115
)
 
(11,258
)
Other
 

 

 
(150
)
 

 

 

 
(1,261
)
 
(1,411
)
 
2,597

Comprehensive income (loss):
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
    Net income
 

 

 

 
50,911

 

 

 
9,005

 
59,916

 
963

Foreign currency translation adjustments
 

 

 

 

 

 
(3,560
)
 

 
(3,560
)
 

Balances at June 30, 2019
 
210,910,143

 
$
2,101

 
$
2,296,010

 
$
(968,312
)
 
$
(6,865
)
 
$
(148,791
)
 
$
233,613

 
$
1,407,756

 
$
385,328





See Notes to Consolidated Financial Statements
6

Table of Contents

 
 
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)
Balance at March 31, 2018
 
207,634,062

 
$
2,076

 
$
2,348,118

 
$
(1,113,378
)
 
$
(6,865
)
 
$
(92,280
)
 
$
234,550

 
$
1,372,221

 
$
264,700

Non-cash and stock-based compensation
 

 

 
12,450

 

 

 

 

 
12,450

 

Common stock issued under stock plans, net of shares withheld for employee taxes
 
72,008

 
1

 
(657
)
 

 

 

 

 
(656
)
 

Exercise of stock options, net of shares withheld for option cost and employee taxes
 
163,765

 
2

 
2,930

 

 

 

 

 
2,932

 

Repurchase of convertible debt conversion feature
 

 

 
(9,225
)
 

 

 

 

 
(9,225
)
 

Acquisitions
 

 

 

 

 

 

 
8,955

 
8,955

 
11,689

Purchases of noncontrolling interests
 

 

 
1,143

 

 

 

 
(1,143
)
 

 
2

Redeemable noncontrolling interests fair value adjustments
 

 

 
(16,924
)
 

 

 

 

 
(16,924
)
 
16,924

Cash distributions
 

 

 

 

 

 

 
(6,992
)
 
(6,992
)
 
(4,628
)
Other
 

 

 
(144
)
 

 

 

 
(2,467
)
 
(2,611
)
 
78

Comprehensive income (loss):
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
    Net income
 

 

 

 
69,359

 

 

 
9,568

 
78,927

 
4,429

Foreign currency translation adjustments
 

 

 

 

 

 
(33,557
)
 

 
(33,557
)
 

Balance at June 30, 2018
 
207,869,835

 
$
2,079

 
$
2,337,691

 
$
(1,044,019
)
 
$
(6,865
)
 
$
(125,837
)
 
$
242,471

 
$
1,405,520

 
$
293,194


See Notes to Consolidated Financial Statements
7

Table of Contents

 
 
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)
Balance 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
 

 

 
23,320

 

 

 

 

 
23,320

 

Common stock issued under stock plans, net of shares withheld for employee taxes
 
359,817

 
4

 
(8,606
)
 

 

 

 

 
(8,602
)
 

Exercise of stock options, net of shares withheld for option cost and employee taxes
 
632,981

 
6

 
10,848

 

 

 

 

 
10,854

 

Fair value of convertible debt conversion feature, net of issuance costs
 

 

 
62,624

 

 

 

 

 
62,624

 

Repurchase of convertible debt conversion feature
 

 

 
(92,641
)
 

 

 

 

 
(92,641
)
 

Acquisitions
 

 

 

 

 

 

 
22,404

 
22,404

 
21,870

Purchases of noncontrolling interests
 

 

 
1,709

 

 

 

 
(1,636
)
 
73

 
(356
)
Redeemable noncontrolling interests fair value adjustments
 

 

 
(33,456
)
 

 

 

 

 
(33,456
)
 
33,456

Contributions received
 

 

 

 

 

 

 
4,900

 
4,900

 

Cash distributions
 

 

 

 

 

 

 
(23,269
)
 
(23,269
)
 
(7,874
)
Other
 

 

 
(113
)
 

 

 

 
(2,458
)
 
(2,571
)
 
78

Comprehensive income (loss):
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
    Net income
 

 

 

 
35,453

 

 

 
5,582

 
41,035

 
1,293

Foreign currency translation adjustments
 

 

 

 

 

 
(17,295
)
 

 
(17,295
)
 

Balance at June 30, 2018
 
207,869,835

 
$
2,079

 
$
2,337,691

 
$
(1,044,019
)
 
$
(6,865
)
 
$
(125,837
)
 
$
242,471

 
$
1,405,520

 
$
293,194



See Notes to Consolidated Financial Statements
8

Table of Contents

LIVE NATION ENTERTAINMENT, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
 
Six Months Ended 
 June 30,
 
2019
 
2018
 
(in thousands)
CASH FLOWS FROM OPERATING ACTIVITIES
 
 
 
Net income
$
60,879

 
$
42,328

Reconciling items:
 
 
 
Depreciation
106,015

 
85,493

Amortization
96,723

 
92,163

Amortization of non-recoupable ticketing contract advances
34,267

 
36,285

Amortization of debt issuance costs and discounts, net
10,828

 
9,298

Non-cash compensation expense
24,926

 
22,946

Other, net
11,902

 
5,694

Changes in operating assets and liabilities, net of effects of acquisitions and dispositions:
 
 
 
Increase in accounts receivable
(256,575
)
 
(229,016
)
Increase in prepaid expenses and other assets
(380,285
)
 
(604,699
)
Increase in accounts payable, accrued expenses and other liabilities
5,880

 
112,065

Increase in deferred revenue
578,763

 
947,269

Net cash provided by operating activities
293,323

 
519,826

CASH FLOWS FROM INVESTING ACTIVITIES
 
 
 
Advances of notes receivable
(13,931
)
 
(69,346
)
Collection of notes receivable
5,337

 
14,481

Investments made in nonconsolidated affiliates
(28,931
)
 
(38,201
)
Purchases of property, plant and equipment
(135,940
)
 
(100,641
)
Cash paid for acquisitions, net of cash acquired
(87,595
)
 
(93,256
)
Purchases of intangible assets
(20,614
)
 
(27,620
)
Other, net
20

 
188

Net cash used in investing activities
(281,654
)
 
(314,395
)
CASH FLOWS FROM FINANCING ACTIVITIES
 
 
 
Proceeds from long-term debt, net of debt issuance costs
558

 
857,121

Payments on long-term debt
(21,933
)
 
(372,650
)
Distributions to noncontrolling interests
(63,373
)
 
(31,143
)
Purchases and sales of noncontrolling interests, net
(1,463
)
 
(131,093
)
Proceeds from exercise of stock options
10,199

 
10,854

Taxes paid for net share settlement of equity awards
(10,259
)
 
(8,602
)
Payments for deferred and contingent consideration
(19,962
)
 
(14,655
)
Other, net
8,323

 
4,899

Net cash provided by (used in) financing activities
(97,910
)
 
314,731

Effect of exchange rate changes on cash, cash equivalents and restricted cash
(6,983
)
 
(48,671
)
Net increase (decrease) in cash, cash equivalents and restricted cash
(93,224
)
 
471,491

Cash, cash equivalents and restricted cash at beginning of period
2,378,203

 
1,828,822

Cash, cash equivalents and restricted cash at end of period
$
2,284,979

 
$
2,300,313


See Notes to Consolidated Financial Statements
9

Table of Contents

LIVE NATION ENTERTAINMENT, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)

NOTE 1BASIS OF PRESENTATION AND OTHER INFORMATION
Preparation of Interim Financial Statements
The accompanying unaudited consolidated financial statements have been prepared in accordance with GAAP for interim financial information and the instructions to Form 10-Q and Article 10 of Regulation S-X issued by the SEC. Accordingly, they do not include all of the information and footnotes required by GAAP for complete financial statements. In the opinion of management, they include all normal and recurring accruals and adjustments necessary to present fairly the results of the interim periods shown.
The financial statements should be read in conjunction with the consolidated financial statements and notes thereto included in our 2018 Annual Report on Form 10-K filed with the SEC on February 28, 2019, as amended by the Form 10-K/A filed with the SEC on June 28, 2019.
Seasonality
Due to the seasonal nature of shows at outdoor amphitheaters and festivals, which primarily occur from May through October, our Concerts and Sponsorship & Advertising segments experience higher revenue during the second and third quarters. Our Ticketing segment’s revenue is impacted by fluctuations in the availability of events for sale to the public, which vary depending upon scheduling by its clients. Our seasonality also results in higher balances in cash and cash equivalents, accounts receivable, prepaid expenses, accrued expenses and deferred revenue at different times in the year. Therefore, the results to date are not necessarily indicative of the results expected for the full year.
Cash, Cash Equivalents and Restricted Cash
Included in the June 30, 2019 and December 31, 2018 cash and cash equivalents balance is $777.2 million and $859.1 million, respectively, of cash received that includes the face value of tickets sold on behalf of ticketing clients and their share of service charges, which amounts are to be remitted to these clients.
Restricted cash primarily consists of cash held in escrow accounts to fund capital improvements of certain leased or operated venues. The cash is held in these accounts pursuant to the related lease or operating agreement.
Acquisitions
During the first six months of 2019, we completed several acquisitions that were accounted for as business combinations under the acquisition method of accounting. These acquisitions were not significant either on an individual basis or in the aggregate.
Income Taxes
Each reporting period, we evaluate the realizability of all of our deferred tax assets in each tax jurisdiction. As of June 30, 2019, we continued to maintain a full valuation allowance against our net deferred tax assets in certain jurisdictions due to cumulative pre-tax losses. As a result of the valuation allowances, no tax benefits have been recognized for losses incurred, if any, in those tax jurisdictions for the first six months of 2019 and 2018.
Accounting Pronouncements - Recently Adopted
Lease Accounting
In February 2016, the FASB issued guidance that requires lessees to recognize most leases on their balance sheet as a lease liability and asset, and to disclose key information about leasing arrangements. The guidance should be applied on a modified retrospective basis.
We adopted this standard on January 1, 2019, applying the transitional provisions of the standard to the beginning of the period of adoption and elected the package of practical expedients available under the transition guidance within the new guidance which, among other things, allowed us to carry forward the historical lease classification. We also made an accounting policy election to keep leases with an initial term of twelve months or less off the balance sheet, recognizing those lease payments in our statements of operations generally on a straight-line basis over the term of the lease. We have implemented third-party lease software, and corresponding internal controls, to account for our leases and facilitate compliance with the new guidance.
The new guidance had a material impact on our balance sheet, but did not have a material impact on our statements of operations. The new guidance did not have an impact on our compliance with the debt covenant requirements under our senior

10

Table of Contents

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 August 2018, the FASB issued guidance that aligns the requirements for capitalizing implementation costs incurred in a hosting arrangement that is a service contract with the requirements for capitalizing implementation costs incurred to develop or obtain internal-use software. The amortization period of these implementation costs would include periods covered under renewal options that are reasonably certain to be exercised. The expense related to the capitalized implementation costs also would be presented in the same financial statement line item as the hosting fees. The guidance is effective for annual periods beginning after December 15, 2019 and interim periods within that year, and early adoption is permitted. The guidance should be applied either retrospectively or prospectively to all implementation costs incurred after the date of adoption. We expect to adopt this guidance on January 1, 2020, and are currently assessing which implementation method we will apply and the impact that adoption will have on our financial position and results of operations.
NOTE 2—LONG-LIVED ASSETS
Definite-lived Intangible Assets
The following table presents the changes in the gross carrying amount and accumulated amortization of definite-lived intangible assets for the six months ended June 30, 2019:
 
Revenue-
generating
contracts
 
Client /
vendor
relationships
 
Trademarks
and
naming
rights
 
Technology
 
Other (1)
 
Total
 
(in thousands)
Balance as of December 31, 2018:
 
 
 
 
 
 
 
 
Gross carrying amount
$
692,963

 
$
393,772

 
$
123,707

 
$
85,411

 
$
120,163

 
$
1,416,016

Accumulated amortization
(391,002
)
 
(213,599
)
 
(41,808
)
 
(38,826
)
 
(69,330
)
 
(754,565
)
Net
301,961

 
180,173

 
81,899

 
46,585

 
50,833

 
661,451

Gross carrying amount:
 
 
 
 
 
 
 
 
 
 
Acquisitions—current year
103,389

 
22,385

 
1,632

 
7,216

 
54,964

 
189,586

Acquisitions—prior year