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, 2018 (In thousands) Parent Company Guarantor Subsidiaries Non- Guarantor Subsidiaries Eliminations Consolidated ASSETS Current Assets: Cash and cash equivalents $ 121 $ 368,151 $ 186,614 $ — $ 554,886 Accounts receivable, trade (including amounts due from related parties, net, less allowance for doubtful accounts) 16 600,121 235,840 — 835,977 Current portion of program rights, net — 292,002 148,955 (218 ) 440,739 Prepaid expenses, other current assets and intercompany receivable 6,543 158,936 23,549 (57,219 ) 131,809 Total current assets 6,680 1,419,210 594,958 (57,437 ) 1,963,411 Property and equipment, net — 175,040 71,222 — 246,262 Investment in affiliates 3,656,003 1,655,083 — (5,311,086 ) — Program rights, net — 969,802 245,862 (1,613 ) 1,214,051 Long-term intercompany notes receivable — — 190 (190 ) — Deferred carriage fees, net — 15,993 838 — 16,831 Intangible assets, net — 161,417 417,490 — 578,907 Goodwill — 65,282 732,755 — 798,037 Deferred tax asset, net — — 19,272 — 19,272 Other assets — 149,724 292,068 — 441,792 Total assets $ 3,662,683 $ 4,611,551 $ 2,374,655 $ (5,370,326 ) $ 5,278,563 LIABILITIES AND STOCKHOLDERS' EQUITY Current Liabilities: Accounts payable $ — $ 34,630 $ 72,436 $ — $ 107,066 Accrued liabilities and intercompany payable 35,189 173,836 114,943 (59,050 ) 264,918 Current portion of program rights obligations — 259,414 84,175 — 343,589 Deferred revenue — 34,608 20,816 — 55,424 Current portion of long-term debt 18,750 — 2,584 — 21,334 Current portion of capital lease obligations — 2,941 2,149 — 5,090 Total current liabilities 53,939 505,429 297,103 (59,050 ) 797,421 Program rights obligations — 349,814 23,435 — 373,249 Long-term debt, net 3,088,221 — — — 3,088,221 Capital lease obligations — 1,420 20,007 — 21,427 Deferred tax liability, net 140,474 — 4,969 — 145,443 Other liabilities and intercompany notes payable 63,369 98,885 45,972 (190 ) 208,036 Total liabilities 3,346,003 955,548 391,486 (59,240 ) 4,633,797 Commitments and contingencies Redeemable noncontrolling interests — — 299,558 — 299,558 Stockholders' equity: AMC Networks stockholders' equity 316,680 3,656,003 1,655,083 (5,311,086 ) 316,680 Non-redeemable noncontrolling interests — — 28,528 — 28,528 Total stockholders' equity 316,680 3,656,003 1,683,611 (5,311,086 ) 345,208 Total liabilities and stockholders' equity $ 3,662,683 $ 4,611,551 $ 2,374,655 $ (5,370,326 ) $ 5,278,563 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, less allowance for doubtful accounts) — 581,270 194,621 — 775,891 Current portion of program rights, net — 294,303 149,301 — 443,604 Prepaid expenses, other current assets and intercompany receivable 3,760 183,815 8,540 (104,389 ) 91,726 Total current assets 4,080 1,450,636 519,677 (104,389 ) 1,870,004 Property and equipment, net — 136,032 47,482 — 183,514 Investment in affiliates 3,443,013 934,612 — (4,377,625 ) — Program rights, net — 1,137,867 191,258 — 1,329,125 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' (DEFICIENCY) 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' deficiency: AMC Networks stockholders' (deficiency) equity 134,944 3,443,013 934,612 (4,377,625 ) 134,944 Non-redeemable noncontrolling interests — — 29,001 — 29,001 Total stockholders' (deficiency) 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 Year Ended December 31, 2018 (In thousands) Parent Company Guarantor Subsidiaries Non- Guarantor Subsidiaries Eliminations Consolidated Revenues, net $ — $ 2,166,686 $ 820,532 $ (15,289 ) $ 2,971,929 Operating expenses: Technical and operating (excluding depreciation and amortization) — 956,272 493,751 (4,074 ) 1,445,949 Selling, general and administrative — 450,880 216,608 (10,031 ) 657,457 Depreciation and amortization — 45,204 46,077 — 91,281 Impairment and related charges — — 4,486 4,486 Restructuring expense — 29,277 16,570 — 45,847 Total operating expenses — 1,481,633 777,492 (14,105 ) 2,245,020 Operating income — 685,053 43,040 (1,184 ) 726,909 Other income (expense): Interest expense, net (151,751 ) 28,460 (12,522 ) — (135,813 ) Share of affiliates' income (loss) 734,472 32,874 — (767,346 ) — Miscellaneous, net (151 ) (1,876 ) 30,020 1,184 29,177 Total other income (expense) 582,570 59,458 17,498 (766,162 ) (106,636 ) Income from operations before income taxes 582,570 744,511 60,538 (767,346 ) 620,273 Income tax expense (136,383 ) (10,039 ) (9,884 ) — (156,306 ) Net income including noncontrolling interests 446,187 734,472 50,654 (767,346 ) 463,967 Net income attributable to noncontrolling interests — — (17,780 ) — (17,780 ) Net income attributable to AMC Networks' stockholders $ 446,187 $ 734,472 $ 32,874 $ (767,346 ) $ 446,187 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 Comprehensive Income Year Ended December 31, 2018 (In thousands) Parent Company Guarantor Subsidiaries Non- Guarantor Subsidiaries Eliminations Consolidated Net income including noncontrolling interest $ 446,187 $ 734,472 $ 50,654 $ (767,346 ) $ 463,967 Other comprehensive income (loss): Foreign currency translation adjustment (41,716 ) — (41,716 ) 41,716 (41,716 ) Unrealized loss on interest rate swaps (356 ) — — — (356 ) Amounts reclassified from accumulated other comprehensive loss (370 ) — — — (370 ) Other comprehensive (loss) income, before income taxes (42,442 ) — (41,716 ) 41,716 (42,442 ) Income tax expense 45 — — — 45 Other comprehensive (loss) income, net of income taxes (42,397 ) — (41,716 ) 41,716 (42,397 ) Comprehensive income 403,790 734,472 8,938 (725,630 ) 421,570 Comprehensive income attributable to noncontrolling interests — — (16,044 ) — (16,044 ) Comprehensive income (loss) attributable to AMC Networks' stockholders $ 403,790 $ 734,472 $ (7,106 ) $ (725,630 ) $ 405,526 Condensed Consolidating Statement of Comprehensive Income Year Ended December 31, 2017 (In thousands) Parent Company Guarantor Subsidiaries Non- Guarantor Subsidiaries Eliminations Consolidated Net income (loss) 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 Cash Flows Year Ended December 31, 2018 (In thousands) Parent Company Guarantor Subsidiaries Non- Guarantor Subsidiaries Eliminations Consolidated Cash flows from operating activities: Net cash provided by operating activities $ 503,796 $ 1,351,256 $ (476,129 ) $ (772,376 ) $ 606,547 Cash flows from investing activities: Capital expenditures — (74,710 ) (15,092 ) — (89,802 ) Return of capital from investees — — 4,088 — 4,088 Payments for acquisitions, net of cash acquired — (675 ) (83,714 ) — (84,389 ) Investments in and loans to investees — — (90,081 ) — (90,081 ) (Increase) decrease to investment in affiliates (215,862 ) (2,646,335 ) 1,813,007 1,049,190 — Net cash (used in) provided by investing activities (215,862 ) (2,721,720 ) 1,628,208 1,049,190 (260,184 ) Cash flows from financing activities: Proceeds from the issuance of long-term debt 289 — — — 289 Deemed repurchases of restricted stock/units (16,836 ) — — — (16,836 ) Purchase of treasury stock (283,143 ) — — — (283,143 ) Proceeds from stock option exercises 4,317 — — — 4,317 Principal payments on capital lease obligations — (3,000 ) (1,938 ) — (4,938 ) Distributions to noncontrolling interest — — (14,296 ) — (14,296 ) Net cash used in financing activities (295,373 ) (3,000 ) (16,234 ) — (314,607 ) Net (decrease) increase in cash and cash equivalents from operations (7,439 ) (1,373,464 ) 1,135,845 276,814 31,756 Effect of exchange rate changes on cash and cash equivalents 7,240 1,350,367 (1,116,446 ) (276,814 ) (35,653 ) Cash and cash equivalents at beginning of period 320 391,248 167,215 — 558,783 Cash and cash equivalents at end of period $ 121 $ 368,151 $ 186,614 $ — $ 554,886 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 increase (decrease) 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 |