Condensed Consolidating Financial Statements | Condensed Consolidating Financial Statements Debt of AMC Networks includes $600 million of 4.75% senior notes due December 2022 and $1 billion 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, 2017 (In thousands) Parent Company Guarantor Subsidiaries Non- Guarantor Subsidiaries Eliminations Consolidated ASSETS Current Assets: Cash and cash equivalents $ 523 $ 262,256 $ 140,869 $ — $ 403,648 Accounts receivable, trade (less allowance for doubtful accounts) — 559,982 156,922 — 716,904 Amounts due from related parties, net — 536 — — 536 Current portion of program rights, net — 322,957 138,048 — 461,005 Prepaid expenses, other current assets and intercompany receivable 16 177,967 16,450 (122,539 ) 71,894 Total current assets 539 1,323,698 452,289 (122,539 ) 1,653,987 Property and equipment, net of accumulated depreciation — 108,318 60,905 — 169,223 Investment in affiliates 3,120,330 805,401 — (3,925,731 ) — Program rights, net — 913,013 164,345 — 1,077,358 Long-term intercompany notes receivable — 431,140 678 (431,818 ) — Deferred carriage fees, net — 39,336 1,067 — 40,403 Intangible assets, net — 177,861 300,899 — 478,760 Goodwill — 68,518 593,558 — 662,076 Deferred tax asset, net — — 8,906 — 8,906 Other assets 1,790 133,612 243,939 — 379,341 Total assets $ 3,122,659 $ 4,000,897 $ 1,826,586 $ (4,480,088 ) $ 4,470,054 LIABILITIES AND STOCKHOLDERS’ EQUITY Current Liabilities: Accounts payable $ 135 $ 55,547 $ 41,795 $ — $ 97,477 Accrued liabilities and intercompany payable 143,519 125,579 153,641 (122,539 ) 300,200 Current portion of program rights obligations — 205,501 70,582 — 276,083 Deferred revenue — 35,935 10,967 — 46,902 Current portion of long-term debt 240,500 — — — 240,500 Current portion of capital lease obligations — 2,713 1,736 — 4,449 Total current liabilities 384,154 425,275 278,721 (122,539 ) 965,611 Program rights obligations — 366,515 31,480 — 397,995 Long-term debt, net 2,525,544 — — — 2,525,544 Capital lease obligations — 5,949 28,212 — 34,161 Deferred tax liability, net 153,594 — (2,445 ) — 151,149 Other liabilities and intercompany notes payable 27,915 82,828 442,355 (431,818 ) 121,280 Total liabilities 3,091,207 880,567 778,323 (554,357 ) 4,195,740 Commitments and contingencies Redeemable noncontrolling interests — — 214,998 — 214,998 Stockholders’ equity: AMC Networks stockholders’ equity 31,452 3,120,330 805,401 (3,925,731 ) 31,452 Non-redeemable noncontrolling interests — — 27,864 — 27,864 Total stockholders’ equity 31,452 3,120,330 833,265 (3,925,731 ) 59,316 Total liabilities and stockholders’ equity $ 3,122,659 $ 4,000,897 $ 1,826,586 $ (4,480,088 ) $ 4,470,054 Condensed Consolidating Balance Sheet December 31, 2016 (In thousands) 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’ (deficiency) equity (30,082 ) 3,029,922 784,024 (3,813,946 ) (30,082 ) Non-redeemable noncontrolling interests — — 28,438 — 28,438 Total stockholders’ (deficiency) equity (30,082 ) 3,029,922 812,462 (3,813,946 ) (1,644 ) Total liabilities and stockholders’ (deficiency) equity 3,032,906 3,994,201 1,795,773 (4,342,285 ) 4,480,595 Condensed Consolidating Statement of Income Three Months Ended March 31, 2017 (In thousands) Parent Company Guarantor Subsidiaries Non- Guarantor Subsidiaries Eliminations Consolidated Revenues, net $ — $ 579,382 $ 143,132 $ (2,325 ) $ 720,189 Operating expenses: Technical and operating (excluding depreciation and amortization) — 221,754 77,617 (759 ) 298,612 Selling, general and administrative — 119,681 45,479 (1,451 ) 163,709 Depreciation and amortization — 10,204 13,289 — 23,493 Restructuring expense — 2,704 — — 2,704 Total operating expenses — 354,343 136,385 (2,210 ) 488,518 Operating income — 225,039 6,747 (115 ) 231,671 Other income (expense): Interest expense, net (29,412 ) 9,823 (7,418 ) — (27,007 ) Share of affiliates’ income 235,774 3,145 — (238,919 ) — Miscellaneous, net (112 ) 431 10,615 115 11,049 Total other income (expense) 206,250 13,399 3,197 (238,804 ) (15,958 ) Income from operations before income taxes 206,250 238,438 9,944 (238,919 ) 215,713 Income tax expense (70,033 ) (2,664 ) (385 ) — (73,082 ) Net income including noncontrolling interests 136,217 235,774 9,559 (238,919 ) 142,631 Net income attributable to noncontrolling interests — — (6,414 ) — (6,414 ) Net income attributable to AMC Networks’ stockholders $ 136,217 $ 235,774 $ 3,145 $ (238,919 ) $ 136,217 Condensed Consolidating Statement of Income Three Months Ended March 31, 2016 (In thousands) 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 Depreciation and amortization — 10,075 9,557 — 19,632 Restructuring expense (credit) — (70 ) 35 — (35 ) 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 Comprehensive Income Three Months Ended March 31, 2017 (In thousands) Parent Company Guarantor Subsidiaries Non- Guarantor Subsidiaries Eliminations Consolidated Net income including noncontrolling interest $ 136,217 $ 235,774 $ 9,559 $ (238,919 ) $ 142,631 Other comprehensive income (loss): Foreign currency translation adjustment 9,864 — 9,864 (9,864 ) 9,864 Unrealized gain on interest rate swaps 319 — — — 319 Unrealized gain on available for sale securities 4,021 — — — 4,021 Other comprehensive income, before income taxes 14,204 — 9,864 (9,864 ) 14,204 Income tax expense (1,597 ) — — — (1,597 ) Other comprehensive income, net of income taxes 12,607 — 9,864 (9,864 ) 12,607 Comprehensive income 148,824 235,774 19,423 (248,783 ) 155,238 Comprehensive income attributable to noncontrolling interests — — (6,805 ) — (6,805 ) Comprehensive income attributable to AMC Networks’ stockholders $ 148,824 $ 235,774 $ 12,618 $ (248,783 ) $ 148,433 Condensed Consolidating Statement of Comprehensive Income Three Months Ended March 31, 2016 (In thousands) 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 loss 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 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 Cash Flows Three Months Ended March 31, 2017 (In thousands) Parent Company Guarantor Subsidiaries Non- Guarantor Subsidiaries Eliminations Consolidated Cash flows from operating activities: Net cash provided by operating activities $ 224,091 $ 138,889 $ 21,097 $ (239,207 ) $ 144,870 Cash flows from investing activities: Capital expenditures — (15,645 ) (4,561 ) — (20,206 ) Investment in and loans to investees — — (28,000 ) — (28,000 ) Increase to investment in affiliates (57,926 ) (36,982 ) — 94,908 — Net cash used in investing activities (57,926 ) (52,627 ) (32,561 ) 94,908 (48,206 ) Cash flows from financing activities: Principal payments on long-term debt (55,500 ) — — — (55,500 ) Deemed repurchases of restricted stock units (12,796 ) — — — (12,796 ) Purchase of treasury stock (91,423 ) — — — (91,423 ) Principal payments on capital lease obligations — (657 ) (744 ) — (1,401 ) Distributions to noncontrolling interests — — (11,712 ) — (11,712 ) Net cash used in financing activities (159,719 ) (657 ) (12,456 ) — (172,832 ) Net increase (decrease) in cash and cash equivalents from operations 6,446 85,605 (23,920 ) (144,299 ) (76,168 ) Effect of exchange rate changes on cash and cash equivalents (6,488 ) (144,299 ) 4,915 144,299 (1,573 ) Cash and cash equivalents at beginning of period 565 320,950 159,874 — 481,389 Cash and cash equivalents at end of period $ 523 $ 262,256 $ 140,869 $ — $ 403,648 Condensed Consolidated Statement of Cash Flows Three Months Ended March 31, 2016 (In thousands) 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 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 |