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 September 30, 2019 (In thousands) Parent Company Guarantor Subsidiaries Non- Guarantor Subsidiaries Eliminations Consolidated ASSETS Current Assets: Cash and cash equivalents $ 437 $ 552,653 $ 220,296 $ — $ 773,386 Accounts receivable, trade (less allowance for doubtful accounts) — 543,065 264,416 — 807,481 Current portion of program rights, net — 296,682 160,241 (635) 456,288 Prepaid expenses, other current assets and intercompany receivable (24,284) 246,542 14,325 (48,828) 187,755 Total current assets (23,847) 1,638,942 659,278 (49,463) 2,224,910 Property and equipment, net of accumulated depreciation — 204,599 64,688 — 269,287 Investment in affiliates 3,884,536 1,635,646 — (5,520,182) — Program rights, net — 815,763 236,459 (1,154) 1,051,068 Long-term intercompany notes receivable — — 54 (54) — Deferred carriage fees, net — 15,814 1,518 — 17,332 Intangible assets, net — 154,008 386,357 — 540,365 Goodwill — 64,286 717,948 — 782,234 Deferred tax asset, net 9 — 61,367 — 61,376 Operating lease right-of-use asset 96,722 20,213 55,640 — 172,575 Other assets 45,436 169,686 282,734 1,206 499,062 Total assets $ 4,002,856 $ 4,718,957 $ 2,466,043 $ (5,569,647) $ 5,618,209 LIABILITIES AND STOCKHOLDERS' EQUITY Current Liabilities: Accounts payable $ 24,986 $ 29,919 $ 68,933 $ — $ 123,838 Accrued liabilities and intercompany payable 19,059 116,208 152,498 (48,828) 238,937 Current portion of program rights obligations — 242,545 68,143 — 310,688 Deferred revenue — 36,303 30,005 (583) 65,725 Current portion of long-term debt 46,875 — 1,000 — 47,875 Current portion of lease obligations 13,847 7,027 12,475 — 33,349 Total current liabilities 104,767 432,002 333,054 (49,411) 820,412 Program rights obligations — 270,171 14,253 — 284,424 Long-term debt, net 3,056,692 — — — 3,056,692 Lease obligations 118,809 19,718 76,724 — 215,251 Deferred tax liability, net 74,687 — 47,697 — 122,384 Other liabilities and intercompany notes payable 19,777 117,719 22,199 (54) 159,641 Total liabilities 3,374,732 839,610 493,927 (49,465) 4,658,804 Commitments and contingencies Redeemable noncontrolling interests — (5,189) 309,795 — 304,606 Stockholders' equity: AMC Networks stockholders' equity 628,124 3,884,536 1,635,646 (5,520,182) 628,124 Non-redeemable noncontrolling interests — — 26,675 — 26,675 Total stockholders' equity 628,124 3,884,536 1,662,321 (5,520,182) 654,799 Total liabilities and stockholders' equity $ 4,002,856 $ 4,718,957 $ 2,466,043 $ (5,569,647) $ 5,618,209 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 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 September 30, 2019 (In thousands) Parent Company Guarantor Subsidiaries Non- Guarantor Subsidiaries Eliminations Consolidated Revenues, net $ — $ 474,512 $ 246,695 $ (2,610) $ 718,597 Operating expenses: Technical and operating (excluding depreciation and amortization) — 203,925 152,443 (1,376) 354,992 Selling, general and administrative — 100,496 59,835 (974) 159,357 Depreciation and amortization — 12,405 13,214 — 25,619 Restructuring and other related charges — 10,180 11 — 10,191 Total operating expenses — 327,006 225,503 (2,350) 550,159 Operating income — 147,506 21,192 (260) 168,438 Other income (expense): Interest expense, net (38,751) 3,564 192 — (34,995) Share of affiliates’ income 159,156 11,294 — (170,450) — Miscellaneous, net (277) (880) (593) 260 (1,490) Total other income (expense) 120,128 13,978 (401) (170,190) (36,485) Income from operations before income taxes 120,128 161,484 20,791 (170,450) 131,953 Income tax expense (3,205) (2,328) (3,194) — (8,727) Net income including noncontrolling interests 116,923 159,156 17,597 (170,450) 123,226 Net income attributable to noncontrolling interests — — (6,303) — (6,303) Net income attributable to AMC Networks’ stockholders $ 116,923 $ 159,156 $ 11,294 $ (170,450) $ 116,923 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 Nine Months Ended September 30, 2019 (In thousands) Parent Company Guarantor Subsidiaries Non- Guarantor Subsidiaries Eliminations Consolidated Revenues, net $ — $ 1,565,851 $ 720,274 $ (11,008) $ 2,275,117 Operating expenses: Technical and operating (excluding depreciation and amortization) — 657,992 426,308 (3,537) 1,080,763 Selling, general and administrative — 321,524 191,005 (7,296) 505,233 Depreciation and amortization — 37,529 38,039 — 75,568 Restructuring and other related charges — 26,472 3,523 — 29,995 Total operating expenses — 1,043,517 658,875 (10,833) 1,691,559 Operating income — 522,334 61,399 (175) 583,558 Other income (expense): Interest expense, net (116,708) 10,470 827 — (105,411) Share of affiliates’ income 545,540 19,817 — (565,357) — Miscellaneous, net (417) (71) (16,659) 175 (16,972) Total other income (expense) 428,415 30,216 (15,832) (565,182) (122,383) Income from operations before income taxes 428,415 552,550 45,567 (565,357) 461,175 Income tax expense (39,352) (7,010) (7,445) — (53,807) Net income including noncontrolling interests 389,063 545,540 38,122 (565,357) 407,368 Net income attributable to noncontrolling interests — — (18,305) — (18,305) Net income attributable to AMC Networks’ stockholders $ 389,063 $ 545,540 $ 19,817 $ (565,357) $ 389,063 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 and related 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 AMC Networks’ stockholders $ 374,308 $ 607,374 $ 51,010 $ (658,384) $ 374,308 Condensed Consolidating Statement of Comprehensive Income Three Months Ended September 30, 2019 (In thousands) Parent Company Guarantor Subsidiaries Non- Guarantor Subsidiaries Eliminations Consolidated Net income including noncontrolling interests $ 116,923 $ 159,156 $ 17,597 $ (170,450) $ 123,226 Other comprehensive income (loss): Foreign currency translation adjustment (33,281) — (33,281) 33,281 (33,281) Unrealized loss on interest rate swaps (187) — — — (187) Other comprehensive (loss) income, before income taxes (33,468) — (33,281) 33,281 (33,468) Income tax benefit 335 — — — 335 Other comprehensive (loss) income, net of income taxes (33,133) — (33,281) 33,281 (33,133) Comprehensive income (loss) 83,790 159,156 (15,684) (137,169) 90,093 Comprehensive income attributable to noncontrolling interests — — (5,217) — (5,217) Comprehensive income (loss) attributable to AMC Networks' stockholders $ 83,790 $ 159,156 $ (20,901) $ (137,169) $ 84,876 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 (loss) 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 Nine Months Ended September 30, 2019 (In thousands) Parent Company Guarantor Subsidiaries Non- Guarantor Subsidiaries Eliminations Consolidated Net income including noncontrolling interest $ 389,063 $ 545,540 $ 38,122 $ (565,357) $ 407,368 Other comprehensive income (loss): Foreign currency translation adjustment (38,490) — (38,490) 38,490 (38,490) Unrealized loss on interest rate swaps (2,076) — — — (2,076) Other comprehensive loss, before income taxes (40,566) — (38,490) 38,490 (40,566) Income tax benefit 483 — — — 483 Other comprehensive loss, net of income taxes (40,083) — (38,490) 38,490 (40,083) Comprehensive income (loss) 348,980 545,540 (368) (526,867) 367,285 Comprehensive income attributable to noncontrolling interests — — (17,048) — (17,048) Comprehensive income (loss) attributable to AMC Networks’ stockholders $ 348,980 $ 545,540 $ (17,416) $ (526,867) $ 350,237 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 (loss) 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 Cash Flows Nine Months Ended September 30, 2019 (In thousands) Parent Company Guarantor Subsidiaries Non- Guarantor Subsidiaries Eliminations Consolidated Cash flows from operating activities: Net cash provided by operating activities $ 183,552 $ 599,576 $ 199,082 $ (581,813) $ 400,397 Cash flows from investing activities: Capital expenditures — (62,741) (6,355) — (69,096) Return of capital from investees — 1,354 7,878 — 9,232 Increase (decrease) to investment in affiliates (255,160) (39,259) — 294,419 — Net cash (used in) provided by investing activities (255,160) (100,646) 1,523 294,419 (59,864) Cash flows from financing activities: Proceeds from the issuance of long-term debt — — 1,521 — 1,521 Repayment of long-term debt (9,375) — (3,238) — (12,613) Deemed repurchases of restricted stock units (23,019) — — — (23,019) Purchase of treasury stock (70,598) — — — (70,598) Proceeds from stock option exercises 4,630 — — — 4,630 Principal payments on finance lease obligations — (2,476) (1,583) — (4,059) Distributions to noncontrolling interests — — (13,545) — (13,545) Net cash used in financing activities (98,362) (2,476) (16,845) — (117,683) Net (decrease) increase in cash and cash equivalents from operations (169,970) 496,454 183,760 (287,394) 222,850 Effect of exchange rate changes on cash and cash equivalents 170,286 (311,952) (150,078) 287,394 (4,350) Cash and cash equivalents at beginning of period 121 368,151 186,614 — 554,886 Cash and cash equivalents at end of period $ 437 $ 552,653 $ 220,296 $ — $ 773,386 Condensed Consolidated 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 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 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 (decrease) increase 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 |