Condensed Consolidating Financial Statements | Condensed Consolidating Financial Statements Debt of AMC Networks includes $600 million of 4.75% senior notes due December 2022, $1 billion of 5.00% senior notes due April 2024 and $800 million of 4.75% senior notes due August 2025. All outstanding senior notes issued by AMC Networks (for purposes of this Note 18, "Parent Company") 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, 2018 (In thousands) Parent Company Guarantor Subsidiaries Non- Guarantor Subsidiaries Eliminations Consolidated ASSETS Current Assets: Cash and cash equivalents $ 184 $ 354,419 $ 174,597 $ — $ 529,200 Accounts receivable, trade (including amounts due from related parties, net, — 588,633 204,642 — 793,275 Current portion of program rights, net — 315,628 149,293 — 464,921 Prepaid expenses, other current assets and intercompany receivable 1,419 212,382 10,592 (122,335 ) 102,058 Total current assets 1,603 1,471,062 539,124 (122,335 ) 1,889,454 Property and equipment, net of accumulated depreciation — 138,866 46,574 — 185,440 Investment in affiliates 3,616,931 1,013,078 — (4,630,009 ) — Program rights, net — 1,092,691 186,898 — 1,279,589 Long-term intercompany notes receivable — 490,380 343 (490,723 ) — Deferred carriage fees, net — 26,008 1,164 — 27,172 Intangible assets, net — 168,117 284,278 — 452,395 Goodwill — 66,282 641,372 — 707,654 Deferred tax asset, net — — 21,731 — 21,731 Other assets — 173,988 375,944 — 549,932 Total assets $ 3,618,534 $ 4,640,472 $ 2,097,428 $ (5,243,067 ) $ 5,113,367 LIABILITIES AND STOCKHOLDERS' EQUITY Current Liabilities: Accounts payable $ 32 $ 47,245 $ 49,539 $ — $ 96,816 Accrued liabilities and intercompany payable 86,500 121,433 149,703 (122,335 ) 235,301 Current portion of program rights obligations — 255,744 71,118 — 326,862 Deferred revenue — 34,738 17,178 — 51,916 Current portion of capital lease obligations — 3,001 1,770 — 4,771 Total current liabilities 86,532 462,161 289,308 (122,335 ) 715,666 Program rights obligations — 470,626 20,901 — 491,527 Long-term debt, net 3,101,138 — — — 3,101,138 Capital lease obligations — 2,963 22,270 — 25,233 Deferred tax liability, net 150,247 — (5,088 ) — 145,159 Other liabilities and intercompany notes payable 49,873 87,791 506,226 (490,723 ) 153,167 Total liabilities 3,387,790 1,023,541 833,617 (613,058 ) 4,631,890 Commitments and contingencies Redeemable noncontrolling interests — — 220,366 — 220,366 Stockholders' equity: AMC Networks stockholders' equity 230,744 3,616,931 1,013,078 (4,630,009 ) 230,744 Non-redeemable noncontrolling interests — — 30,367 — 30,367 Total stockholders' equity 230,744 3,616,931 1,043,445 (4,630,009 ) 261,111 Total liabilities and stockholders' equity $ 3,618,534 $ 4,640,472 $ 2,097,428 $ (5,243,067 ) $ 5,113,367 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 (including amounts due from related parties, net, — 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 of accumulated depreciation — 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 long-term debt — — — — — 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 Statement of Income Three Months Ended March 31, 2018 (In thousands) Parent Company Guarantor Subsidiaries Non- Guarantor Subsidiaries Eliminations Consolidated Revenues, net $ — $ 574,917 $ 170,386 $ (4,480 ) $ 740,823 Operating expenses: Technical and operating (excluding depreciation and amortization) — 222,621 98,522 (778 ) 320,365 Selling, general and administrative — 122,059 48,089 (3,699 ) 166,449 Depreciation and amortization — 10,804 9,550 — 20,354 Total operating expenses — 355,484 156,161 (4,477 ) 507,168 Operating income — 219,433 14,225 (3 ) 233,655 Other income (expense): Interest expense, net (36,907 ) 11,897 (8,176 ) — (33,186 ) Share of affiliates' income 247,482 17,498 — (264,980 ) — Miscellaneous, net (206 ) 734 16,415 3 16,946 Total other income (expense) 210,369 30,129 8,239 (264,977 ) (16,240 ) Income from operations before income taxes 210,369 249,562 22,464 (264,980 ) 217,415 Income tax expense (53,499 ) (2,080 ) (1,300 ) — (56,879 ) Net income including noncontrolling interests 156,870 247,482 21,164 (264,980 ) 160,536 Net income attributable to noncontrolling interests — — (3,666 ) — (3,666 ) Net income attributable to Parent Company's stockholders $ 156,870 $ 247,482 $ 17,498 $ (264,980 ) $ 156,870 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 Parent Company's stockholders $ 136,217 $ 235,774 $ 3,145 $ (238,919 ) $ 136,217 Condensed Consolidating Statement of Comprehensive Income Three Months Ended March 31, 2018 (In thousands) Parent Company Guarantor Subsidiaries Non- Guarantor Subsidiaries Eliminations Consolidated Net income including noncontrolling interest $ 156,870 $ 247,482 $ 21,164 $ (264,980 ) $ 160,536 Other comprehensive income (loss): Foreign currency translation adjustment 18,805 — 18,805 (18,805 ) 18,805 Other comprehensive income, net of income taxes 18,805 — 18,805 (18,805 ) 18,805 Comprehensive income 175,675 247,482 39,969 (283,785 ) 179,341 Comprehensive income attributable to noncontrolling interests — — (4,563 ) — (4,563 ) Comprehensive income attributable to Parent Company's stockholders $ 175,675 $ 247,482 $ 35,406 $ (283,785 ) $ 174,778 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 Parent Company's stockholders $ 148,824 $ 235,774 $ 12,618 $ (248,783 ) $ 148,433 Condensed Consolidating Statement of Cash Flows Three Months Ended March 31, 2018 (In thousands) Parent Company Guarantor Subsidiaries Non- Guarantor Subsidiaries Eliminations Consolidated Cash flows from operating activities: Net cash provided by (used in) operating activities $ 234,947 $ 154,495 $ (7,472 ) $ (264,998 ) $ 116,972 Cash flows from investing activities: Capital expenditures — (11,040 ) (902 ) — (11,942 ) Return of capital from investees — — 172 — 172 Investment in investees — — (42,318 ) — (42,318 ) Increase to investment in affiliates (141,109 ) (129,821 ) 67,191 203,739 — Net cash (used in) provided by investing activities (141,109 ) (140,861 ) 24,143 203,739 (54,088 ) Cash flows from financing activities: Deemed repurchases of restricted stock units (15,354 ) — — — (15,354 ) Purchase of treasury stock (83,637 ) — — — (83,637 ) Principal payments on capital lease obligations — (723 ) (683 ) — (1,406 ) Distributions to noncontrolling interests — — (1,435 ) — (1,435 ) Net cash used in financing activities (98,991 ) (723 ) (2,118 ) — (101,832 ) Net (decrease) increase in cash and cash equivalents from operations (5,153 ) 12,911 14,553 (61,259 ) (38,948 ) Effect of exchange rate changes on cash and cash equivalents 5,017 (49,740 ) (7,171 ) 61,259 9,365 Cash and cash equivalents at beginning of period 320 391,248 167,215 — 558,783 Cash and cash equivalents at end of period $ 184 $ 354,419 $ 174,597 $ — $ 529,200 Condensed Consolidated 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 |