Condensed Consolidating Financial Statements | Condensed Consolidating Financial Statements Debt of AMC Networks includes $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 December 31, 2016 Parent Company Guarantor Subsidiaries Non- Guarantor Subsidiaries Eliminations Consolidated ASSETS Current Assets: Cash and cash equivalents 565 320,950 159,874 — 481,389 Accounts receivable, trade (less allowance for doubtful accounts) — 537,751 162,904 — 700,655 Amounts due from related parties, net — 508 — — 508 Current portion of program rights, net — 307,050 134,080 — 441,130 Prepaid expenses, other current assets and intercompany receivable 948 151,175 15,961 (95,423 ) 72,661 Total current assets 1,513 1,317,434 472,819 (95,423 ) 1,696,343 Property and equipment, net of accumulated depreciation — 104,272 62,364 — 166,636 Investment in affiliates 3,029,922 784,024 — (3,813,946 ) — Program rights, net — 947,657 160,929 — 1,108,586 Long-term intercompany notes receivable — 432,099 817 (432,916 ) — Deferred carriage fees, net — 42,656 1,230 — 43,886 Intangible assets, net — 180,297 305,512 — 485,809 Goodwill — 69,154 588,554 — 657,708 Deferred tax asset, net — — 8,598 — 8,598 Other assets 1,471 116,608 194,950 — 313,029 Total assets 3,032,906 3,994,201 1,795,773 (4,342,285 ) 4,480,595 LIABILITIES AND STOCKHOLDERS’ EQUITY Current Liabilities: Accounts payable — 40,033 48,644 — 88,677 Accrued liabilities and intercompany payable 71,680 182,667 125,505 (95,423 ) 284,429 Current portion of program rights obligations — 226,474 74,371 — 300,845 Deferred revenue — 42,782 10,861 — 53,643 Current portion of long-term debt 222,000 — — — 222,000 Current portion of capital lease obligations — 2,645 1,939 — 4,584 Total current liabilities 293,680 494,601 261,320 (95,423 ) 954,178 Program rights obligations — 365,262 32,913 — 398,175 Long-term debt, net 2,597,263 — — — 2,597,263 Capital lease obligations — 6,647 28,635 — 35,282 Deferred tax liability, net 145,364 — 427 — 145,791 Other liabilities and intercompany notes payable 26,681 97,769 440,685 (432,916 ) 132,219 Total liabilities 3,062,988 964,279 763,980 (528,339 ) 4,262,908 Commitments and contingencies Redeemable noncontrolling interests — — 219,331 — 219,331 Stockholders’ equity: AMC Networks stockholders’ equity (30,082 ) 3,029,922 784,024 (3,813,946 ) (30,082 ) Non-redeemable noncontrolling interests — — 28,438 — 28,438 Total stockholders’ equity (30,082 ) 3,029,922 812,462 (3,813,946 ) (1,644 ) Total liabilities and stockholders’ equity 3,032,906 3,994,201 1,795,773 (4,342,285 ) 4,480,595 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 Total current assets 4,592 1,155,855 416,640 (55,947 ) 1,521,140 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 Deferred tax asset, net — — 10,765 — 10,765 Other assets 1,449 100,620 89,857 — 191,926 Total assets $ 2,803,979 $ 3,793,648 $ 1,752,775 $ (4,099,793 ) $ 4,250,609 LIABILITIES AND STOCKHOLDERS’ DEFICIENCY Current Liabilities: Accounts payable $ 6 $ 44,152 $ 26,990 $ — $ 71,148 Accrued liabilities and intercompany payable 30,857 181,377 97,745 (55,947 ) 254,032 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 178,863 508,218 199,733 (55,947 ) 830,867 Program rights obligations — 415,419 25,172 — 440,591 Long-term debt, net 2,519,808 — — — 2,519,808 Capital lease obligations — 9,268 20,511 — 29,779 Deferred tax liability, net 112,376 — 10,605 — 122,981 Other liabilities and intercompany notes payable 32,209 62,805 409,355 (400,839 ) 103,530 Total liabilities 2,843,256 995,710 665,376 (456,786 ) 4,047,556 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 $ 2,803,979 $ 3,793,648 $ 1,752,775 $ (4,099,793 ) $ 4,250,609 Condensed Consolidating Statement of Income Year Ended December 31, 2016 Parent Company Guarantor Subsidiaries Non- Guarantor Subsidiaries Eliminations Consolidated Revenues, net $ — $ 2,142,325 $ 623,892 $ (10,563 ) $ 2,755,654 Operating expenses: Technical and operating (excluding depreciation and amortization) — 947,707 334,888 (2,611 ) 1,279,984 Selling, general and administrative — 460,150 183,597 (7,719 ) 636,028 Depreciation and amortization — 40,230 44,548 — 84,778 Impairment charges — — 67,805 — 67,805 Restructuring expense — 24,950 4,553 — 29,503 Total operating expenses — 1,473,037 635,391 (10,330 ) 2,098,098 Operating income — 669,288 (11,499 ) (233 ) 657,556 Other income (expense): Interest expense, net (119,192 ) 38,137 (37,513 ) — (118,568 ) Share of affiliates' income (loss) 591,395 (103,464 ) — (487,931 ) — Loss on extinguishment of debt (50,639 ) — — — (50,639 ) Miscellaneous, net (273 ) (2,892 ) (30,592 ) 233 (33,524 ) Total other income (expense) 421,291 (68,219 ) (68,105 ) (487,698 ) (202,731 ) Income (loss) from operations before income taxes 421,291 601,069 (79,604 ) (487,931 ) 454,825 Income tax expense (150,781 ) (9,674 ) (4,407 ) — (164,862 ) Net income (loss) including noncontrolling interest 270,510 591,395 (84,011 ) (487,931 ) 289,963 Net income attributable to noncontrolling interests — — (19,453 ) (19,453 ) Net income (loss) attributable to AMC Networks' stockholders $ 270,510 $ 591,395 $ (103,464 ) $ (487,931 ) $ 270,510 Condensed Consolidating Statement of Income Year Ended December 31, 2015 Parent Company Guarantor Subsidiaries Non- Guarantor Subsidiaries Eliminations Consolidated Revenues, net $ — $ 2,041,244 $ 540,545 $ (854 ) $ 2,580,935 Operating expenses: Technical and operating (excluding depreciation and amortization) — 850,882 287,007 (756 ) 1,137,133 Selling, general and administrative — 471,455 165,285 (160 ) 636,580 Depreciation and amortization — 37,176 45,855 — 83,031 Restructuring expense — 7,772 7,226 — 14,998 Total operating expenses — 1,367,285 505,373 (916 ) 1,871,742 Operating income — 673,959 35,172 62 709,193 Other income (expense): Interest expense, net (81,405 ) (14,456 ) (29,847 ) — (125,708 ) Share of affiliates' income (loss) 715,807 (15,378 ) — (700,429 ) — Miscellaneous, net (87,368 ) 80,865 5,874 (62 ) (691 ) Total other income (expense) 547,034 51,031 (23,973 ) (700,491 ) (126,399 ) Income from operations before income taxes 547,034 724,990 11,199 (700,429 ) 582,794 Income tax (expense) benefit (180,246 ) (9,183 ) (11,661 ) — (201,090 ) Net income (loss) including noncontrolling interest 366,788 715,807 (462 ) (700,429 ) 381,704 Net income attributable to noncontrolling interests — — (14,916 ) — (14,916 ) Net income (loss) attributable to AMC Networks' stockholders $ 366,788 $ 715,807 $ (15,378 ) $ (700,429 ) $ 366,788 Condensed Consolidating Statement of Comprehensive Income Year Ended December 31, 2016 Parent Company Guarantor Subsidiaries Non- Guarantor Subsidiaries Eliminations Consolidated Net income (loss) including noncontrolling interest $ 270,510 $ 591,395 $ (84,011 ) $ (487,931 ) $ 289,963 Other comprehensive income (loss): Foreign currency translation adjustment (45,426 ) — (45,426 ) 45,426 (45,426 ) Unrealized gain on interest rate swaps 22 — — — 22 Other comprehensive income (loss), before income taxes (45,404 ) — (45,426 ) 45,426 (45,404 ) Income tax expense (12,337 ) — — — (12,337 ) Other comprehensive (loss), net of income taxes (57,741 ) — (45,426 ) 45,426 (57,741 ) Comprehensive income (loss) 212,769 591,395 (129,437 ) (442,505 ) 232,222 Comprehensive (income) attributable to noncontrolling interests — — (16,491 ) — (16,491 ) Comprehensive income (loss) attributable to AMC Networks’ stockholders $ 212,769 $ 591,395 $ (145,928 ) $ (442,505 ) $ 215,731 Condensed Consolidating Statement of Comprehensive Income Year Ended December 31, 2015 Parent Company Guarantor Subsidiaries Non- Guarantor Subsidiaries Eliminations Consolidated Net income (loss) including noncontrolling interest $ 366,788 $ 715,807 $ (462 ) $ (700,429 ) $ 381,704 Other comprehensive income (loss): Foreign currency translation adjustment (73,695 ) (73,695 ) 17,843 73,695 (55,852 ) Unrealized gain on interest rate swaps 3,365 — — — 3,365 Other comprehensive (loss) income, before income taxes (70,330 ) (73,695 ) 17,843 73,695 (52,487 ) Income tax expense (4,322 ) — — — (4,322 ) Other comprehensive (loss) income, net of income taxes (74,652 ) (73,695 ) 17,843 73,695 (56,809 ) Comprehensive income 292,136 642,112 17,381 (626,734 ) 324,895 Comprehensive (income) attributable to noncontrolling interests — — (13,123 ) — (13,123 ) Comprehensive income attributable to AMC Networks' stockholders $ 292,136 $ 642,112 $ 4,258 $ (626,734 ) $ 311,772 Condensed Consolidating Statement of Cash Flows Year Ended December 31, 2016 Parent Company Guarantor Subsidiaries Non- Guarantor Subsidiaries Eliminations Consolidated Cash flows from operating activities: Net cash provided by operating activities $ 401,179 $ 548,381 $ 55,450 $ (490,685 ) $ 514,325 Cash flows from investing activities: Capital expenditures — (42,064 ) (37,156 ) — (79,220 ) Payments for acquisitions, net of cash acquired — — (354 ) — (354 ) Purchases of investments — — (95,000 ) — (95,000 ) (Increase) decrease to investment in affiliates (159,533 ) (69,231 ) — 228,764 — Net cash used in investing activities (159,533 ) (111,295 ) (132,510 ) 228,764 (174,574 ) Cash flows from financing activities: Proceeds from the issuance of long-term debt 982,500 — — — 982,500 Principal payments on long-term debt (848,000 ) — — — (848,000 ) Premium and fees paid on extinguishment of debt (40,954 ) — — — (40,954 ) Payments for financing costs (2,070 ) — — — (2,070 ) Deemed repurchases of restricted stock/units (10,822 ) — — — (10,822 ) Purchase of treasury stock (223,237 ) — — — (223,237 ) Proceeds from stock option exercises 1,228 — — — 1,228 Excess tax benefits from share-based compensation arrangements 789 — — — 789 Principal payments on capital lease obligations — (2,475 ) (1,813 ) — (4,288 ) Distributions to noncontrolling interest — — (9,010 ) — (9,010 ) Net cash used in financing activities (140,566 ) (2,475 ) (10,823 ) — (153,864 ) Net increase in cash and cash equivalents from operations 101,080 434,611 (87,883 ) (261,921 ) 185,887 Effect of exchange rate changes on cash and cash equivalents (100,949 ) (261,921 ) 80,130 261,921 (20,819 ) Cash and cash equivalents at beginning of period 434 148,260 167,627 — 316,321 Cash and cash equivalents at end of period $ 565 $ 320,950 $ 159,874 $ — $ 481,389 Condensed Consolidating Statement of Cash Flows Year Ended December 31, 2015 Parent Company Guarantor Subsidiaries Non- Guarantor Subsidiaries Eliminations Consolidated Cash flows from operating activities: Net cash provided by (used in) operating activities $ 1,050,818 $ (294,219 ) $ 312,469 $ (699,029 ) $ 370,039 Cash flows from investing activities: Capital expenditures (9 ) (40,592 ) (27,720 ) — (68,321 ) Payments for acquisitions, net of cash acquired — — (24,199 ) — (24,199 ) Acquisition of investments — — (24,250 ) — (24,250 ) (Increase) decrease to investment in affiliates (890,626 ) 466,322 (201,524 ) 625,828 — Net cash (used in) provided by investing activities (890,635 ) 425,730 (277,693 ) 625,828 (116,770 ) Cash flows from financing activities: Principal payments on long-term debt (74,000 ) — — — (74,000 ) Payment of Promissory Note — — (40,000 ) — (40,000 ) Deemed repurchases of restricted stock/units (14,452 ) — — — (14,452 ) Proceeds from stock option exercises 1,340 — — — 1,340 Excess tax benefits from share-based compensation arrangements 4,610 — — — 4,610 Principal payments on capital lease obligations — (2,218 ) (727 ) — (2,945 ) Cash contributions from member — 8,492 (8,492 ) — — Distributions to noncontrolling interest — — (3,154 ) — (3,154 ) Contributions from noncontrolling interest — — 1,322 — 1,322 Net cash used in financing activities (82,502 ) 6,274 (51,051 ) — (127,279 ) Net increase (decrease) in cash and cash equivalents from operations 77,681 137,785 (16,275 ) (73,201 ) 125,990 Effect of exchange rate changes on cash and cash equivalents (78,828 ) (73,201 ) 67,792 73,201 (11,036 ) Cash and cash equivalents at beginning of year 1,581 83,676 116,110 — 201,367 Cash and cash equivalents at end of year $ 434 $ 148,260 $ 167,627 $ — $ 316,321 |