UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q ________________________ (Mark One) ☑ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended December 31, 2023 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: 001-39245 SPHERE ENTERTAINMENT CO. (Exact name of registrant as specified in its charter) Delaware 84-3 ...

[FORM 10-Q](index=1&type=section&id=FORM%2010-Q) [PART I. FINANCIAL INFORMATION](index=4&type=section&id=PART%20I.%20FINANCIAL%20INFORMATION) This section presents unaudited condensed consolidated financial statements, management's discussion and analysis, market risk disclosures, and controls [Item 1. Financial Statements](index=4&type=section&id=Item%201.%20Financial%20Statements) This section provides unaudited condensed consolidated financial statements, covering balance sheets, operations, cash flows, and detailed notes [Condensed Consolidated Balance Sheets](index=4&type=section&id=Condensed%20Consolidated%20Balance%20Sheets%20as%20of%20September%2030,%202023%20and%20June%2030,%202023%20(unaudited)) Total assets decreased to $4,864,654 thousand, driven by reduced investments and deferred tax liabilities, increasing stockholders' equity Condensed Consolidated Balance Sheet Highlights (in thousands) | Item | September 30, 2023 | June 30, 2023 | Change | | :------------------------------------ | :------------------- | :---------------- | :------- | | Total current assets | $674,022 | $623,913 | +$50,109 | | Investments in nonconsolidated affiliates | $50,788 | $394,519 | -$343,731 | | Property and equipment, net | $3,471,141 | $3,307,161 | +$163,980 | | Total assets | $4,864,654 | $4,973,015 | -$108,361 | | Total current liabilities | $642,915 | $692,141 | -$49,226 | | Deferred tax liabilities, net | $285,852 | $379,552 | -$93,700 | | Total liabilities | $2,228,766 | $2,389,150 | -$160,384 | | Total stockholders' equity | $2,635,888 | $2,583,865 | +$52,023 | [Condensed Consolidated Statements of Operations](index=5&type=section&id=Condensed%20Consolidated%20Statements%20of%20Operations%20for%20the%20three%20months%20ended%20September%2030,%202023%20and%202022%20(unaudited)) Net income reached $66,425 thousand, a significant improvement from a prior-year loss, driven by tax benefits and a litigation settlement Condensed Consolidated Statements of Operations Highlights (in thousands) | Item | Three Months Ended Sep 30, 2023 | Three Months Ended Sep 30, 2022 | Change | | :------------------------------------ | :------------------------------ | :------------------------------ | :---------------- | | Revenues | $118,007 | $123,129 | -$5,122 (-4%) | | Direct operating expenses | $(84,499) | $(75,420) | -$9,079 (+12%) | | Selling, general, and administrative expenses | $(87,144) | $(94,631) | +$7,487 (-8%) | | Operating loss | $(69,789) | $(51,055) | -$18,734 (+37%) | | Other income (expense), net | $42,196 | $(415) | +$42,611 (NM) | | Income tax benefit | $90,287 | $1,834 | +$88,453 (NM) | | Net income (loss) | $66,425 | $(44,043) | +$110,468 (NM) | | Basic earnings (loss) per common share | $1.90 | $(1.30) | +$3.20 (NM) | | Diluted earnings (loss) per common share | $1.89 | $(1.30) | +$3.19 (NM) | [Condensed Consolidated Statements of Comprehensive Income (Loss)](index=6&type=section&id=Condensed%20Consolidated%20Statements%20of%20Comprehensive%20Income%20(Loss)%20for%20the%20three%20months%20ended%20September%2030,%202023%20and%202022%20(unaudited)) Comprehensive income reached $60,380 thousand, a significant improvement from a prior-year loss, primarily due to net income Condensed Consolidated Statements of Comprehensive Income (Loss) Highlights (in thousands) | Item | Three Months Ended Sep 30, 2023 | Three Months Ended Sep 30, 2022 | Change | | :------------------------------------ | :------------------------------ | :------------------------------ | :---------------- | | Net income (loss) | $66,425 | $(44,043) | +$110,468 (NM) | | Other comprehensive loss, before income taxes | $(8,160) | $(15,570) | +$7,410 (-48%) | | Comprehensive income (loss) | $60,380 | $(56,669) | +$117,049 (NM) | [Condensed Consolidated Statements of Cash Flows](index=7&type=section&id=Condensed%20Consolidated%20Statements%20of%20Cash%20Flows%20for%20the%20three%20months%20ended%20September%2030,%202023%20and%202022%20(unaudited)) Net cash increased by $22,628 thousand, a significant improvement, driven by investing and financing activities Condensed Consolidated Statements of Cash Flows Highlights (in thousands) | Item | Three Months Ended Sep 30, 2023 | Three Months Ended Sep 30, 2022 | Change | | :------------------------------------ | :------------------------------ | :------------------------------ | :---------------- | | Net cash used in operating activities | $(94,641) | $(81,183) | $(13,458) | | Net cash provided by (used in) investing activities | $66,498 | $(285,218) | +$351,716 (NM) | | Net cash provided by (used in) financing activities | $50,854 | $(20,023) | +$70,877 (NM) | | Net increase (decrease) in cash, cash equivalents, and restricted cash | $22,628 | $(387,117) | +$409,745 (NM) | | Cash, cash equivalents, and restricted cash at end of period | $451,742 | $458,893 | -$7,151 (-2%) | [Condensed Consolidated Statements of Stockholders' Equity and Redeemable Noncontrolling Interests](index=9&type=section&id=Condensed%20Consolidated%20Statements%20of%20Stockholders'%20Equity%20and%20Redeemable%20Noncontrolling%20Interests%20for%20the%20three%20months%20ended%20September%2030,%202023%20and%202022%20(unaudited)) Total stockholders' equity increased to $2,635,888 thousand, primarily driven by net income, despite other comprehensive loss Condensed Consolidated Statements of Stockholders' Equity Highlights (in thousands) | Item | Balance as of June 30, 2023 | Net Income | Other Comprehensive Loss | Share-based Compensation | Tax Withholding | Balance as of Sep 30, 2023 | | :------------------------------------ | :-------------------------- | :--------- | :----------------------- | :----------------------- | :-------------- | :-------------------------- | | Total Sphere Entertainment Co. Stockholders' Equity | $2,583,865 | $66,425 | $(6,045) | $5,789 | $(14,146) | $2,635,888 | [Notes to Condensed Consolidated Financial Statements](index=10&type=section&id=Notes%20to%20Condensed%20Consolidated%20Financial%20Statements%20(unaudited)) These notes provide detailed explanations and disclosures for the unaudited condensed consolidated financial statements [Note 1. Description of Business and Basis of Presentation](index=10&type=section&id=Note%201.%20Description%20of%20Business%20and%20Basis%20of%20Presentation) Sphere Entertainment Co. operates two segments: Sphere (next-generation entertainment) and MSG Networks (regional sports and entertainment) - Sphere Entertainment Co. is comprised of two reportable segments: **Sphere** (next-generation entertainment medium, with its first venue opened in Las Vegas in September 2023) and **MSG Networks** (regional sports and entertainment networks, including MSG Network, MSG Sportsnet, and MSG+ streaming product)[23](index=23&type=chunk)[24](index=24&type=chunk) - The company distributed approximately **67% of MSG Entertainment's common stock** to its stockholders on April 20, 2023, and subsequently sold its retained interest, **no longer holding any MSG Entertainment stock as of September 30, 2023**[26](index=26&type=chunk)[27](index=27&type=chunk) - The company completed the sale of its **66.9% majority interest in Tao Group Hospitality** on May 3, 2023. Both MSG Entertainment and Tao Group Hospitality businesses are presented as **discontinued operations** for all periods[29](index=29&type=chunk)[30](index=30&type=chunk) [Note 2. Accounting Policies](index=11&type=section&id=Note%202.%20Accounting%20Policies) Financial statements adhere to GAAP, relying on estimates; MSG Entertainment and Tao Group Hospitality are discontinued operations - The financial statements are prepared using GAAP for interim information, requiring management to make estimates and assumptions, which are evaluated on an ongoing basis[31](index=31&type=chunk)[38](index=38&type=chunk)[39](index=39&type=chunk) - The company's primary sources of liquidity are cash and cash equivalents and cash flows from operations, with substantial expected uses including working capital, capital spending for Sphere content, and debt service[42](index=42&type=chunk) - Funding operations and refinancing MSG Networks Credit Facilities depends on **Sphere in Las Vegas generating significant positive cash flow in Fiscal Year 2024**; management plans to refinance MSG Networks Credit Facilities prior to maturity in October 2024[43](index=43&type=chunk)[45](index=45&type=chunk) [Note 3. Discontinued Operations](index=14&type=section&id=Note%203.%20Discontinued%20Operations) MSG Entertainment and Tao Group Hospitality are discontinued operations; a $647 thousand loss was recognized from Tao Group disposition - MSG Entertainment and Tao Group Hospitality businesses are classified as **discontinued operations** due to their distributions/dispositions in April and May 2023[46](index=46&type=chunk) Loss from Discontinued Operations (in thousands) | Period | Loss from Discontinued Operations, net of taxes | | :------------------------------------ | :---------------------------------------------- | | Three months ended September 30, 2023 | $(647) | Operating Results of Discontinued Operations (Three Months Ended September 30, 2022, in thousands) | Item | MSGE | Tao | Eliminations | Total | | :------------------------------------ | :------- | :------- | :----------- | :------- | | Revenues | $146,075 | $132,576 | $(562) | $278,089 | | Operating income | $697 | $5,234 | $276 | $6,207 | | Net (loss) income | $(1,770) | $3,754 | $276 | $2,260 | [Note 4. Revenue Recognition](index=15&type=section&id=Note%204.%20Revenue%20Recognition) Total revenues were $118,007 thousand, primarily from MSG Networks' affiliation agreements and Sphere's event-related activities Disaggregated Revenue by Segment and Source (Three Months Ended September 30, 2023, in thousands) | Source | Sphere | MSG Networks | Total | | :------------------------------------ | :------- | :----------- | :------- | | Event-related | $4,059 | $0 | $4,059 | | Sponsorship, signage, Exosphere advertising, and suite licenses | $2,560 | $218 | $2,778 | | Media related, primarily from affiliation agreements | $0 | $109,795 | $109,795 | | Other | $431 | $215 | $646 | | Revenues from subleases | $729 | $0 | $729 | | **Total revenues** | **$7,779** | **$110,228** | **$118,007** | Disaggregated Revenue by Segment and Source (Three Months Ended September 30, 2022, in thousands) | Source | Sphere | MSG Networks | Total | | :------------------------------------ | :------- | :----------- | :------- | | Sponsorship, signage, Exosphere advertising, and suite licenses | $0 | $244 | $244 | | Media related, primarily from affiliation agreements | $0 | $121,812 | $121,812 | | Other | $0 | $423 | $423 | | Revenues from subleases | $650 | $0 | $650 | | **Total revenues** | **$650** | **$122,479** | **$123,129** | Contract Balances (in thousands) | Item | September 30, 2023 | June 30, 2023 | | :------------------------------------ | :------------------- | :---------------- | | Receivables from contracts with customers, net | $114,247 | $115,039 | | Deferred revenue, including non-current portion | $70,904 | $27,397 | [Note 5. Restructuring Charges](index=18&type=section&id=Note%205.%20Restructuring%20Charges) The company incurred $3,391 thousand in restructuring charges for executive and employee termination benefits in the Sphere segment Restructuring Charges (in thousands) | Period | Restructuring Charges | | :------------------------------------ | :-------------------- | | Three months ended September 30, 2023 | $3,391 | | Three months ended September 30, 2022 | $0 | Changes to Restructuring Liability (in thousands) | Item | Amount | | :------------------------------------ | :------- | | June 30, 2023 | $8,891 | | Restructuring charges | $3,391 | | Payments | $(6,804) | | September 30, 2023 | $5,478 | [Note 6. Investments in Nonconsolidated Affiliates](index=19&type=section&id=Note%206.%20Investments%20in%20Nonconsolidated%20Affiliates) Total investments in nonconsolidated affiliates significantly decreased to $50,788 thousand due to MSG Entertainment investment disposition Investments in Nonconsolidated Affiliates (in thousands) | Investment | September 30, 2023 | June 30, 2023 | | :------------------------------------ | :------------------- | :---------------- | | SACO Technologies Inc. | $20,074 | $22,246 | | Holoplot Loan | $20,576 | $20,971 | | Holoplot | $1,417 | $1,542 | | MSG Entertainment | $0 | $341,039 | | Equity investments without readily determinable fair values | $8,721 | $8,721 | | **Total investments in nonconsolidated affiliates** | **$50,788** | **$394,519** | - The company **no longer holds any outstanding common stock of MSG Entertainment** as of September 30, 2023, following sales and repayment of a delayed draw term loan[62](index=62&type=chunk) Realized and Unrealized (Loss) Gain on Equity Investments (in thousands) | Item | Three Months Ended Sep 30, 2023 | Three Months Ended Sep 30, 2022 | | :------------------------------------ | :------------------------------ | :------------------------------ | | Unrealized gain | $0 | $1,969 | | Realized loss from shares of MSG Entertainment Class A common stock sold | $(19,027) | $0 | | **Total realized and unrealized (loss) gain on equity investments** | **$(19,027)** | **$1,969** | [Note 7. Property and Equipment, net](index=20&type=section&id=Note%207.%20Property%20and%20Equipment,%20net) Property and equipment, net, increased to $3,471,141 thousand, primarily due to Sphere in Las Vegas assets placed into service Property and Equipment, net (in thousands) | Item | September 30, 2023 | June 30, 2023 | | :------------------------------------ | :------------------- | :---------------- | | Land | $77,617 | $80,878 | | Buildings | $2,300,506 | $69,049 | | Equipment, furniture, and fixtures | $1,090,194 | $159,786 | | Construction in progress | $85,469 | $3,066,785 | | Total property and equipment, gross | $3,572,277 | $3,394,989 | | Less accumulated depreciation and amortization | $(101,136) | $(87,828) | | **Property and equipment, net** | **$3,471,141** | **$3,307,161** | - During the three months ended September 30, 2023, the company placed **$3,130,028 thousand of construction in progress assets related to Sphere in Las Vegas into service**, initiating depreciation[66](index=66&type=chunk) Depreciation Expense on Property and Equipment (in thousands) | Period | Depreciation Expense | | :------------------------------------ | :------------------- | | Three months ended September 30, 2023 | $13,480 | | Three months ended September 30, 2022 | $5,354 | [Note 8. Goodwill and Intangible Assets](index=20&type=section&id=Note%208.%20Goodwill%20and%20Intangible%20Assets) Goodwill remained stable at $456,807 thousand with no impairment, while intangible assets, net, slightly decreased due to amortization Goodwill by Segment (in thousands) | Segment | September 30, 2023 | June 30, 2023 | | :------------------------------------ | :------------------- | :---------------- | | Sphere | $32,299 | $32,299 | | MSG Networks | $424,508 | $424,508 | | **Total Goodwill** | **$456,807** | **$456,807** | - The company performed its annual impairment test of goodwill during the first quarter of Fiscal Year 2024 and determined **no impairment was identified**[68](index=68&type=chunk) Intangible Assets Subject to Amortization (in thousands) | Item | September 30, 2023 | June 30, 2023 | | :------------------------------------ | :------------------- | :---------------- | | Gross carrying amount | $83,044 | $83,044 | | Accumulated amortization | $(65,913) | $(65,134) | | **Intangible assets, net** | **$17,131** | **$17,910** | [Note 9. Commitments and Contingencies](index=21&type=section&id=Note%209.%20Commitments%20and%20Contingencies) Two Networks Merger litigations settled: $85,000 thousand paid to the company, $48,500 thousand to plaintiffs - As of June 30, 2023, the company had **$3,134,884 thousand in contract obligations**, mainly from media rights agreements, with no material changes during the quarter[70](index=70&type=chunk)[71](index=71&type=chunk) - The MSG Entertainment Litigation, alleging fiduciary breaches, was settled for **$85,000 thousand paid to the company**, fully funded by insurers, resulting in a **$62,647 thousand realized gain**[75](index=75&type=chunk)[76](index=76&type=chunk) - The MSG Networks Litigation, also alleging fiduciary breaches, was settled for **$48,500 thousand to the plaintiffs**, with **$28,000 thousand paid and $20,500 thousand accrued** as of September 30, 2023, and an ongoing dispute with insurers[78](index=78&type=chunk)[79](index=79&type=chunk) [Note 10. Credit Facilities](index=23&type=section&id=Note%2010.%20Credit%20Facilities) Total debt was $1,207,250 thousand; MSG Networks' term loan requires refinancing by October 2024, LV Sphere Term Loan matures December 2027 Outstanding Debt Balances (in thousands) | Facility | September 30, 2023 | June 30, 2023 | | :------------------------------------ | :------------------- | :---------------- | | MSG Networks Term Loan (Current Portion) | $103,125 | $82,500 | | MSG Networks Term Loan (Non-Current Portion, net of deferred financing costs) | $827,940 | $848,267 | | LV Sphere Term Loan Facility (Non-Current Portion, net of deferred financing costs) | $270,395 | $270,120 | | **Total Long-term debt (carrying value)** | **$1,207,250** | **$1,207,250** | - The MSG Networks Term Loan Facility amortizes quarterly and matures on **October 11, 2024**, requiring refinancing of the remaining **$829,125 thousand** as operating cash flows will be insufficient[84](index=84&type=chunk)[45](index=45&type=chunk)[196](index=196&type=chunk) - The LV Sphere Term Loan Facility, a **$275,000 thousand senior secured term loan**, matures on **December 22, 2027**, with no amortization payments prior to maturity and includes financial covenants[88](index=88&type=chunk)[90](index=90&type=chunk)[91](index=91&type=chunk) - The company drew down the full **$65,000 thousand Delayed Draw Term Loan Facility** on July 14, 2023, and repaid it on August 9, 2023, using MSG Entertainment Class A common stock[95](index=95&type=chunk)[96](index=96&type=chunk) [Note 11. Pension Plans and Other Postretirement Benefit Plan](index=27&type=section&id=Note%2011.%20Pension%20Plans%20and%20Other%20Postretirement%20Benefit%20Plan) Net periodic benefit costs for pension plans and postretirement plans decreased, with a $500 thousand contribution to the Networks 1212 Plan Net Periodic Benefit Cost (in thousands) | Item | Pension Plans (Sep 30, 2023) | Pension Plans (Sep 30, 2022) | Postretirement Plan (Sep 30, 2023) | Postretirement Plan (Sep 30, 2022) | | :------------------------------------ | :--------------------------- | :--------------------------- | :--------------------------------- | :--------------------------------- | | Service cost | $61 | $123 | $5 | $15 | | Interest cost | $439 | $1,189 | $17 | $19 | | Expected return on plan assets | $(213) | $(1,719) | $0 | $0 | | Recognized actuarial loss (gain) | $(224) | $501 | $(17) | $9 | | **Net periodic benefit cost** | **$63** | **$94** | **$5** | **$43** | - The company contributed **$500 thousand to the Networks 1212 Plan**, a qualified defined benefit pension plan, during the three months ended September 30, 2023[103](index=103&type=chunk) Total Savings Plan Expenses (in thousands) | Period | Continuing Operations | Discontinued Operations | Total | | :------------------------------------ | :-------------------- | :---------------------- | :------ | | Three months ended September 30, 2023 | $1,210 | $0 | $1,210 | | Three months ended September 30, 2022 | $1,387 | $1,178 | $2,565 | [Note 12. Share-based Compensation](index=28&type=section&id=Note%2012.%20Share-based%20Compensation) Share-based compensation expense decreased to $4,883 thousand, with $55,963 thousand of unrecognized cost remaining for unvested awards Share-based Compensation Expense (in thousands) | Period | Share-based Compensation Expense | | :------------------------------------ | :------------------------------- | | Three months ended September 30, 2023 | $4,883 | | Three months ended September 30, 2022 | $11,490 | - As of September 30, 2023, there was **$55,963 thousand of unrecognized compensation cost** related to unvested RSUs and PSUs, expected to be recognized over approximately **2.47 years**[109](index=109&type=chunk) Award Activity (Units) | Award Type | Granted (Sep 30, 2023) | Vested (Sep 30, 2023) | Granted (Sep 30, 2022) | Vested (Sep 30, 2022) | | :------------------------------------ | :--------------------- | :-------------------- | :--------------------- | :-------------------- | | RSUs | 449 | 564 | 598 | 493 | | PSUs | 404 | 241 | 566 | 82 | [Note 13. Stockholders' Equity](index=29&type=section&id=Note%2013.%20Stockholders'%20Equity) The company has a re-authorized share repurchase program for up to $350,000 thousand of Class A Common Stock, with no repurchases to date - The company has a re-authorized share repurchase program for up to **$350,000 thousand of Class A Common Stock**, but **no shares have been repurchased to date**[115](index=115&type=chunk)[198](index=198&type=chunk) Accumulated Other Comprehensive Loss (in thousands) | Item | Balance as of June 30, 2023 | Other Comprehensive Loss, total | Balance as of Sep 30, 2023 | | :------------------------------------ | :-------------------------- | :------------------------------ | :-------------------------- | | Pension Plans and Postretirement Plan | $(5,138) | $(178) | $(5,316) | | Cumulative Translation Adjustments | $200 | $(5,867) | $(5,667) | | **Total Accumulated Other Comprehensive Loss** | **$(4,938)** | **$(6,045)** | **$(10,983)** | [Note 14. Related Party Transactions](index=30&type=section&id=Note%2014.%20Related%20Party%20Transactions) Dolan Family Group controls 72.1% voting power; company engages in significant related party transactions for services and media rights - The Dolan Family Group beneficially owned **100% of Class B Common Stock** and approximately **5.6% of Class A Common Stock**, collectively representing about **72.1% of the company's aggregate voting power** as of September 30, 2023[118](index=118&type=chunk) Related Party Revenues and Operating Expenses (in thousands) | Item | Three Months Ended Sep 30, 2023 | Three Months Ended Sep 30, 2022 | | :------------------------------------ | :------------------------------ | :------------------------------ | | Revenues | $390 | $0 | | Media rights fees (Operating expenses) | $44,185 | $42,767 | | Corporate general and administrative expenses, net - MSG Entertainment Transition Services Agreement (Operating expenses) | $30,337 | $0 | | **Total operating expenses, net** | **$76,323** | **$34,471** | - Revenues from related parties primarily stem from advertising agreements between **MSG Networks and MSG Sports**[125](index=125&type=chunk) [Note 15. Segment Information](index=31&type=section&id=Note%2015.%20Segment%20Information) The company operates Sphere and MSG Networks segments, evaluating performance using adjusted operating income (loss) (AOI) - The company evaluates segment performance primarily using **adjusted operating income (loss) (AOI)**, a non-GAAP measure that excludes items like depreciation, share-based compensation, and restructuring charges[127](index=127&type=chunk)[128](index=128&type=chunk) Segment Operating Performance (Three Months Ended September 30, 2023, in thousands) | Item | Sphere | MSG Networks | Total | | :------------------------------------ | :------- | :----------- | :------- | | Revenues | $7,779 | $110,228 | $118,007 | | Operating (loss) income | $(98,447) | $28,658 | $(69,789) | | Adjusted operating (loss) income | $(83,066) | $25,185 | $(57,881) | | Capital expenditures | $183,163 | $1,408 | $184,571 | Segment Operating Performance (Three Months Ended September 30, 2022, in thousands) | Item | Sphere | MSG Networks | Total | | :------------------------------------ | :------- | :----------- | :------- | | Revenues | $650 | $122,479 | $123,129 | | Operating (loss) income | $(79,056) | $28,001 | $(51,055) | | Adjusted operating (loss) income | $(64,083) | $33,268 | $(30,815) | | Capital expenditures | $260,239 | $1,227 | $261,466 | [Note 16. Additional Financial Information](index=35&type=section&id=Note%2016.%20Additional%20Financial%20Information) Cash, cash equivalents, and restricted cash totaled $451,742 thousand; other income (expense), net, was positive due to a litigation settlement Cash, Cash Equivalents and Restricted Cash (in thousands) | Item | September 30, 2023 | June 30, 2023 | | :------------------------------------ | :------------------- | :---------------- | | Cash and cash equivalents | $433,507 | $131,965 | | Restricted cash | $18,235 | $297,149 | | **Total cash, cash equivalents and restricted cash** | **$451,742** | **$429,114** | Prepaid Expenses and Other Current Assets (in thousands) | Item | September 30, 2023 | June 30, 2023 | | :------------------------------------ | :------------------- | :---------------- | | Prepaid expenses | $18,812 | $22,616 | | Note and other receivables | $28,441 | $21,453 | | Inventory | $2,388 | $0 | | Current deferred production costs | $11,624 | $6,524 | | Other | $4,990 | $5,492 | | **Total prepaid expenses and other current assets** | **$66,255** | **$56,085** | Other Income (Expense), net (in thousands) | Item | Three Months Ended Sep 30, 2023 | Three Months Ended Sep 30, 2022 | | :------------------------------------ | :------------------------------ | :------------------------------ | | Gain on litigation settlement | $62,647 | $0 | | Realized loss on equity method investments | $(19,027) | $(2,247) | | Other | $(1,424) | $1,832 | | **Total other income (expense), net** | **$42,196** | **$(415)** | [Management's Discussion and Analysis of Financial Condition and Results of Operations](index=36&type=section&id=Item%202.%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) This section analyzes Sphere Entertainment Co.'s financial condition and operating results, covering segment performance, liquidity, and dispositions [Introduction](index=39&type=section&id=Introduction) This introduction outlines the MD&A's purpose, supplementing financial statements and including forward-looking statements on future performance - The MD&A contains forward-looking statements concerning future operating and financial performance, including plans to refinance MSG Networks' debt and the success of Sphere[140](index=140&type=chunk) - Investors are cautioned that forward-looking statements are not guarantees of future performance and involve risks and uncertainties, with actual results potentially differing materially[140](index=140&type=chunk)[143](index=143&type=chunk) [Business Overview](index=39&type=section&id=Business%20Overview) Sphere Entertainment Co. operates Sphere, a new entertainment medium, and MSG Networks, providing regional sports and entertainment programming - Sphere Entertainment Co. is a live entertainment and media company with two segments: **Sphere** (next-generation entertainment medium, first venue in Las Vegas opened September 2023) and **MSG Networks** (regional sports and entertainment networks, including MSG+ streaming)[146](index=146&type=chunk)[147](index=147&type=chunk) - The Sphere segment hosts original immersive productions, concerts, residencies, and sporting/corporate events, supported by Sphere Studios for in-house creative and production services[147](index=147&type=chunk) - MSG Networks broadcasts live local games for **NBA (Knicks) and NHL (Rangers, Islanders, Devils, Sabres)** teams, along with NFL coverage, serving the New York designated market area and surrounding regions[147](index=147&type=chunk) [MSG Entertainment Distribution](index=40&type=section&id=MSG%20Entertainment%20Distribution) The company distributed approximately 67% of MSG Entertainment's common stock and no longer holds any shares as of September 30, 2023 - On April 20, 2023, the company distributed approximately **67% of MSG Entertainment's common stock** to its stockholders, retaining about 33% (MSGE Retained Interest)[151](index=151&type=chunk) - As of September 30, 2023, the company **no longer holds any outstanding common stock of MSG Entertainment**, following sales and debt repayment[152](index=152&type=chunk) - The MSG Entertainment business has been classified as a **discontinued operation** since April 20, 2023[152](index=152&type=chunk) [Tao Group Hospitality Disposition](index=40&type=section&id=Tao%20Group%20Hospitality%20Disposition) The company completed the sale of its 66.9% majority interest in Tao Group Hospitality, which is now classified as a discontinued operation - The company completed the sale of its **66.9% majority interest in Tao Group Hospitality** on May 3, 2023[153](index=153&type=chunk) - The Tao Group Hospitality segment has been classified as a **discontinued operation** since March 31, 2023[154](index=154&type=chunk) [Factors Affecting Operating Results](index=40&type=section&id=Factors%20Affecting%20Operating%20Results) Operating results depend on Sphere's audience attraction and MSG Networks' affiliation agreements, subscriber numbers, and advertising rates - Sphere segment's operating results are dependent on attracting audiences to The Sphere Experience, and advertisers, marketing partners, guests, and artists to events[155](index=155&type=chunk) - MSG Networks' operating results rely on affiliation agreements with Distributors, subscriber numbers, success of its direct-to-consumer product, and advertising rates, influenced by professional sports teams' popularity[155](index=155&type=chunk) - General economic conditions, competition, and investments in new immersive productions are **key factors affecting the company's future performance**[156](index=156&type=chunk)[157](index=157&type=chunk) [Condensed Consolidated Results of Operations](index=41&type=section&id=Condensed%20Consolidated%20Results%20of%20Operations) Net income reached $66,425 thousand, a significant improvement from a prior-year loss, driven by tax benefits and a litigation settlement Consolidated Results of Operations (in thousands) | Item | Three Months Ended Sep 30, 2023 | Three Months Ended Sep 30, 2022 | Change (Amount) | Change (Percentage) | | :------------------------------------ | :------------------------------ | :------------------------------ | :---------------- | :------------------ | | Revenues | $118,007 | $123,129 | $(5,122) | (4)% | | Operating loss | $(69,789) | $(51,055) | $(18,734) | 37 % | | Other income (expense), net | $42,196 | $(415) | $42,611 | NM | | Income tax benefit | $90,287 | $1,834 | $88,453 | NM | | Net income (loss) | $66,425 | $(44,043) | $110,468 | NM | - Depreciation and amortization increased by **$8,126 thousand (132%)** primarily due to Sphere in Las Vegas assets being placed in service[161](index=161&type=chunk) - Other income (expense), net, increased by **$42,611 thousand**, mainly due to a **$62,647 thousand realized gain from the Networks Merger litigation settlement**, partially offset by a **$19,027 thousand realized loss** from the sale of MSGE Retained Interest[165](index=165&type=chunk) - Income tax benefit of **$90,287 thousand** reflects an effective tax rate of **389%**, primarily due to a **$64,401 thousand benefit from a state rate change** and a **$15,655 thousand benefit** from the nontaxable gain on DDTL Facility repayment[167](index=167&type=chunk) [Business Segment Results](index=44&type=section&id=Business%20Segment%20Results) This section details operating results for Sphere and MSG Networks segments, highlighting revenue changes and operating income/loss [Sphere Segment](index=44&type=section&id=Sphere%20Segment) Sphere segment revenues increased significantly to $7,779 thousand, but operating loss also increased due to venue opening and content expenses Sphere Segment Operating Performance (in thousands) | Item | Three Months Ended Sep 30, 2023 | Three Months Ended Sep 30, 2022 | Change (Amount) | Change (Percentage) | | :------------------------------------ | :------------------------------ | :------------------------------ | :---------------- | :------------------ | | Revenues | $7,779 | $650 | $7,129 | NM | | Direct operating expenses | $(7,805) | $0 | $(7,805) | NM | | Selling, general, and administrative expenses | $(84,150) | $(77,191) | $(6,959) | 9 % | | Depreciation and amortization | $(12,377) | $(4,515) | $(7,862) | 174 % | | Operating loss | $(98,447) | $(79,056) | $(19,391) | (25)% | | Adjusted operating loss | $(83,066) | $(64,083) | $(18,983) | (30)% | - The increase in Sphere's revenues was primarily due to **$4,059 thousand from concerts** and **$2,560 thousand from sponsorship, signage, and Exosphere advertising**, reflecting the opening of Sphere in Las Vegas on September 29, 2023[173](index=173&type=chunk)[174](index=174&type=chunk) - Direct operating expenses increased by **$7,805 thousand**, driven by venue operating expenses, event-related direct operating expenses (concerts), and advertising expenses for "The Sphere Experience"[177](index=177&type=chunk)[178](index=178&type=chunk)[179](index=179&type=chunk) [MSG Networks Segment](index=47&type=section&id=MSG%20Networks%20Segment) MSG Networks' revenues decreased by $12,251 thousand due to subscriber decline, but operating income increased from reduced SG&A expenses MSG Networks Segment Operating Performance (in thousands) | Item | Three Months Ended Sep 30, 2023 | Three Months Ended Sep 30, 2022 | Change (Amount) | Change (Percentage) | | :------------------------------------ | :------------------------------ | :------------------------------ | :---------------- | :------------------ | | Revenues | $110,228 | $122,479 | $(12,251) | (10)% | | Direct operating expenses | $(76,694) | $(75,420) | $(1,274) | 2 % | | Selling, general, and administrative expenses | $(2,994) | $(17,440) | $14,446 | (83)% | | Operating income | $28,658 | $28,001 | $657 | 2 % | | Adjusted operating income | $25,185 | $33,268 | $(8,083) | (24)% | - Affiliation fee revenue decreased by **$11,746 thousand**, primarily due to an approximate **11.5% decrease in subscribers**, partially offset by higher affiliation rates[188](index=188&type=chunk) - Selling, general, and administrative expenses decreased by **$14,446 thousand**, mainly due to lower professional fees (**$8,050 thousand**, including litigation-related insurance recoveries) and reduced employee compensation and benefits (**$3,739 thousand**)[190](index=190&type=chunk) [Liquidity and Capital Resources](index=48&type=section&id=Liquidity%20and%20Capital%20Resources) Unrestricted cash increased to $433,507 thousand; liquidity depends on Sphere's cash flow and refinancing MSG Networks' $829,125 thousand debt Cash and Debt Balances (in thousands) | Item | September 30, 2023 | June 30, 2023 | | :------------------------------------ | :------------------- | :---------------- | | Unrestricted cash and cash equivalents | $433,507 | $131,965 | | Restricted cash | $18,235 | $297,149 | | Total debt outstanding | $1,207,250 | $1,207,250 | - The company's liquidity is dependent on **Sphere in Las Vegas generating significant positive cash flow in Fiscal Year 2024** and the successful refinancing of MSG Networks Credit Facilities, as MSG Networks will be unable to generate sufficient operating cash flows to settle its **$829,125 thousand outstanding borrowings maturing within one year**[195](index=195&type=chunk)[196](index=196&type=chunk) Cash Flow Activities (in thousands) | Item | Three Months Ended Sep 30, 2023 | Three Months Ended Sep 30, 2022 | Change | | :------------------------------------ | :------------------------------ | :------------------------------ | :---------------- | | Net cash used in operating activities | $(94,641) | $(81,183) | $(13,458) | | Net cash provided by (used in) investing activities | $66,498 | $(285,218) | $351,716 | | Net cash provided by (used in) financing activities | $50,854 | $(20,023) | $70,877 | | Net increase (decrease) in cash, cash equivalents, and restricted cash | $22,628 | $(387,117) | +$409,745 (NM) | [Seasonality of Our Business](index=51&type=section&id=Seasonality%20of%20Our%20Business) MSG Networks' revenues are seasonal, with higher proportions in the second and third fiscal quarters due to live NBA and NHL programming - MSG Networks segment earns a **higher share of its annual revenues in the second and third fiscal quarters**[215](index=215&type=chunk) - This seasonality is attributed to MSG Networks' advertising revenue being largely derived from the sale of inventory in **live NBA and NHL professional sports programming**[215](index=215&type=chunk) [Recently Issued Accounting Pronouncements and Critical Accounting Estimates](index=51&type=section&id=Recently%20Issued%20Accounting%20Pronouncements%20and%20Critical%20Accounting%20Estimates) No material changes to critical accounting policies, and no goodwill impairment was identified during the annual test for Fiscal Year 2024 - No material changes to critical accounting policies, other than those noted in Item 1[217](index=217&type=chunk) - The annual impairment test for goodwill was performed during the first quarter of Fiscal Year 2024, and **no impairment was identified** for the Sphere or MSG Networks reporting units[218](index=218&type=chunk)[219](index=219&type=chunk) Goodwill Balance by Reporting Unit (in thousands) | Reporting Unit | September 30, 2023 | | :------------------------------------ | :------------------- | | Sphere | $32,299 | | MSG Networks | $424,508 | | **Total Goodwill** | **$456,807** | [Item 3. Quantitative and Qualitative Disclosures About Market Risk](index=53&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) The company faces interest rate risk (200 bps increase: $24,145 thousand annual interest) and foreign currency risk from London Sphere development - A hypothetical **200 basis point increase in floating interest rates** would increase the company's annual interest payments on outstanding credit facilities by **$24,145 thousand**[224](index=224&type=chunk) - The company is exposed to foreign currency exchange rate risk, primarily with the **British pound sterling**, due to its investment in land for future Sphere development in London[225](index=225&type=chunk) - A hypothetical **9.42% fluctuation in the GBP/USD exchange rate** would result in a change of approximately **$19,700 thousand in the company's net asset value**[225](index=225&type=chunk) [Item 4. Controls and Procedures](index=53&type=section&id=Item%204.%20Controls%20and%20Procedures) Disclosure controls and procedures were effective as of September 30, 2023, with no material changes in internal control over financial reporting - The company's disclosure controls and procedures were evaluated and concluded to be **effective as of September 30, 2023**[226](index=226&type=chunk) - There were **no material changes in the company's internal control over financial reporting** during the fiscal quarter ended September 30, 2023[227](index=227&type=chunk) [PART II. OTHER INFORMATION](index=54&type=section&id=PART%20II.%20OTHER%20INFORMATION) This section provides additional information, including legal proceedings, equity security sales, and a list of exhibits [Item 1. Legal Proceedings](index=54&type=section&id=Item%201.%20Legal%20Proceedings) The company settled two Networks Merger litigations, with an $85 million payment to the company and a $48.5 million payment to plaintiffs - Fifteen complaints were filed in connection with the Networks Merger, with **nine disclosure actions voluntarily dismissed**[229](index=229&type=chunk)[230](index=230&type=chunk) - The MSG Entertainment Litigation, alleging fiduciary breaches, was settled for **$85 million paid to the company**, fully funded by insurers, and approved on August 14, 2023[232](index=232&type=chunk)[233](index=233&type=chunk) - The MSG Networks Litigation, also alleging fiduciary breaches, was settled for **$48.5 million to the plaintiffs**, with **$28 million paid and $20.5 million accrued** as of September 30, 2023, and an ongoing dispute with insurers[234](index=234&type=chunk)[235](index=235&type=chunk) [Item 2. Unregistered Sales of Equity Securities, Use of Proceeds, and Issuer Purchases of Equity Securities](index=56&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities,%20Use%20of%20Proceeds,%20and%20Issuer%20Purchases%20of%20Equity%20Securities) The company has a re-authorized share repurchase program for up to $350 million of Class A Common Stock, but no shares have been repurchased - The company has a re-authorized share repurchase program for up to **$350 million of its Class A Common Stock**[238](index=238&type=chunk) - **No shares have been repurchased** under the share repurchase program to date[238](index=238&type=chunk) [Item 6. Exhibits](index=57&type=section&id=Item%206.%20Exhibits) This section lists exhibits filed as part of the Form 10-Q, including agreements, certifications, and iXBRL financial statements - The exhibits include Form of Sphere Entertainment Co. Off-Cycle Performance Stock Option Agreement, Separation Agreement, and certifications by the Principal Executive Officer and Principal Financial Officer[241](index=241&type=chunk) - Financial statements are provided in **Inline Extensible Business Reporting Language (iXBRL) format**[241](index=241&type=chunk)

PART I [Item 1. Business](index=3&type=section&id=Item%201.%20Business) Sphere Entertainment Co. operates two segments, Sphere and MSG Networks, following significant corporate restructuring and asset dispositions - Sphere Entertainment Co. operates two reportable segments: **Sphere (next-generation entertainment)** and **MSG Networks (regional sports and entertainment networks)**[14](index=14&type=chunk) - The Company completed the distribution of approximately **67%** of MSG Entertainment's common stock on **April 20, 2023**, retaining approximately **17%** after further sales and debt repayment[12](index=12&type=chunk)[57](index=57&type=chunk) - The sale of its **66.9%** majority interest in Tao Group Hospitality was completed on **May 3, 2023**[13](index=13&type=chunk) - The first Sphere venue in Las Vegas is expected to open in **September 2023**, featuring a **16K x 16K** LED screen, Sphere Immersive Sound, and 4D multi-sensory technologies[15](index=15&type=chunk)[23](index=23&type=chunk) - MSG Networks launched MSG+, a direct-to-consumer streaming product, in **June 2023**, offering authenticated access and single-game purchases for NBA and NHL teams[32](index=32&type=chunk)[47](index=47&type=chunk) - The company holds a **30%** interest in SACO Technologies Inc. (LED video lighting) and a **25%** interest in Holoplot GmbH (3D audio technology), extending a **€18.8 million** convertible loan to Holoplot in **January 2023**[55](index=55&type=chunk)[56](index=56&type=chunk) - As of **June 30, 2023**, approximately **29%** of the company's employees were represented by unions, with **10%** subject to expired collective bargaining agreements and **67%** expiring by **June 30, 2024**[102](index=102&type=chunk) [Item 1A. Risk Factors](index=24&type=section&id=Item%201A.%20Risk%20Factors) The company faces significant risks from new entertainment technologies, intense competition, substantial indebtedness, and controlled ownership - The success of the Sphere business is highly dependent on the popularity of 'The Sphere Experience' and the ability to attract advertisers, marketing partners, and artists, with **no assurance of success** for its cutting-edge technologies[115](index=115&type=chunk)[118](index=118&type=chunk) - The estimated final construction costs for Sphere in Las Vegas are approximately **$2.3 billion**, net of **$75 million** from The Venetian, with actual costs paid through **August 18, 2023**, at approximately **$2.25 billion**[119](index=119&type=chunk) - MSG Networks' business is vulnerable to declining subscriber numbers, non-renewal of affiliation agreements (e.g., Comcast non-renewal reduced subscribers by **~10%**), and competition from new direct-to-consumer streaming platforms[129](index=129&type=chunk)[137](index=137&type=chunk) - The company has substantial indebtedness, totaling **$1.1 billion** as of **June 30, 2023**, with **$82.5 million** maturing in **Fiscal Year 2024**, and faces risks in refinancing the MSG Networks Credit Facilities by **October 2024**[190](index=190&type=chunk)[192](index=192&type=chunk) - The Dolan family controls approximately **72.3%** of the total voting power of the company's common stock, enabling them to prevent or cause a change in control and influence corporate actions[224](index=224&type=chunk)[225](index=225&type=chunk) [Item 1B. Unresolved Staff Comments](index=57&type=section&id=Item%201B.%20Unresolved%20Staff%20Comments) The company has no unresolved staff comments to report - **No unresolved staff comments**[236](index=236&type=chunk) [Item 2. Properties](index=57&type=section&id=Item%202.%20Properties) The company's properties include leased offices and studios in New York City, a Las Vegas Sphere venue lease, and owned land in London for future development - The company leases approximately **64,000 square feet** for MSG Networks' administrative offices and **18,000 square feet** of studio space in New York City[237](index=237&type=chunk) - Approximately **810,000 square feet** are leased in Las Vegas, Nevada, for the Sphere venue, and **205,000 square feet** are owned in Stratford, London, for a future Sphere venue[238](index=238&type=chunk) - Leased office space (**67,000 sq ft**) and content creation/testing facilities (**153,000 sq ft**) are located in Burbank, California[238](index=238&type=chunk) [Item 3. Legal Proceedings](index=57&type=section&id=Item%203.%20Legal%20Proceedings) Fifteen Networks Merger complaints were consolidated into two litigations, both settled and approved by the Court in August 2023 - **Fifteen complaints** related to the Networks Merger were filed, consolidated into **two litigations**: In re Madison Square Garden Entertainment Corp. Stockholders Litigation and In re MSG Networks Inc. Stockholder Class Action Litigation[240](index=240&type=chunk)[242](index=242&type=chunk)[243](index=243&type=chunk)[245](index=245&type=chunk) - The MSG Entertainment Litigation was settled for **$85 million**, to be fully funded by the other defendants' insurers, and was approved by the Court on **August 14, 2023**[244](index=244&type=chunk) - The MSG Networks Litigation was settled for **$48.5 million**, recorded as a liability, with MSG Networks disputing insurance coverage; the settlement was approved on **August 14, 2023**[247](index=247&type=chunk) [Item 4. Mine Safety Disclosures](index=59&type=section&id=Item%204.%20Mine%20Safety%20Disclosures) This item is not applicable to the company's operations - **Not applicable**[249](index=249&type=chunk) PART II [Item 5. Market for the Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities](index=60&type=section&id=Item%205.%20Market%20for%20the%20Registrant%27s%20Common%20Equity%2C%20Related%20Stockholder%20Matters%20and%20Issuer%20Purchases%20of%20Equity%20Securities) Class A Common Stock (SPHR) is NYSE-listed, with no dividends paid in FY2023, and a re-authorized $350 million share repurchase program remains unused - **Class A Common Stock (SPHR)** is listed on the **New York Stock Exchange**; **Class B Common Stock** is not publicly traded[3](index=3&type=chunk)[252](index=252&type=chunk)[257](index=257&type=chunk) - As of **June 30, 2023**, there were **687** holders of record for Class A Common Stock and **15** for Class B Common Stock[257](index=257&type=chunk) - **No dividends** were paid on common stock during **Fiscal Year 2023**, and there are no current plans for future cash dividends[257](index=257&type=chunk) - A share repurchase program for up to **$350 million** of Class A Common Stock was re-authorized on **March 29, 2023**, with **no shares repurchased** to date[258](index=258&type=chunk) Stock Performance Comparison (April 20, 2020 - June 30, 2023) | Index | 4/20/20 | 6/30/20 | 6/30/21 | 6/30/22 | 6/30/23 | | :----------------------------- | :------ | :------ | :------ | :------ | :------ | | Sphere Entertainment Co. | $100.00 | $114.80 | $128.53 | $80.54 | $90.81 | | Russell 2000 Index | 100.00 | 119.13 | 193.03 | 144.39 | 162.16 | | Russell 3000 Index | 100.00 | 111.76 | 161.11 | 138.77 | 165.07 | | Bloomberg Americas Entertainment Index | 100.00 | 123.07 | 283.23 | 149.70 | 177.25 | [Item 6. [Reserved]](index=61&type=section&id=Item%206.%20%5BReserved%5D) This item is reserved and contains no information - **This item is reserved**[260](index=260&type=chunk) [Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=62&type=section&id=Item%207.%20Management%27s%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) This section analyzes Sphere Entertainment Co.'s financial condition and results for FY2023-2021, covering segment performance, liquidity, and the impact of recent corporate restructuring - The **MSGE Distribution** (**April 20, 2023**) and **Tao Group Hospitality Disposition** (**May 3, 2023**) are classified as **discontinued operations**, significantly impacting comparability of financial results[269](index=269&type=chunk)[271](index=271&type=chunk)[294](index=294&type=chunk) - The Sphere segment is in its **pre-opening phase** and has **not yet generated material revenue**, while MSG Networks' revenue primarily comes from affiliation fees and advertising[279](index=279&type=chunk)[281](index=281&type=chunk) Consolidated Results of Operations (FY2023 vs FY2022) | Metric | FY2023 (in thousands) | FY2022 (in thousands) | Change (Amount) | Change (%) | | :------------------------------------------ | :-------------------- | :-------------------- | :-------------- | :--------- | | Revenues | $573,831 | $610,055 | $(36,224) | (6)% | | Direct operating expenses | $(342,211) | $(320,278) | $(21,933) | 7% | | Selling, general and administrative expenses| $(452,142) | $(419,793) | $(32,349) | 8% | | Depreciation and amortization | $(30,716) | $(22,562) | $(8,154) | 36% | | Restructuring charges | $(27,924) | $(13,404) | $(14,520) | 108% | | Operating loss | $(273,042) | $(165,737) | $(107,305) | 65% | | Other income (expense), net | $536,887 | $(5,518) | $542,405 | NM | | Net income (loss) | $505,680 | $(190,147) | $695,827 | NM | Adjusted Operating Loss (FY2023 vs FY2022) | Segment | FY2023 (in thousands) | FY2022 (in thousands) | Change (Amount) | Change (%) | | :-------------------------- | :-------------------- | :-------------------- | :-------------- | :--------- | | Sphere segment | $(292,409) | $(231,167) | $(61,242) | 26% | | MSG Networks segment | $169,889 | $206,699 | $(36,810) | (18)% | | Consolidated Adjusted Operating Loss | $(122,520) | $(24,468) | $(98,052) | NM | - Net cash provided by operating activities increased by **$12.3 million** to **$153.6 million** in **FY2023**, while net cash used in investing activities decreased by **$150.2 million** to **$653.9 million**, primarily due to proceeds from dispositions and investment sales[395](index=395&type=chunk)[397](index=397&type=chunk) - The company's total debt outstanding as of **June 30, 2023**, was **$1.2 billion**, with **$82.5 million** maturing in **FY2024**. The MSG Networks Credit Facilities mature in **October 2024**, and refinancing is expected[371](index=371&type=chunk)[374](index=374&type=chunk)[680](index=680&type=chunk) Contractual Obligations as of June 30, 2023 (in thousands) | Obligation Type | Total | Year 1 | Years 2-3 | Years 4-5 | More Than 5 Years | | :---------------- | :---------- | :---------- | :---------- | :---------- | :---------------- | | Leases | $184,711 | $10,489 | $31,831 | $22,952 | $119,439 | | Debt repayments | $1,207,250 | $82,500 | $849,750 | $275,000 | — | | **Total** | **$1,391,961**| **$92,989** | **$881,581**| **$297,952**| **$119,439** | [Item 7A. Quantitative and Qualitative Disclosures about Market Risk](index=92&type=section&id=Item%207A.%20Quantitative%20and%20Qualitative%20Disclosures%20about%20Market%20Risk) The company faces market risks from interest rate fluctuations, foreign currency exchange rates, and actuarial assumptions for benefit plans - A hypothetical **200 basis point** increase in floating interest rates would increase the company's annual interest expense by **$24.1 million**[419](index=419&type=chunk) - The company is exposed to **British pound sterling (GBP)** fluctuations; a uniform hypothetical **10%** fluctuation in the GBP/USD exchange rate would result in a **$17.7 million** change in net asset value[420](index=420&type=chunk)[421](index=421&type=chunk) - A **25 basis point** decrease in assumed discount rates for pension and postretirement plans would increase projected benefit obligations by **$890,000** and **$30,000**, respectively[424](index=424&type=chunk) [Item 8. Financial Statements and Supplementary Data](index=93&type=section&id=Item%208.%20Financial%20Statements%20and%20Supplementary%20Data) This section incorporates by reference the company's audited consolidated financial statements and supplementary data, which begin on page F-1 of the Annual Report on Form 10-K - The financial statements and supplementary data are located starting on page **F-1** of this Annual Report on Form 10-K[429](index=429&type=chunk) [Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure](index=93&type=section&id=Item%209.%20Changes%20in%20and%20Disagreements%20with%20Accountants%20on%20Accounting%20and%20Financial%20Disclosure) The company reports no changes in or disagreements with its accountants on accounting and financial disclosure matters - **No changes in and disagreements** with accountants on accounting and financial disclosure[430](index=430&type=chunk) [Item 9A. Controls and Procedures](index=93&type=section&id=Item%209A.%20Controls%20and%20Procedures) Management concluded that disclosure controls and internal control over financial reporting were effective as of June 30, 2023, after remediating a prior material weakness - The company's disclosure controls and procedures were **effective** as of **June 30, 2023**[431](index=431&type=chunk) - Management concluded that internal control over financial reporting was **effective** as of **June 30, 2023**, having **remediated a material weakness** identified in **Fiscal Year 2022** related to capitalized interest costs[206](index=206&type=chunk)[434](index=434&type=chunk) [Item 9B. Other Information](index=93&type=section&id=Item%209B.%20Other%20Information) The company has no other information to disclose under this item - **No other information to disclose**[436](index=436&type=chunk) [Item 9C. Disclosure Regarding Foreign Jurisdictions that Prevent Inspections](index=93&type=section&id=Item%209C.%20Disclosure%20Regarding%20Foreign%20Jurisdictions%20that%20Prevent%20Inspections) This item is not applicable to the company - **Not applicable**[437](index=437&type=chunk) PART III [Item 10. Directors, Executive Officers and Corporate Governance](index=95&type=section&id=Item%2010.%20Directors%2C%20Executive%20Officers%20and%20Corporate%20Governance) Information regarding directors, executive officers, and corporate governance is incorporated by reference from the company's definitive proxy statement for the 2023 annual meeting of stockholders - Information is **incorporated by reference** to the proxy statement for the **2023** annual meeting of stockholders[439](index=439&type=chunk) [Item 11. Executive Compensation](index=95&type=section&id=Item%2011.%20Executive%20Compensation) Details on executive compensation are incorporated by reference from the company's definitive proxy statement for the 2023 annual meeting of stockholders - Information is **incorporated by reference** to the proxy statement for the **2023** annual meeting of stockholders[440](index=440&type=chunk) [Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters](index=95&type=section&id=Item%2012.%20Security%20Ownership%20of%20Certain%20Beneficial%20Owners%20and%20Management%20and%20Related%20Stockholder%20Matters) Information concerning the beneficial ownership of common stock by certain owners and management, along with related stockholder matters, is incorporated by reference from the company's definitive proxy statement for the 2023 annual meeting of stockholders - Information is **incorporated by reference** to the proxy statement for the **2023** annual meeting of stockholders[441](index=441&type=chunk) [Item 13. Certain Relationships and Related Transactions, and Director Independence](index=95&type=section&id=Item%2013.%20Certain%20Relationships%20and%20Related%20Transactions%2C%20and%20Director%20Independence) Information regarding certain relationships, related transactions, and director independence is incorporated by reference from the company's definitive proxy statement for the 2023 annual meeting of stockholders - Information is **incorporated by reference** to the proxy statement for the **2023** annual meeting of stockholders[442](index=442&type=chunk) [Item 14. Principal Accountant Fees and Services](index=95&type=section&id=Item%2014.%20Principal%20Accountant%20Fees%20and%20Services) Information detailing principal accountant fees and services is incorporated by reference from the company's definitive proxy statement for the 2023 annual meeting of stockholders - Information is **incorporated by reference** to the proxy statement for the **2023** annual meeting of stockholders[443](index=443&type=chunk) PART IV [Item 15. Exhibits and Financial Statement Schedules](index=96&type=section&id=Item%2015.%20Exhibits%20and%20Financial%20Statement%20Schedules) This section lists all financial statements, schedules, and exhibits filed with the 10-K report, including various agreements and corporate documents - The section includes **financial statements**, **Schedule II – Valuation and Qualifying Accounts**, and separate financial statements of Madison Square Garden Entertainment Corp. and subsidiaries[446](index=446&type=chunk) - **Numerous exhibits** are filed, including distribution agreements, contribution agreements, credit agreements, employment agreements, and equity compensation plans[447](index=447&type=chunk)[448](index=448&type=chunk)[449](index=449&type=chunk)[450](index=450&type=chunk)[451](index=451&type=chunk)[452](index=452&type=chunk) [Item 16. Form 10-K Summary](index=101&type=section&id=Item%2016.%20Form%2010-K%20Summary) The company has elected not to provide a summary of the Form 10-K information - The Company has **elected not to provide summary information** for Form 10-K[453](index=453&type=chunk)

Financial Data and Key Metrics Changes - For the fiscal 2023 fourth quarter, the company generated revenues of $129 million and reported an adjusted operating loss of $60 million, which included a $90 million adjusted operating loss in the Sphere segment primarily due to corporate overhead expenses related to Sphere Studios and venue preparation costs [25][29]. - The MSG Networks segment generated $128 million in revenues and $31 million in adjusted operating income, reflecting decreases of 8% and 22% respectively compared to the prior year period [29]. Business Line Data and Key Metrics Changes - The Sphere segment's adjusted operating loss was significantly impacted by costs associated with the Las Vegas venue and content development, with expectations for increased operating costs as operations ramp up [25][27]. - MSG Networks experienced a decline in affiliate revenue due to ongoing subscriber losses, although advertising revenue showed strong growth driven by sports gaming and returning advertisers [18][29]. Market Data and Key Metrics Changes - The company anticipates that the Sphere venue in Las Vegas will host a variety of events, including concert residencies and marquee sporting events, with the first major event being the Formula 1 Las Vegas Grand Prix in November [12][13]. - The Exosphere's advertising capabilities have generated significant media coverage and interest from potential advertisers, with an estimated total reach of over 5 billion [14][15]. Company Strategy and Development Direction - The company aims to disrupt the traditional venue model with the Sphere, designed to operate year-round with multiple events daily, leveraging immersive technologies to create a new entertainment medium [8][10]. - Future Spheres are planned to be constructed with a franchise model to reduce capital expenditure, learning from the experience of building the first venue [39][41]. Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the Sphere's potential to generate significant returns despite initial high capital investment, emphasizing the shift from a landlord model to a high-margin experiential business [36][37]. - The company is optimistic about the upcoming launch of the Sphere and expects to see financial impacts from events and experiences starting in the fiscal second quarter [25][26]. Other Important Information - The total construction costs for the Sphere project are expected to be approximately $2.3 billion, with $2.25 billion already paid as of August 18 [32]. - The company has approximately $341 million in unrestricted cash and a debt balance of approximately $1.2 billion, positioning it for future growth [27]. Q&A Session Summary Question: Why does the investment in Sphere make sense despite high costs? - Management acknowledged the unexpected high costs but believes the investment is warranted due to the potential for a new entertainment model that operates year-round and generates higher margins compared to traditional venues [36][37]. Question: What is the plan for additional Spheres and their capital expenditure? - The company plans to adopt a franchise model for future Spheres, which will be less capital-intensive than the first venue, leveraging lessons learned from the initial construction [39][41]. Question: What is the demand for original content like "Postcard from Earth"? - Early demand indicators are not yet available as marketing has not started, but management expects ticket sales to follow a similar pattern to other successful shows, with significant sales occurring close to the event date [48][49]. Question: How will Sphere's cash flows impact MSG Networks' refinancing? - The performance of Sphere will significantly influence decisions regarding MSG Networks' refinancing, with all options being considered as the company monitors the situation [57][69].

Corporate Structure and Financial Position - The Company distributed approximately 67% of the outstanding common stock of MSG Entertainment to its stockholders on April 20, 2023, retaining about 33%[169]. - The Company has classified Tao Group Hospitality as held for sale, resulting in two reportable segments: Entertainment and MSG Networks[173]. - The total debt outstanding as of May 9, 2023, was $1,227,875, reflecting the company's financial obligations post-MSGE Spinco Distribution[244]. - The MSG Networks Credit Facilities include a $1,100,000 term loan facility and a $250,000 revolving credit facility, with no borrowings under the revolving credit facility as of March 31, 2023[257]. - The company entered into a delayed draw term loan facility of up to $65,000 on April 20, 2023, which will mature on October 20, 2024[263]. Revenue and Performance - Revenues for the three months ended March 31, 2023, increased by $10,763 to $363,297, representing a 3% growth compared to the same period in 2022[188]. - For the nine months ended March 31, 2023, revenues rose by $211,050 to $1,139,492, marking a 23% increase year-over-year[189]. - Revenues for the three months ended March 31, 2023 increased by $7,276 to $201,861, and for the nine months ended March 31, 2023, revenues increased by $229,047 to $705,481, representing a 48% increase[207]. - The increase in revenues for the nine months ended March 31, 2023 was primarily driven by a $45,516 increase in revenues subject to the sharing of economics with MSG Sports pursuant to the Arena License Agreements[207]. - The increase in advertising revenue for the three months ended March 31, 2023 was $4,476, attributed to higher sales related to professional sports telecasts[232]. Expenses and Losses - Direct operating expenses for the three months ended March 31, 2023, increased by $12,174 to $210,141, a 6% rise compared to the prior year[188]. - Selling, general and administrative expenses surged by $61,082 to $179,870 for the three months ended March 31, 2023, reflecting a 51% increase year-over-year[188]. - The net loss for the three months ended March 31, 2023, was $58,555, compared to a net loss of $19,306 in the same period of 2022, indicating a significant increase in losses[188]. - Restructuring charges for the three months ended March 31, 2023, rose by $5,808 to $20,498, attributed to workforce reductions in the Entertainment segment[193]. - The operating loss for the three months ended March 31, 2023 was $81,140, an increase of $36,324 compared to the prior year period, attributed to higher direct operating and administrative expenses[222]. Cash Flow and Investments - As of March 31, 2023, cash, cash equivalents, and restricted cash totaled $327,245, down from $822,885 as of June 30, 2022[269]. - Net cash provided by operating activities for the nine months ended March 31, 2023, improved by $31,623 to $137,824 compared to the prior year period[270]. - Net cash used in investing activities increased by $277,558 to $825,484 for the nine months ended March 31, 2023, primarily due to capital expenditures for the Sphere in Las Vegas[271]. - Net cash provided by financing activities increased by $278,005 to $200,485 for the nine months ended March 31, 2023, mainly due to proceeds from the LV Sphere Term Loan Facility[272]. Future Projects and Developments - The Company is completing construction of its first Sphere venue in Las Vegas, which is expected to enhance its entertainment offerings[174]. - The estimated cost for the Sphere in Las Vegas is approximately $2,300,000, with actual construction costs paid through May 9, 2023, being around $2,080,000[252]. - The company expects to open the Sphere venue in September 2023, although construction is subject to potential delays[251]. - The company plans to finance the completion of the Sphere construction from cash-on-hand and cash flows from operations, potentially accessing proceeds from the sale of MSGE Retained Interest if needed[253]. Market and Economic Conditions - The demand for MSG Networks programming is influenced by the popularity of sports teams and the ability to renew affiliation agreements with distributors[167]. - The Company’s future performance is dependent on general economic conditions, which may affect demand for entertainment offerings and advertising revenues[183]. - The impact of COVID-19 on operations has diminished, but concerns regarding new variants and government restrictions remain[181]. Operational Metrics - The Company had 181 Christmas Spectacular performances during the holiday season, with approximately 930,000 tickets sold, representing over a 25% increase in attendance on a per-show basis compared to the prior year[211]. - For the nine months ended March 31, 2023, adjusted operating loss improved to $20,650 from $71,739 in the prior year, primarily due to an increase in revenues[224]. - The effective income tax benefit for the three months ended March 31, 2023, was 14%, compared to an effective tax expense of (46)% in the same period of 2022[199].

Financial Performance - Revenues for the three months ended December 31, 2022, increased by $125,759, or 24%, to $642,198 compared to $516,439 in the prior year[172]. - Operating income for the three months ended December 31, 2022, rose by $38,600, or 109%, to $73,950 compared to $35,350 in the prior year[172]. - Net income for the three months ended December 31, 2022, increased significantly by $65,538, resulting in a net income of $70,557 compared to $5,019 in the prior year[172]. - Revenues for the six months ended December 31, 2022, increased by $232,467, or 29%, to $1,043,416 compared to $810,949 in the prior year[172]. - Net income attributable to Madison Square Garden Entertainment Corp.'s stockholders for the six months ended December 31, 2022, was $22,827, a significant increase from a net loss of $76,961 in the prior year[172]. - Adjusted operating income for the three months ended December 31, 2022 increased by $48,024 to $124,132, representing a 63% increase compared to the prior year[188]. - For the six months ended December 31, 2022, adjusted operating income increased by $40,546 to $126,911, a 47% increase compared to the prior year[188]. Debt and Financial Risks - The Company faces risks related to its substantial debt and the ability of its subsidiaries to manage payments and refinancing[151]. - The principal balance of the company's total debt outstanding as of December 31, 2022 was $2,010,725, an increase from $1,756,898 as of September 30, 2022[238]. - A hypothetical 200 basis point increase in floating interest rates would increase the Company's interest expense by $40,215[281]. - The MSGN Credit Agreement requires a maximum total leverage ratio of 5.50:1.00, with compliance confirmed as of December 31, 2022[254]. Operational Developments - The Company is currently building its first MSG Sphere venue in Las Vegas, which is part of its strategy to expand its entertainment offerings[156]. - The Company continues to explore additional opportunities for expansion in the entertainment industry, with new investments aimed at becoming operationally profitable over time[169]. - The company is exploring a sale of its interest in Tao Group Hospitality to advance the MSG Sphere initiative, which may include additional personnel and content development[239]. - The company is exploring additional domestic and international markets for next-generation venues like MSG Sphere[249]. Revenue Sources and Trends - The demand for the Christmas Spectacular and the performance of professional sports teams significantly influence the Company's revenue levels[166]. - The increase in revenues from the presentation of the Christmas Spectacular was $71,092 for the three months ended December 31, 2022, primarily due to higher ticket-related revenues[196]. - The increase in event-related revenues for the three months ended December 31, 2022 was primarily due to higher revenues from concerts of $7,866[199]. - The increase in advertising revenue for the three and six months ended December 31, 2022 was primarily due to a higher number of live professional sports telecasts and increased per-game advertising sales[217]. Cost Management - The Company is focused on successfully implementing cost reductions and managing discretionary capital projects to improve financial performance[151]. - Direct operating expenses for the three months ended December 31, 2022 were $181,042, an increase of 23% from $147,343 in the prior year[192]. - Selling, general and administrative expenses for the three months ended December 31, 2022 increased by $891 to $38,083, while for the six months ended December 31, 2022, they decreased by $29,268 to $55,899[219]. - Direct operating expenses for the three months ended December 31, 2022 increased by $15,603, or 26%, to $76,483, attributed to higher employee compensation and food and beverage costs[230]. Seasonal Trends - The Company experiences seasonality in revenue, with a disproportionate share earned in the second and third quarters, while the first quarter is typically lower[271]. Cash Flow and Liquidity - As of December 31, 2022, the company's unrestricted cash and cash equivalents were $432,173, a slight decrease from $441,350 as of September 30, 2022[238]. - Net cash provided by operating activities for the six months ended December 31, 2022, was $54.965 million, a decrease of $77.821 million compared to the prior year[268]. - Net cash used in investing activities increased by $243,377 to $575,909 for the six months ended December 31, 2022, primarily due to increased capital expenditures for the MSG Sphere[269]. - Net cash provided by financing activities increased by $286,814 to $229,175 for the six months ended December 31, 2022, mainly due to proceeds from the MSG Sphere Term Loan Facility[270].

Madison Square Garden Entertainment Corp. (MSGE) Q2 2023 Earnings Conference Call February 9, 2023 10:00 AM ET Company Participants Ari Danes - Senior Vice President Investor Relations, Financial Communications and Treasury Dave Byrnes - Executive Vice President and Chief Financial Officer Andrea Greenberg - President and Chief Executive Officer Conference Call Participants Brandon Ross - LightShed Partners David Karnovsky - JPMorgan Devin Brisco - Wolfe Research Paul Golding - Macquarie Capital Operator G ...

Financial Performance - Revenues for the three months ended September 30, 2022, increased by $106,708, or 36%, to $401,218 compared to $294,510 in the prior year[142]. - The net loss for the three months ended September 30, 2022, was $44,043, a decrease of $32,612, or 43%, compared to a net loss of $76,655 in the prior year[142]. - Adjusted operating income decreased by $7,478, or 73%, to $2,779 compared to $10,257 in the prior year[154]. - The operating loss for the three months ended September 30, 2022 was $75,308, an improvement of $39,373, or 34%, compared to a loss of $114,681 in the prior year period[166]. - Adjusted operating loss for the three months ended September 30, 2022 was $44,440, an improvement of $26,952, or 38%, compared to the adjusted operating loss of $71,392 in the prior year period[167]. - The Entertainment segment's revenues increased by $112,863 to $147,102, attributed to higher event-related revenues and the return of live events[160]. - Revenues for Tao Group Hospitality increased by $13,187, or 11%, to $132,651 for the three months ended September 30, 2022, driven by new venue openings and the reopening of previously closed venues[180]. Expenses and Costs - Direct operating expenses rose by $88,140, or 53%, to $253,901, while selling, general and administrative expenses decreased by $10,429, or 6%, to $164,410[142]. - Direct operating expenses for the three months ended September 30, 2022 increased by $65,463 to $101,765 compared to the prior year period, primarily due to higher event-related expenses and venue operating costs[162]. - Direct operating expenses for Tao Group Hospitality increased by $15,484, or 25%, to $76,577 for the three months ended September 30, 2022, primarily due to increased staffing and inflation-related costs[182]. - Selling, general and administrative expenses for MSG Networks decreased by $30,159, or 63%, to $17,816 for the three months ended September 30, 2022, reflecting lower acquisition-related costs[174]. - The increase in direct operating expenses for MSG Networks was primarily due to higher rights fees expense and other programming costs, totaling $6,997 for the three months ended September 30, 2022[173]. Debt and Financing - The Company has incurred a substantial amount of debt, impacting its ability to obtain additional financing if required[121]. - The total debt outstanding as of September 30, 2022, was $1,756,898[190]. - The MSGN Term Loan Facility has a principal amount of $1,100,000, with no borrowings or letters of credit outstanding as of September 30, 2022[201]. - The National Properties Credit Facilities include a $650,000 senior secured term loan facility and a $100,000 revolving credit facility, with compliance on financial covenants as of September 30, 2022[205][208]. - The Tao Credit Facilities consist of a $75,000 term loan facility and a $60,000 revolving credit facility, with outstanding letters of credit totaling $750 as of September 30, 2022[209][212]. - The company plans to utilize cash on hand and cash flows from operations to finance the remaining construction costs of MSG Sphere, with potential for additional capital if necessary[196]. Operational Insights - The Company reported that its operations and results were not materially impacted by the COVID-19 pandemic during the three months ended September 30, 2022, compared to the prior year period[134]. - Attendance at venues may be affected by government actions and health concerns, which could impact revenues from events and sponsorships[121]. - The demand for MSG Networks programming is influenced by the popularity of the sports teams and events broadcasted, as well as the ability to renew affiliation agreements with distributors[121]. - The Company faces risks related to economic conditions, which may lead to lower demand for entertainment offerings and negatively affect revenues[137]. - The company is exploring additional domestic and international markets for future MSG Sphere venues[199]. Cash Flow and Liquidity - As of September 30, 2022, the company's unrestricted cash and cash equivalents were $441,350, down from $828,540 as of June 30, 2022[190]. - As of September 30, 2022, cash, cash equivalents, and restricted cash totaled $458,893, down from $846,010 as of June 30, 2022[214]. - Net cash used in operating activities increased by $88,171 to $81,183 compared to the prior year, primarily due to changes in working capital assets and liabilities[215]. - Net cash used in investing activities rose by $138,916 to $285,218, mainly due to increased capital expenditures for the MSG Sphere[216]. - Net cash used in financing activities decreased by $24,774 to $20,023 compared to the prior year, attributed to the repayment of the Tao Revolving Credit Facility in the prior year[217]. Future Outlook - The company expects MSG Sphere to generate substantial revenue and adjusted operating income annually from various content and sponsorship opportunities[193]. - The Company expects a disproportionate share of revenues and operating income in the second and third quarters of the fiscal year due to seasonal factors[218][219].

Madison Square Garden Entertainment Corp. (MSGE) Q1 2023 Earnings Conference Call November 9, 2022 10:00 AM ET Company Representatives Andrea Greenberg - President, Chief Executive Officer Dave Byrnes - EVP, Chief Financial Officer Ari Danes - Senior Vice President, Investor Relations, Financial Communications and Treasury Conference Call Participants Brandon Ross - LightShed Partners David Katz - Jefferies David Karnovsky - JP Morgan Devin Brisco - Wolfe Research Paul Golding - Macquarie Operator Good morn ...

MSG Networks Overview - MSG Networks, acquired in July 2021, is a leader in sports production and distribution, featuring award-winning networks MSG Network and MSG+[74] - MSG Networks has won more New York Emmy Awards for live sports and original programming than any other regional sports network in the past 10 years[77] - MSG Networks provides access to exclusive live local games and programming for teams like the Knicks and Rangers, airing hundreds of live professional games annually[79] - MSG GO allows subscribers to access content on various devices, currently available to all major distributors[76] - MSG Networks is positioned as a premium destination for sports gaming content, enhancing its programming offerings[80] Tao Group Hospitality - Tao Group Hospitality operates over 70 branded locations across 60 venues in more than 20 markets globally, including major cities like New York and Las Vegas[82] - In Fiscal Year 2022, Tao Group Hospitality opened two new locations and has plans for additional openings, including a waterfront restaurant in Miami[83] - The company has a controlling interest in Tao Group Hospitality, which operates over 70 entertainment dining and nightlife locations across 20 markets globally[131] Employee and Workforce Information - As of June 30, 2022, the company employed approximately 2,200 full-time and 8,700 part-time employees, highlighting its substantial workforce[126] - Approximately 38% of the company's employees are represented by unions, with 7% of union employees under collective bargaining agreements that expired as of June 30, 2022[129] Competition and Market Landscape - The company faces significant competition in the entertainment sector, particularly in New York City, which is one of the most competitive markets globally, with numerous live performances and attractions[108] - The competitive landscape for programming networks is intense, with challenges in securing distribution and programming rights against larger networks and direct-to-consumer services[114] - The company competes for advertising revenue, which is influenced by factors such as viewer preferences and the performance of sports teams[119] Financial and Regulatory Considerations - The Company is subject to potential interest rate risk exposure, with a hypothetical 200 basis point increase in floating interest rates potentially increasing interest expense by $35,247[522] - The GBP/USD exchange rate fluctuated between 1.1999 and 1.3967 during Fiscal Year 2022, with a hypothetical 10% fluctuation resulting in a change of $18,315 in the Company's net asset value[524] - The weighted-average discount rates for the Company's Pension Plans and Postretirement Plan were 4.85% and 4.64% as of June 30, 2022, respectively[527] - A 25 basis point decrease in the assumed discount rates would increase projected benefit obligations by $4,640 for the Pension Plans and $50 for the Postretirement Plan[527] - The expected long-term rate of return on plan assets for the Company's funded pension plans was 4.79% for Fiscal Year 2022[529] - A 25 basis point decrease in the long-term return on pension plan assets assumption would increase net periodic pension benefit cost by $290 for Fiscal Year 2022[530] Community and Social Responsibility - The Company has committed over $5.8 million in aid through the Inspire Scholarship program to support high school seniors with college expenses[90] - The company aims to enhance diversity and inclusion through initiatives led by its Diversity and Inclusion Council, focusing on workforce, workplace, and community[122] Health and Safety Protocols - The company has implemented health and safety protocols in response to COVID-19 to protect employees and guests at its venues[130] Regulatory Compliance - The company is subject to various regulations regarding its websites and mobile applications, including privacy laws and consumer protection regulations[107]