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 20 , "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, 2019 (In thousands) Parent Company Guarantor Subsidiaries Non- Guarantor Subsidiaries Eliminations Consolidated ASSETS Current Assets: Cash and cash equivalents $ 827 $ 477,816 $ 205,039 $ — $ 683,682 Accounts receivable, trade (less allowance for doubtful accounts) 19 589,936 239,749 — 829,704 Current portion of program rights, net — 293,477 140,586 (201 ) 433,862 Prepaid expenses, other current assets and intercompany receivable 58 194,921 32,133 (69,140 ) 157,972 Total current assets 904 1,556,150 617,507 (69,341 ) 2,105,220 Property and equipment, net of accumulated depreciation — 182,433 69,408 — 251,841 Investment in affiliates 3,844,267 1,637,988 — (5,482,255 ) — Program rights, net — 918,943 236,759 (1,437 ) 1,154,265 Long-term intercompany notes receivable — — 218 (218 ) — Deferred carriage fees, net — 14,055 816 — 14,871 Intangible assets, net — 158,947 410,580 — 569,527 Goodwill — 64,950 732,843 — 797,793 Deferred tax asset, net — — 19,927 — 19,927 Operating lease right-of-use asset 101,521 20,085 52,957 — 174,563 Other assets — 171,200 262,707 — 433,907 Total assets $ 3,946,692 $ 4,724,751 $ 2,403,722 $ (5,553,251 ) $ 5,521,914 LIABILITIES AND STOCKHOLDERS' EQUITY Current Liabilities: Accounts payable $ — $ 38,969 $ 68,423 $ — $ 107,392 Accrued liabilities and intercompany payable 79,873 116,858 124,069 (70,850 ) 249,950 Current portion of program rights obligations — 243,013 78,901 — 321,914 Deferred revenue — 28,632 22,629 — 51,261 Current portion of long-term debt 28,125 — 2,000 — 30,125 Current portion of lease obligations 13,505 6,568 11,268 — 31,341 Total current liabilities 121,503 434,040 307,290 (70,850 ) 791,983 Program rights obligations — 323,343 18,830 — 342,173 Long-term debt, net 3,080,800 — — — 3,080,800 Lease obligations 125,814 21,833 77,037 — 224,684 Deferred tax liability, net 131,723 — 5,844 — 137,567 Other liabilities and intercompany notes payable 31,463 101,268 27,783 (146 ) 160,368 Total liabilities 3,491,303 880,484 436,784 (70,996 ) 4,737,575 Commitments and contingencies Redeemable noncontrolling interests — — 299,802 — 299,802 Stockholders' equity: AMC Networks stockholders' equity 455,389 3,844,267 1,637,989 (5,482,255 ) 455,390 Non-redeemable noncontrolling interests — — 29,147 — 29,147 Total stockholders' equity 455,389 3,844,267 1,667,136 (5,482,255 ) 484,537 Total liabilities and stockholders' equity $ 3,946,692 $ 4,724,751 $ 2,403,722 $ (5,553,251 ) $ 5,521,914 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, 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 of accumulated depreciation — 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 Statement of Income Three Months Ended March 31, 2019 (In thousands) Parent Company Guarantor Subsidiaries Non- Guarantor Subsidiaries Eliminations Consolidated Revenues, net $ — $ 574,230 $ 212,760 $ (2,769 ) $ 784,221 Operating expenses: Technical and operating (excluding depreciation and amortization) — 220,488 120,718 (1,058 ) 340,148 Selling, general and administrative — 111,581 62,831 (1,900 ) 172,512 Depreciation and amortization — 12,537 11,519 — 24,056 Impairment charges — — — — — Restructuring expense — (283 ) 2,925 — 2,642 Total operating expenses — 344,323 197,993 (2,958 ) 539,358 Operating income — 229,907 14,767 189 244,863 Other income (expense): Interest expense, net (38,929 ) 3,183 301 — (35,445 ) Share of affiliates’ income (loss) 224,244 (7,311 ) — (216,933 ) — Miscellaneous, net (99 ) 709 (13,206 ) (189 ) (12,785 ) Total other income (expense) 185,216 (3,419 ) (12,905 ) (217,122 ) (48,230 ) Income from operations before income taxes 185,216 226,488 1,862 (216,933 ) 196,633 Income tax expense (41,819 ) (2,244 ) (2,413 ) — (46,476 ) Net income including noncontrolling interests 143,397 224,244 (551 ) (216,933 ) 150,157 Net income attributable to noncontrolling interests — — (6,760 ) — (6,760 ) Net income attributable to AMC Networks’ stockholders $ 143,397 $ 224,244 $ (7,311 ) $ (216,933 ) $ 143,397 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 Impairment and related charges — — — — — Restructuring (credit) expense — — — — — 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 ) — Loss on extinguishment of debt — — — — — 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) benefit (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 AMC Networks’ stockholders $ 156,870 $ 247,482 $ 17,498 $ (264,980 ) $ 156,870 Condensed Consolidating Statement of Comprehensive Income Three Months Ended March 31, 2019 (In thousands) Parent Company Guarantor Subsidiaries Non- Guarantor Subsidiaries Eliminations Consolidated Net income including noncontrolling interests $ 143,397 $ 224,244 $ (551 ) $ (216,933 ) $ 150,157 Other comprehensive income (loss): Foreign currency translation adjustment (5,762 ) — (5,762 ) 5,762 (5,762 ) Unrealized loss on interest rate swaps (639 ) — — — (639 ) Other comprehensive income, before income taxes (6,401 ) — (5,762 ) 5,762 (6,401 ) Income tax expense 149 — — — 149 Other comprehensive income, net of income taxes (6,252 ) — (5,762 ) 5,762 (6,252 ) Comprehensive income 137,145 224,244 (6,313 ) (211,171 ) 143,905 Comprehensive income attributable to noncontrolling interests — — (6,722 ) — (6,722 ) Comprehensive income attributable to AMC Networks' stockholders $ 137,145 $ 224,244 $ (13,035 ) $ (211,171 ) $ 137,183 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 AMC Networks’ stockholders $ 175,675 $ 247,482 $ 35,406 $ (283,785 ) $ 174,778 Condensed Consolidating Statement of Cash Flows Three Months Ended March 31, 2019 (In thousands) Parent Company Guarantor Subsidiaries Non- Guarantor Subsidiaries Eliminations Consolidated Cash flows from operating activities: Net cash provided by (used in) operating activities $ 197,776 $ 164,138 $ 27,703 $ (217,930 ) $ 171,687 Cash flows from investing activities: Capital expenditures (26 ) (19,868 ) (2,159 ) — (22,053 ) Return of capital from investees — — 3,908 — 3,908 Investment in and loans to investees — — — — — Payments for acquisition of a business, net of cash acquired — — — — — Increase (decrease) to investment in affiliates (177,117 ) 69,120 (75,454 ) 183,451 — Net cash (used in) provided by investing activities (177,143 ) 49,252 (73,705 ) 183,451 (18,145 ) Cash flows from financing activities: Proceeds from the issuance of long-term debt — — 2,521 — 2,521 Repayment of long-term debt — — (3,238 ) — (3,238 ) Deemed repurchases of restricted stock units (22,959 ) — — — (22,959 ) Purchase of treasury stock (991 ) — — — (991 ) Proceeds from stock option exercises 4,630 — — — 4,630 Principal payments on finance lease obligations — (786 ) (523 ) — (1,309 ) Distributions to noncontrolling interests — — (5,629 ) — (5,629 ) Net cash used in financing activities (19,320 ) (786 ) (6,869 ) — (26,975 ) Net increase (decrease) in cash and cash equivalents from operations 1,313 212,604 (52,871 ) (34,479 ) 126,567 Effect of exchange rate changes on cash and cash equivalents (607 ) (102,939 ) 71,296 34,479 2,229 Cash and cash equivalents at beginning of period 121 368,151 186,614 — 554,886 Cash and cash equivalents at end of period $ 827 $ 477,816 $ 205,039 $ — $ 683,682 Condensed Consolidated 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 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 (decrease) 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: Proceeds from the issuance of long-term debt — — — — — Principal payments on long-term debt — — — — — Payments for financing costs — — — — — 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 increase (decrease) 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 |