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 19 , "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 September 30, 2018 (In thousands) Parent Company Guarantor Subsidiaries Non- Guarantor Subsidiaries Eliminations Consolidated ASSETS Current Assets: Cash and cash equivalents $ 25,127 $ 360,124 $ 179,466 $ — $ 564,717 Accounts receivable, trade (including amounts due from related parties, net, — 544,083 233,867 — 777,950 Current portion of program rights, net — 308,039 162,215 — 470,254 Prepaid expenses, other current assets and intercompany receivable 2,174 184,253 20,335 (88,193 ) 118,569 Total current assets 27,301 1,396,499 595,883 (88,193 ) 1,931,490 Property and equipment, net of accumulated depreciation — 158,651 66,817 — 225,468 Investment in affiliates 3,590,449 1,584,454 — (5,174,903 ) — Program rights, net — 980,299 172,152 — 1,152,451 Long-term intercompany notes receivable — 45,986 303 (46,289 ) — Deferred carriage fees, net — 19,331 860 — 20,191 Intangible assets, net — 163,886 305,871 — 469,757 Goodwill — 65,626 639,756 — 705,382 Deferred tax asset, net — — 21,677 — 21,677 Other assets — 167,548 467,993 — 635,541 Total assets $ 3,617,750 $ 4,582,280 $ 2,271,312 $ (5,309,385 ) $ 5,161,957 LIABILITIES AND STOCKHOLDERS' EQUITY Current Liabilities: Accounts payable $ 6 $ 33,716 $ 63,786 $ — $ 97,508 Accrued liabilities and intercompany payable 56,373 153,174 119,538 (88,193 ) 240,892 Current portion of program rights obligations — 291,059 65,098 — 356,157 Deferred revenue — 32,734 28,555 — 61,289 Current portion of long-term debt 9,375 — — — 9,375 Current portion of capital lease obligations — 2,749 1,900 — 4,649 Total current liabilities 65,754 513,432 278,877 (88,193 ) 769,870 Program rights obligations — 385,640 11,952 — 397,592 Long-term debt, net 3,095,628 — — — 3,095,628 Capital lease obligations — 1,751 20,671 — 22,422 Deferred tax liability, net 142,041 — 12,069 — 154,110 Other liabilities and intercompany notes payable 51,321 91,008 82,120 (46,289 ) 178,160 Total liabilities 3,354,744 991,831 405,689 (134,482 ) 4,617,782 Commitments and contingencies Redeemable noncontrolling interests — — 252,536 — 252,536 Stockholders' equity: AMC Networks stockholders' equity 263,006 3,590,449 1,584,454 (5,174,903 ) 263,006 Non-redeemable noncontrolling interests — — 28,633 — 28,633 Total stockholders' equity 263,006 3,590,449 1,613,087 (5,174,903 ) 291,639 Total liabilities and stockholders' equity $ 3,617,750 $ 4,582,280 $ 2,271,312 $ (5,309,385 ) $ 5,161,957 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 September 30, 2018 (In thousands) Parent Company Guarantor Subsidiaries Non- Guarantor Subsidiaries Eliminations Consolidated Revenues, net $ — $ 485,737 $ 214,150 $ (3,012 ) $ 696,875 Operating expenses: Technical and operating (excluding depreciation and amortization) — 216,253 130,901 (756 ) 346,398 Selling, general and administrative — 106,068 52,431 (2,257 ) 156,242 Depreciation and amortization — 11,297 10,714 — 22,011 Impairment charges — — 4,486 — 4,486 Restructuring expense — 2,275 864 — 3,139 Total operating expenses — 335,893 199,396 (3,013 ) 532,276 Operating income — 149,844 14,754 1 164,599 Other income (expense): Interest expense, net (38,316 ) 2,178 3,103 — (33,035 ) Share of affiliates’ income (loss) 187,659 37,704 — (225,363 ) — Miscellaneous, net (101 ) 213 28,651 (1 ) 28,762 Total other income (expense) 149,242 40,095 31,754 (225,364 ) (4,273 ) Income from operations before income taxes 149,242 189,939 46,508 (225,363 ) 160,326 Income tax expense (37,985 ) (2,280 ) (3,401 ) — (43,666 ) Net income including noncontrolling interests 111,257 187,659 43,107 (225,363 ) 116,660 Net income attributable to noncontrolling interests — — (5,403 ) — (5,403 ) Net income attributable to AMC Networks’ stockholders $ 111,257 $ 187,659 $ 37,704 $ (225,363 ) $ 111,257 Condensed Consolidating Statement of Income Three Months Ended September 30, 2017 (In thousands) Parent Company Guarantor Subsidiaries Non- Guarantor Subsidiaries Eliminations Consolidated Revenues, net $ — $ 494,563 $ 157,346 $ (3,886 ) $ 648,023 Operating expenses: Technical and operating (excluding depreciation and amortization) — 232,432 91,142 (831 ) 322,743 Selling, general and administrative — 99,481 42,352 (3,145 ) 138,688 Depreciation and amortization — 10,072 10,866 — 20,938 Impairment and related charges — — 11,036 — 11,036 Restructuring (credit) expense — (10 ) 1,274 — 1,264 Total operating expenses — 341,975 156,670 (3,976 ) 494,669 Operating income — 152,588 676 90 153,354 Other income (expense): Interest expense, net (34,403 ) 10,543 (7,950 ) — (31,810 ) Share of affiliates’ income 171,490 10,784 — (182,274 ) — Loss on extinguishment of debt (3,004 ) — — — (3,004 ) Miscellaneous, net (1,076 ) (244 ) 13,830 (90 ) 12,420 Total other income (expense) 133,007 21,083 5,880 (182,364 ) (22,394 ) Income from operations before income taxes 133,007 173,671 6,556 (182,274 ) 130,960 Income tax (expense) benefit (46,005 ) (2,181 ) 8,062 — (40,124 ) Net income including noncontrolling interests 87,002 171,490 14,618 (182,274 ) 90,836 Net income attributable to noncontrolling interests — — (3,834 ) — (3,834 ) Net income attributable to AMC Networks’ stockholders $ 87,002 $ 171,490 $ 10,784 $ (182,274 ) $ 87,002 Condensed Consolidating Statement of Income Nine Months Ended September 30, 2018 (In thousands) Parent Company Guarantor Subsidiaries Non- Guarantor Subsidiaries Eliminations Consolidated Revenues, net $ — $ 1,609,916 $ 600,542 $ (11,375 ) $ 2,199,083 Operating expenses: Technical and operating (excluding depreciation and amortization) — 687,055 359,165 (2,648 ) 1,043,572 Selling, general and administrative — 348,590 154,206 (8,729 ) 494,067 Depreciation and amortization — 33,276 30,758 — 64,034 Impairment charges — — 4,486 — 4,486 Restructuring expense — 2,275 864 — 3,139 Total operating expenses — 1,071,196 549,479 (11,377 ) 1,609,298 Operating income — 538,720 51,063 2 589,785 Other income (expense): Interest expense, net (113,057 ) 25,790 (12,887 ) — (100,154 ) Share of affiliates' income 607,374 51,010 — (658,384 ) — Miscellaneous, net (48 ) (1,557 ) 32,596 (2 ) 30,989 Total other income (expense) 494,269 75,243 19,709 (658,386 ) (69,165 ) Income from operations before income taxes 494,269 613,963 70,772 (658,384 ) 520,620 Income tax expense (119,961 ) (6,589 ) (6,542 ) — (133,092 ) Net income including noncontrolling interests 374,308 607,374 64,230 (658,384 ) 387,528 Net income attributable to noncontrolling interests — — (13,220 ) — (13,220 ) Net income attributable to Parent Company's stockholders $ 374,308 $ 607,374 $ 51,010 $ (658,384 ) $ 374,308 Condensed Consolidating Statement of Income Nine Months Ended September 30, 2017 (In thousands) Parent Company Guarantor Subsidiaries Non- Guarantor Subsidiaries Eliminations Consolidated Revenues, net $ — $ 1,610,247 $ 480,153 $ (11,643 ) $ 2,078,757 Operating expenses: Technical and operating (excluding depreciation and amortization) — 694,336 264,231 (2,367 ) 956,200 Selling, general and administrative — 335,585 138,669 (9,584 ) 464,670 Depreciation and amortization — 30,399 34,638 — 65,037 Impairment and related charges — — 28,148 — 28,148 Restructuring expense — 2,649 1,238 — 3,887 Total operating expenses — 1,062,969 466,924 (11,951 ) 1,517,942 Operating income — 547,278 13,229 308 560,815 Other income (expense): Interest expense, net (93,548 ) 30,531 (22,751 ) — (85,768 ) Share of affiliates’ income 592,012 19,610 — (611,622 ) — Loss on extinguishment of debt (3,004 ) — — — (3,004 ) Miscellaneous, net (1,419 ) 2,085 42,090 (308 ) 42,448 Total other income (expense) 494,041 52,226 19,339 (611,930 ) (46,324 ) Income from operations before income taxes 494,041 599,504 32,568 (611,622 ) 514,491 Income tax (expense) benefit (168,225 ) (7,492 ) 2,318 — (173,399 ) Net income including noncontrolling interests 325,816 592,012 34,886 (611,622 ) 341,092 Net income attributable to noncontrolling interests — — (15,276 ) — (15,276 ) Net income attributable to AMC Networks’ stockholders $ 325,816 $ 592,012 $ 19,610 $ (611,622 ) $ 325,816 Condensed Consolidating Statement of Comprehensive Income Three Months Ended September 30, 2018 (In thousands) Parent Company Guarantor Subsidiaries Non- Guarantor Subsidiaries Eliminations Consolidated Net income including noncontrolling interest $ 111,257 $ 187,659 $ 43,107 $ (225,363 ) $ 116,660 Other comprehensive income (loss): Foreign currency translation adjustment (6,094 ) — (6,094 ) 6,094 (6,094 ) Other comprehensive income, net of income taxes (6,094 ) — (6,094 ) 6,094 (6,094 ) Comprehensive income 105,163 187,659 37,013 (219,269 ) 110,566 Comprehensive income attributable to noncontrolling interests — — (5,218 ) — (5,218 ) Comprehensive income attributable to AMC Networks’ stockholders $ 105,163 $ 187,659 $ 31,795 $ (219,269 ) $ 105,348 Condensed Consolidating Statement of Comprehensive Income Three Months Ended September 30, 2017 (In thousands) Parent Company Guarantor Subsidiaries Non- Guarantor Subsidiaries Eliminations Consolidated Net income including noncontrolling interest $ 87,002 $ 171,490 $ 14,618 $ (182,274 ) $ 90,836 Other comprehensive income (loss): Foreign currency translation adjustment 15,791 — 15,791 (15,791 ) 15,791 Unrealized loss on interest rate swaps (174 ) — — — (174 ) Unrealized gain on available for sale securities 6,596 — — — 6,596 Other comprehensive income, before income taxes 22,213 — 15,791 (15,791 ) 22,213 Income tax expense (2,363 ) — — — (2,363 ) Other comprehensive income, net of income taxes 19,850 — 15,791 (15,791 ) 19,850 Comprehensive income 106,852 171,490 30,409 (198,065 ) 110,686 Comprehensive income attributable to noncontrolling interests — — (4,633 ) — (4,633 ) Comprehensive income attributable to AMC Networks’ stockholders $ 106,852 $ 171,490 $ 25,776 $ (198,065 ) $ 106,053 Condensed Consolidating Statement of Comprehensive Income Nine Months Ended September 30, 2018 (In thousands) Parent Company Guarantor Subsidiaries Non- Guarantor Subsidiaries Eliminations Consolidated Net income including noncontrolling interest $ 374,308 $ 607,374 $ 64,230 $ (658,384 ) $ 387,528 Other comprehensive income (loss): Foreign currency translation adjustment (32,679 ) — (32,679 ) 32,679 (32,679 ) Other comprehensive income, net of income taxes (32,679 ) — (32,679 ) 32,679 (32,679 ) Comprehensive income 341,629 607,374 31,551 (625,705 ) 354,849 Comprehensive income attributable to noncontrolling interests — — (11,954 ) — (11,954 ) Comprehensive income attributable to AMC Networks' stockholders $ 341,629 $ 607,374 $ 19,597 $ (625,705 ) $ 342,895 Condensed Consolidating Statement of Comprehensive Income Nine Months Ended September 30, 2017 (In thousands) Parent Company Guarantor Subsidiaries Non- Guarantor Subsidiaries Eliminations Consolidated Net income including noncontrolling interest $ 325,816 $ 592,012 $ 34,886 $ (611,622 ) $ 341,092 Other comprehensive income (loss): Foreign currency translation adjustment 63,475 — 63,475 (63,475 ) 63,475 Unrealized loss on interest rate swaps (35 ) — — — (35 ) Unrealized gain on available for sale securities 9,534 — — — 9,534 Other comprehensive income, before income taxes 72,974 — 63,475 (63,475 ) 72,974 Income tax expense (3,495 ) — — — (3,495 ) Other comprehensive income, net of income taxes 69,479 — 63,475 (63,475 ) 69,479 Comprehensive income 395,295 592,012 98,361 (675,097 ) 410,571 Comprehensive income attributable to noncontrolling interests — — (17,997 ) — (17,997 ) Comprehensive income attributable to AMC Networks’ stockholders $ 395,295 $ 592,012 $ 80,364 $ (675,097 ) $ 392,574 Condensed Consolidating Statement of Cash Flows Nine Months Ended September 30, 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 $ 426,876 $ 1,180,996 $ (477,659 ) $ (658,401 ) $ 471,812 Cash flows from investing activities: Capital expenditures — (51,695 ) (9,079 ) — (60,774 ) Return of capital from investees — — 523 — 523 Investment in and loans to investees — — (90,080 ) — (90,080 ) Payments for acquisition of a business, net of cash acquired — (675 ) (34,879 ) — (35,554 ) Increase (decrease) to investment in affiliates (129,968 ) (1,798,987 ) 1,040,871 888,084 — Net cash (used in) provided by investing activities (129,968 ) (1,851,357 ) 907,356 888,084 (185,885 ) Cash flows from financing activities: Deemed repurchases of restricted stock units (15,734 ) — — — (15,734 ) Purchase of treasury stock (267,400 ) — — — (267,400 ) Proceeds from stock option exercises 4,317 — — — 4,317 Principal payments on capital lease obligations — (2,223 ) (1,655 ) — (3,878 ) Distributions to noncontrolling interests — — (9,333 ) — (9,333 ) Net cash used in financing activities (278,817 ) (2,223 ) (10,988 ) — (292,028 ) Net increase (decrease) in cash and cash equivalents from operations 18,091 (672,584 ) 418,709 229,683 (6,101 ) Effect of exchange rate changes on cash and cash equivalents 6,716 641,460 (406,458 ) (229,683 ) 12,035 Cash and cash equivalents at beginning of period 320 391,248 167,215 — 558,783 Cash and cash equivalents at end of period $ 25,127 $ 360,124 $ 179,466 $ — $ 564,717 Condensed Consolidated Statement of Cash Flows Nine Months Ended September 30, 2017 (In thousands) Parent Company Guarantor Subsidiaries Non- Guarantor Subsidiaries Eliminations Consolidated Cash flows from operating activities: Net cash provided by operating activities $ 374,873 $ 498,874 $ 11,714 $ (611,888 ) $ 273,573 Cash flows from investing activities: Capital expenditures — (47,811 ) (13,983 ) — (61,794 ) Investment in and loans to investees — — (43,000 ) — (43,000 ) Increase (decrease) to investment in affiliates (289,891 ) (394,117 ) 254,014 429,994 — Net cash (used in) provided by investing activities (289,891 ) (441,928 ) 197,031 429,994 (104,794 ) Cash flows from financing activities: Proceeds from the issuance of long-term debt 1,536,000 — — — 1,536,000 Principal payments on long-term debt (1,257,965 ) — — — (1,257,965 ) Payments for financing costs (10,405 ) — — — (10,405 ) Deemed repurchases of restricted stock units (13,373 ) — — — (13,373 ) Purchase of treasury stock (347,334 ) — — — (347,334 ) Principal payments on capital lease obligations — (2,019 ) (1,409 ) — (3,428 ) Distributions to noncontrolling interests — — (16,110 ) — (16,110 ) Net cash used in financing activities (93,077 ) (2,019 ) (17,519 ) — (112,615 ) Net increase (decrease) in cash and cash equivalents from operations (8,095 ) 54,927 191,226 (181,894 ) 56,164 Effect of exchange rate changes on cash and cash equivalents 7,798 26,885 (201,841 ) 181,894 14,736 Cash and cash equivalents at beginning of period 565 320,950 159,874 — 481,389 Cash and cash equivalents at end of period $ 268 $ 402,762 $ 149,259 $ — $ 552,289 |