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May 5, 2020, 7:00 a.m. EDT

AMC Networks Inc. Reports First Quarter 2020 Results

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As previously disclosed in the 8-K filed March 27, 2020, the impact of COVID-19 and measures to prevent its spread are affecting the Company's businesses in a number of ways. Beginning in mid-March, the Company experienced adverse advertising sales impacts and suspended content production, which has led to delays in the creation and availability of some of its television programming. Operationally, nearly all Company employees are working remotely, and the Company has restricted business travel. The Company has evaluated and continues to evaluate the potential impact of the COVID-19 pandemic on its consolidated financial statements. The ultimate impact of the COVID-19 pandemic, including the extent of any adverse impact on our business, results of operations and financial condition, will depend on, among other things, the duration and spread of the pandemic, the impact of governmental regulations that have been, and may continue to be, imposed in response to the pandemic, the effectiveness of actions taken to contain or mitigate the outbreak, and global economic conditions. Although the effect of the pandemic may not be fully reflected in the Company's business until future periods, the Company believes that the adverse impact of the COVID-19 pandemic will be material to its results of operations. The Company does not expect the COVID-19 pandemic and its related economic impact to affect its liquidity position or its ongoing ability to meet the covenants in its debt instruments.

Stock Repurchase Program

As previously disclosed, the Company's Board of Directors authorized a program to repurchase up to $1.5 billion of its outstanding shares of common stock. The Company will determine the timing and the amount of any repurchases based on its evaluation of market conditions, share price, and other factors. The stock repurchase program has no pre-established closing date and may be suspended or discontinued at any time. During the first quarter, the Company repurchased approximately 3.3 million shares for $86 million. From April 1, 2020 through May 1, 2020, the Company repurchased approximately 688,000 additional shares for $17 million. As of May 1, 2020, the Company had $386 million available under its stock repurchase authorization.

Debt Redemption

As previously disclosed, on March 4, 2020, the Company redeemed $200 million of the outstanding $600 million principal amount of its 4.75% Senior Notes due 2022. In connection with this redemption, the Company recorded a charge of $3 million related to a loss on the extinguishment of debt.

Please see the Company's Form 10-Q for the period ended March 31, 2020 for further details regarding the above matters.

Description of Non-GAAP Measures

The Company defines Adjusted Operating Income (Loss), which is a non-GAAP financial measure, as operating income (loss) before depreciation and amortization, cloud computing amortization, share-based compensation expense or benefit, impairment and related charges (including gains or losses on sales or dispositions of businesses), restructuring and other related charges, and including the Company's proportionate share of adjusted operating income (loss) from majority owned equity method investees. Because it is based upon operating income (loss), Adjusted Operating Income (Loss) also excludes interest expense (including cash interest expense) and other non-operating income and expense items. The Company believes that the exclusion of share-based compensation expense or benefit allows investors to better track the performance of the various operating units of the business without regard to the effect of the settlement of an obligation that is not expected to be made in cash.

The Company believes that Adjusted Operating Income (Loss) is an appropriate measure for evaluating the operating performance of the business segments and the Company on a consolidated basis. Adjusted Operating Income (Loss) and similar measures with similar titles are common performance measures used by investors, analysts and peers to compare performance in the industry.

Internally, the Company uses net revenues and Adjusted Operating Income (Loss) measures as the most important indicators of its business performance, and evaluates management's effectiveness with specific reference to these indicators. Adjusted Operating Income (Loss) should be viewed as a supplement to and not a substitute for operating income (loss), net income (loss), and other measures of performance presented in accordance with U.S. generally accepted accounting principles ("GAAP"). Since Adjusted Operating Income (Loss) is not a measure of performance calculated in accordance with GAAP, this measure may not be comparable to similar measures with similar titles used by other companies. For a reconciliation of operating income (loss) to Adjusted Operating Income (Loss), please see page 8 of this release.

The Company defines Free Cash Flow ("Free Cash Flow"), which is a non-GAAP financial measure, as net cash provided by operating activities less capital expenditures and cash distributions to noncontrolling interests, all of which are reported in our Consolidated Statement of Cash Flows. The Company believes the most comparable GAAP financial measure of its liquidity is net cash provided by operating activities. The Company believes that Free Cash Flow is useful as an indicator of its overall liquidity, as the amount of Free Cash Flow generated in any period is representative of cash that is available for debt repayment, investment, and other discretionary and non-discretionary cash uses. The Company also believes that Free Cash Flow is one of several benchmarks used by analysts and investors who follow the industry for comparison of its liquidity with other companies in the industry, although the Company's measure of Free Cash Flow may not be directly comparable to similar measures reported by other companies. For a reconciliation of net cash provided by operating activities to Free Cash Flow, please see page 9 of this release.

The Company defines Adjusted Earnings per Diluted Share ("Adjusted EPS"), which is a non-GAAP financial measure, as earnings per diluted share excluding the following items: amortization of acquisition-related intangible assets; impairment and related charges (including gains or losses on sales or dispositions of businesses); non-cash impairments of goodwill, intangible and fixed assets; restructuring and other related charges; and gains and losses related to the extinguishment of debt; as well as the impact of taxes on the aforementioned items. The Company believes the most comparable GAAP financial measure is earnings per diluted share. The Company believes that Adjusted EPS is one of several benchmarks used by analysts and investors who follow the industry for comparison of its performance with other companies in the industry, although the Company's measure of Adjusted EPS may not be directly comparable to similar measures reported by other companies. For a reconciliation of earnings per diluted share to Adjusted EPS, please see page 10 of this release.

Forward-Looking Statements

This earnings release may contain statements that constitute forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. These statements are based on management's current expectations and are subject to uncertainty and changes in circumstances. Investors are cautioned that any such forward-looking statements are not guarantees of future performance or results and involve risks and uncertainties, and that actual results or developments may differ materially from those in the forward-looking statements as a result of various factors, including financial community and rating agency perceptions of the Company and its business, operations, financial condition and the industries in which it operates and the factors described in the Company's filings with the Securities and Exchange Commission, including the sections entitled "Risk Factors" and "Management's Discussion and Analysis of Financial Condition and Results of Operations" contained therein. The Company disclaims any obligation to update any forward-looking statements contained herein.

Conference Call Information

AMC Networks will host a conference call today at 8:30 a.m. ET to discuss its first quarter 2020 results. To listen to the call, visit http://www.amcnetworks.com or dial 1-877-347-9170, using the following passcode: 8975473.

About AMC Networks Inc.

AMC Networks is a global entertainment company known for delivering high-quality content to audiences and a valuable platform to distributors and advertisers. The Company, which operates several of the most recognizable brands in entertainment, manages its business through two operating segments: (i) National Networks, which principally includes AMC, BBC AMERICA, IFC, SundanceTV and WE tv; and AMC Studios, the Company's television production business; and (ii) International and Other, which principally includes AMC Networks International, the Company's international programming business; AMC Networks SVOD, the Company's targeted subscription streaming services, Acorn TV, Shudder, Sundance Now and UMC (Urban Movie Channel); Levity Entertainment Group, the Company's production services and comedy venues business; and IFC Films, the Company's independent film distribution business. For more information on AMC Networks, please visit the Company's website at www.amcnetworks.com .







        Contacts
        Investor Relations          Corporate Communications
        Seth Zaslow (646) 273-3766  Georgia Juvelis (917) 542-6390
        seth.zaslow@amcnetworks.com georgia.juvelis@amcnetworks.com
        


AMC NETWORKS INC.

CONSOLIDATED STATEMENTS OF INCOME

(In thousands, except per share amounts)

(unaudited)







                                                                           Three Months Ended
                                                                           March 31,
                                                                              2020           2019
        Revenues, net                                                      $  734,375     $  784,221
        Operating expenses:
        Technical and operating (excluding depreciation and amortization)     344,060        340,148
        Selling, general and administrative                                   184,649        172,512
        Depreciation and amortization                                         26,730         24,056
        Restructuring and other related charges                               5,966          2,642
                                                                              561,405        539,358
        Operating income                                                      172,970        244,863
        Other income (expense):
        Interest expense                                                      (37,564 )      (39,645 )
        Interest income                                                       4,555          4,200
        Loss on extinguishment of debt                                        (2,908  )      -
        Miscellaneous, net                                                    (29,939 )      (12,785 )
                                                                              (65,856 )      (48,230 )
        Income from operations before income taxes                            107,114        196,633
        Income tax expense                                                    (33,588 )      (46,476 )
        Net income including noncontrolling interests                         73,526         150,157
        Net income attributable to noncontrolling interests                   (4,859  )      (6,760  )
        Net income attributable to AMC Networks' stockholders              $  68,667      $  143,397
        Net income per share attributable to AMC Networks' stockholders:
        Basic                                                              $  1.24        $  2.53
        Diluted                                                            $  1.22        $  2.48
        Weighted average common shares:
        Basic                                                                 55,477         56,588
        Diluted                                                               56,061         57,725
        


AMC NETWORKS INC.

SUPPLEMENTAL FINANCIAL DATA

(Dollars in thousands)

(Unaudited)







                                                Three Months Ended March 31, 2020
                                                National Networks  International and Other  Inter-segment eliminations  Consolidated
        Operating income (loss)                 $        195,224   $       (19,450 )        $        (2,804   )         $      172,970
        Share-based compensation expense                 12,465            3,047                     -                         15,512
        Depreciation and amortization                    8,389             18,341                    -                         26,730
        Restructuring and other related charges          1,509             4,457                     -                         5,966
        Majority owned equity investees AOI              -                 1,276                     -                         1,276
        Adjusted operating income (loss)        $        217,587   $       7,671            $        (2,804   )         $      222,454
        








                                                Three Months Ended March 31, 2019
                                                National Networks  International and Other  Inter-segment eliminations  Consolidated
        Operating income (loss)                 $        251,502   $       (13,748 )        $        7,109              $      244,863
        Share-based compensation expense                 16,269            3,630                     -                         19,899
        Depreciation and amortization                    8,612             15,444                    -                         24,056
        Restructuring and other related charges          303               3,035                     (696     )                2,642
        Majority owned equity investees AOI              -                 1,580                     -                         1,580
        Adjusted operating income (loss)        $        276,686   $       9,941            $        6,413              $      293,040
        


AMC NETWORKS INC.

SUPPLEMENTAL FINANCIAL DATA

(In thousands)

(Unaudited)







        Capitalization                          March 31, 2020
        Cash and cash equivalents               $                 704,129
        Credit facility debt                    $                 721,875
        Senior notes                                              2,200,000
        Other Debt                                                5,000
        Total debt                              $                 2,926,875
        Net debt                                $                 2,222,746
        Finance leases                                            33,147
        Net debt and finance leases             $                 2,255,893
                                                Twelve Months Ended March 31, 2020
        Operating income (GAAP)                 $                 553,384
        Share-based compensation expense                          59,746
        Depreciation and amortization                             103,772
        Restructuring and other related charges                   44,238
        Impairment and related charges                            106,603
        Majority owned equity investees AOI                       5,661
        Adjusted operating income (Non-GAAP)    $                 873,404
        Leverage ratio                          2.6 x
        


-- Represents the aggregate principal amount of the debt.

-- Represents net debt and finance leases divided by Adjusted Operating Income for the twelve months ended March 31, 2020. This ratio differs from the calculation contained in the Company's credit facility. No adjustments have been made for consolidated entities that are not 100% owned.







        Free Cash Flow                                  Three Months Ended March 31,
                                                             2020               2019
        Net cash provided by operating activities       $    198,408       $    171,687
        Less: capital expenditures                           (12,916 )          (22,053 )
        Less: distributions to noncontrolling interests      (3,081  )          (5,629  )
        Free cash flow                                  $    182,411       $    144,005
        


AMC NETWORKS INC.

SUPPLEMENTAL FINANCIAL DATA

(In thousands, except per share amounts)

(Unaudited)

Adjusted Earnings Per Diluted Share







                                                              Three Months Ended March 31, 2020
                                                              Income from operations before income taxes   Income tax expense  Net income attributable to noncontrolling interests  Net income attributable to AMC Networks' stockholders  Diluted EPS attributable to AMC Networks' stockholders
        Reported results (GAAP)                               $                     107,114                $      (33,588 )    $                 (4,859            )                $                          68,667                      $                           1.22
        Adjustments:
        Amortization of acquisition-related intangible assets                       12,132                        (2,023  )                      (3,027            )                                           7,082                                                   0.13
        Restructuring and other related charges                                     5,966                         (1,458  )                      -                                                             4,508                                                   0.08
        Loss on extinguishment  of debt                                             2,908                         (693    )                      -                                                             2,215                                                   0.04
        Adjusted results                                      $                     128,120                $      (37,762 )    $                 (7,886            )                $                          82,472                      $                           1.47
        (Non-GAAP)
        








                                                              Three Months Ended March 31, 2019
                                                              Income from operations before income taxes   Income tax expense  Net income attributable to noncontrolling interests  Net income attributable to AMC Networks' stockholders  Diluted EPS attributable to AMC Networks' stockholders
        Reported results (GAAP)                               $                     196,633                $      (46,476 )    $                 (6,760            )                $                          143,397                     $                           2.48
        Adjustments:
        Amortization of acquisition-related intangible assets                       10,255                        (1,861  )                      (1,507            )                                           6,887                                                   0.12
        Restructuring and other related charges                                     2,642                         (399    )                      (77               )                                           2,166                                                   0.04
        Loss on extinguishment  of debt                                             -                             -                              -                                                             -                                                       -
        Adjusted results                                      $                     209,530                $      (48,736 )    $                 (8,344            )                $                          152,450                     $                           2.64
        (Non-GAAP)
        


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