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 September 30, 2015 Parent Company Guarantor Subsidiaries Non- Guarantor Subsidiaries Eliminations Consolidated ASSETS Current Assets: Cash and cash equivalents $ 485 $ 155,366 $ 151,704 $ — $ 307,555 Accounts receivable, trade (less allowance for doubtful accounts) — 422,052 149,408 — 571,460 Amounts due from related parties, net — 3,786 247 — 4,033 Current portion of program rights, net — 348,128 129,090 — 477,218 Prepaid expenses, other current assets and intercompany receivable 35,425 152,822 17,466 (122,182 ) 83,531 Deferred tax asset, net 35,834 — 1,703 — 37,537 Total current assets 71,744 1,082,154 449,618 (122,182 ) 1,481,334 Property and equipment, net of accumulated depreciation — 86,026 59,191 — 145,217 Investment in affiliates 2,064,388 778,605 — (2,842,993 ) — Program rights, net — 890,235 105,971 — 996,206 Long-term intercompany notes receivable 617,567 400,204 (864 ) (1,016,907 ) — Deferred carriage fees, net — 50,404 2,795 — 53,199 Intangible assets, net — 192,477 357,122 — 549,599 Goodwill — 72,331 644,726 — 717,057 Other assets 21,898 97,428 107,873 — 227,199 Total assets $ 2,775,597 $ 3,649,864 $ 1,726,432 $ (3,982,082 ) $ 4,169,811 LIABILITIES AND STOCKHOLDERS’ DEFICIENCY Current Liabilities: Accounts payable $ 6 $ 97,973 $ 37,809 $ — $ 135,788 Accrued liabilities and intercompany payable 43,192 134,803 128,430 (122,182 ) 184,243 Current portion of program rights obligations — 222,708 79,765 — 302,473 Deferred revenue — 42,918 9,332 — 52,250 Current portion of long-term debt 129,500 — — — 129,500 Current portion of capital lease obligations — 2,346 575 — 2,921 Total current liabilities 172,698 500,748 255,911 (122,182 ) 807,175 Program rights obligations — 403,332 19,598 — 422,930 Long-term debt 2,576,446 — — — 2,576,446 Capital lease obligations — 9,918 14,897 — 24,815 Deferred tax liability, net 114,085 — 13,370 — 127,455 Other liabilities and intercompany notes payable 31,246 671,478 408,202 (1,016,907 ) 94,019 Total liabilities 2,894,475 1,585,476 711,978 (1,139,089 ) 4,052,840 Commitments and contingencies Redeemable noncontrolling interests — — 210,420 — 210,420 Stockholders’ deficiency: AMC Networks stockholders’ (deficiency) equity (118,878 ) 2,064,388 778,605 (2,842,993 ) (118,878 ) Total AMC Networks stockholders’ (deficiency) equity (118,878 ) 2,064,388 778,605 (2,842,993 ) (118,878 ) Non-redeemable noncontrolling interests — — 25,429 — 25,429 Total stockholders' (deficiency) equity (118,878 ) 2,064,388 804,034 (2,842,993 ) (93,449 ) Total liabilities and stockholders’ (deficiency) equity $ 2,775,597 $ 3,649,864 $ 1,726,432 $ (3,982,082 ) $ 4,169,811 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 September 30, 2015 Parent Company Guarantor Subsidiaries Non- Guarantor Subsidiaries Eliminations Consolidated Revenues, net $ — $ 494,636 $ 137,704 $ (175 ) $ 632,165 Operating expenses: Technical and operating (excluding depreciation and amortization) — 220,918 72,366 (188 ) 293,096 Selling, general and administrative — 112,607 43,727 (26 ) 156,308 Restructuring expense — 230 2,401 — 2,631 Depreciation and amortization — 9,344 11,518 — 20,862 Total operating expenses — 343,099 130,012 (214 ) 472,897 Operating income — 151,537 7,692 39 159,268 Other income (expense): Interest expense, net (19,197 ) (2,898 ) (9,275 ) — (31,370 ) Share of affiliates' income 119,870 (25,028 ) — (94,842 ) — Miscellaneous, net 1,707 (1,291 ) (8,017 ) (39 ) (7,640 ) Total other income (expense) 102,380 (29,217 ) (17,292 ) (94,881 ) (39,010 ) Income from continuing operations before income taxes 102,380 122,320 (9,600 ) (94,842 ) 120,258 Income tax expense (29,610 ) (2,450 ) (11,298 ) — (43,358 ) Income (loss) from continuing operations 72,770 119,870 (20,898 ) (94,842 ) 76,900 Net income (loss) including noncontrolling interest 72,770 119,870 (20,898 ) (94,842 ) 76,900 Net income attributable to noncontrolling interests — — (4,130 ) — (4,130 ) Net income (loss) attributable to AMC Networks' stockholders $ 72,770 $ 119,870 $ (25,028 ) $ (94,842 ) $ 72,770 Condensed Consolidating Statement of Income Three Months Ended September 30, 2014 Parent Company Guarantor Subsidiaries Non- Guarantor Subsidiaries Eliminations Consolidated Revenues, net $ — $ 420,227 $ 99,323 $ — $ 519,550 Operating expenses: Technical and operating (excluding depreciation and amortization) — 196,783 55,773 — 252,556 Selling, general and administrative — 104,176 28,675 — 132,851 Restructuring expense — 4,746 873 — 5,619 Depreciation and amortization — 9,045 9,250 — 18,295 Total operating expenses — 314,750 94,571 — 409,321 Operating income — 105,477 4,752 — 110,229 Other income (expense): Interest expense, net (17,512 ) (11,904 ) (1,900 ) — (31,316 ) Share of affiliates' income 151,603 (1,538 ) — (150,065 ) — Miscellaneous, net (57,230 ) 50,264 (4,800 ) — (11,766 ) Total other income (expense) 76,861 36,822 (6,700 ) (150,065 ) (43,082 ) Income (loss) from continuing operations before income taxes 76,861 142,299 (1,948 ) (150,065 ) 67,147 Income tax (expense) benefit (23,701 ) 8,853 1,770 — (13,078 ) Income (loss) from continuing operations 53,160 151,152 (178 ) (150,065 ) 54,069 Loss from discontinued operations, net of income taxes — — (966 ) — (966 ) Net income (loss) including noncontrolling interest 53,160 151,152 (1,144 ) (150,065 ) 53,103 Net (income) loss attributable to noncontrolling interests — 451 (394 ) — 57 Net income (loss) attributable to AMC Networks' stockholders $ 53,160 $ 151,603 $ (1,538 ) $ (150,065 ) $ 53,160 Condensed Consolidating Statement of Income Nine Months Ended September 30, 2015 Parent Company Guarantor Subsidiaries Non- Guarantor Subsidiaries Eliminations Consolidated Revenues, net $ — $ 1,498,447 $ 404,116 $ (578 ) $ 1,901,985 Operating expenses: Technical and operating (excluding depreciation and amortization) — 607,176 208,388 (565 ) 814,999 Selling, general and administrative — 345,174 124,637 (44 ) 469,767 Restructuring expense — 902 5,039 — 5,941 Depreciation and amortization — 27,514 34,915 — 62,429 Total operating expenses — 980,766 372,979 (609 ) 1,353,136 Operating income — 517,681 31,137 31 548,849 Other income (expense): Interest expense, net (59,571 ) (15,688 ) (20,477 ) — (95,736 ) Share of affiliates' income 522,142 (17,272 ) — (504,870 ) — Miscellaneous, net (50,645 ) 44,421 (231 ) (31 ) (6,486 ) Total other income (expense) 411,926 11,461 (20,708 ) (504,901 ) (102,222 ) Income from continuing operations before income taxes 411,926 529,142 10,429 (504,870 ) 446,627 Income tax expense (135,227 ) (7,000 ) (13,382 ) — (155,609 ) Income (loss) from continuing operations 276,699 522,142 (2,953 ) (504,870 ) 291,018 Net income (loss) including noncontrolling interest 276,699 522,142 (2,953 ) (504,870 ) 291,018 Net income attributable to noncontrolling interests — — (14,319 ) — (14,319 ) Net income (loss) attributable to AMC Networks' stockholders $ 276,699 $ 522,142 $ (17,272 ) $ (504,870 ) $ 276,699 Condensed Consolidating Statement of Income Nine Months Ended September 30, 2014 Parent Company Guarantor Subsidiaries Non- Guarantor Subsidiaries Eliminations Consolidated Revenues, net $ — $ 1,293,088 $ 273,109 $ — $ 1,566,197 Operating expenses: Technical and operating (excluding depreciation and amortization) — 553,755 148,016 — 701,771 Selling, general and administrative — 345,516 74,571 10 420,097 Restructuring expense — 4,746 2,026 — 6,772 Depreciation and amortization — 25,765 24,455 — 50,220 Total operating expenses — 929,782 249,068 10 1,178,860 Operating income — 363,306 24,041 (10 ) 387,337 Other income (expense): Interest expense, net (59,697 ) (32,489 ) (4,166 ) — (96,352 ) Share of affiliates' income 390,479 4,532 — (395,011 ) — Miscellaneous, net (55,388 ) 49,930 (10,559 ) 10 (16,007 ) Total other income (expense) 275,394 21,973 (14,725 ) (395,001 ) (112,359 ) Income from continuing operations before income taxes 275,394 385,279 9,316 (395,011 ) 274,978 Income tax (expense) benefit (92,212 ) 3,895 (425 ) — (88,742 ) Income from continuing operations 183,182 389,174 8,891 (395,011 ) 186,236 Loss from discontinued operations, net of income taxes — — (3,448 ) — (3,448 ) Net income including noncontrolling interest 183,182 389,174 5,443 (395,011 ) 182,788 Net (income) loss attributable to noncontrolling interests — 1,305 (911 ) — 394 Net income attributable to AMC Networks' stockholders $ 183,182 $ 390,479 $ 4,532 $ (395,011 ) $ 183,182 Condensed Consolidating Statement of Comprehensive Income Three Months Ended September 30, 2015 Parent Company Guarantor Subsidiaries Non- Guarantor Subsidiaries Eliminations Consolidated Net income (loss) including noncontrolling interest $ 72,770 $ 119,870 $ (20,898 ) $ (94,842 ) $ 76,900 Other comprehensive income (loss): Foreign currency translation adjustment (5,121 ) (5,121 ) 2,035 5,121 (3,086 ) Unrealized gain on interest rate swaps 528 — — — 528 Other comprehensive (loss) income, before income taxes (4,593 ) (5,121 ) 2,035 5,121 (2,558 ) Income tax expense (4,532 ) — — — (4,532 ) Other comprehensive (loss) income, net of income taxes (9,125 ) (5,121 ) 2,035 5,121 (7,090 ) Comprehensive income (loss) 63,645 114,749 (18,863 ) (89,721 ) 69,810 Comprehensive (income) attributable to noncontrolling interests — — (4,130 ) — (4,130 ) Comprehensive income (loss) attributable to AMC Networks' stockholders $ 63,645 $ 114,749 $ (22,993 ) $ (89,721 ) $ 65,680 Condensed Consolidating Statement of Comprehensive Income Three Months Ended September 30, 2014 Parent Company Guarantor Subsidiaries Non- Guarantor Subsidiaries Eliminations Consolidated Net income (loss) including noncontrolling interest $ 53,160 $ 151,152 $ (1,144 ) $ (150,065 ) $ 53,103 Other comprehensive income (loss): Foreign currency translation adjustment (57,503 ) (61,207 ) 5,322 61,207 (52,181 ) Unrealized gain on interest rate swaps 1,571 — — — 1,571 Other comprehensive (loss) income, before income taxes (55,932 ) (61,207 ) 5,322 61,207 (50,610 ) Income tax expense (569 ) — — — (569 ) Other comprehensive (loss) income, net of income taxes (56,501 ) (61,207 ) 5,322 61,207 (51,179 ) Comprehensive (loss) income (3,341 ) 89,945 4,178 (88,858 ) 1,924 Comprehensive loss attributable to noncontrolling interests — 451 2,016 — 2,467 Comprehensive (loss) income attributable to AMC Networks' stockholders $ (3,341 ) $ 90,396 $ 6,194 $ (88,858 ) $ 4,391 Condensed Consolidating Statement of Comprehensive Income Nine Months Ended September 30, 2015 Parent Company Guarantor Subsidiaries Non- Guarantor Subsidiaries Eliminations Consolidated Net income (loss) including noncontrolling interest $ 276,699 $ 522,142 $ (2,953 ) $ (504,870 ) $ 291,018 Other comprehensive income (loss): Foreign currency translation adjustment (69,241 ) (69,241 ) 29,449 69,241 (39,792 ) Unrealized gain on interest rate swaps 1,898 — — — 1,898 Other comprehensive (loss) income, before income taxes (67,343 ) (69,241 ) 29,449 69,241 (37,894 ) Income tax expense (868 ) — — — (868 ) Other comprehensive (loss) income, net of income taxes (68,211 ) (69,241 ) 29,449 69,241 (38,762 ) Comprehensive income (loss) 208,488 452,901 26,496 (435,629 ) 252,256 Comprehensive (income) attributable to noncontrolling interests — — (14,319 ) — (14,319 ) Comprehensive income attributable to AMC Networks' stockholders $ 208,488 $ 452,901 $ 12,177 $ (435,629 ) $ 237,937 Condensed Consolidating Statement of Comprehensive Income Nine Months Ended September 30, 2014 Parent Company Guarantor Subsidiaries Non- Guarantor Subsidiaries Eliminations Consolidated Net income including noncontrolling interests $ 183,182 $ 389,174 $ 5,443 $ (395,011 ) $ 182,788 Other comprehensive income (loss): Foreign currency translation adjustment (42,129 ) (45,833 ) — 45,833 (42,129 ) Unrealized gain on interest rate swaps 3,528 — — — 3,528 Other comprehensive loss, before income taxes (38,601 ) (45,833 ) — 45,833 (38,601 ) Income tax expense (1,291 ) — — — (1,291 ) Other comprehensive loss, net of income taxes (39,892 ) (45,833 ) — 45,833 (39,892 ) Comprehensive income 143,290 343,341 5,443 (349,178 ) 142,896 Comprehensive loss attributable to noncontrolling interests — 1,305 652 — 1,957 Comprehensive income attributable to AMC Networks' stockholders $ 143,290 $ 344,646 $ 6,095 $ (349,178 ) $ 144,853 Condensed Consolidating Statement of Cash Flows Nine Months Ended September 30, 2015 Parent Company Guarantor Subsidiaries Non- Guarantor Subsidiaries Eliminations Consolidated Cash flows from operating activities: Net cash provided by operating activities $ 287,714 $ 171,707 $ 344,993 $ (503,441 ) $ 300,973 Cash flows from investing activities: Capital expenditures (9 ) (31,276 ) (17,525 ) — (48,810 ) Payments for acquisitions, net of cash acquired — — (6,545 ) — (6,545 ) Acquisition of investments — — (24,250 ) — (24,250 ) (Increase) decrease to investment in affiliates (152,175 ) 2,238 (284,160 ) 434,097 — Net cash used in investing activities (152,184 ) (29,038 ) (332,480 ) 434,097 (79,605 ) Cash flows from financing activities: Principal payments on long-term debt (55,500 ) — — — (55,500 ) Payment of Promissory Note — — (40,000 ) (40,000 ) Deemed repurchases of restricted stock/units (14,454 ) — — — (14,454 ) Proceeds from stock option exercises 1,183 — — — 1,183 Excess tax benefits from share-based compensation arrangements 4,297 — — — 4,297 Principal payments on capital lease obligations — (1,635 ) (757 ) — (2,392 ) Distributions to noncontrolling interest — — (3,154 ) — (3,154 ) Contributions from noncontrolling interest — — 1,354 — 1,354 Net cash used in financing activities (64,474 ) (1,635 ) (42,557 ) — (108,666 ) Net increase (decrease) in cash and cash equivalents from continuing operations 71,056 141,034 (30,044 ) (69,344 ) 112,702 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 (72,152 ) (69,344 ) 65,638 69,344 (6,514 ) Cash and cash equivalents at beginning of period 1,581 83,676 116,110 — 201,367 Cash and cash equivalents at end of period $ 485 $ 155,366 $ 151,704 $ — $ 307,555 Condensed Consolidated Statement of Cash Flows Nine Months Ended September 30, 2014 Parent Company Guarantor Subsidiaries Non- Guarantor Subsidiaries Eliminations Consolidated Cash flows from operating activities: Net cash provided by operating activities $ 166,339 $ 292,623 $ 25,668 $ (222,800 ) $ 261,830 Cash flows from investing activities: Capital expenditures (1,426 ) (16,144 ) (6,770 ) — (24,340 ) Payment for acquisition of a business, net of cash acquired — — (1,024,427 ) — (1,024,427 ) Acquisition of investments — (3,482 ) (502 ) — (3,984 ) Proceeds from insurance settlements — 654 — — 654 (Increase) decrease to investment in affiliates (43,581 ) (133,386 ) — 176,967 — Net cash used in investing activities (45,007 ) (152,358 ) (1,031,699 ) 176,967 (1,052,097 ) 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 1,070 — — — 1,070 Excess tax benefits from share-based compensation arrangements 5,662 — — — 5,662 Principal payments on capital lease obligations — (1,382 ) (1,325 ) — (2,707 ) Long-term intercompany debt (651,405 ) 651,405 — — — Cash contributions from member — (1,046,413 ) 1,046,413 — — Contributions from noncontrolling interest — — 835 — 835 Net cash (used in) provided by financing activities (71,743 ) (396,390 ) 1,045,923 — 577,790 Net increase (decrease) in cash and cash equivalents from continuing operations 49,589 (256,125 ) 39,892 (45,833 ) (212,477 ) Cash flows from discontinued operations: Net cash used in operating activities — — (2,955 ) — (2,955 ) Net decrease in cash and cash equivalents from discontinued operations — — (2,955 ) — (2,955 ) Effect of exchange rate changes on cash and cash equivalents (45,833 ) (45,833 ) 35,936 45,833 (9,897 ) Cash and cash equivalents at beginning of period 942 519,392 1,617 — 521,951 Cash and cash equivalents at end of period $ 4,698 $ 217,434 $ 74,490 $ — $ 296,622 |