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

6 Months Ended

Jun. 30, 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 sheets for leases with an initial term of twelve months or less, including multi-year festival site leases where the sum of the non-consecutive periods of rental time is less than twelve months. Rent expense for these short-term leases is generally recognized on a straight-line basis over the lease term.

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

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

In addition to fixed rental payments, many of our leases contain contingent rental payments based on a percentage of revenue, tickets sold or other variables, while others include periodic adjustments to rental payments based on the prevailing inflationary index or market rental rates. 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 June 30, 2019			Six Months Ended June 30, 2019
	(in thousands)
Operating lease cost	$	49,110		$	95,839
Variable and short-term lease cost	34,064			47,829
Sublease income	(4,888		)	(8,629		)
Net lease cost	$	78,286		$	135,039

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



	Six Months Ended June 30, 2019
	(in thousands)
Cash paid for amounts included in the measurement of lease liabilities	$	94,562
Lease assets obtained in exchange for lease obligations	$	128,175

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



	(in thousands)
July 1 - December 31, 2019	$	83,879
2020	182,103
2021	161,123
2022	154,944
2023	147,285
Thereafter	1,150,313
Total lease payments	1,879,647
Less: Interest	620,689
Present value of lease liabilities	$	1,258,958

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



	June 30, 2019
Weighted average remaining lease term (in years)	13.5
Weighted average discount rate	5.75	%

As of June 30, 2019, we have additional operating leases that have not yet commenced with total lease payments of $304.7 million. These operating leases, which are not included on our consolidated balance sheets, have commencement dates ranging from July 2019 to December 2020 with lease terms ranging from 3 to 23 years.