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

Quarterly report pursuant to Section 13 or 15(d)

FAIR VALUE MEASUREMENTS

FAIR VALUE MEASUREMENTS

9 Months Ended

Sep. 30, 2020

Recurring

The following table shows the fair value of our significant financial assets that are required to be measured at fair value on a recurring basis, which are classified on the consolidated balance sheets as cash and cash equivalents and other long-term liabilities.


	Estimated Fair Value
	September 30, 2020						December 31, 2019
	Level 1		Level 2		Total		Level 1		Level 2		Total
	(in thousands)
Assets:
Cash equivalents	$	392,945	$	—	$	392,945	$	215,674	$	—	$	215,674
Liabilities:
Interest rate swap	$	—	$	35,638	$	35,638	$	—	$	—	$	—

The fair value for our interest rate swap is based upon inputs corroborated by observable market data with similar tenors, which are considered Level 2 inputs.

Our outstanding debt held by third-party financial institutions is carried at cost, adjusted for any 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 secured notes, senior notes and convertible senior notes:


	Estimated Fair Value at
	September 30, 2020		December 31, 2019
	Level 2
	(in thousands)
6.5% Senior Secured Notes due 2027	$	1,294,440	$	—
4.75% Senior Notes due 2027	$	891,015	$	983,735
4.875% Senior Notes due 2024	$	556,727	$	596,137
5.625% Senior Notes due 2026	$	290,727	$	320,553
2.5% Convertible Senior Notes due 2023	$	607,893	$	675,664
2.0% Convertible Senior Notes Due 2025	$	364,112	$	—

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 nine months ended September 30, 2020.


			Fair Value Measurements Using
Description	Fair Value Measurement		Level 1		Level 2		Level 3		Loss (Gain)
2020			(in thousands)
Definite-lived intangible assets, net	$	7,390	$	—	$	—	$	7,390	$	15,264
2019
Definite-lived intangible assets, net	$	—	$	—	$	—	$	—	$	19,372

During the nine months ended September 30, 2020 and 2019, we recorded impairment charges related to definite-lived intangible assets of $15.3 million and $19.4 million, respectively, as a component of depreciation and amortization. For the nine months ended September 30, 2020, the impairment charges are primarily related to intangible assets for revenue-generating contracts and client/vendor relationships in the Concerts segment. For the nine months ended September 30, 2019, the impairment charges were primarily related to intangible assets for revenue-generating contracts in the Concerts segment. 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, as a result of the expected impacts from the global COVID-19 pandemic for the 2020 period. 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.

- Definition

The entire disclosure for the fair value of financial instruments (as defined), including financial assets and financial liabilities (collectively, as defined), and the measurements of those instruments as well as disclosures related to the fair value of non-financial assets and liabilities. Such disclosures about the financial instruments, assets, and liabilities would include: (1) the fair value of the required items together with their carrying amounts (as appropriate); (2) for items for which it is not practicable to estimate fair value, disclosure would include: (a) information pertinent to estimating fair value (including, carrying amount, effective interest rate, and maturity, and (b) the reasons why it is not practicable to estimate fair value; (3) significant concentrations of credit risk including: (a) information about the activity, region, or economic characteristics identifying a concentration, (b) the maximum amount of loss the entity is exposed to based on the gross fair value of the related item, (c) policy for requiring collateral or other security and information as to accessing such collateral or security, and (d) the nature and brief description of such collateral or security; (4) quantitative information about market risks and how such risks are managed; (5) for items measured on both a recurring and nonrecurring basis information regarding the inputs used to develop the fair value measurement; and (6) for items presented in the financial statement for which fair value measurement is elected: (a) information necessary to understand the reasons for the election, (b) discussion of the effect of fair value changes on earnings, (c) a description of [similar groups] items for which the election is made and the relation thereof to the balance sheet, the aggregate carrying value of items included in the balance sheet that are not eligible for the election; (7) all other required (as defined) and desired information.

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