Condensed Consolidating Financial Statements | Condensed Consolidating Financial Statements Debt of AMC Networks includes $600.0 million of 4.75% Notes due December 2022 and $1.0 billion of 5.00% Notes due April 2024 and $800.0 million of 4.75% Notes due August 2025. 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, 2017 (In thousands) Parent Company Guarantor Subsidiaries Non- Guarantor Subsidiaries Eliminations Consolidated ASSETS Current Assets: Cash and cash equivalents $ 320 $ 391,248 $ 167,215 $ — $ 558,783 Accounts receivable, trade — 581,270 194,621 — 775,891 Current portion of program rights, net — 304,149 149,301 — 453,450 Prepaid expenses, other current assets and intercompany receivable 3,760 183,815 8,540 (104,389 ) 91,726 Total current assets 4,080 1,460,482 519,677 (104,389 ) 1,879,850 Property and equipment, net — 136,032 47,482 — 183,514 Investment in affiliates 3,443,013 934,612 — (4,377,625 ) — Program rights, net — 1,128,021 191,258 — 1,319,279 Long-term intercompany notes receivable — 489,939 436 (490,375 ) — Deferred carriage fees, net — 29,346 578 — 29,924 Intangible assets, net — 170,554 286,688 — 457,242 Goodwill — 66,609 628,549 — 695,158 Deferred tax asset, net — — 20,081 — 20,081 Other assets — 142,115 305,822 447,937 Total assets $ 3,447,093 $ 4,557,710 $ 2,000,571 $ (4,972,389 ) $ 5,032,985 LIABILITIES AND STOCKHOLDERS' EQUITY Current Liabilities: Accounts payable $ 350 $ 50,282 $ 51,565 $ — $ 102,197 Accrued liabilities and intercompany payable 51,692 179,003 136,770 (104,389 ) 263,076 Current portion of program rights obligations — 262,004 65,545 — 327,549 Deferred revenue — 27,530 18,903 — 46,433 Current portion of capital lease obligations — 2,939 1,908 — 4,847 Total current liabilities 52,042 521,758 274,691 (104,389 ) 744,102 Program rights obligations — 511,996 22,984 — 534,980 Long-term debt, net 3,099,257 — — — 3,099,257 Capital lease obligations — 3,745 22,532 — 26,277 Deferred tax liability, net 114,717 — (5,019 ) — 109,698 Other liabilities and intercompany notes payable 46,133 77,198 503,166 (490,375 ) 136,122 Total liabilities 3,312,149 1,114,697 818,354 (594,764 ) 4,650,436 Commitments and contingencies Redeemable noncontrolling interests — — 218,604 — 218,604 Stockholders' equity: AMC Networks stockholders' equity 134,944 3,443,013 934,612 (4,377,625 ) 134,944 Non-redeemable noncontrolling interests — — 29,001 — 29,001 Total stockholders' equity 134,944 3,443,013 963,613 (4,377,625 ) 163,945 Total liabilities and stockholders' equity $ 3,447,093 $ 4,557,710 $ 2,000,571 $ (4,972,389 ) $ 5,032,985 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 — 538,259 162,904 — 701,163 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 — 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' (DEFICIENCY) 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' deficiency: 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' equity $ 3,032,906 $ 3,994,201 $ 1,795,773 $ (4,342,285 ) $ 4,480,595 Condensed Consolidating Statement of Income Year Ended December 31, 2017 (In thousands) Parent Company Guarantor Subsidiaries Non- Guarantor Subsidiaries Eliminations Consolidated Revenues, net $ — $ 2,182,867 $ 637,823 $ (14,999 ) $ 2,805,691 Operating expenses: Technical and operating (excluding depreciation and amortization) — 991,476 352,788 (3,188 ) 1,341,076 Selling, general and administrative — 447,118 178,332 (12,108 ) 613,342 Depreciation and amortization — 40,923 53,715 — 94,638 Impairment and related charges — — 28,148 — 28,148 Restructuring expense — 2,566 3,562 — 6,128 Total operating expenses — 1,482,083 616,545 (15,296 ) 2,083,332 Operating income — 700,784 21,278 297 722,359 Other income (expense): Interest expense, net (129,971 ) 41,934 (31,260 ) — (119,297 ) Share of affiliates' income (loss) 748,430 13,360 — (761,790 ) — Loss on extinguishment of debt (3,004 ) — — — (3,004 ) Miscellaneous, net (1,530 ) 2,484 39,663 (297 ) 40,320 Total other income (expense) 613,925 57,778 8,403 (762,087 ) (81,981 ) Income from operations before income taxes 613,925 758,562 29,681 (761,790 ) 640,378 Income tax (expense) benefit (142,609 ) (10,132 ) 2,000 — (150,741 ) Net income including noncontrolling interests 471,316 748,430 31,681 (761,790 ) 489,637 Net income attributable to noncontrolling interests — — (18,321 ) — (18,321 ) Net income attributable to AMC Networks' stockholders $ 471,316 $ 748,430 $ 13,360 $ (761,790 ) $ 471,316 Condensed Consolidating Statement of Income Year Ended December 31, 2016 (In thousands) 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 and related 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 (loss) — 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 interests 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 Comprehensive Income Year Ended December 31, 2017 (In thousands) Parent Company Guarantor Subsidiaries Non- Guarantor Subsidiaries Eliminations Consolidated Net income including noncontrolling interest $ 471,316 $ 748,430 $ 31,681 $ (761,790 ) $ 489,637 Other comprehensive income (loss): Foreign currency translation adjustment 76,023 — 76,023 (76,023 ) 76,023 Unrealized loss on interest rate swaps (35 ) — — — (35 ) Unrealized gain on available for sale securities 5,398 — — — 5,398 Other comprehensive income, before income taxes 81,386 — 76,023 (76,023 ) 81,386 Income tax expense (1,974 ) — — — (1,974 ) Other comprehensive income, net of income taxes 79,412 — 76,023 (76,023 ) 79,412 Comprehensive income 550,728 748,430 107,704 (837,813 ) 569,049 Comprehensive income attributable to noncontrolling interests — — (21,430 ) — (21,430 ) Comprehensive income attributable to AMC Networks' stockholders $ 550,728 $ 748,430 $ 86,274 $ (837,813 ) $ 547,619 Condensed Consolidating Statement of Comprehensive Income Year Ended December 31, 2016 (In thousands) 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 loss, before income taxes (45,404 ) — (45,426 ) 45,426 (45,404 ) Income tax expense (12,337 ) — — — (12,337 ) Other comprehensive (loss) income, 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 Cash Flows Year Ended December 31, 2017 (In thousands) Parent Company Guarantor Subsidiaries Non- Guarantor Subsidiaries Eliminations Consolidated Cash flows from operating activities: Net cash provided by operating activities $ 454,539 $ 662,123 $ 31,157 $ (762,090 ) $ 385,729 Cash flows from investing activities: Capital expenditures — (63,925 ) (16,124 ) — (80,049 ) Return of capital from investees — 1,868 579 — 2,447 Investments in and loans to investees — — (53,000 ) — (53,000 ) (Increase) decrease to investment in affiliates (282,424 ) (2,234,682 ) 2,082,401 434,705 — Net cash used in investing activities (282,424 ) (2,296,739 ) 2,013,856 434,705 (130,602 ) Cash flows from financing activities: Proceeds from the issuance of long-term debt 1,536,000 — — — 1,536,000 Repayment of long-term debt (1,257,965 ) — — — (1,257,965 ) Payments for financing costs (10,405 ) — — — (10,405 ) Deemed repurchases of restricted stock/units (14,496 ) — — — (14,496 ) Purchase of treasury stock (434,210 ) — — — (434,210 ) Principal payments on capital lease obligations — (2,725 ) (1,848 ) — (4,573 ) Distributions to noncontrolling interest — — (18,561 ) — (18,561 ) Net cash used in financing activities (181,076 ) (2,725 ) (20,409 ) — (204,210 ) Net (decrease) increase in cash and cash equivalents from operations (8,961 ) (1,637,341 ) 2,024,604 (327,385 ) 50,917 Effect of exchange rate changes on cash and cash equivalents 8,716 1,707,639 (2,017,263 ) 327,385 26,477 Cash and cash equivalents at beginning of period 565 320,950 159,874 — 481,389 Cash and cash equivalents at end of period $ 320 $ 391,248 $ 167,215 $ — $ 558,783 Condensed Consolidating Statement of Cash Flows Year Ended December 31, 2016 (In thousands) 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 ) Investments in and loans to investees — — (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 Repayment of 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 (decrease) 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 |