Condensed Consolidating Financial Statements | Condensed Consolidating Financial Statements Long-term debt of AMC Networks includes $700,000 of 7.75% senior notes due July 2021 and $600,000 of 4.75% senior notes due December 2022. All outstanding senior notes issued by AMC Networks are guaranteed on a senior unsecured basis by certain of its existing and future domestic restricted subsidiaries (the “Guarantor Subsidiaries”). All Guarantor Subsidiaries are owned 100% by AMC Networks. The outstanding notes are fully and unconditionally guaranteed by the Guarantor Subsidiaries on a joint and several basis. Set forth below are condensed consolidating financial statements presenting the financial position, results of operations, comprehensive income, and cash flows of (i) the Parent Company, (ii) the Guarantor Subsidiaries on a combined basis (as such guarantees are joint and several), (iii) the direct and indirect non-guarantor subsidiaries of the Parent Company (the “Non-Guarantor Subsidiaries”) on a combined basis and (iv) reclassifications and eliminations necessary to arrive at the information for the Company on a consolidated basis. Basis of Presentation In presenting the condensed consolidating financial statements, the equity method of accounting has been applied to (i) the Parent Company's interests in the Guarantor Subsidiaries and the Non-Guarantor Subsidiaries, and (ii) the Guarantor Subsidiaries' interests in the Non-Guarantor Subsidiaries, even though all such subsidiaries meet the requirements to be consolidated under GAAP. All intercompany balances and transactions between the Parent Company, the Guarantor Subsidiaries and the Non-Guarantor Subsidiaries have been eliminated, as shown in the column "Eliminations." The accounting basis in all subsidiaries, including goodwill and identified intangible assets, have been allocated to the applicable subsidiaries. Condensed Consolidating Balance Sheet June 30, 2015 Parent Company Guarantor Subsidiaries Non- Guarantor Subsidiaries Eliminations Consolidated ASSETS Current Assets: Cash and cash equivalents $ 894 $ 122,665 $ 117,501 $ — $ 241,060 Accounts receivable, trade (less allowance for doubtful accounts) — 453,121 153,905 — 607,026 Amounts due from related parties, net — 3,721 254 — 3,975 Current portion of program rights, net — 339,508 100,975 — 440,483 Prepaid expenses, other current assets and intercompany receivable 24,693 159,592 18,470 (130,549 ) 72,206 Deferred tax asset, net 19,660 — 2,081 — 21,741 Total current assets 45,247 1,078,607 393,186 (130,549 ) 1,386,491 Property and equipment, net of accumulated depreciation — 85,013 55,310 — 140,323 Investment in affiliates 2,037,049 946,829 — (2,983,878 ) — Program rights, net — 929,806 99,121 — 1,028,927 Long-term intercompany notes receivable 615,906 400,258 201,598 (1,217,762 ) — Deferred carriage fees, net — 53,370 2,208 — 55,578 Intangible assets, net — 194,913 367,552 — 562,465 Goodwill — 72,962 654,244 — 727,206 Other assets 23,525 73,060 112,035 — 208,620 Total assets $ 2,721,727 $ 3,834,818 $ 1,885,254 $ (4,332,189 ) $ 4,109,610 LIABILITIES AND STOCKHOLDERS’ DEFICIENCY Current Liabilities: Accounts payable $ 12 $ 102,615 $ 43,633 $ — $ 146,260 Accrued liabilities and intercompany payable 36,994 101,626 146,028 (130,549 ) 154,099 Current portion of program rights obligations — 225,383 55,258 — 280,641 Deferred revenue — 62,868 7,736 — 70,604 Current portion of long-term debt 111,000 — — — 111,000 Current portion of capital lease obligations — 2,312 771 — 3,083 Total current liabilities 148,006 494,804 253,426 (130,549 ) 765,687 Program rights obligations — 441,316 18,334 — 459,650 Long-term debt 2,612,806 — — — 2,612,806 Capital lease obligations — 10,603 15,105 — 25,708 Deferred tax liability, net 121,398 — 9,744 — 131,142 Other liabilities and intercompany notes payable 32,177 851,046 409,239 (1,217,762 ) 74,700 Total liabilities 2,914,387 1,797,769 705,848 (1,348,311 ) 4,069,693 Commitments and contingencies Redeemable noncontrolling interests — — 208,287 — 208,287 Stockholders’ deficiency: AMC Networks stockholders’ (deficiency) equity (192,660 ) 2,037,049 946,829 (2,983,878 ) (192,660 ) Total AMC Networks stockholders’ (deficiency) equity (192,660 ) 2,037,049 946,829 (2,983,878 ) (192,660 ) Non-redeemable noncontrolling interests — — 24,290 — 24,290 Total stockholders' (deficiency) equity (192,660 ) 2,037,049 971,119 (2,983,878 ) (168,370 ) Total liabilities and stockholders’ (deficiency) equity $ 2,721,727 $ 3,834,818 $ 1,885,254 $ (4,332,189 ) $ 4,109,610 Condensed Consolidating Balance Sheet December 31, 2014 Parent Company Guarantor Subsidiaries Non- Guarantor Subsidiaries Eliminations Consolidated ASSETS Current Assets: Cash and cash equivalents $ 1,581 $ 83,676 $ 116,110 $ — $ 201,367 Accounts receivable, trade (less allowance for doubtful accounts) — 443,720 143,473 — 587,193 Amounts due from related parties, net — 3,846 256 — 4,102 Current portion of program rights, net — 350,750 86,552 — 437,302 Prepaid expenses, other current assets and intercompany receivable 44,011 75,631 6,702 (52,050 ) 74,294 Deferred tax asset, net 22,221 — 2,601 — 24,822 Total current assets 67,813 957,623 355,694 (52,050 ) 1,329,080 Property and equipment, net of accumulated depreciation — 80,064 53,780 — 133,844 Investment in affiliates 1,851,065 1,237,919 — (3,088,984 ) — Program rights, net — 878,294 81,647 — 959,941 Long-term intercompany notes receivable 624,100 111,263 198,304 (933,667 ) — Deferred carriage fees, net — 44,644 2,093 — 46,737 Intangible assets, net — 199,785 391,039 — 590,824 Goodwill — 74,224 660,132 — 734,356 Other assets 26,760 63,700 91,345 — 181,805 Total assets $ 2,569,738 $ 3,647,516 $ 1,834,034 $ (4,074,701 ) $ 3,976,587 LIABILITIES AND STOCKHOLDERS’ DEFICIENCY Current Liabilities: Accounts payable $ 15 $ 62,573 $ 39,278 $ — $ 101,866 Accrued liabilities and intercompany payable 39,566 155,569 61,701 (52,050 ) 204,786 Current portion of program rights obligations — 212,310 58,889 — 271,199 Deferred revenue — 30,184 6,704 — 36,888 Promissory note payable — — 40,000 — 40,000 Current portion of long-term debt 74,000 — — — 74,000 Current portion of capital lease obligations — 2,226 727 — 2,953 Total current liabilities 113,581 462,862 207,299 (52,050 ) 731,692 Program rights obligations — 453,343 12,329 — 465,672 Long-term debt 2,685,566 — — — 2,685,566 Capital lease obligations — 11,884 15,502 — 27,386 Deferred tax liability, net 113,742 — 14,324 — 128,066 Other liabilities and intercompany payable 28,604 868,362 122,204 (933,667 ) 85,503 Total liabilities 2,941,493 1,796,451 371,658 (985,717 ) 4,123,885 Commitments and contingencies Redeemable noncontrolling interests — — 204,611 — 204,611 Stockholders’ deficiency: AMC Networks stockholders’ (deficiency) equity (371,755 ) 1,851,065 1,237,919 (3,088,984 ) (371,755 ) Total AMC Networks stockholders’ (deficiency) equity (371,755 ) 1,851,065 1,237,919 (3,088,984 ) (371,755 ) Non-redeemable noncontrolling interests — — 19,846 — 19,846 Total stockholders' (deficiency) equity (371,755 ) 1,851,065 1,257,765 (3,088,984 ) (351,909 ) Total liabilities and stockholders’ (deficiency) equity $ 2,569,738 $ 3,647,516 $ 1,834,034 $ (4,074,701 ) $ 3,976,587 Condensed Consolidating Statement of Income Three Months Ended June 30, 2015 Parent Company Guarantor Subsidiaries Non- Guarantor Subsidiaries Eliminations Consolidated Revenues, net $ — $ 464,368 $ 136,948 $ (178 ) $ 601,138 Operating expenses: Technical and operating (excluding depreciation and amortization) — 189,500 70,401 (171 ) 259,730 Selling, general and administrative — 114,080 44,819 (19 ) 158,880 Restructuring expense — 557 2,097 — 2,654 Depreciation and amortization — 9,203 11,837 — 21,040 — 313,340 129,154 (190 ) 442,304 Operating income — 151,028 7,794 12 158,834 Other income (expense): Interest expense, net (20,020 ) (2,325 ) (9,434 ) — (31,779 ) Share of affiliates' income 126,287 3,368 — (129,655 ) — Miscellaneous, net 23,961 (23,601 ) 11,036 (12 ) 11,384 130,228 (22,558 ) 1,602 (129,667 ) (20,395 ) Income from continuing operations before income taxes 130,228 128,470 9,396 (129,655 ) 138,439 Income tax (expense) benefit (47,219 ) (2,183 ) (1,595 ) — (50,997 ) Income from continuing operations 83,009 126,287 7,801 (129,655 ) 87,442 Net income including noncontrolling interest 83,009 126,287 7,801 (129,655 ) 87,442 Net (income) attributable to noncontrolling interests — — (4,433 ) — (4,433 ) Net income attributable to AMC Networks' stockholders $ 83,009 $ 126,287 $ 3,368 $ (129,655 ) $ 83,009 Condensed Consolidating Statement of Income Three Months Ended June 30, 2014 Parent Company Guarantor Subsidiaries Non- Guarantor Subsidiaries Eliminations Consolidated Revenues, net $ — $ 412,773 $ 109,320 $ — $ 522,093 Operating expenses: Technical and operating (excluding depreciation and amortization) — 175,522 56,522 — 232,044 Selling, general and administrative — 114,963 26,917 10 141,890 Restructuring expense — — 1,153 — 1,153 Depreciation and amortization — 8,511 9,020 — 17,531 — 298,996 93,612 10 392,618 Operating income — 113,777 15,708 (10 ) 129,475 Other income (expense): Interest expense, net (19,953 ) (12,213 ) (1,439 ) — (33,605 ) Share of affiliates' income 115,703 9,663 — (125,366 ) — Miscellaneous, net (4,500 ) 6,461 (1,102 ) 10 869 91,250 3,911 (2,541 ) (125,356 ) (32,736 ) Income from continuing operations before income taxes 91,250 117,688 13,167 (125,366 ) 96,739 Income tax expense (32,595 ) (2,417 ) (1,547 ) — (36,559 ) Income from continuing operations 58,655 115,271 11,620 (125,366 ) 60,180 Loss from discontinued operations, net of income taxes — — (1,732 ) — (1,732 ) Net income including noncontrolling interest 58,655 115,271 9,888 (125,366 ) 58,448 Net (income) loss attributable to noncontrolling interests — 432 (225 ) — 207 Net income attributable to AMC Networks' stockholders $ 58,655 $ 115,703 $ 9,663 $ (125,366 ) $ 58,655 Condensed Consolidating Statement of Income Six Months Ended June 30, 2015 Parent Company Guarantor Subsidiaries Non- Guarantor Subsidiaries Eliminations Consolidated Revenues, net $ — $ 1,003,811 $ 266,412 $ (403 ) $ 1,269,820 Operating expenses: Technical and operating (excluding depreciation and amortization) — 386,258 136,022 (377 ) 521,903 Selling, general and administrative — 232,567 80,910 (18 ) 313,459 Restructuring expense — 672 2,638 — 3,310 Depreciation and amortization — 18,170 23,397 — 41,567 — 637,667 242,967 (395 ) 880,239 Operating income — 366,144 23,445 (8 ) 389,581 Other income (expense): Interest expense, net (40,374 ) (12,790 ) (11,202 ) — (64,366 ) Share of affiliates' income 402,272 7,756 — (410,028 ) — Miscellaneous, net (52,352 ) 45,712 7,786 8 1,154 309,546 40,678 (3,416 ) (410,020 ) (63,212 ) Income from continuing operations before income taxes 309,546 406,822 20,029 (410,028 ) 326,369 Income tax (expense) benefit (105,617 ) (4,550 ) (2,084 ) — (112,251 ) Income from continuing operations 203,929 402,272 17,945 (410,028 ) 214,118 Net income including noncontrolling interest 203,929 402,272 17,945 (410,028 ) 214,118 Net (income) attributable to noncontrolling interests — — (10,189 ) — (10,189 ) Net income attributable to AMC Networks' stockholders $ 203,929 $ 402,272 $ 7,756 $ (410,028 ) $ 203,929 Condensed Consolidating Statement of Income Six Months Ended June 30, 2014 Parent Company Guarantor Subsidiaries Non- Guarantor Subsidiaries Eliminations Consolidated Revenues, net $ — $ 872,861 $ 173,786 $ — $ 1,046,647 Operating expenses: Technical and operating (excluding depreciation and amortization) — 356,972 92,243 — 449,215 Selling, general and administrative — 241,340 45,896 10 287,246 Restructuring expense — — 1,153 — 1,153 Depreciation and amortization — 16,720 15,205 — 31,925 — 615,032 154,497 10 769,539 Operating income — 257,829 19,289 (10 ) 277,108 Other income (expense): Interest expense, net (42,185 ) (20,585 ) (2,266 ) — (65,036 ) Share of affiliates' income 238,876 6,070 — (244,946 ) — Miscellaneous, net 1,842 (334 ) (5,759 ) 10 (4,241 ) 198,533 (14,849 ) (8,025 ) (244,936 ) (69,277 ) Income from continuing operations before income taxes 198,533 242,980 11,264 (244,946 ) 207,831 Income tax expense (68,511 ) (4,958 ) (2,195 ) — (75,664 ) Income from continuing operations 130,022 238,022 9,069 (244,946 ) 132,167 Loss from discontinued operations, net of income taxes — — (2,482 ) — (2,482 ) Net income including noncontrolling interest 130,022 238,022 6,587 (244,946 ) 129,685 Net (income) loss attributable to noncontrolling interests — 854 (517 ) — 337 Net income attributable to AMC Networks' stockholders $ 130,022 $ 238,876 $ 6,070 $ (244,946 ) $ 130,022 Condensed Consolidating Statement of Comprehensive Income Three Months Ended June 30, 2015 Parent Company Guarantor Subsidiaries Non- Guarantor Subsidiaries Eliminations Consolidated Net income including noncontrolling interest $ 83,009 $ 126,287 $ 7,801 $ (129,655 ) $ 87,442 Other comprehensive income (loss): Foreign currency translation adjustment 7,591 7,572 16,528 (7,572 ) 24,119 Unrealized gain on interest rate swaps 674 — — — 674 Other comprehensive income (loss), before income taxes 8,265 7,572 16,528 (7,572 ) 24,793 Income tax benefit 5,943 — — — 5,943 Other comprehensive income, net of income taxes 14,208 7,572 16,528 (7,572 ) 30,736 Comprehensive income 97,217 133,859 24,329 (137,227 ) 118,178 Comprehensive (income) attributable to noncontrolling interests — — (4,433 ) — (4,433 ) Comprehensive income attributable to AMC Networks' stockholders $ 97,217 $ 133,859 $ 19,896 $ (137,227 ) $ 113,745 Condensed Consolidating Statement of Comprehensive Income Three Months Ended June 30, 2014 Parent Company Guarantor Subsidiaries Non- Guarantor Subsidiaries Eliminations Consolidated Net income including noncontrolling interests $ 58,655 $ 115,271 $ 9,888 $ (125,366 ) $ 58,448 Other comprehensive income (loss): Foreign currency translation adjustment 9,221 9,221 (4,719 ) (9,221 ) 4,502 Unrealized gain on interest rate swaps 1,171 — — — 1,171 Other comprehensive income (loss), before income taxes 10,392 9,221 (4,719 ) (9,221 ) 5,673 Income tax expense (432 ) — — — (432 ) Other comprehensive income (loss), net of income taxes 9,960 9,221 (4,719 ) (9,221 ) 5,241 Comprehensive income 68,615 124,492 5,169 (134,587 ) 63,689 Comprehensive loss (income) attributable to noncontrolling interests — 432 (225 ) — 207 Comprehensive income attributable to AMC Networks' stockholders $ 68,615 $ 124,924 $ 4,944 $ (134,587 ) $ 63,896 Condensed Consolidating Statement of Comprehensive Income Six Months Ended June 30, 2015 Parent Company Guarantor Subsidiaries Non- Guarantor Subsidiaries Eliminations Consolidated Net income including noncontrolling interest $ 203,929 $ 402,272 $ 17,945 $ (410,028 ) $ 214,118 Other comprehensive income (loss): Foreign currency translation adjustment (64,120 ) (64,120 ) 27,414 64,120 (36,706 ) Unrealized gain on interest rate swaps 1,370 — — — 1,370 Other comprehensive (loss) income, before income taxes (62,750 ) (64,120 ) 27,414 64,120 (35,336 ) Income tax benefit 3,664 — — — 3,664 Other comprehensive (loss) income, net of income taxes (59,086 ) (64,120 ) 27,414 64,120 (31,672 ) Comprehensive income 144,843 338,152 45,359 (345,908 ) 182,446 Comprehensive (income) attributable to noncontrolling interests — — (10,189 ) — (10,189 ) Comprehensive income attributable to AMC Networks' stockholders $ 144,843 $ 338,152 $ 35,170 $ (345,908 ) $ 172,257 Condensed Consolidating Statement of Comprehensive Income Six Months Ended June 30, 2014 Parent Company Guarantor Subsidiaries Non- Guarantor Subsidiaries Eliminations Consolidated Net income including noncontrolling interests $ 130,022 $ 238,022 $ 6,587 $ (244,946 ) $ 129,685 Other comprehensive income (loss): Foreign currency translation adjustment 15,374 15,374 (5,322 ) (15,374 ) 10,052 Unrealized gain on interest rate swaps 1,957 — — — 1,957 Other comprehensive income (loss), before income taxes 17,331 15,374 (5,322 ) (15,374 ) 12,009 Income tax expense (722 ) — — — (722 ) Other comprehensive income (loss), net of income taxes 16,609 15,374 (5,322 ) (15,374 ) 11,287 Comprehensive income 146,631 253,396 1,265 (260,320 ) 140,972 Comprehensive loss (income) attributable to noncontrolling interests — 854 (517 ) — 337 Comprehensive income attributable to AMC Networks' stockholders $ 146,631 $ 254,250 $ 748 $ (260,320 ) $ 141,309 Condensed Consolidating Statement of Cash Flows Six Months Ended June 30, 2015 Parent Company Guarantor Subsidiaries Non- Guarantor Subsidiaries Eliminations Consolidated Cash flows from operating activities: Net cash provided by operating activities $ 238,455 $ 169 $ 362,865 $ (411,248 ) $ 190,241 Cash flows from investing activities: Capital expenditures (3 ) (22,875 ) (10,246 ) — (33,124 ) Payments for acquisitions, net of cash acquired — — (6,545 ) — (6,545 ) Acquisition of investments — (369 ) (23,881 ) — (24,250 ) (Increase) decrease to investment in affiliates (134,957 ) 127,384 (339,452 ) 347,025 — Net cash (used in) provided by investing activities (134,960 ) 104,140 (380,124 ) 347,025 (63,919 ) Cash flows from financing activities: Principal payments on long-term debt (37,000 ) — — — (37,000 ) Payment of Promissory Note — — (40,000 ) — (40,000 ) Deemed repurchases of restricted stock/units (14,320 ) — — — (14,320 ) Proceeds from stock option exercises 1,031 — — — 1,031 Excess tax benefits from share-based compensation arrangements 4,038 — — — 4,038 Principal payments on capital lease obligations — (1,097 ) (352 ) — (1,449 ) Distributions to noncontrolling member — — (3,154 ) — (3,154 ) Contributions from noncontrolling member — — 1,373 — 1,373 Net cash (used in) provided by financing activities (46,251 ) (1,097 ) (42,133 ) — (89,481 ) Net increase in cash and cash equivalents from continuing operations 57,244 103,212 (59,392 ) (64,223 ) 36,841 Cash flows from discontinued operations: Net cash used in operating activities — — — — — Net decrease in cash and cash equivalents from discontinued operations — — — — — Effect of exchange rate changes on cash and cash equivalents (57,931 ) (64,223 ) 60,783 64,223 2,852 Cash and cash equivalents at beginning of period 1,581 83,676 116,110 — 201,367 Cash and cash equivalents at end of period $ 894 $ 122,665 $ 117,501 $ — $ 241,060 Condensed Consolidated Statement of Cash Flows Six Months Ended June 30, 2014 Parent Company Guarantor Subsidiaries Non- Guarantor Subsidiaries Eliminations Consolidated Cash flows from operating activities: Net cash provided by operating activities $ 153,255 $ 141,858 $ 37,951 $ (155,613 ) $ 177,451 Cash flows from investing activities: Capital expenditures (1,371 ) (13,086 ) (4,298 ) — (18,755 ) (Increase) decrease to investment in affiliates (38,589 ) (161,166 ) 28,768 170,987 — Payment for acquisition of a business, net of cash acquired — (1,009,286 ) 16,076 — (993,210 ) Proceeds from insurance settlements — 654 — — 654 Net cash (used in) provided by investing activities (39,960 ) (1,182,884 ) 40,546 170,987 (1,011,311 ) Cash flows from financing activities: Proceeds from the issuance of long-term debt 600,000 — — — 600,000 Payments for financing costs (9,266 ) — — — (9,266 ) Purchase of treasury stock (17,804 ) — — — (17,804 ) Proceeds from stock option exercises 925 — — — 925 Excess tax benefits from share-based compensation arrangements 4,708 — — — 4,708 Principal payments on capital lease obligations — (865 ) (447 ) — (1,312 ) Long-term intercompany debt (706,190 ) 706,190 — — — Cash contributions from member — (5,100 ) 5,100 — — Contributions from noncontrolling member — — 835 — 835 Net cash (used in) provided by financing activities (127,627 ) 700,225 5,488 — 578,086 Net (decrease) increase in cash and cash equivalents from continuing operations (14,332 ) (340,801 ) 83,985 15,374 (255,774 ) Cash flows from discontinued operations: Net cash used in operating activities — — (2,719 ) — (2,719 ) Net decrease in cash and cash equivalents from discontinued operations — — (2,719 ) — (2,719 ) Effect of exchange rate changes on cash and cash equivalents 15,374 15,374 5,160 (15,374 ) 20,534 Cash and cash equivalents at beginning of period 942 519,392 1,617 — 521,951 Cash and cash equivalents at end of period $ 1,984 $ 193,965 $ 88,043 $ — $ 283,992 |