<PAGE>
FORM 10-Q
(Mark One)
[ X ] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended June 30, 1995
----------------------------------------
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period from to
-------------------- --------------------
Commission File Number: 1-9046
----------------------
Cablevision Systems Corporation
---------------------------------------------------------------
(Exact name of registrant as specified in its charter)
Delaware 11-2776686
------------------------------- -----------------------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
One Media Crossways, Woodbury, New York 11797
--------------------------------------- -------------
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (516) 364-8450
------------------
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days.
Yes X No
----- -----
Number of shares of common stock outstanding as of August 4, 1995:
Class A Common Stock 12,220,055
Class B Common Stock 11,573,922
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
<PAGE>
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements
CABLEVISION SYSTEMS CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(Dollars in thousands, except per share data)
(Unaudited)
<TABLE>
<CAPTION>
Six Months Ended Three Months Ended
June 30, June 30,
---------------- ------------------
1995 1994 1995 1994
---- ---- ---- ----
<S> <C> <C> <C> <C>
Revenues . . . . . . . . . . . . . .$ 509,135 $ 368,177 $ 263,734 $ 192,090
--------- --------- --------- ---------
Operating expenses:
Technical . . . . . . . . . . . . . 193,243 134,640 100,018 68,604
Selling, general and
administrative . . . . . . . . . . 131,611 72,404 75,794 42,585
Restructuring charge. . . . . . . . - 4,306 - -
Depreciation and amortization . . . 159,537 110,095 76,883 55,322
--------- --------- --------- ---------
483,391 321,445 252,695 166,511
--------- --------- --------- ---------
Operating profit. . . . . . . . 24,744 46,732 11,039 25,579
--------- --------- --------- ---------
Other income (expense):
Interest expense. . . . . . . . . .(155,318) (118,586) (79,590) (59,918)
Interest income . . . . . . . . . . 790 492 390 271
Share of affiliates' net losses . . (52,692) (34,257) (23,587) (16,975)
Write off on deferred financing
costs . . . . . . . . . . . . . . (2,888) - - -
Provision for preferential
payment to related party. . . . . (2,800) (2,800) (1,400) (1,400)
Minority interest . . . . . . . . . (4,276) - (2,166) -
Miscellaneous . . . . . . . . . . . (2,999) (3,432) (1,623) (2,281)
--------- --------- --------- ---------
(220,183) (158,583) (107,976) (80,303)
--------- --------- --------- ---------
Net loss . . . . . . . . . . . . . (195,439) (111,851) (96,937) (54,724)
Dividend requirements applicable
to preferred stocks. . . . . . . (4,918) (2,054) (2,447) (1,833)
--------- --------- --------- ---------
Net loss applicable to common
shareholders. . . . . . . . . . . $(200,357) $(113,905) $ (99,384) $ (56,557)
--------- --------- --------- ---------
--------- --------- --------- ---------
Net loss per common share. . . . . $ (8.45) $ (4.88) $ (4.18) $ (2.42)
--------- --------- --------- ---------
--------- --------- --------- ---------
Average number of common shares
outstanding (in thousands). . . . 23,710 23,323 23,751 23,368
--------- --------- --------- ---------
--------- --------- --------- ---------
</TABLE>
See accompanying notes to
consolidated financial statements.
(2)
<PAGE>
CABLEVISION SYSTEMS CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(Dollars in thousands)
<TABLE>
<CAPTION>
ASSETS June 30, December 31,
1995 1994
-------- --------
(unaudited)
<S> <C> <C>
Cash and cash equivalents. . . . . . . . . . . . . . . . . $ 23,487 $ 11,350
Accounts receivable trade (less allowance for doubtful
accounts of $11,210 and $10,087) . . . . . . . . . . . . 71,406 72,881
Notes receivable affiliates. . . . . . . . . . . . . . . . 1,786 2,143
Notes and other receivables. . . . . . . . . . . . . . . . 16,086 14,280
Prepaid expenses and other assets. . . . . . . . . . . . . 13,256 18,950
Property, plant and equipment, net . . . . . . . . . . . . 916,312 886,028
Investments in affiliates. . . . . . . . . . . . . . . . . 144,541 42,954
Advances to affiliates . . . . . . . . . . . . . . . . . . 37,539 36,681
Acquisition related costs and deposits . . . . . . . . . . - 1,844
Feature film inventory . . . . . . . . . . . . . . . . . . 151,113 129,496
Franchises, net of accumulated amortization of
$278,674 and $240,609. . . . . . . . . . . . . . . . . . 398,621 436,686
Excess costs over fair value of net assets acquired and
other intangible assets, net of accumulated
amortization of $509,299 and $475,673. . . . . . . . . . 397,010 430,028
Deferred financing, acquisition and other costs, net of
accumulated amortization of $21,887 and $18,422. . . . . 48,592 50,949
Deferred interest expense, net of accumulated
amortization of $35,119 and $28,095. . . . . . . . . . . 35,119 42,143
----------- -----------
$ 2,254,868 $ 2,176,413
----------- -----------
----------- -----------
</TABLE>
See accompanying notes to
consolidated financial statements.
(3)
<PAGE>
CABLEVISION SYSTEMS CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(Dollars in thousands)
<TABLE>
<CAPTION>
June 30, December 31,
1995 1994
----------- -----------
(unaudited)
LIABILITIES AND STOCKHOLDERS' DEFICIENCY
<S> <C> <C>
Accounts payable $ 117,203 $ 120,627
Accrued liabilities:
Interest . . . . . . . . . . . . . . . . . . . . . . . 42,250 39,322
Payroll and related benefits . . . . . . . . . . . . . 41,445 34,085
Franchise fees . . . . . . . . . . . . . . . . . . . . 16,854 19,179
Other. . . . . . . . . . . . . . . . . . . . . . . . . 113,013 86,047
Accounts payable to affiliates . . . . . . . . . . . . . 27,577 22,273
Feature film rights payable. . . . . . . . . . . . . . . 131,026 110,542
Bank debt. . . . . . . . . . . . . . . . . . . . . . . . 1,499,762 1,335,419
Senior debt. . . . . . . . . . . . . . . . . . . . . . . 880,888 862,440
Subordinated debentures. . . . . . . . . . . . . . . . . 623,571 623,534
Subordinated notes payable . . . . . . . . . . . . . . . 141,268 141,268
Obligation to related party. . . . . . . . . . . . . . . 190,212 193,079
Capital lease obligations and other debt . . . . . . . . 10,241 13,496
------------- -----------
Total liabilities. . . . . . . . . . . . . . . . . . . 3,835,310 3,601,311
------------ -----------
Deficit investment in affiliates . . . . . . . . . . . . 436,321 393,637
------------ -----------
Commitments and contingencies
Stockholders' deficiency:
8% Series C Cumulative Preferred Stock, $.01 par
value, 112,500 shares authorized, 110,622 shares
issued ($100 per share liquidation preference) . . . 1 1
8% Series D Cumulative Preferred Stock, $.01 par
value, 112,500 shares authorized, none issued
($100 per share liquidation preference). . . . . . . - -
Series E Redeemable Exchangeable Convertible
Preferred Stock, $.01 par value, 100,000 shares
authorized and issued ($1,000 per share liquidation
preference). . . . . . . . . . . . . . . . . . . . . 1 1
Class A Common Stock, $.01 par value, 50,000,000
shares authorized, 12,116,867 and 11,850,242 shares
issued . . . . . . . . . . . . . . . . . . . . . . . 121 119
Class B Common Stock, $.01 par value, 20,000,000
shares authorized, 11,673,922 and 11,787,622 shares
issued . . . . . . . . . . . . . . . . . . . . . . . 117 118
Par value in excess of capital contributed . . . . . . (71,888) (74,016)
Accumulated deficit. . . . . . . . . . . . . . . . . . (1,941,878) (1,741,521)
----------- -----------
(2,013,526) (1,815,298)
Less treasury stock, at cost (50,000 shares) . . . . . (3,237) (3,237)
----------- -----------
Total stockholders' deficiency . . . . . . . . . . . . (2,016,763) (1,818,535)
----------- -----------
$ 2,254,868 $ 2,176,413
----------- -----------
----------- -----------
</TABLE>
See accompanying notes
to consolidated financial statements.
(4)
<PAGE>
CABLEVISION SYSTEMS CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
SIX MONTHS ENDED JUNE 30, 1995 AND 1994
(Dollars in thousands)
(Unaudited)
<TABLE>
<CAPTION>
1995 1994
-------- --------
<S> <C> <C>
Cash flows from operating activities:
Net loss. . . . . . . . . . . . . . . . . . . . . . . ($195,439) $(111,851)
Adjustments to reconcile net loss to net cash provided
by operating activities:
Depreciation and amortization. . . . . . . . 159,537 110,095
Share of affiliates' net losses. . . . . . . . 52,692 34,257
Minority interest. . . . . . . . . . . . . . . . . 4,276 -
Amortization of deferred financing . . . . . . . . 2,619 2,105
Amortization of deferred interest. . . . . . . . . 7,024 7,024
Amortization of debenture discount . . . . . . 37 74
Accretion of interest on debt. . . . . . . . 19,065 17,190
Write off of deferred finance costs. . . . . . . . 2,888 -
Loss on sale of equpiment. . . . . . . . . . . . 1,933 1,405
Changes in assets and liabilities net of effects
of acquisitions:
Decrease (increase) in accounts receivable
trade . . . . . . . . . . . . . . . . . . . . 1,475 (4,202)
Decrease in notes receivable, affiliates . . . 357 354
Increase in notes and other receivables. . . . (2,424) (2,513)
Decrease in prepaid expenses and other assets. 1,418 258
Decrease (increase) in advances to affiliates. (858) 7
Increase in feature film inventory . . . . . . (21,617) -
Decrease in accounts payable . . . . . . . . . (3,424) (6,776)
Increase in accrued interest . . . . . . . . . 2,928 609
Increase in accrued payroll and related
benefits. . . . . . . . . . . . . . . . . . . 7,360 2,882
Decrease in accrued franchise fees . . . . . . (2,325) (4,475)
Increase (decrease) in accrued liabilities, other 26,966 (9,457)
Increase in accounts payable to affiliates . . 5,304 6,958
Increase in feature film rights payable. . . . 20,484 -
--------- ---------
Total adjustments. . . . . . . . . . . . . . 285,715 155,795
--------- ---------
Net cash provided by operating activities. . . . . . . $ 90,276 $ 43,944
--------- ---------
</TABLE>
See accompanying notes
to consolidated financial statements.
(5)
<PAGE>
CABLEVISION SYSTEMS CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
SIX MONTHS ENDED JUNE 30, 1995 AND 1994
(Dollars in thousands)
(Unaudited)
continued
<TABLE>
<CAPTION>
1995 1994
---------- ----------
<S> <C> <C>
Cash flows from investing activities:
Capital expenditures. . . . . . . . . . . . . . . . . $ (119,180) $(122,575)
Proceeds from sale of plant and equipment . . . . . . 397 832
Additions to intangible assets. . . . . . . . . . . . (928) (44)
(Increase) decrease in acquisition related costs
and deposits. . . . . . . . . . . . . . . . . . . . 1,844 (26,483)
(Increase) decrease in investments in
affiliates, net . . . . . . . . . . . . . . . . . . 249 2,513
Payments for acquisition, net of cash acquired. . . . (110,906) (120,848)
--------- --------
Net cash used in investing activities. . . . . . . . (228,524) (266,605)
--------- --------
Cash flows from financing activities:
Proceeds from bank debt . . . . . . . . . . . . . . . 319,078 261,325
Repayment of bank debt. . . . . . . . . . . . . . . . (154,735) (125,079)
Proceeds from senior debt . . . . . . . . . . . . . . 6,500 2,500
Repayment of senior debt. . . . . . . . . . . . . . . (7,117) (8,500)
Preferred stock dividends . . . . . . . . . . . . . . (4,918) (2,054)
Issuance of Redeemable Exchangeable Convertible
Preferred Stock . . . . . . . . . . . . . . . . . . - 98,625
Issuance of common stock. . . . . . . . . . . . . . . 2,629 6,661
Decrease in obligation to related party . . . . . . . (2,867) (2,871)
Payments of capital lease obligations and other debt. (3,255) (1,323)
Additions to deferred financing and other costs . . . (4,930) (2,168)
-------- --------
Net cash provided by financing activities . . . . . 150,385 227,116
-------- --------
Net increase in cash and cash equivalents. . . . . . . 12,137 4,455
Cash and cash equivalents at beginning of year . . . . 11,350 12,944
-------- --------
Cash and cash equivalents at end of period . . . . . . $ 23,487 $ 17,399
-------- --------
-------- --------
</TABLE>
See accompanying notes
to consolidated financial statements.
(6)
<PAGE>
CABLEVISION SYSTEMS CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Dollars in thousands)
(Unaudited)
Note 1. BASIS OF PRESENTATION
The accompanying unaudited consolidated financial statements of Cablevision
Systems Corporation and its majority owned subsidiaries (the "Company") have
been prepared in accordance with the rules and regulations of the Securities and
Exchange Commission. Certain information and footnote disclosures normally
included in financial statements prepared in accordance with generally accepted
accounting principles have been condensed or omitted.
Note 2. RESPONSIBILITY FOR INTERIM FINANCIAL STATEMENTS
The consolidated financial statements as of June 30, 1995 presented in this Form
10-Q are unaudited; however, in the opinion of management, such statements
include all adjustments, consisting solely of normal recurring adjustments,
necessary for a fair presentation of the results for the periods presented.
The interim financial statements should be read in conjunction with the audited
financial statements and notes thereto included in the Company's Annual Report
on Form 10-K for the fiscal year ended December 31, 1994.
The results of operations for the interim periods are not necessarily indicative
of the results that might be expected for future interim periods or for the full
year ending December 31, 1995.
Note 3. LOSS PER COMMON SHARE
Net loss per common share is computed based on the weighted average number of
common shares outstanding. Common stock equivalents were not included in the
computation as their effect would be to decrease net loss per share.
Note 4. CASH FLOWS
For purposes of the consolidated statements of cash flows, the Company considers
short-term investments with a maturity at date of purchase of three months or
less to be cash equivalents. The Company paid cash interest expense of
approximately
(7)
<PAGE>
CABLEVISION SYSTEMS CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Dollars in thousands except per share amounts)
(Unaudited)
Note 4. CASH FLOWS (continued)
$123,645 and $91,262 for the six months ended June 30, 1995 and 1994,
respectively. The Company's noncash financing activities for the six months
ended June 30, 1994 included capital lease obligations of $4,020 incurred when
the Company entered into leases for new equipment.
Note 5. RECENT DEVELOPMENTS
Pursuant to an agreement between Rainbow Programming and National Broadcasting
Company, Inc. ("NBC"), NBC had the right to require Rainbow Programming, by
notice given on or before April 13, 1995, to purchase its interests in
SportsChannel (New York) Associates ("SCNY") and Rainbow News 12 Company
("RN12") at a predetermined purchase price, subject to certain adjustments. On
April 7, 1995 NBC elected to require Rainbow Programming to purchase such
interests. On July 12, 1995, Rainbow Programming consummated the purchase of
such interests, and, effective that date, the Company will consolidate the
results of operations of SCNY and RN12. The aggregate purchase price amounted
to approximately $95,500. Funds for the purchase and related fees were made
available under Rainbow Programming's $202,000 amended and restated credit
agreement and by an equity contribution of $2,500 from the Company. See Item 2.
- "Management's Discussion and Analysis of Financial Condition and Results of
Operations - Liquidity and Capital Resources - Rainbow Programming".
(8)
<PAGE>
CABLEVISION SYSTEMS CORPORATION
Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations
RESULTS OF OPERATIONS
The following tables set forth on a historical basis certain items related to
operations as a percentage of net revenues for the periods indicated.
<TABLE>
<CAPTION>
STATEMENT OF OPERATIONS DATA
----------------------------
Six Months Ended June 30,
-----------------------------------------
1995 1994
------------------ ------------------- (Increase)
% of % of Decrease
Amount Revenues Amount Revenues in Net loss
------ -------- ------ -------- -----------
(Dollars in thousands)
<S> <C> <C> <C> <C> <C>
Revenues . . . . . . . . . . . . . . $ 509,135 100% $ 368,177 100% $140,958
Operating expenses:
Technical. . . . . . . . . . . . . 193,243 38 134,640 37 (58,603)
Selling, general &
administrative . . . . . . . . . 131,611 26 72,404 20 (59,207)
Restructuring charge . . . . . . . - - 4,306 1 4,306
Depreciation and
amortization . . . . . . . . . . 159,537 31 110,095 30 (49,442)
--------- --------- --------
Operating profit . . . . . . . . . . 24,744 5 46,732 13 (21,988)
Other expense:
Interest expense, net. . . . . . . (154,528) (30) (118,094) (32) (36,434)
Share of affiliates' net loss. . . (52,692) (10) (34,257) (9) (18,435)
Write-off of deferred financing
costs. . . . . . . . . . . . . . (2,888) (1) - - (2,888)
Provision for preferential
payment to related party . . . . (2,800) (1) (2,800) (1) -
Minority interest. . . . . . . . . (4,276) (1) - - (4,276)
Miscellaneous, net . . . . . . . . (2,999) (1) (3,432) (1) 433
--------- --------- --------
Net loss . . . . . . . . . . . . . . $(195,439) (38)% $(111,851) (30)% $(83,588)
--------- --------- --------
--------- --------- --------
OTHER OPERATING DATA:
---------------------
Operating profit before depreciation
and amortization (1) . . . . . . . $184,281 $ 156,827
Currently payable interest expense,
net. . . . . . . . . . . . . . . . 126,573 92,193
Net cash provided by operating
activities (2) . . . . . . . . . . 90,276 43,944
Net cash used in investing
activities (2) . . . . . . . . . . 228,524 266,605
Net cash provided by financing
activities (2) . . . . . . . . . . 150,385 227,116
<FN>
(1) Operating profit before depreciation and amortization is presented here to
provide additional information about the Company's ability to meet future
debt service, capital expenditures and working capital requirements.
Operating profit before depreciation and amortization should be considered
in addition to and not as a substitute for net income and cash flows as
indicators of financial performance and liquidity as reported in accordance
with generally accepted accounting principles.
(2) See Item 1. - "Consolidated Statements of Cash Flows".
</TABLE>
(9)
<PAGE>
CABLEVISION SYSTEMS CORPORATION
<TABLE>
<CAPTION>
STATEMENT OF OPERATIONS DATA
----------------------------
Three Months Ended June 30,
-----------------------------------------
1995 1994
------------------ ------------------- (Increase)
% of % of Decrease
Amount Revenues Amount Revenues in Net loss
------ -------- ------ -------- -----------
(Dollars in thousands)
<S> <C> <C> <C> <C> <C>
Revenues . . . . . . . . . . . . . . $ 263,734 100% $ 192,090 100% $ 71,644
Operating expenses:
Technical . . . . . . . . . . . . . 100,018 38 68,604 36 (31,414)
Selling, general &
administrative. . . . . . . . . . 75,794 29 42,585 22 (33,209)
Depreciation and
amortization. . . . . . . . . . . 76,883 29 55,322 29 (21,561)
--------- --------- --------
Operating profit . . . . . . . . . . 11,039 4 25,579 13 (14,540)
Other expense:
Interest expense, net . . . . . . . (79,200) (30) (59,647) (31) (19,553)
Share of affiliates' net loss . . . (23,587) (9) (16,975) (9) (6,612)
Provision for preferential
payment to related party. . . . . (1,400) - (1,400) (1) -
Minority interest . . . . . . . . . (2,166) (1) - - (2,166)
Miscellaneous, net. . . . . . . . . (1,623) (1) (2,281) (1) 658
--------- --------- --------
Net loss . . . . . . . . . . . . . . $ (96,937) (37)% $ (54,724) (28)% $(42,213)
--------- --------- --------
--------- --------- --------
OTHER OPERATING DATA:
Operating profit before depreciation
and amortization (1). . . . . . . . $ 87,922 $ 80,901
Currently payable interest expense,
net . . . . . . . . . . . . . . . . 65,090 46,730
Net cash provided by operating
activities. . . . . . . . . . . . . 48,927 20,618
Net cash used in investing
activities. . . . . . . . . . . . . 67,260 105,270
Net cash provided by financing
activities. . . . . . . . . . . . . 20,287 70,457
<FN>
(1) Operating profit before depreciation and amortization is presented here to
provide additional information about the Company's ability to meet future
debt service, capital expenditures and working capital requirements.
Operating profit before depreciation and amortization should be considered
in addition to and not as a substitute for net income and cash flows as
indicators of financial performance and liquidity as reported in accordance
with generally accepted accounting principles.
</TABLE>
(10)
<PAGE>
CABLEVISION SYSTEMS CORPORATION
1994 ACQUISITIONS In March 1994, the Company completed the acquisition of North
Coast Cable; in July 1994, the Company through Rainbow Programming purchased an
additional approximate 50% interest in American Movie Classics Company ("AMCC"),
giving Rainbow Programming a 75% ownership interest in AMCC; and in August 1994,
the Company consummated the acquisition of Monmouth Cablevision and Riverview
Cablevision. The foregoing acquisitions will collectively be referred to as the
"1994 Acquisitions".
REVENUES for the six and three months ended June 30, 1995 increased $141.0
million (38%) and $71.6 million (37%), respectively, when compared to the same
periods in 1994. Increases of 26% and 24%, respectively, for the six and three
month periods were attributable to the 1994 Acquisitions, with the remaining
increases of 12% and 13%, respectively, resulting primarily from internal growth
in the average number of subscribers (approximately 148,500 (11%) for the six
month period).
TECHNICAL EXPENSES increased 43% and 46%, respectively, for the six and three
months ended June 30, 1995 over the corresponding 1994 periods. Increases of
approximately 25% and 23% for the respective six and three month periods were
directly attributable to the 1994 Acquisitions. The remaining 18% and 23%
increases were due primarily to increases in those costs directly associated
with the internal growth in the average number of subscribers mentioned above.
As a percentage of revenues, technical expenses increased 1% and 2%,
respectively, for the six and three months ended June 30, 1995 over the same
1994 periods.
SELLING, GENERAL AND ADMINISTRATIVE EXPENSES increased 82% and 78%,
respectively, for the six and three months ended June 30, 1995 over the
comparable 1994 periods. Increases of 35% and 29% for the respective periods
resulted from the 1994 Acquisitions. During 1995 and 1994, adjustments were
made related to an incentive stock plan. Excluding these adjustments, and the
effects of the 1994 Acquisitions, discussed above, selling, general and
administrative expenses would have increased 14% and 18%, respectively, for the
six and three months ended June 30, 1995 over the same 1994 periods primarily
due to higher administrative and customer service costs, and as a percentage of
revenues, would have increased less than 1% for each of the periods presented.
RESTRUCTURING CHARGE The Company recorded a one time charge in the first
quarter of 1994 to provide for employee severance and related costs, resulting
from a restructuring of its operations, which was undertaken in response to FCC-
mandated rate reductions in substantially all of the Company's cable television
systems.
(11)
<PAGE>
CABLEVISION SYSTEMS CORPORATION
OPERATING PROFIT BEFORE DEPRECIATION AND AMORTIZATION increased 18% and 9%,
respectively, for the six and three months ended June 30, 1995 compared to the
same periods in 1994 as a result of the combined effect of the revenue and
expense changes discussed above. Operating profit before depreciation and
amortization is presented here to provide additional information about the
Company's ability to meet future debt service, capital expenditures and working
capital requirements. Operating profit before depreciation and amortization
should be considered in addition to and not as a substitute for net income and
cash flows as indicators of financial performance and liquidity as reported in
accordance with generally accepted accounting principles.
DEPRECIATION AND AMORTIZATION EXPENSE increased 45% and 39%, respectively, for
the six and three months ended June 30, 1995 over the comparable 1994 periods.
Approximately 36% and 32% of the respective increases were attributable to the
1994 Acquisitions, with the remaining 9% and 7% increases resulting from
increased depreciation charges on capital expenditures made during 1995 and
1994, offset to some extent by decreased depreciation and amortization charges
on assets which became fully depreciated or amortized during the periods.
NET INTEREST EXPENSE increased 31% and 33%, respectively, for the six and three
months ended June 30, 1995 compared to the same 1994 periods. Increases of 18%
and 16%, respectively, were related to the 1994 Acquisitions. Remaining
increases of 13% and 17%, respectively, resulted primarily from higher average
debt levels, reflecting the increased capital expenditures referred to above, as
well as from generally higher interest rates.
SHARE OF AFFILIATES' NET LOSSES increased from $34.3 million to $52.7 million
for the six months ended June 30, 1995 compared to the same 1994 period. Such
amounts consist primarily of the Company's share in the net losses of certain
cable affiliates which, for the six months ended June 30, 1995 and 1994 amounted
to $47.7 million and $35.5 million, respectively, and in the net (income) losses
of certain programming businesses, in which the Company has varying ownership
interests, which aggregated $5.0 million and $(1.2) million for the respective
periods.
WRITE OFF OF DEFERRED FINANCING COSTS in 1995 relates primarily to costs
associated with Rainbow Programming's original $105 million credit facility
which was replaced in January 1995 with a new $202 million facility.
PROVISION FOR PREFERENTIAL PAYMENT TO RELATED PARTY consists of the expensing of
the proportionate amount due with respect to an annual payment ($5.6 million)
made in connection with the acquisition of Cablevision of New York City ("CNYC")
in 1992.
MINORITY INTEREST in 1995 represents NBC's share of the net income of AMCC.
(12)
<PAGE>
CABLEVISION SYSTEMS CORPORATION
LIQUIDITY AND CAPITAL RESOURCES
For financing purposes, the Company is structured as the Restricted Group,
consisting of Cablevision Systems Corporation and certain of its subsidiaries
and an unrestricted group of certain subsidiaries which includes V Cable, Inc.,
Rainbow Programming and Cablevision MFR, Inc. On October 14, 1994, CNYC,
formerly an unrestricted subsidiary, became a member of the Restricted Group.
The following table presents selected historical results of operations and other
financial information related to the captioned groups or entities for the six
months ended June 30, 1995. (Rainbow Programming, Rainbow Advertising, AMCC, and
a radio station located in Cleveland, Ohio are included in "Other Unrestricted
Subsidiaries").
<TABLE>
<CAPTION>
Core Total Other Cablevision
Restricted Restricted Cablevision Unrestricted Systems
Group CNYC Group V Cable,Inc. MFR Subsidiaries Corporation
---------- ------ ---------- ------------ ----------- ------------ -----------
(Dollars in thousands)
<S> <C> <C> <C> <C> <C> <C> <C>
Net revenues $ 229,381 $ 97,725 $ 327,106 $ 72,789 $ 37,570 $ 71,670 $ 509,135
Operating expenses:
Technical 85,261 45,150 130,411 29,016 12,200 21,616 193,243
Selling, general and
administrative 37,106 25,779 62,885 10,844 5,924 51,958 131,611
Depreciation and
amortization 60,846 20,637 81,483 33,965 32,657 11,432 159,537
---------- -------- ---------- -------- --------- --------- ----------
Operating profit
(loss) $ 46,168 (1) $ 6,159 (1) $ 52,327 $ (1,036) $ (13,211) $ (13,336) $ 24,744
---------- -------- ---------- -------- --------- --------- ----------
---------- -------- ---------- -------- --------- --------- ----------
Currently payable
interest expense $ 74,541 $ 5,751 $ 80,292 $ 25,450 $ 14,119 $ 6,712 $ 126,573
---------- -------- ---------- -------- --------- --------- ----------
---------- -------- ---------- -------- --------- --------- ----------
Total interest expense $ 75,829 $ 6,207 $ 82,036 $ 51,496 $ 14,328 $ 7,458 $ 155,318
---------- -------- ---------- -------- --------- --------- ----------
---------- -------- ---------- -------- --------- --------- ----------
Senior debt $1,014,375 $138,600 $1,152,975 $880,888 $ 209,000 $ 148,028 $2,390,891
---------- -------- ---------- -------- --------- --------- ----------
---------- -------- ---------- -------- --------- --------- ----------
Subordinated debt $ 623,571 $ - $ 623,571 $ - $ 141,268 (3) $ - $ 764,839
---------- -------- ---------- -------- --------- --------- ----------
---------- -------- ---------- -------- --------- --------- ----------
Obligation to related
party $ - $190,212 (2) $ 190,212 $ - $ - $ - $ 190,212
---------- -------- ---------- -------- --------- --------- ----------
---------- -------- ---------- -------- --------- --------- ----------
Deficit investment in
affiliates $ 420,098 $ - $ 420,098 $ - $ - $ 16,223 $ 436,321
---------- -------- ---------- -------- --------- --------- ----------
---------- -------- ---------- -------- --------- --------- ----------
Capital expenditures $ 52,015 $ 45,213 $ 97,228 $ 13,163 $ 5,840 $ 2,955 $ 119,180 (4)
---------- -------- ---------- -------- --------- --------- ----------
---------- -------- ---------- -------- --------- --------- ----------
Ending Cable subscribers 950,000 371,000 1,321,000 372,000 173,000 - 1,866,000
---------- -------- ---------- -------- --------- --------- ----------
---------- -------- ---------- -------- --------- --------- ----------
<FN>
(1) Includes management fees from CNYC of $3,420.
(2) Obligation of NYC LP Corp., a wholly-owned Restricted Group subsidiary, relating to the
CNYC acquisition.
(3) Guaranteed by the Restricted Group.
(4) Includes intercompany elimination of $6
</TABLE>
(13)
<PAGE>
CABLEVISION SYSTEMS CORPORATION
RESTRICTED GROUP
On March 10, 1995 the Company, through Rainbow Programming, invested $110
million in the MSG acquisition. The funds were provided by borrowings under the
Restricted Group's $1.5 billion credit agreement (the "Credit Agreement").
On August 4, 1995 the Restricted Group, including CNYC, had total usage under
the Credit Agreement of $1,149.6 million and Letters of Credit of $22.4 million
issued on behalf of the Company and CNYC. Unrestricted and undrawn funds
available to the Restricted Group under the Credit Agreement amounted to
approximately $328 million at August 4, 1995. The Credit Agreement contains
certain financial covenants that may limit the Restricted Group's ability to
utilize all of the undrawn funds available thereunder, including covenants
requiring the Restricted Group to maintain certain financial ratios and
restricting the permitted uses of borrowed funds.
As of August 4, 1995 the Company and CNYC had entered into interest exchange
(swap and interest rate cap) agreements with several of their banks on a
notional amount of $275 million, on which the Company pays a fixed rate of
interest and receives a variable rate of interest for specified periods, with an
average maturity of two years. The average effective annual interest rate on
all bank debt outstanding as of July 31, 1995 was approximately 8.4%.
The Company believes that, for the Restricted Group, internally generated funds
together with funds available under its existing Credit Agreement will be
sufficient through December 31, 1996 (i) to meet its debt service requirements
including its amortization requirements under the Credit Agreement, (ii) to fund
its ongoing capital expenditures, including CNYC and the required upgrades under
the New York Upgrade Agreement, (iii) to fund its anticipated investments
including the $5.6 million Annual Payment to Charles Dolan in connection with
the CNYC acquisition, (iv) to fund payments with respect to the proposed
Cablevision of Boston transactions and (v) to fund any anticipated equity
requirements through 1996 in A-R Cable and/or V Cable.
Further acquisitions and other investments by the Company, if any, will be
funded by undrawn borrowing capacity and by possible increases in the amount
available under the Credit Agreement, additional borrowings from other sources,
and/or possible future sales of debt, equity or equity related securities.
(14)
<PAGE>
CABLEVISION SYSTEMS CORPORATION
V CABLE
The long-term credit facilities extended by General Electric Capital Corporation
("GECC") to V Cable and VC Holding on December 31, 1992, refinanced all of
V Cable's pre-existing debt. Under the credit agreement between V Cable and
GECC (the "V Cable Credit Agreement"), GECC has provided a term loan (the "V
Cable Term Loan") in the amount of $25.9 million, as of June 30, 1995, which
loan accretes interest at a rate of 10.62% compounded semi-annually until
December 31, 1997 (the reset date) and is payable in full on December 31, 2001.
Under the credit agreement between VC Holding and GECC, GECC has extended to
VC Holding a $501.9 million term loan (the "Series A Term Loan"), a $258.4
million term loan (the "Series B Term Loan") and a $25 million revolving line of
credit (the "Revolving Line"). The Series A Term Loan and any amounts drawn
under the Revolving Line pay current cash interest and mature on December 31,
2001. The Series B Term Loan does not pay cash interest but rather accretes
interest at a rate of 10.62% compounded semi-annually until December 31, 1997
(the reset date) and is payable in full on December 31, 2001. On August 1, 1995
VC Holding had $2.5 million outstanding under the Revolving Line and had letters
of credit issued approximating $1.1 million. Accordingly, unrestricted and
undrawn funds under the VC Holding Revolving Line amounted to approximately
$21.4 million on August 1, 1995.
The VC Holding Credit Agreement also provides for the assumption by VC Holding
of certain loans of U.S. Cable, the present value of which amounted to $92.2
million at June 30, 1995. VC Holding and V Cable are required to apply all
consolidated available cash flow (as defined), as well as the net proceeds of
any disposition of assets, to the reduction of the VC Holding Term Loans and the
V Cable Term Loan. A mandatory prepayment of the Series A Term Loan amounting
to approximately $3.1 million was made on April 14, 1995 in accordance with this
requirement.
After taking into account the reductions to regulated revenue arising from the
latest round of FCC regulation, V Cable believes that it is likely that it will
be unable to meet certain of its financial covenants during 1995. To remedy the
anticipated covenant defaults, V Cable may request waivers and/or amendments to
its credit agreement and/or seek equity contributions from the Restricted Group.
During 1995, the Restricted Group has made equity contributions aggregating $1.9
million to enable V Cable to meet certain of its financial covenants. There can
be no assurance as to V Cable's ability to accomplish any of these alternatives
in the future or the terms or timing of such alternatives. Assuming any
covenant defaults are waived or cured, V Cable anticipates that its cash flow
from operations and amounts available under the VC Holding Revolving Line will
be sufficient to service its debt, to fund its capital expenditures and to meet
its working capital requirements through 1996.
(15)
<PAGE>
CABLEVISION SYSTEMS CORPORATION
MONMOUTH AND RIVERVIEW
Monmouth/Riverview are party to a credit facility, as amended on May 12,
1995, with a group of banks led by NationsBank of Texas, N.A., as agent (the
"Monmouth/Riverview Credit Facility"). The maximum amount available to
Monmouth/Riverview under the Monmouth/Riverview Credit Facility is $285 million
with a final maturity at June 30, 2003. The facility is a reducing revolving
loan, with scheduled facility reductions beginning on March 31, 1996 resulting
in a 15% reduction by December 31, 1998. As of August 4, 1995,
Monmouth/Riverview had outstanding bank borrowings of $207 million.
Unrestricted and undrawn funds available to Monmouth/Riverview under the
Monmouth/Riverview Credit Facility amounted to approximately $78 million at
August 4, 1995. The Monmouth/Riverview Credit Facility contains certain
financial covenants that may limit Monmouth/Riverview's ability to utilize all
of the undrawn funds available thereunder, including covenants requiring
Monmouth/Riverview to maintain certain financial ratios. Under the terms of the
Monmouth/Riverview Credit Facility, Monmouth/Riverview is prohibited from
transferring funds to Cablevision MFR. The weighted average interest rate on
all bank indebtedness as of July 31, 1995 was approximately 8.6%.
Monmouth/Riverview have entered into interest rate swap and cap agreements with
several banks on a notional amount of $130 million on which the Company pays a
fixed rate of interest and receives a variable rate of interest for specified
periods, with an average maturity of 16 months.
The Company believes that for Monmouth/Riverview, internally generated funds
together with funds available under its existing credit agreement will be
sufficient to meet its debt service requirements including its amortization
requirements and to fund its capital expenditures through 1996.
RAINBOW PROGRAMMING
In July 1994, Rainbow Programming entered into a $105 million credit facility
with a group of banks. On January 27, 1995 Rainbow entered into an amended and
restated credit facility with Toronto-Dominion (Texas), Inc., and Canadian
Imperial Bank of Commerce, as co-agents and a group of banks for $202 million of
which $108 million was drawn on such date to refinance the original facility.
On July 12, 1995 Rainbow Programming consummated the purchase of National
Broadcasting Company's (NBC") interests in SCNY and RN12 for approximately $95.5
million, giving Rainbow Programming a 100% interest in SCNY and RN12. The
purchase was financed by an additional drawdown of $94 million under Rainbow's
$202 million amended and restated credit facility and by a $2.5 million equity
contribution from the Company for the balance of the purchase price and related
fees. The proceeds of the initial $105 million loan plus $76 million of equity
from the Company were used to purchase Liberty Media's 50% interest in AMCC
giving Rainbow Programming a 75%
(16)
<PAGE>
CABLEVISION SYSTEMS CORPORATION
ownership interest in AMCC. The credit facility is payable in full at maturity
on December 31, 1996 and bears interest at varying rates based upon the banks'
Base Rate or Eurodollar Rate, as defined in the credit agreement. Repayment of
the loan is anticipated to be made by Rainbow Programming from one or a
combination of the following: (i) internally generated funds; (ii) refinancing
the existing Rainbow Programming $202 million credit facility; (iii) refinancing
the existing $57 million credit agreement of AMCC; (iv) the sale of equity
interests in, or assets of, the programming businesses; and (v) advances from
the Restricted Group. The loan is secured by a pledge of the Company's stock in
Rainbow Programming and is guaranteed by the subsidiaries of Rainbow Programming
as permitted.
Rainbow Programming's financing needs have been funded by the Restricted Group's
investments in and advances to Rainbow Programming, by sales of equity interests
in the programming businesses and, in the case of one of the programming
businesses, through separate external debt financing. The Company expects that
the future cash needs of Rainbow Programming's current programming partnerships
will increasingly be met by internally generated funds, although certain of such
partnerships will at least in the near future rely to some extent upon their
partners (including Rainbow Programming) for certain cash needs. The partners'
contributions may be supplemented through the sale of additional equity
interests in, or through the incurrence of indebtedness by, such programming
businesses.
(17)
<PAGE>
CABLEVISION SYSTEMS CORPORATION
Part II. Other Information
Item 1. Legal Proceedings
The Company is party to various lawsuits, some involving substantial
amounts. Management does not believe that such lawsuits will have a
material adverse impact on the financial position of the Company.
Item 4. Submission of Matters to a Vote of Security-Holders.
The Company's Annual Meeting of Shareholders was held on June 20,
1995.
The following matters were voted upon at the company's Annual Meeting
of Shareholders, indicating the number of votes cast for and against
as well as the number of abstentions:
Election of Directors:
---------------------
Class A Directors:
Charles D. Ferris: For: 10,034,840
Votes withheld: 97,196
Richard H. Hochman: For: 10,050,240
Votes withheld: 81,796
Victor Oristano: For: 10,049,740
Votes withheld: 82,296
A. Jerrold Perenchio: For: 10,050,340
Votes withheld: 81,696
Class B Directors: For: 116,404,220
Against: 0
Each nominee for election by the Class B common stockholders
received the same vote on each proxy.
(18)
<PAGE>
CABLEVISION SYSTEMS CORPORATION
AUTHORIZE AND APPROVE THE AMENDMENT TO THE COMPANY'S AMENDED AND
RESTATED EMPLOYEE STOCK PLAN PERMITTING THE EXTENSION OF THE
DURATION OF CERTAIN NONQUALIFIED STOCK OPTIONS AND/OR SARS
GRANTED UNDER THE PLAN FOR UP TO TWO YEARS:
Class A Common Stock:
For: 7,424,251
Against: 2,650,322
Abstain: 37,129
Broker non-vote: 20,334
Class B Common Stock:
For: 116,404,220
Against: 0
Abstain: 0
RATIFICATION AND APPROVAL OF KPMG PEAT MARWICK LLP
Class A Common Stock:
For: 10,121,380
Against: 6,400
Abstain: 4,256
Class B Common Stock
For: 116,404,220
Against: 0
Abstain: 0
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits.
The index to exhibits is on page 21.
(b) The Company has not filed any Current Reports on Form 8-K with
the Commission during the quarter for which this report is filed.
(19)
<PAGE>
CABLEVISION SYSTEMS CORPORATION
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
CABLEVISION SYSTEMS CORPORATION
Registrant
Date: August 8, 1995 /s/William J. Bell
-------------------- -----------------------------------------
By: William J. Bell, as Vice Chairman of
Cablevision Systems Corporation
Date: August 8, 1995 /s/Barry J. O'Leary
-------------------- -----------------------------------------
By: Barry J. O'Leary, as Senior Vice
President - Finance and Treasurer and
Principal Financial Officer of
Cablevision Systems Corporation
Date: August 8, 1995 /s/Jerry Shaw
-------------------- -----------------------------------------
By: Jerry Shaw, as Vice President and
Controller and Chief Accounting
Officer of Cablevision Systems
Corporation
(20)
<PAGE>
CABLEVISION SYSTEMS CORPORATION
INDEX TO EXHIBITS
EXHIBIT PAGE
NO. DESCRIPTION NO.
------- ----------- ----
27 Financial Data Schedule
(21)
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-END> JUN-30-1995
<CASH> 23,487
<SECURITIES> 0
<RECEIVABLES> 82,616
<ALLOWANCES> (11,210)
<INVENTORY> 151,113
<CURRENT-ASSETS> 0
<PP&E> 1,671,630
<DEPRECIATION> (755,318)
<TOTAL-ASSETS> 2,263,708
<CURRENT-LIABILITIES> 0
<BONDS> 3,375,942
<COMMON> 238
0
2
<OTHER-SE> (2,017,003)
<TOTAL-LIABILITY-AND-EQUITY> 2,263,708
<SALES> 0
<TOTAL-REVENUES> 509,135
<CGS> 0
<TOTAL-COSTS> 193,243
<OTHER-EXPENSES> 159,537
<LOSS-PROVISION> (6,556)
<INTEREST-EXPENSE> 155,318
<INCOME-PRETAX> (195,439)
<INCOME-TAX> 0
<INCOME-CONTINUING> (195,439)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (195,439)
<EPS-PRIMARY> (8.45)
<EPS-DILUTED> 0<F1>
<FN>
<F1>Not presented as the resultant computation would be a decrease in net loss
per share and therefore not meaningful.
</FN>
</TABLE>
