Supplement Condensed Consolidating Financial Information | Supplemental Condensed Consolidating Financial Information The following tables present condensed consolidating financial statements of (a) the parent company, American Media, Inc., as issuer of the Senior Secured Notes; (b) on a combined basis, the subsidiary guarantors of the Senior Secured Notes; and (c) on a combined basis, the subsidiaries that are not guarantors of the Senior Secured Notes. Separate financial statements of the subsidiary guarantors are not presented because the parent company owns all outstanding voting stock of each of the subsidiary guarantors and the guarantee by each subsidiary guarantor is full and unconditional and joint and several. As a result and in accordance with Rule 3-10(f) of Regulation S-X under the Securities Exchange Act of 1934, as amended, the Company includes the following tables in these notes to the condensed consolidated financial statements: SUPPLEMENTAL CONDENSED CONSOLIDATING BALANCE SHEET AS OF SEPTEMBER 30, 2015 ( in thousands ) Parent Guarantors Non Guarantors Eliminations Condensed Consolidated ASSETS CURRENT ASSETS: Cash and cash equivalents $ — $ 2,033 $ 1,290 $ — $ 3,323 Trade receivables, net — 20,460 675 — 21,135 Inventories — — 61 — 61 Prepaid expenses and other current assets — 22,082 1,548 (5,487 ) 18,143 Total current assets — 44,575 3,574 (5,487 ) 42,662 PROPERTY AND EQUIPMENT, NET: Leasehold improvements — 3,660 — — 3,660 Furniture, fixtures and equipment — 42,332 40 — 42,372 Less – accumulated depreciation — (33,288 ) (22 ) — (33,310 ) Total property and equipment, net — 12,704 18 — 12,722 OTHER ASSETS: Deferred debt costs, net 5,194 — — — 5,194 Deferred rack costs, net — 4,797 — — 4,797 Investments in affiliates 610,545 (634 ) — (608,855 ) 1,056 Other long-term assets — 3,074 — — 3,074 Due from affiliates — 303,005 — (303,005 ) — Total other assets 615,739 310,242 — (911,860 ) 14,121 GOODWILL AND OTHER IDENTIFIED INTANGIBLE ASSETS: Goodwill — 149,488 4,510 — 153,998 Other identified intangibles, net — 210,605 6,000 — 216,605 Total goodwill and other identified intangible assets — 360,093 10,510 — 370,603 TOTAL ASSETS $ 615,739 $ 727,614 $ 14,102 $ (917,347 ) $ 440,108 LIABILITIES AND STOCKHOLDERS' (DEFICIT) EQUITY Accounts payable Accounts payable $ — $ 9,287 $ 161 $ — $ 9,448 Accrued expenses and other liabilities — 35,505 4,405 (5,790 ) 34,120 Accrued interest 10,078 — — — 10,078 Deferred revenues — 23,303 285 — 23,588 Total current liabilities 10,078 68,095 4,851 (5,790 ) 77,234 NON-CURRENT LIABILITIES: Senior secured notes 308,053 — — — 308,053 Revolving credit facility 13,800 — — — 13,800 Other non-current liabilities — 8,677 — — 8,677 Deferred income taxes — 43,080 26 303 43,409 Due to affiliates 298,873 — 4,132 (303,005 ) — Total liabilities 630,804 119,852 9,009 (308,492 ) 451,173 COMMITMENTS AND CONTINGENCIES Redeemable noncontrolling interests — — 4,000 — 4,000 STOCKHOLDERS' (DEFICIT) EQUITY: Total stockholders' (deficit) equity (15,065 ) 607,762 1,093 (608,855 ) (15,065 ) TOTAL LIABILITIES AND STOCKHOLDERS' (DEFICIT) EQUITY $ 615,739 $ 727,614 $ 14,102 $ (917,347 ) $ 440,108 SUPPLEMENTAL CONDENSED CONSOLIDATING BALANCE SHEET AS OF MARCH 31, 2015 ( in thousands ) Parent Guarantors Non Guarantors Eliminations Condensed Consolidated ASSETS CURRENT ASSETS: Cash and cash equivalents $ — $ 1,040 $ 2,412 $ — $ 3,452 Trade receivables, net — 38,058 1,354 — 39,412 Inventories — 739 134 — 873 Prepaid expenses and other current assets — 16,207 636 (5,487 ) 11,356 Total current assets — 56,044 4,536 (5,487 ) 55,093 PROPERTY AND EQUIPMENT, NET: Leasehold improvements — 3,801 — — 3,801 Furniture, fixtures and equipment — 43,189 790 — 43,979 Less – accumulated depreciation — (29,465 ) (765 ) — (30,230 ) Total property and equipment, net — 17,525 25 — 17,550 OTHER ASSETS: Deferred debt costs, net 6,383 — — — 6,383 Deferred rack costs, net — 4,824 — — 4,824 Investments in affiliates 587,126 224 — (586,547 ) 803 Other long-term assets — 3,193 — — 3,193 Due from affiliates — 300,246 — (300,246 ) — Total other assets 593,509 308,487 — (886,793 ) 15,203 GOODWILL AND OTHER IDENTIFIED INTANGIBLE ASSETS: Goodwill — 149,488 4,510 — 153,998 Other identified intangibles, net — 218,181 6,000 — 224,181 Total goodwill and other identified intangible assets — 367,669 10,510 — 378,179 TOTAL ASSETS $ 593,509 $ 749,725 $ 15,071 $ (892,280 ) $ 466,025 LIABILITIES AND STOCKHOLDERS' (DEFICIT) EQUITY CURRENT LIABILITIES: Accounts payable $ — $ 15,434 $ 347 $ — $ 15,781 Accrued expenses and other liabilities — 104,580 5,393 (65,958 ) 44,015 Accrued interest 10,075 — — — 10,075 Deferred revenues — 25,718 1,016 — 26,734 Total current liabilities 10,075 145,732 6,756 (65,958 ) 96,605 NON-CURRENT LIABILITIES: Senior secured notes 309,569 — — — 309,569 Revolving credit facility 14,700 — — — 14,700 Other non-current liabilities — 8,352 — — 8,352 Deferred income taxes — 10,250 26 60,471 70,747 Due to affiliates 296,113 — 4,133 (300,246 ) — Total liabilities 630,457 164,334 10,915 (305,733 ) 499,973 COMMITMENTS AND CONTINGENCIES Redeemable noncontrolling interests — — 3,000 — 3,000 STOCKHOLDERS' (DEFICIT) EQUITY: Total stockholders' (deficit) equity (36,948 ) 585,391 1,156 (586,547 ) (36,948 ) TOTAL LIABILITIES AND STOCKHOLDERS' (DEFICIT) EQUITY $ 593,509 $ 749,725 $ 15,071 $ (892,280 ) $ 466,025 SUPPLEMENTAL CONDENSED CONSOLIDATING STATEMENT OF INCOME (LOSS) AND COMPREHENSIVE INCOME (LOSS) FOR THE THREE MONTHS ENDED SEPTEMBER 30, 2015 ( in thousands ) Parent Guarantors Non Guarantors Eliminations Condensed Consolidated OPERATING REVENUES: Circulation $ — $ 37,961 $ 124 $ — $ 38,085 Advertising — 16,023 — — 16,023 Other — 1,018 6,806 — 7,824 Total operating revenues — 55,002 6,930 — 61,932 OPERATING EXPENSES: Editorial — 6,976 269 — 7,245 Production — 12,225 3,593 — 15,818 Distribution, circulation and other cost of sales — 8,606 32 — 8,638 Selling, general and administrative — 14,263 374 — 14,637 Depreciation and amortization — 6,614 4 — 6,618 Impairment of goodwill and intangible assets — — — — — Total operating expenses — 48,684 4,272 — 52,956 OPERATING INCOME — 6,318 2,658 — 8,976 OTHER EXPENSES: Interest expense (9,369 ) (880 ) (48 ) — (10,297 ) Amortization of deferred debt costs (866 ) — — — (866 ) Other expenses, net — 1 (40 ) — (39 ) Total other expense, net (10,235 ) (879 ) (88 ) — (11,202 ) (LOSS) INCOME BEFORE PROVISION (BENEFIT) FOR INCOME TAXES, AND EQUITY IN EARNINGS OF CONSOLIDATED SUBSIDIARIES (10,235 ) 5,439 2,570 — (2,226 ) PROVISION FOR INCOME TAXES (7,576 ) 6,513 31 — (1,032 ) EQUITY (LOSSES) IN EARNINGS OF CONSOLIDATED SUBSIDIARIES 473 (553 ) — 80 — NET INCOME (LOSS) FROM CONTINUING OPERATIONS (2,186 ) (1,627 ) 2,539 80 (1,194 ) INCOME FROM DISCONTINUED OPERATIONS, NET OF INCOME TAXES — — — — — NET INCOME (LOSS) (2,186 ) (1,627 ) 2,539 80 (1,194 ) LESS: NET LOSS ATTRIBUTABLE TO NONCONTROLLING INTERESTS — — (992 ) — (992 ) NET INCOME (LOSS) ATTRIBUTABLE TO AMERICAN MEDIA, INC AND SUBSIDIARIES $ (2,186 ) $ (1,627 ) $ 1,547 $ 80 $ (2,186 ) Parent Guarantors Non Guarantors Eliminations Condensed Consolidated NET INCOME (LOSS) $ (2,186 ) $ (1,627 ) $ 2,539 $ 80 $ (1,194 ) Foreign currency translation adjustment — — — — — Comprehensive income (loss) $ (2,186 ) $ (1,627 ) $ 2,539 $ 80 $ (1,194 ) Less: comprehensive loss attributable to noncontrolling interests — — (992 ) — (992 ) COMPREHENSIVE INCOME (LOSS) ATTRIBUTABLE TO AMERICAN MEDIA, INC. AND SUBSIDIARIES $ (2,186 ) $ (1,627 ) $ 1,547 $ 80 $ (2,186 ) SUPPLEMENTAL CONDENSED CONSOLIDATING STATEMENT OF INCOME (LOSS) AND COMPREHENSIVE INCOME (LOSS) FOR THE SIX MONTHS ENDED SEPTEMBER 30, 2015 ( in thousands ) Parent Guarantors Non Guarantors Eliminations Condensed Consolidated OPERATING REVENUES: Circulation $ — $ 74,101 $ 146 $ — $ 74,247 Advertising — 33,885 — — 33,885 Other — 3,077 6,831 — 9,908 Total operating revenues — 111,063 6,977 — 118,040 OPERATING EXPENSES: Editorial — 12,774 391 — 13,165 Production — 26,147 3,634 — 29,781 Distribution, circulation and other cost of sales — 17,585 89 — 17,674 Selling, general and administrative — 29,444 610 — 30,054 Depreciation and amortization — 13,338 7 — 13,345 Impairment of goodwill and intangible assets — — — — — Total operating expenses — 99,288 4,731 — 104,019 OPERATING INCOME — 11,775 2,246 — 14,021 OTHER EXPENSES: Interest expense (18,769 ) (883 ) (48 ) — (19,700 ) Amortization of deferred debt costs (1,716 ) — — — (1,716 ) Other expenses, net — 1 (40 ) — (39 ) Total other expense, net (20,485 ) (882 ) (88 ) — (21,455 ) (LOSS) INCOME BEFORE PROVISION (BENEFIT) FOR INCOME TAXES, AND EQUITY IN EARNINGS OF CONSOLIDATED SUBSIDIARIES (20,485 ) 10,893 2,158 — (7,434 ) PROVISION FOR INCOME TAXES (7,576 ) (22,911 ) 183 — (30,304 ) EQUITY (LOSSES) IN EARNINGS OF CONSOLIDATED SUBSIDIARIES 34,793 (1,111 ) — (33,682 ) — NET INCOME (LOSS) FROM CONTINUING OPERATIONS 21,884 32,693 1,975 (33,682 ) 22,870 INCOME FROM DISCONTINUED OPERATIONS, NET OF INCOME TAXES — — — — — NET INCOME (LOSS) 21,884 32,693 1,975 (33,682 ) 22,870 LESS: NET LOSS ATTRIBUTABLE TO NONCONTROLLING INTERESTS — — (986 ) — (986 ) NET INCOME (LOSS) ATTRIBUTABLE TO AMERICAN MEDIA, INC AND SUBSIDIARIES $ 21,884 $ 32,693 $ 989 $ (33,682 ) $ 21,884 Parent Guarantors Non Guarantors Eliminations Condensed Consolidated NET INCOME (LOSS) $ 21,884 $ 32,693 $ 1,975 $ (33,682 ) $ 22,870 Foreign currency translation adjustment — — (1 ) — (1 ) Comprehensive income (loss) 21,884 32,693 1,974 (33,682 ) 22,869 Less: comprehensive loss attributable to noncontrolling interests — — (986 ) — (986 ) COMPREHENSIVE INCOME (LOSS) ATTRIBUTABLE TO AMERICAN MEDIA, INC. AND SUBSIDIARIES $ 21,884 $ 32,693 $ 988 $ (33,682 ) $ 21,883 SUPPLEMENTAL CONDENSED CONSOLIDATING STATEMENT OF INCOME (LOSS) AND COMPREHENSIVE INCOME (LOSS) FOR THE THREE MONTHS ENDED SEPTEMBER 30, 2014 ( in thousands ) Parent Guarantors Non Guarantors Eliminations Condensed Consolidated OPERATING REVENUES: Circulation $ — $ 37,636 $ 1,261 $ — $ 38,897 Advertising — 12,742 1,407 — 14,149 Other — 1,837 6,589 — 8,426 Total operating revenues — 52,215 9,257 — 61,472 OPERATING EXPENSES: Editorial — 7,137 331 — 7,468 Production — 15,691 4,505 — 20,196 Distribution, circulation and other cost of sales — 9,820 549 — 10,369 Selling, general and administrative — 21,836 785 — 22,621 Depreciation and amortization — 2,897 20 — 2,917 Impairment of goodwill and intangible assets — 18,458 — — 18,458 Total operating expenses — 75,839 6,190 — 82,029 OPERATING INCOME — (23,624 ) 3,067 — (20,557 ) OTHER EXPENSES: Interest expense (13,784 ) (11 ) (17 ) — (13,812 ) Amortization of deferred debt costs (1,623 ) — — — (1,623 ) Other income 1 (16 ) — — (15 ) Total other income (expenses), net (15,406 ) (27 ) (17 ) — (15,450 ) (LOSS) INCOME BEFORE PROVISION (BENEFIT) FOR INCOME TAXES, AND EQUITY IN EARNINGS OF CONSOLIDATED SUBSIDIARIES (15,406 ) (23,651 ) 3,050 — (36,007 ) PROVISION FOR INCOME TAXES — (5,977 ) 98 — (5,879 ) EQUITY IN EARNINGS OF CONSOLIDATED SUBSIDIARIES (13,975 ) 374 — 13,601 — NET LOSS FROM CONTINUING OPERATIONS (29,381 ) (17,300 ) 2,952 13,601 (30,128 ) INCOME FROM DISCONTINUED OPERATIONS, NET OF INCOME TAXES — 1,351 — — 1,351 NET (LOSS) INCOME (29,381 ) (15,949 ) 2,952 13,601 (28,777 ) LESS: NET INCOME ATTRIBUTABLE TO NONCONTROLLING INTERESTS — — (1,285 ) — (1,285 ) NET (LOSS) INCOME ATTRIBUTABLE TO AMERICAN MEDIA, INC AND SUBSIDIARIES $ (29,381 ) $ (15,949 ) $ 1,667 $ 13,601 $ (30,062 ) Parent Guarantors Non Guarantors Eliminations Condensed Consolidated NET (LOSS) INCOME $ (29,381 ) $ (15,949 ) $ 2,952 $ 13,601 $ (28,777 ) Foreign currency translation adjustment — — (66 ) — (66 ) Comprehensive (loss) income $ (29,381 ) $ (15,949 ) $ 2,886 $ 13,601 $ (28,843 ) Less: comprehensive income attributable to noncontrolling interests — — (1,285 ) — (1,285 ) COMPREHENSIVE (LOSS) INCOME ATTRIBUTABLE TO AMERICAN MEDIA, INC. AND SUBSIDIARIES $ (29,381 ) $ (15,949 ) $ 1,601 $ 13,601 $ (30,128 ) SUPPLEMENTAL CONDENSED CONSOLIDATING STATEMENT OF INCOME (LOSS) AND COMPREHENSIVE INCOME (LOSS) FOR THE SIX MONTHS ENDED SEPTEMBER 30, 2014 ( in thousands ) Parent Guarantors Non Guarantors Eliminations Condensed Consolidated OPERATING REVENUES: Circulation $ — $ 80,286 $ 2,735 $ — $ 83,021 Advertising — 28,587 2,913 — 31,500 Other — 3,310 6,979 — 10,289 Total operating revenues — 112,183 12,627 — 124,810 OPERATING EXPENSES: Editorial — 14,052 932 — 14,984 Production — 31,195 5,350 — 36,545 Distribution, circulation and other cost of sales — 18,922 1,268 — 20,190 Selling, general and administrative — 43,422 1,574 — 44,996 Depreciation and amortization — 5,994 44 — 6,038 Impairment of goodwill and intangible assets — 18,458 — — 18,458 Total operating expenses — 132,043 9,168 — 141,211 OPERATING INCOME — (19,860 ) 3,459 — (16,401 ) OTHER EXPENSES: Interest expense (27,740 ) (28 ) (31 ) — (27,799 ) Amortization of deferred debt costs (2,057 ) — — — (2,057 ) Other income 1 298 — — 299 Total other income (expenses), net (29,796 ) 270 (31 ) — (29,557 ) (LOSS) INCOME BEFORE PROVISION (BENEFIT) FOR INCOME TAXES, AND EQUITY IN EARNINGS OF CONSOLIDATED SUBSIDIARIES (29,796 ) (19,590 ) 3,428 — (45,958 ) PROVISION FOR INCOME TAXES — (5,367 ) 220 — (5,147 ) EQUITY IN EARNINGS OF CONSOLIDATED SUBSIDIARIES (11,553 ) 735 — 10,818 — NET LOSS FROM CONTINUING OPERATIONS (41,349 ) (13,488 ) 3,208 10,818 (40,811 ) INCOME FROM DISCONTINUED OPERATIONS, NET OF INCOME TAXES — (4 ) — — (4 ) NET (LOSS) INCOME (41,349 ) (13,492 ) 3,208 10,818 (40,815 ) LESS: NET INCOME ATTRIBUTABLE TO NONCONTROLLING INTERESTS — — (1,215 ) — (1,215 ) NET (LOSS) INCOME ATTRIBUTABLE TO AMERICAN MEDIA, INC AND SUBSIDIARIES $ (41,349 ) $ (13,492 ) $ 1,993 $ 10,818 $ (42,030 ) Parent Guarantors Non Guarantors Eliminations Condensed Consolidated NET (LOSS) INCOME $ (41,349 ) $ (13,492 ) $ 3,208 $ 10,818 $ (40,815 ) Foreign currency translation adjustment — — (48 ) — (48 ) Comprehensive (loss) income (41,349 ) (13,492 ) 3,160 10,818 (40,863 ) Less: comprehensive income attributable to noncontrolling interests — — (1,215 ) — (1,215 ) COMPREHENSIVE (LOSS) INCOME ATTRIBUTABLE TO AMERICAN MEDIA, INC. AND SUBSIDIARIES $ (41,349 ) $ (13,492 ) $ 1,945 $ 10,818 $ (42,078 ) SUPPLEMENTAL CONDENSED CONSOLIDATING STATEMENT OF CASH FLOWS FOR THE SIX MONTHS ENDED SEPTEMBER 30, 2015 (in thousands) Parent Guarantors Non Guarantors Eliminations Condensed Consolidated Cash Flows from Operating Activities: Net cash provided by (used in) operating activities $ (7,274 ) $ 12,260 $ (1,072 ) $ — $ 3,914 Cash Flows from Investing Activities: Purchases of property and equipment — (90 ) — — (90 ) Purchase of intangible assets — (861 ) — — (861 ) Due from affiliates — (10,335 ) — 10,335 — Other — 18 — — 18 Net cash provided by (used in) investing activities — (11,268 ) — 10,335 (933 ) Cash Flows from Financing Activities: Proceeds from revolving credit facility 33,400 — — — 33,400 Repayment to revolving credit facility (34,300 ) — — — (34,300 ) Senior secured notes repurchases (2,000 ) — — — (2,000 ) Redemption premium payment (118 ) — — — (118 ) Payment of debt costs (43 ) — — — (43 ) Payments to noncontrolling interest holder of Olympia — — (50 ) — (50 ) Due to affiliates 10,335 — — (10,335 ) — Net cash provided by (used in) financing activities 7,274 — (50 ) (10,335 ) (3,111 ) Effect of exchange rate changes on cash — 1 — — 1 Net increase (decrease) in cash and cash equivalents — 993 (1,122 ) — (129 ) Cash and cash equivalents, beginning of period — 1,040 2,412 — 3,452 Cash and cash equivalents, end of period $ — $ 2,033 $ 1,290 $ — $ 3,323 SUPPLEMENTAL CONDENSED CONSOLIDATING STATEMENT OF CASH FLOWS FOR THE SIX MONTHS ENDED SEPTEMBER 30, 2014 (in thousands) Parent Guarantors Non Guarantors Eliminations Condensed Consolidated Cash Flows from Operating Activities: Net cash provided by (used in) operating activities $ (18,764 ) $ 40,332 $ 2,902 $ — $ 24,470 Cash Flows from Investing Activities: Purchases of property and equipment — (5,114 ) — — (5,114 ) Purchase of intangible assets — (2,167 ) — — (2,167 ) Due from affiliates — (31,406 ) — 31,406 — Other — 9 — — 9 Net cash provided by (used in) investing activities — (38,678 ) — 31,406 (7,272 ) Cash Flows from Financing Activities: Proceeds from revolving credit facility 28,300 — — — 28,300 Repayment to revolving credit facility (49,700 ) — — — (49,700 ) Proceeds from issuance of senior secured notes 12,500 — — — 12,500 Capital contribution 573 — — — 573 Costs incurred in restructuring (4,315 ) — — — (4,315 ) Due to affiliates 31,406 — — (31,406 ) — Net cash provided by (used in) financing activities 18,764 — — (31,406 ) (12,642 ) Effect of exchange rate changes on cash — (26 ) — — (26 ) Net increase (decrease) in cash and cash equivalents — 1,628 2,902 — 4,530 Cash and cash equivalents, beginning of period — 415 2,615 — 3,030 Cash and cash equivalents, end of period $ — $ 2,043 $ 5,517 $ — $ 7,560 |