Live Nation Entertainment Quarterly report pursuant to Section 13 or 15(d)

Quarterly report pursuant to Section 13 or 15(d)

LEASES LEASES

LEASES LEASES

3 Months Ended

Mar. 31, 2019

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 sheet for leases with an initial term of twelve months or less, including multi-year festival site leases where the sum of the non-consecutive periods of rental time is less than twelve months. Rent expense for these short-term leases is generally recognized on a straight-line basis over the lease term.

Some of our lease agreements contain annual rental escalation clauses, as well as provisions for us to pay the related utilities and maintenance. We have elected to account for the lease components (i.e., fixed payments including rent, parking and real estate taxes) and nonlease components (i.e., common-area maintenance costs) as a single lease component.

Many of our lease agreements contain renewal options that can extend the lease for additional terms typically ranging from one to ten years. Renewal options at the discretion of the lessor are included in the lease term while renewal options at our discretion are generally not included in the lease term unless they are reasonably certain to be exercised.

In addition to fixed rental payments, many of our leases contain contingent rental payments based on a percentage of revenue, tickets sold or other variables while others include periodic adjustments to rental payments based on the prevailing inflationary index or market rental rates. 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.

The significant components of operating lease expense are as follows:



	Three Months Ended March 31, 2019
	(in thousands)
Operating lease cost	$	46,729
Variable and short-term lease cost	13,765
Sublease income	(3,741		)
Net lease cost	$	56,753

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



	Three Months Ended March 31, 2019
	(in thousands)
Cash paid for amounts included in the measurement of lease liabilities	$	48,940
Lease assets obtained in exchange for lease obligations	$	27,872

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



	(in thousands)
April 1 - December 31, 2019	$	120,219
2020	168,770
2021	147,980
2022	145,247
2023	137,072
Thereafter	1,052,820
Total lease payments	1,772,108
Less: Interest	587,976
Present value of lease liabilities	$	1,184,132

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



	March 31, 2019
Weighted average remaining lease term (in years)	13.5
Weighted average discount rate	5.76	%

As of March 31, 2019, we have additional operating leases that have not yet commenced with total lease payments of $190.5 million. These operating leases, which are not included on our consolidated balance sheet, have commencement dates ranging from April 2019 to December 2020 with lease terms ranging from 3 to 23 years.