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AMC Networks Inc. Reports Second Quarter 2013 Results



AMC Networks Inc. Reports Second Quarter 2013 Results

Second Quarter 2013 Highlights:

  * Net revenues increased 15.8% to $379 million
  * Operating income increased 151.7% to $247 million
  * AOCF^1 increased 8.7% to $138 million

NEW YORK, Aug. 8, 2013 (GLOBE NEWSWIRE) -- AMC Networks Inc. ("AMC Networks"
or the "Company") (Nasdaq:AMCX) today reported financial results for the
second quarter ended June 30, 2013.

President and Chief Executive Officer Josh Sapan said: "In the second quarter,
our successful original content drove our overall financial results, with a
16% increase in net revenues and a 9% increase in AOCF. Our original
programming continues to fuel the performance of our networks and underpin the
Company's growth, with last month's 39 Emmy Award nominations for AMC, IFC and
Sundance Channel, the most nominations of any basic cable programming group,
contributing to our momentum."

Second quarter net revenues increased $52 million, or 15.8%, to $379 million
over the second quarter of 2012, led by 15.9% growth at National Networks and
a 13.9% increase at International and Other. Adjusted Operating Cash Flow
("AOCF")^1 totaled $138 million, an increase of 8.7% or $11 million versus the
prior year period. National Networks AOCF increased 7.8% and International and
Other AOCF improved $1 million versus the prior year period. Operating income
was $247 million, an increase of 151.7% or $149 million versus the prior year
period. As discussed in the "Other Matters" section of this release, operating
income included a litigation settlement gain of $133 million. Excluding the
impact of the litigation settlement gain, operating income increased 14.6% at
National Networks and was essentially flat at International and Other.

For the six months ended June 30, 2013, net revenues increased $107 million,
or 16.4%, to $761 million, AOCF increased $36 million, or 14.1%, to $288
million, and operating income increased $179 million, or 91.9%, to $375
million. Excluding the litigation settlement gain recorded in the second
quarter of 2013, operating income for the six months ended June 30, 2013
increased $47 million, or 23.8%, to $242 million.

Second quarter net income from continuing operations was $136 million ($1.87
per diluted share), compared with $41 million ($0.57 per diluted share) in the
second quarter of 2012. The increase resulted from the growth in operating
income as well as a decrease in interest expense.

Net income from continuing operations for the six months ended June 30, 2013
was $197 million ($2.72 per diluted share), compared with $84 million ($1.17
per diluted share) in the prior year period.

^1. See definition of Adjusted Operating Cash Flow ("AOCF") included in the
discussion of non-GAAP financial measures on page 3 of this earnings release.

For the six months ended June 30, 2013, net cash used in operating activities
was $141 million and Free Cash Flow^2 was negative $154 million. These amounts
represent a decrease of $306 million and $313 million, respectively, compared
to the prior year period. The decrease was primarily the result of a $175
million payment to Cablevision Systems Corporation ("Cablevision") and an
increase of approximately $59 million in cash income tax payments, both of
which related to the VOOM HD settlement agreement. See the "Other Matters"
section of this release for a further discussion of this matter. Excluding the
impact of these two items, the decrease in Free Cash Flow was primarily the
result of an increase in working capital and cash income taxes partially
offset by improved operating performance.

Segment Results                                                               
(dollars in      Three Months Ended June Six Months Ended June 30,
thousands)       30,
                 2013    2012    Change  2013      2012     Change
                                                             
Net revenues:                                                
National         $       $       15.9%   $ 713,034 $        17.0%
Networks         353,568 305,184                   609,407
International    29,919  26,269  13.9%   56,212    52,615   6.8%
and Other
Inter-segment    (4,165) (3,883) (7.3%)  (7,963)   (8,213)  3.0%
eliminations
Total net        $       $       15.8%   $ 761,283 $        16.4%
revenues         379,322 327,570                   653,809
                                                             
AOCF:                                                        
National         $       $       7.8%    $ 305,328 $        13.5%
Networks         146,225 135,623                   268,995
International    (8,838) (9,414) 6.1%    (18,739)  (17,621) (6.3%)
and Other
Inter-segment    905     1,035   (12.6%) 1,869     1,540    21.4%
eliminations
Total AOCF       $       $       8.7%    $ 288,458 $        14.1%
                 138,292 127,244                   252,914

National Networks

National Networks principally consists of the Company's four nationally
distributed programming networks, AMC, WE tv, IFC and Sundance Channel.

National Networks revenues for the second quarter 2013 increased 15.9% to $354
million, AOCF rose 7.8% to $146 million, and operating income grew 14.6% to
$128 million, all compared to the prior year period.

National Networks revenues for the six months ended June 30, 2013 increased
17.0% to $713 million, AOCF rose 13.5% to $305 million, and operating income
grew 22.0% to $269 million, all compared to the prior year period.

Second quarter growth in revenues was led by a 17.5% increase in distribution
revenues to $206 million. The increase in distribution revenues was primarily
attributable to growth in affiliate fees as well as increases in home video
and digital distribution revenues. Advertising revenues increased 13.7% to
$147 million. The growth in advertising revenues was due to strong demand for
our original programming.

Second quarter AOCF increased 7.8% to $146 million reflecting the increase in
revenues offset by an increase in expenses. The increase in expenses was
primarily attributable to higher programming and marketing expenses compared
to the prior year period.  The operating income increase reflected the growth
in AOCF and a reduction in amortization expense.

International and Other

International and Other principally consists of AMC/Sundance Channel Global,
the Company's international programming business; IFC Films, the Company's
independent film distribution business; AMC Networks Broadcasting &
Technology, the Company's network technical services business; various
developing online content distribution initiatives; and VOOM HD.

^2. See definition of Free Cash Flow included in the discussion of non-GAAP
financial measures on page 3 of this earnings release.

International and Other revenues for the second quarter of 2013 increased $4
million to $30 million, AOCF improved $1 million to a deficit of $9 million,
and operating income increased $133 million to $119 million, all compared to
the prior year period. As previously noted, operating income reflected the
$133 million VOOM HD litigation settlement gain.

International and Other revenues for the six months ended June 30, 2013
increased $4 million to $56 million, AOCF decreased $1 million to a deficit of
$19 million, and operating income increased $131 million to $104 million, all
compared to the prior year period.

Second quarter revenues principally reflected an increase in affiliate fee
revenues related to the Company's international operations.

Second quarter AOCF reflected the increase in revenues offset by an increase
in expenses. The increase in expenses was primarily related to IFC
Films. Operating income reflected the litigation settlement gain and the
increase in AOCF partially offset by an increase in depreciation expense.

Other Matters

DISH Network

As previously disclosed, on October 21, 2012, DISH Network L.L.C. ("DISH
Network") and the Company entered into a settlement agreement, which included
a payment of $700 million in cash proceeds. The Company and Cablevision agreed
that pending a final determination of the allocation of the $700 million cash
proceeds received from the settlement, $350 million of the settlement proceeds
would be preliminarily distributed to each of Cablevision and the Company. On
April 8, 2013, Cablevision and the Company entered into an agreement to
finalize the allocation of the $700 million in settlement proceeds. As a
result of the April 8^th agreement, the Company retained $175 million and paid
the remaining $175 million of the $350 million that was previously distributed
to it to Cablevision. Additionally, the Company recorded to operating income a
litigation settlement gain of approximately $133 million during the second
quarter.

Please see the Company's Form 10-Q for the period ended June 30, 2013 for
further details.

Description of Non-GAAP Measures

The Company defines Adjusted Operating Cash Flow ("AOCF"), which is a non-GAAP
financial measure, as operating income (loss) before depreciation and
amortization, share-based compensation expense or benefit, restructuring
expense or credit and the litigation settlement gain recorded in connection
with the settlement with DISH Network. The Company does not consider the
one-time litigation settlement gain with DISH Network to be indicative of its
ongoing operating performance. Because it is based upon operating income
(loss), AOCF 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 AOCF is an appropriate measure for evaluating the
operating performance of the business segments and the Company on a
consolidated basis. AOCF 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 AOCF measures as the most
important indicators of its business performance, and evaluates management's
effectiveness with specific reference to these indicators. AOCF 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 AOCF 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 AOCF to operating income (loss), please see
page 7 of this release.

The Company defines Free Cash Flow from Continuing Operations, ("Free Cash
Flow"), which is a non-GAAP financial measure, as net cash provided by
operating activities (continuing operations) less capital expenditures
(continuing operations), both of which are reported in our Consolidated
Statement of Cash Flows. Net cash provided by operating activities excludes
net cash provided by operating activities of discontinued operations. 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 Free Cash Flow to net cash provided by operating activities,
please see page 8 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 11:00 a.m. ET to discuss its
second quarter 2013 results. To listen to the call, visit
http://www.amcnetworks.com or dial 1-877-347-9170, using the following
passcode: 16925927.

About AMC Networks Inc.

AMC Networks owns and operates several of cable television's most recognized
brands delivering high quality content to audiences and a valuable platform to
distributors and advertisers. The Company manages its business through two
reportable operating segments: (i) National Networks, which includes AMC, WE
tv, IFC and Sundance Channel; and (ii) International and Other, which includes
AMC/Sundance Channel Global, our international programming business; IFC
Films, the Company's independent film distribution business; and AMC Networks
Broadcasting & Technology, the Company's network technical services business.
For more information on AMC Networks, please visit the Company's website at
http://www.amcnetworks.com.

AMC NETWORKS INC.
CONSOLIDATED STATEMENTS OF INCOME
Three and Six Months Ended June 30, 2013 and 2012
 (In thousands, except per share amounts)
(Unaudited)
                                                                      
                                       Three Months Ended  Six Months Ended 
                                       June 30,            June 30,
                                       2013      2012      2013      2012
                                                                      
Revenues, net                          $ 379,322 $ 327,570 $ 761,283 $ 653,809
                                                                      
Operating expenses:                                                   
Technical and operating (excluding     137,656   114,349   274,335   219,279
depreciation and amortization) 
Selling, general and administrative    108,978   90,878    208,431   190,100
Restructuring credit                   --        --        --        (3)
Depreciation and amortization          18,308    24,067    36,653    49,118
Litigation settlement gain             (132,944) --        (132,944) --
                                       131,998   229,294   386,475   458,494
                                                                      
                                                                      
Operating income                       247,324   98,276    374,808   195,315
                                                                      
Other income (expense):                                               
Interest expense                       (27,768)  (29,431)  (57,137)  (59,228)
Interest income                        169       102       422       207
Write-off of deferred financing costs  --        --        --        (312)
Miscellaneous, net                     (144)     (644)     (346)     (632)
                                       (27,743)  (29,973)  (57,061)  (59,965)
                                                                      
Income from continuing operations      219,581   68,303    317,747   135,350
before income taxes 
Income tax expense                     (83,850)  (26,898)  (120,499) (50,868)
Income from continuing operations      135,731   41,405    197,248   84,482
Income from discontinued operations,   --        105       --        209
net of income taxes
Net income                             $ 135,731 $ 41,510  $ 197,248 $ 84,691
                                                                      
Basic net income per share:                                           
Income from continuing operations      $ 1.90    $ 0.59    $ 2.76    $ 1.20
                                                                      
Income from discontinued operations    $ 0.00    $ 0.00    $ 0.00    $ 0.00
                                                                      
Net income                             $ 1.90    $ 0.59    $ 2.76    $ 1.21
                                                                      
Diluted net income per share:                                         
Income from continuing operations      $ 1.87    $ 0.57    $ 2.72    $ 1.17
                                                                      
Income from discontinued operations    $ 0.00    $ 0.00    $ 0.00    $ 0.00
                                                                      
Net income                             $ 1.87    $ 0.58    $ 2.72    $ 1.17
                                                                      
Weighted average common shares:                                       
Basic weighted average common shares   71,568    70,479    71,430    70,175
                                                                      
Diluted weighted average common        72,643    72,183    72,613    72,157
shares 

 
AMC NETWORKS INC.
SUPPLEMENTAL FINANCIAL DATA
 (Dollars in thousands)
(Unaudited)
                                                                     
                Three Months Ended June 30, 2013
                           Depreciation   Share-Based               Operating
                           and            Compensation              Income
                AOCF       Amortization   Expense        Other ^(a) (Loss)
                                                                     
National        $ 146,225  $ (14,153)     $ (4,503)      $ --       $ 127,569
Networks
International   (8,838)    (4,155)        (1,101)        132,944    118,850
and Other
Inter-segment   905        --             --             --         905
eliminations
Total           $ 138,292  $ (18,308)     $ (5,604)      $ 132,944  $ 247,324
                                                                     
                Three Months Ended June 30, 2012
                           Depreciation   Share-Based               Operating
                           and            Compensation              Income
                AOCF       Amortization   Expense        Other ^(a) (Loss)
                                                                     
National        $ 135,623  $ (20,527)     $ (3,799)      $ --       $ 111,297
Networks
International   (9,414)    (3,540)        (1,102)         --        (14,056)
and Other
Inter-segment   1,035      --              --            --         1,035
eliminations
Total           $ 127,244  $ (24,067)     $ (4,901)      $ --       $ 98,276
                                                                     
                Six Months Ended June 30, 2013
                           Depreciation   Share-Based               Operating
                           and            Compensation              Income
                AOCF       Amortization   Expense        Other ^(a) (Loss)
                                                                     
National        $ 305,328  $ (28,374)     $ (7,951)      $ --       $ 269,003
Networks
International   (18,739)   (8,279)        (1,990)        132,944    103,936
and Other
Inter-segment   1,869      --             --             --         1,869
eliminations
Total           $ 288,458  $ (36,653)     $ (9,941)      $ 132,944  $ 374,808
                                                                     
                Six Months Ended June 30, 2012
                           Depreciation   Share-Based               Operating
                           and            Compensation              Income
                AOCF       Amortization   Expense        Other ^(a) (Loss)
                                                                     
National        $ 268,995  $ (41,832)     $ (6,648)      $ --       $ 220,515
Networks
International   (17,621)   (7,286)        (1,836)        3          (26,740)
and Other
Inter-segment   1,540      --             --             --         1,540
eliminations
Total           $ 252,914  $ (49,118)     $ (8,484)      $ 3        $ 195,315
                                                                     
(a)  Results for the three and six months ended June 30, 2013 include a
$132,944 litigation settlement gain related to the VOOM HD lawsuit settlement
agreement (see the "Other Matters" section of this release for further
details). Results for the six months ended June 30, 2012 include a $3
restructuring credit.

 
AMC NETWORKS INC.
SUPPLEMENTAL FINANCIAL DATA
 (In thousands)
(Unaudited)
                                                                       
                                             June 30,       March 31, June 30,
                                             2013           2013      2012
                                                                       
National Networks Subscribers                                          
AMC ^(a)                                     98,300         98,700    96,900
WE tv ^(a)                                   82,700         81,800    78,500
IFC ^(a)                                     69,500         70,300    66,900
Sundance Channel ^(b)                        50,600         50,300    40,400
                                                                       
(a)  Estimated U.S. subscribers as measured                            
by Nielsen Media Research.
(b)  Subscriber counts are based on internal management                
reports and represent viewing subscribers.

                                                 
Capitalization                                  June 30,
                                                2013
                                                 
Cash and cash equivalents                       $ 448,637
Credit facility debt ^(a)                       $ 880,000
Senior notes ^(a)                               1,300,000
Total debt                                      $ 2,180,000
                                                 
Net debt                                        $ 1,731,363
                                                 
Capital leases                                  14,902
Net debt and capital leases                     $ 1,746,265
                                                 
LTM AOCF ^(b)                                   $ 500,961
                                                 
Leverage ratio ^(c)                             3.5 x
                                                 
(a)  Represents the aggregate principal amount of the debt.                   
(b)  Represents reported AOCF for the trailing twelve months.                 
(c)  Represents net debt and capital leases divided by LTM AOCF. This ratio
differs from the calculation contained in the Company's credit facility.

                                        
Free Cash Flow                         Six Months Ended June 30,
                                       2013                 2012
Net cash (used in) provided by         $ (140,522)          $ 165,604
operating activities ^(a)
Less: capital expenditures             (13,670)             (6,619)
Free cash flow ^(a)                    $ (154,192)          $ 158,985
                                                             
(a)  Net cash used in operating activities and free cash flow for the six
months ended June 30, 2013 includes a $175 million payment to Cablevision and
approximately $59 million of cash income tax payments related to the VOOM HD
litigation settlement. See the "Other Matters" section of this release for
further details.

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