Condensed Consolidating Financial Statements | Condensed Consolidating Financial Statements Long-term debt of AMC Networks includes $45,551 of 7.75% senior notes due July 2021, $600,000 of 4.75% senior notes due December 2022 and $1,000,000 of 5.00% senior notes due April 2024. 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 March 31, 2016 Parent Company Guarantor Subsidiaries Non- Guarantor Subsidiaries Eliminations Consolidated ASSETS Current Assets: Cash and cash equivalents $ 279,468 $ 257,259 $ 166,073 $ — $ 702,800 Accounts receivable, trade (less allowance for doubtful accounts) — 519,912 165,232 — 685,144 Amounts due from related parties, net — 2,743 238 — 2,981 Current portion of program rights, net — 335,169 113,366 — 448,535 Prepaid expenses, other current assets and intercompany receivable 89 136,839 15,073 (89,558 ) 62,443 Deferred tax asset, net 18,881 — 5,178 — 24,059 Total current assets 298,438 1,251,922 465,160 (89,558 ) 1,925,962 Property and equipment, net of accumulated depreciation — 89,929 84,040 — 173,969 Investment in affiliates 2,986,397 852,545 — (3,838,942 ) — Program rights, net — 907,952 138,350 — 1,046,302 Long-term intercompany notes receivable — 400,109 603 (400,712 ) — Deferred carriage fees, net — 44,592 2,469 — 47,061 Intangible assets, net — 187,605 363,316 — 550,921 Goodwill — 71,069 660,924 — 731,993 Other assets 172 101,426 100,423 — 202,021 Total assets $ 3,285,007 $ 3,907,149 $ 1,815,285 $ (4,329,212 ) $ 4,678,229 LIABILITIES AND STOCKHOLDERS’ EQUITY Current Liabilities: Accounts payable $ 301 $ 98,580 $ 32,527 $ — $ 131,408 Accrued liabilities and intercompany payable 51,586 74,889 131,384 (89,558 ) 168,301 Current portion of program rights obligations — 223,834 71,253 — 295,087 Deferred revenue — 56,404 11,764 — 68,168 Current portion of long-term debt 166,500 — — — 166,500 Current portion of capital lease obligations — 2,300 1,920 — 4,220 Total current liabilities 218,387 456,007 248,848 (89,558 ) 833,684 Program rights obligations — 405,338 22,104 — 427,442 Long-term debt 2,801,690 — — — 2,801,690 Capital lease obligations — 8,857 31,165 — 40,022 Deferred tax liability, net 144,968 — 11,519 — 156,487 Other liabilities and intercompany notes payable 34,058 50,550 408,729 (400,712 ) 92,625 Total liabilities 3,199,103 920,752 722,365 (490,270 ) 4,351,950 Commitments and contingencies Redeemable noncontrolling interests — — 208,513 — 208,513 Stockholders’ equity: AMC Networks stockholders’ equity 85,904 2,986,397 852,545 (3,838,942 ) 85,904 Non-redeemable noncontrolling interests — — 31,862 — 31,862 Total stockholders’ equity 85,904 2,986,397 884,407 (3,838,942 ) 117,766 Total liabilities and stockholders’ equity $ 3,285,007 $ 3,907,149 $ 1,815,285 $ (4,329,212 ) $ 4,678,229 Condensed Consolidating Balance Sheet December 31, 2015 Parent Company Guarantor Subsidiaries Non- Guarantor Subsidiaries Eliminations Consolidated ASSETS Current Assets: Cash and cash equivalents $ 434 $ 148,260 $ 167,627 $ — $ 316,321 Accounts receivable, trade (less allowance for doubtful accounts) — 538,657 135,954 — 674,611 Amounts due from related parties, net — 3,818 244 — 4,062 Current portion of program rights, net — 352,664 100,493 — 453,157 Prepaid expenses, other current assets and intercompany receivable 4,158 112,456 12,322 (55,947 ) 72,989 Deferred tax asset, net 14,039 — 2,159 — 16,198 Total current assets 18,631 1,155,855 418,799 (55,947 ) 1,537,338 Property and equipment, net — 93,007 70,853 — 163,860 Investment in affiliates 2,797,938 845,069 — (3,643,007 ) — Program rights, net — 889,756 137,638 — 1,027,394 Long-term intercompany notes receivable — 400,163 676 (400,839 ) — Deferred carriage fees, net — 47,437 2,632 — 50,069 Intangible assets, net — 190,041 359,139 — 549,180 Goodwill — 71,700 664,575 — 736,275 Other assets 1,449 100,620 98,730 — 200,799 Total assets $ 2,818,018 $ 3,793,648 $ 1,753,042 $ (4,099,793 ) $ 4,264,915 LIABILITIES AND STOCKHOLDERS’ DEFICIENCY Current Liabilities: Accounts payable $ 6 $ 97,445 $ 26,990 $ — $ 124,441 Accrued liabilities and intercompany payable 30,857 128,084 97,799 (55,947 ) 200,793 Current portion of program rights obligations — 225,375 64,522 — 289,897 Deferred revenue — 54,921 9,308 — 64,229 Current portion of long-term debt 148,000 — — — 148,000 Current portion of capital lease obligations — 2,393 1,168 — 3,561 Total current liabilities 178,863 508,218 199,787 (55,947 ) 830,921 Program rights obligations — 415,419 25,172 — 440,591 Long-term debt 2,519,808 — — — 2,519,808 Capital lease obligations — 9,268 20,511 — 29,779 Deferred tax liability, net 126,415 — 10,818 — 137,233 Other liabilities and intercompany notes payable 32,209 62,805 409,355 (400,839 ) 103,530 Total liabilities 2,857,295 995,710 665,643 (456,786 ) 4,061,862 Commitments and contingencies Redeemable noncontrolling interests — — 211,691 — 211,691 Stockholders’ deficiency: AMC Networks stockholders’ (deficiency) equity (39,277 ) 2,797,938 845,069 (3,643,007 ) (39,277 ) Non-redeemable noncontrolling interests — — 30,639 — 30,639 Total stockholders’ (deficiency) equity (39,277 ) 2,797,938 875,708 (3,643,007 ) (8,638 ) Total liabilities and stockholders’ (deficiency) equity $ 2,818,018 $ 3,793,648 $ 1,753,042 $ (4,099,793 ) $ 4,264,915 Condensed Consolidating Statement of Income Three Months Ended March 31, 2016 Parent Company Guarantor Subsidiaries Non- Guarantor Subsidiaries Eliminations Consolidated Revenues, net $ — $ 554,326 $ 154,737 $ (2,484 ) $ 706,579 Operating expenses: Technical and operating (excluding depreciation and amortization) — 190,110 84,847 (683 ) 274,274 Selling, general and administrative — 114,357 41,348 (1,804 ) 153,901 Restructuring expense (credit) — (70 ) 35 — (35 ) Depreciation and amortization — 10,075 9,557 — 19,632 Total operating expenses — 314,472 135,787 (2,487 ) 447,772 Operating income — 239,854 18,950 3 258,807 Other income (expense): Interest expense, net (30,572 ) 9,293 (9,750 ) — (31,029 ) Share of affiliates’ income (loss) 246,047 (770 ) — (245,277 ) — Loss on extinguishment of debt (48,334 ) — — — (48,334 ) Miscellaneous, net (79 ) (21 ) (734 ) (3 ) (837 ) Total other income (expense) 167,062 8,502 (10,484 ) (245,280 ) (80,200 ) Income from operations before income taxes 167,062 248,356 8,466 (245,277 ) 178,607 Income tax expense (53,618 ) (2,309 ) (2,616 ) — (58,543 ) Net income including noncontrolling interests 113,444 246,047 5,850 (245,277 ) 120,064 Net income attributable to noncontrolling interests — — (6,620 ) — (6,620 ) Net income (loss) attributable to AMC Networks’ stockholders $ 113,444 $ 246,047 $ (770 ) $ (245,277 ) $ 113,444 Condensed Consolidating Statement of Income Three Months Ended March 31, 2015 Parent Company Guarantor Subsidiaries Non- Guarantor Subsidiaries Eliminations Consolidated Revenues, net $ — $ 539,444 $ 129,463 $ (225 ) $ 668,682 Operating expenses: Technical and operating (excluding depreciation and amortization) — 196,758 65,621 (206 ) 262,173 Selling, general and administrative — 118,486 36,091 2 154,579 Restructuring expense — 114 542 — 656 Depreciation and amortization — 8,967 11,560 — 20,527 Total operating expenses — 324,325 113,814 (204 ) 437,935 Operating income — 215,119 15,649 (21 ) 230,747 Other income (expense): Interest expense, net (20,353 ) (10,466 ) (1,768 ) — (32,587 ) Share of affiliates’ income 275,985 4,385 — (280,370 ) — Miscellaneous, net (76,315 ) 69,315 (3,251 ) 21 (10,230 ) Total other income (expense) 179,317 63,234 (5,019 ) (280,349 ) (42,817 ) Income from operations before income taxes 179,317 278,353 10,630 (280,370 ) 187,930 Income tax expense (58,398 ) (2,367 ) (489 ) — (61,254 ) Net income including noncontrolling interests 120,919 275,986 10,141 (280,370 ) 126,676 Net income attributable to noncontrolling interests — — (5,756 ) — (5,756 ) Net income attributable to AMC Networks’ stockholders $ 120,919 $ 275,986 $ 4,385 $ (280,370 ) $ 120,920 Condensed Consolidating Statement of Comprehensive Income Three Months Ended March 31, 2016 Parent Company Guarantor Subsidiaries Non- Guarantor Subsidiaries Eliminations Consolidated Net income including noncontrolling interest $ 113,444 $ 246,047 $ 5,850 $ (245,277 ) $ 120,064 Other comprehensive income (loss): Foreign currency translation adjustment (2,845 ) (2,845 ) 18,230 2,845 15,385 Unrealized gain on interest rate swaps (1,578 ) — — — (1,578 ) Other comprehensive (loss) income, before income taxes (4,423 ) (2,845 ) 18,230 2,845 13,807 Income tax expense (1,899 ) — — — (1,899 ) Other comprehensive (loss) income, net of income taxes (6,322 ) (2,845 ) 18,230 2,845 11,908 Comprehensive income (loss) 107,122 243,202 24,080 (242,432 ) 131,972 Comprehensive income attributable to noncontrolling interests — — (7,032 ) — (7,032 ) Comprehensive income attributable to AMC Networks’ stockholders $ 107,122 $ 243,202 $ 17,048 $ (242,432 ) $ 124,940 Condensed Consolidating Statement of Comprehensive Income Three Months Ended March 31, 2015 Parent Company Guarantor Subsidiaries Non- Guarantor Subsidiaries Eliminations Consolidated Net income including non controlling interest $ 120,919 $ 275,986 $ 10,141 $ (280,370 ) $ 126,676 Other comprehensive income (loss): Foreign currency translation adjustment (71,711 ) (71,692 ) 10,886 71,692 (60,825 ) Unrealized gain on interest rate swaps 696 — — — 696 Other comprehensive (loss) income, before income taxes (71,015 ) (71,692 ) 10,886 71,692 (60,129 ) Income tax expense (2,279 ) — — — (2,279 ) Other comprehensive (loss) income, net of income taxes (73,294 ) (71,692 ) 10,886 71,692 (62,408 ) Comprehensive income 47,625 204,294 21,027 (208,678 ) 64,268 Comprehensive income attributable to noncontrolling interests — — (4,332 ) — (4,332 ) Comprehensive income attributable to AMC Networks’ stockholders $ 47,625 $ 204,294 $ 16,695 $ (208,678 ) $ 59,936 Condensed Consolidating Statement of Cash Flows Three Months Ended March 31, 2016 Parent Company Guarantor Subsidiaries Non- Guarantor Subsidiaries Eliminations Consolidated Cash flows from operating activities: Net cash provided by operating activities $ 204,100 $ 193,453 $ 19,383 $ (249,552 ) $ 167,384 Cash flows from investing activities: Capital expenditures 2 (8,151 ) (4,238 ) — (12,387 ) (Increase) decrease to investment in affiliates (160,665 ) (72,411 ) (13,181 ) 246,257 — Net cash used in investing activities (160,663 ) (80,562 ) (17,419 ) 246,257 (12,387 ) Cash flows from financing activities: Proceeds from the issuance of long-term debt 982,500 — — — 982,500 Principal payments on long-term debt (691,449 ) — — — (691,449 ) Premium and fees paid on extinguishment of debt (39,179 ) — — — (39,179 ) Payments for financing costs (2,070 ) — — — (2,070 ) Deemed repurchases of restricted stock/units (10,413 ) — — — (10,413 ) Proceeds from stock option exercises 1,200 — — — 1,200 Excess tax benefits from share-based compensation arrangements 852 — — — 852 Principal payments on capital lease obligations — (597 ) (489 ) — (1,086 ) Distributions to noncontrolling interest — — (8,968 ) — (8,968 ) Net cash provided by (used in) financing activities 241,441 (597 ) (9,457 ) — 231,387 Net increase (decrease) in cash and cash equivalents from operations 284,878 112,294 (7,493 ) (3,295 ) 386,384 Effect of exchange rate changes on cash and cash equivalents (5,844 ) (3,295 ) 5,939 3,295 95 Cash and cash equivalents at beginning of period 434 148,260 167,627 — 316,321 Cash and cash equivalents at end of period $ 279,468 $ 257,259 $ 166,073 $ — $ 702,800 Condensed Consolidated Statement of Cash Flows Three Months Ended March 31, 2015 Parent Company Guarantor Subsidiaries Non- Guarantor Subsidiaries Eliminations Consolidated Cash flows from operating activities: Net cash provided by operating activities $ 223,495 $ 111,816 $ 25,373 $ (280,489 ) $ 80,195 Cash flows from investing activities: Capital expenditures (9 ) (13,416 ) (4,823 ) — (18,248 ) Payments for acquisitions, net of cash acquired — — (6,581 ) — (6,581 ) Acquisition of investments — (82 ) (25,128 ) — (25,210 ) Increase to investment in affiliates (122,915 ) (14,892 ) (70,990 ) 208,797 — Net cash used in investing activities (122,924 ) (28,390 ) (107,522 ) 208,797 (50,039 ) Cash flows from financing activities: Principal payments on long-term debt (18,500 ) — — — (18,500 ) Deemed repurchases of restricted stock/units (12,848 ) — — — (12,848 ) Proceeds from stock option exercises 130 — — — 130 Excess tax benefits from share-based compensation arrangements 3,672 — — — 3,672 Principal payments on capital lease obligations — (542 ) (878 ) — (1,420 ) Net cash used in financing activities (27,546 ) (542 ) (878 ) — (28,966 ) Net increase (decrease) in cash and cash equivalents from operations 73,025 82,884 (83,027 ) (71,692 ) 1,190 Effect of exchange rate changes on cash and cash equivalents (73,735 ) (71,692 ) 65,485 71,692 (8,250 ) Cash and cash equivalents at beginning of period 1,581 83,676 116,110 — 201,367 Cash and cash equivalents at end of period $ 871 $ 94,868 $ 98,568 $ — $ 194,307 |