<PAGE>
RULE NO. 424(b)(3)
REGISTRATION NO. 33-62313
INFORMATION CONTAINED IN THIS PRELIMINARY PROSPECTUS SUPPLEMENT IS SUBJECT TO
COMPLETION OR AMENDMENT. THIS PRELIMINARY PROSPECTUS SUPPLEMENT AND THE
ACCOMPANYING PROSPECTUS SHALL NOT CONSTITUTE AN OFFER TO SELL OR THE
SOLICITATION OF AN OFFER TO BUY NOR SHALL THERE BE ANY SALE OF THESE
SECURITIES IN ANY JURISDICTION IN WHICH SUCH OFFER, SOLICITATION OR SALE WOULD
BE UNLAWFUL PRIOR TO REGISTRATION OR QUALIFICATION UNDER THE SECURITIES LAWS
OF ANY SUCH JURISDICTION.
SUBJECT TO COMPLETION
PRELIMINARY PROSPECTUS SUPPLEMENT DATED OCTOBER 24, 1995
PROSPECTUS SUPPLEMENT
- ---------------------
(TO PROSPECTUS DATED OCTOBER 18, 1995)
$250,000,000
[LOGO] CABLEVISION
CABLEVISION SYSTEMS CORPORATION
% SENIOR SUBORDINATED NOTES DUE 2005
-----------
Interest on the % Senior Subordinated Notes due 2005 (the "Notes") of
Cablevision Systems Corporation (the "Company") is payable semi-annually on May
and November of each year, commencing May , 1996. The Notes are redeemable
at the option of the Company, in whole or in part, on or after November , 2000
at the redemption prices set forth herein.
The Notes represent senior subordinated unsecured obligations of the Company
and will rank pari passu in right of payment with all other senior subordinated
unsecured indebtedness of the Company. The Notes are subordinated to all
existing and future Senior Indebtedness (as defined) of the Company. The amount
of Senior Indebtedness outstanding at June 30, 1995, adjusted to give pro forma
effect to the transactions described under "Capitalization", including the
application of the estimated net proceeds from the sale of the Notes offered
hereby, would have been approximately $563.6 million.
INVESTMENT IN THE NOTES INVOLVES SIGNIFICANT RISKS DISCUSSED UNDER
"RISK FACTORS" ON PAGE 3 OF THE ACCOMPANYING PROSPECTUS WHICH SHOULD BE
CONSIDERED BY PROSPECTIVE PURCHASERS.
-----------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION, NOR HAS THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMIS-
SION PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS
SUPPLEMENT OR THE PROSPECTUS TO WHICH IT RELATES. ANY
REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
================================================================================
<TABLE>
<CAPTION>
PRICE TO UNDERWRITING PROCEEDS TO
PUBLIC(1) DISCOUNT(2) COMPANY(1)(3)
- --------------------------------------------------------------------------------
<S> <C> <C> <C>
Per Note................................ % % %
- --------------------------------------------------------------------------------
Total................................... $ $ $
</TABLE>
================================================================================
(1) Plus accrued interest, if any, from November , 1995.
(2) The Company has agreed to indemnify the Underwriters against certain
liabilities, including liabilities under the Securities Act of 1933, as
amended. See "Underwriting".
(3) Before deducting expenses payable by the Company estimated at $ .
-----------
The Notes are offered by the several Underwriters, subject to prior sale,
when, as and if issued to and accepted by them, subject to approval of certain
legal matters by counsel for the Underwriters and certain other conditions. The
Underwriters reserve the right to withdraw, cancel or modify such offer and to
reject orders in whole or in part. It is expected that delivery of the Notes
will be made in New York, New York on or about November , 1995.
-----------
MERRILL LYNCH & CO.
BEAR, STEARNS & CO. INC.
MORGAN STANLEY & CO.
INCORPORATED
TORONTO DOMINION SECURITIES (USA) INC.
-----------
The date of this Prospectus Supplement is November , 1995.
<PAGE>
As used herein, unless the context otherwise requires, the term "Company"
refers to Cablevision Systems Corporation and its subsidiaries. The term
"Consolidated Financial Statements" refers to the Company's Consolidated
Financial Statements and the notes thereto incorporated by reference from the
Company's Annual Report on Form 10-K for the fiscal year ended December 31,
1994 (the "Form 10-K") and the term "Management's Discussion and Analysis"
refers to the Management's Discussion and Analysis of Financial Condition and
Results of Operations incorporated by reference from the Form 10-K, the
Company's Quarterly Reports on Form 10-Q and the Company's Current Report on
Form 8-K filed October 17, 1995. See "Incorporation of Certain Documents by
Reference" in the accompanying Prospectus.
----------------
IN CONNECTION WITH THIS OFFERING, THE UNDERWRITERS MAY OVER-ALLOT OR EFFECT
TRANSACTIONS WHICH STABILIZE OR MAINTAIN THE MARKET PRICE OF THE NOTES OFFERED
HEREBY AT A LEVEL ABOVE THAT WHICH MIGHT OTHERWISE PREVAIL IN THE OPEN MARKET.
SUCH STABILIZING, IF COMMENCED, MAY BE DISCONTINUED AT ANY TIME.
S-2
<PAGE>
SUMMARY
The following summary is qualified in its entirety by the information
appearing elsewhere in this Prospectus Supplement and the accompanying
Prospectus and in the documents and financial statements incorporated therein
by reference.
THE COMPANY
The Company is one of the largest operators of cable television systems in
the United States, with approximately 2,753,000 subscribers in 19 states as of
June 30, 1995 based on the number of basic subscribers in systems which the
Company manages and which it owns or in which it has investments (including
91,000 subscribers in the Cablevision of Chicago system that was sold on August
4, 1995, as discussed below). The Company also has ownership interests in
companies that produce and distribute national and regional programming
services and provide advertising sales services for the cable television
industry. The Company was formed in 1985 to effect a reorganization of its
predecessors.
CABLE TELEVISION
The cable television systems that are majority owned and managed by the
Company (the "Company's cable television systems") served approximately
1,866,000 subscribers as of June 30, 1995 in New York, Ohio, Connecticut, New
Jersey, Michigan and Massachusetts. In addition, the Company has non-majority
investments in and manages cable television systems which served approximately
887,000 subscribers as of June 30, 1995 in Alabama, Arkansas, Florida,
Illinois, Kansas, Kentucky, Maine, Massachusetts, Mississippi, Missouri, New
Jersey, New York, North Carolina, Oklahoma, Pennsylvania and Tennessee. The
Company's cable television systems have generally been characterized by
relatively high revenues per subscriber ($37.14 for June 1995) and ratios of
premium service units to basic subscribers (1.7:1 for June 1995). In
calculating revenue per subscriber, the Company includes only recurring service
revenues and excludes installation charges and certain other revenues such as
advertising, pay-per-view and home shopping revenues.
PROGRAMMING SERVICES
The Company conducts its programming activities through Rainbow Programming
Holdings, Inc. ("Rainbow Programming"), its wholly-owned subsidiary, and
through subsidiaries of Rainbow Programming in partnership with certain
unaffiliated entities, including National Broadcasting Company, Inc. ("NBC")
and Liberty Media Corporation. Rainbow Programming's businesses include eight
regional SportsChannel services, four national entertainment services (American
Movie Classics Company, Bravo Network, MuchMusic and the Independent Film
Channel), Rainbow News 12 Company (a regional news service serving Long Island)
and the national backdrop sports services of Prime SportsChannel Networks.
Rainbow Programming also owns an interest in Madison Square Garden Corporation.
ADVERTISING SERVICES
Rainbow Advertising Sales Corporation sells advertising time to national,
regional and local advertisers on behalf of the Company's cable television
systems and the SportsChannel and News 12 programming services, as well as on
behalf of unaffiliated cable television systems.
COMPANY'S THIRD QUARTER RESULTS
The Company's net revenues for the three and nine months ended September 30,
1995 increased 24% and 33%, respectively, over the corresponding 1994 periods.
Increases of 12% and 21%, respectively, for the three
S-3
<PAGE>
and nine month periods were attributable to acquisitions made during 1994 and
1995. The remaining increases of 12% in each period came primarily from
internal growth in the average number of subscribers (approximately 147,500
(10%) for the nine month 1995 period over the same 1994 period).
Net losses for the three and nine months ended September 30, 1995 amounted to
$41.7 million and $237.1 million, or $1.85 and $10.29 per common share (after
preferred dividend requirements), as compared to net losses of $66.9 million
and $178.7 million, or $2.93 and $7.82 per common share (after preferred
dividend requirements), for the same periods in 1994. The increase in net loss
for the nine month 1995 period was primarily due to the net losses of companies
acquired during 1994. The decrease in net loss for the three month 1995 period
reflects gains related to the sale of one cable affiliate and interests in one
programming partnership aggregating approximately $36.2 million.
S-4
<PAGE>
THE OFFERING
Securities Offered.......... $250,000,000 principal amount of % Senior
Subordinated Notes due 2005 (the "Notes")
offered by the Company (the "Offering").
Maturity Date............... November , 2005.
Interest Payment Dates...... May and November , commencing May , 1996.
Optional Redemption......... On and after November , 2000, the Notes are
redeemable, at the option of the Company, in
whole or in part, at the redemption prices set
forth herein plus accrued and unpaid interest
thereon to the redemption date. See "Description
of the Notes".
Subordination............... Subordinated to all existing and future Senior
Indebtedness (as defined) of the Company. The
Notes will rank pari passu with the Company's
$275,000,000 of 10 3/4% Senior Subordinated
Debentures due 2004, the Company's $200,000,000
of 9 7/8% Senior Subordinated Debentures due
2013 and the Company's $150,000,000 of 9 7/8%
Senior Subordinated Debentures due 2023
(collectively, the "Existing Debentures"). The
amount of Senior Indebtedness outstanding at
June 30, 1995, adjusted to give pro forma effect
to the transactions described under
"Capitalization" and the application of the
estimated net proceeds to the Company from the
offering of the Notes and of the Company's %
Series I Cumulative Convertible Exchangeable
Preferred Stock (the "Series I Preferred Stock")
represented by depositary shares (the
"Offerings"), would have been approximately
$563.6 million. At June 30, 1995, the Company
also had outstanding $955.1 million of senior
subordinated indebtedness and obligations
(including $331.5 million of indebtedness of
subsidiaries guaranteed by the Company, included
in indebtedness of consolidated subsidiaries set
forth in the next sentence) that would have
ranked pari passu with the Notes. Also, at June
30, 1995, consolidated subsidiaries of the
Company had outstanding, adjusted to give pro
forma effect to the transactions described under
"Capitalization" and the application of the
estimated net proceeds to the Company from the
Offerings, approximately $1,284.4 million of
indebtedness which, insofar as the assets of
those subsidiaries are concerned, would have
been effectively senior to the Notes.
Certain Restrictions........ The Indenture for the Notes will, among other
things, contain restrictions (with certain
exceptions) on the ability of the Company and
its Restricted Subsidiaries (as defined) to
incur additional indebtedness, make certain
dividend payments or payments to redeem or
retire capital stock, invest in Unrestricted
Subsidiaries (as defined) or affiliates, engage
in certain transactions with affiliates and
merge or consolidate with or transfer all or
substantially all of their assets to another
entity. The Indenture also prohibits the Company
from issuing any indebtedness that is senior in
right of payment to the Notes and expressly
subordinate in right of payment to any other
indebtedness of the Company.
S-5
<PAGE>
Absence of Public Market.... There is no public market for these Notes. The
Company does not intend to apply for listing of
the Notes on any securities exchange or for
quotation through the National Association of
Securities Dealers Automated Quotation System.
Although Merrill Lynch & Co., Merrill Lynch,
Pierce, Fenner & Smith Incorporated, Bear,
Stearns & Co. Inc., Morgan Stanley & Co.
Incorporated and Toronto Dominion Securities
(USA) Inc. have informed the Company that they
currently intend to make a market in the Notes,
they are not obligated to do so and any such
market making may be discontinued at any time
without notice. Accordingly, there can be no
assurance as to the development or liquidity of
any market for the Notes.
Concurrent Offering......... The Company is concurrently with the offering of
the Notes offering its depositary shares (the
"Depositary Shares") representing the Series I
Preferred Stock with an aggregate liquidation
preference of $300 million. The Company expects
to use the net proceeds from that offering
(estimated to be $289.3 million) to repay
borrowings under the Company's principal bank
credit agreement. The consummation of the
offering of the Depositary Shares is not a
condition to the consummation of the offering of
the Notes offered hereby, nor is the
consummation of the offering of the Notes a
condition to the offering of the Depositary
Shares.
Use of Proceeds............. The net proceeds to be received by the Company
from the Offering of the Notes (estimated to be
$243.5 million) will initially be applied to
repay borrowings under the Company's principal
bank credit agreement. The Company expects to
raise additional funds in the future. See "Use
of Proceeds".
S-6
<PAGE>
SELECTED FINANCIAL DATA
The historical consolidated statement of operations data (except for book
value per common share, deficiency of earnings available to cover fixed charges
and deficiency of earnings available to cover fixed charges and preferred stock
dividends) and balance sheet data for each year ended December 31 and as of
December 31 in each year in the five-year period ended December 31, 1994,
included in the following selected financial data have been derived from the
Consolidated Financial Statements of the Company, audited by KPMG Peat Marwick
LLP, independent public accountants. The historical consolidated statement of
operations data and balance sheet data for the periods ended and as of June 30,
1995 and 1994 included in the following selected financial data have been
derived from financial statements of the Company that have not been audited,
but that, in the opinion of the management of the Company, reflect all
adjustments necessary for the fair presentation of such data for the interim
periods. The results of operations for the six-month period ended June 30, 1995
are not necessarily indicative of the results of operations for the full year
although the Company expects to incur a substantial loss for the year ending
December 31, 1995.
<TABLE>
<CAPTION>
SIX MONTHS ENDED
JUNE 30, YEAR ENDED DECEMBER 31,
----------------------- --------------------------------------------------------------
1995 1994 1994 1993 1992 1991 1990
--------- --------- --------- --------- --------- --------- ---------
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA)
<S> <C> <C> <C> <C> <C> <C> <C>
CONSOLIDATED STATEMENT OF
OPERATIONS DATA(1):
Net revenues............. $ 509,135 $ 368,177 $ 837,169 $ 666,724 $ 572,487 $ 603,272 $ 562,989
Operating expenses:
Technical............... 193,243 134,640 302,885 241,877 204,449 213,059 202,850
Selling, general and ad-
ministrative........... 131,611 72,404 195,942 172,687 120,356 121,527 118,825
Restructuring charge.... -- 4,306(2) 4,306(2) -- -- -- --
Depreciation and amorti-
zation................. 159,537 110,095 271,343 194,904 168,538 215,326 216,288
--------- --------- --------- --------- --------- --------- ---------
Operating profit......... 24,744 46,732 62,693 57,256 79,144 53,360 25,026
Other income (expense):
Interest expense, net... (154,528) (118,094) (261,781) (230,327) (193,379) (257,189) (261,114)
Provision for preferen-
tial payment to
related party.......... (2,800) (2,800) (5,600) (5,600) (2,662) -- --
Provision for loss on
Olympics venture....... -- -- -- -- (50,000)(3) -- --
Loss on sale of pre-
ferred stock........... -- -- -- -- (20,000)(4) -- --
Write-off of deferred
financing costs........ (2,888)(5) -- (9,884)(5) (1,044)(5) (12,284)(5) -- --
Loss on redemption of
debentures............. -- -- (7,088)(5) -- -- -- --
Share of affiliates' net
loss................... (52,692) (34,257) (82,864) (61,017) (47,278) (23,780) (39,980)
Gain (loss) on sale of
programming interests,
net.................... -- -- -- (330) 7,053 15,505 --
Minority interest....... (4,276) -- (3,429) 3,000 -- -- --
Gain on sale of market-
able securities, net... -- -- -- -- 733 5,806 --
Settlement of litigation
and related matters.... -- -- -- -- (5,655) (9,677) --
Transaction fees........ -- -- -- -- -- -- 14,759
Miscellaneous, net...... (2,999) (3,432) (7,198) (8,720) (6,175) (11,224) (10,066)
--------- --------- --------- --------- --------- --------- ---------
Net loss................. (195,439) (111,851) (315,151) (246,782) (250,503) (227,199) (271,375)
Preferred dividend re-
quirement............... (4,918) (2,054) (6,385) (885) (885) (4,464) (4,065)
--------- --------- --------- --------- --------- --------- ---------
Net loss applicable to
common shareholders..... $(200,357) $(113,905) $(321,536) $(247,667) $(251,388) $(231,663) $(275,440)
========= ========= ========= ========= ========= ========= =========
Net loss per common
share................... $ (8.45) $ (4.88) $ (13.72) $ (10.83) $ (11.17) $ (10.32) $ (12.36)
========= ========= ========= ========= ========= ========= =========
Average number of common
shares outstanding
(in thousands).......... 23,710 23,323 23,444 22,859 22,512 22,446 22,290
========= ========= ========= ========= ========= ========= =========
Book value per common
share................... $ (84.77) $ (64.52) $ (76.93) $ (64.61) $ (55.28) $ (41.49) $ (31.36)
========= ========= ========= ========= ========= ========= =========
Deficiency of earnings
available to cover fixed
charges................. $(195,402) $(111,777) $(315,003) $(246,644) $(250,429) $(227,124) $(271,301)
========= ========= ========= ========= ========= ========= =========
Deficiency of earnings
available to cover fixed
charges and preferred
stock dividends......... $(200,320) $(113,831) $(321,388) $(247,529) $(251,314) $(231,588) $(275,366)
========= ========= ========= ========= ========= ========= =========
</TABLE>
(footnotes on following page)
S-7
<PAGE>
<TABLE>
<CAPTION>
AS OF DECEMBER 31,
AS OF -------------------------------------------------------------
JUNE 30, 1995 1994 1993 1992 1991 1990
------------- ----------- ----------- ----------- ---------- ----------
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA)
<S> <C> <C> <C> <C> <C> <C>
CONSOLIDATED BALANCE
SHEET DATA(1):
Total assets........... $ 2,254,868 $ 2,176,413 $ 1,309,444 $ 1,251,157 $1,475,672 $1,641,612
Total debt............. 3,345,942 3,169,236 2,235,499 2,004,452 2,211,056 2,170,275
Cumulative redeemable
preferred stock(4).... -- -- -- -- 32,094 28,515
Stockholders' deficien-
cy.................... (2,016,763) (1,818,535) (1,503,244) (1,250,248) (932,428) (702,448)
STATISTICAL DATA(1):
Homes passed(6)........ 3,004,000 2,899,000 2,240,000 2,019,000 2,005,000 1,976,000
Basic service subscrib-
ers................... 1,866,000 1,768,000 1,379,000 1,262,000 1,372,000 1,326,000
Basic penetration(7)... 62.1% 61.0% 61.5% 62.5% 68.4% 67.1%
Number of premium tele-
vision units.......... 3,223,000 3,208,000 3,003,000 2,802,000 2,326,000 2,401,000
Average number of pre-
mium units per basic
subscriber............ 1.7 1.8 2.2 2.2 1.7 1.8
Average monthly revenue
per basic subscrib-
er(8)................. $ 37.14 $ 36.33 $ 36.59 $ 37.64 $ 34.43 $ 34.09
</TABLE>
- --------
(1) The consolidated statement of operations, balance sheet and statistical
data reflect (i) the deconsolidation of A-R Cable Services, Inc. ("A-R
Cable"), effective as of January 1, 1992, as a result of the restructuring
of A-R Cable, (ii) the acquisition of Cablevision of New York City
("Cablevision of NYC"), effective as of July 10, 1992, and (iii) various
acquisitions of cable television systems and other businesses during the
periods presented. See "Business--Cable Television Operations" in the Form
10-K and "Condensed Pro Forma Consolidated Financial Information" herein.
Acquisitions made by the Company during the periods presented were
accounted for under the purchase method of accounting and, accordingly, the
acquisition costs were allocated to the net assets acquired based on their
fair value, except for the acquisition of partnership interests in
Cablevision of NYC from Mr. Dolan and entities affiliated with him, which
were recorded at Mr. Dolan's and such entities' historical costs.
Acquisitions are reflected in the consolidated statement of operations,
balance sheet and statistical data from the time of acquisition. Certain
reclassifications have been made to the 1991 and 1990 financial statement
amounts to conform to the 1992 presentation.
(2) 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.
(3) In 1992, the Company recognized a $50.0 million loss in connection with
Rainbow Programming's commitment in respect of its venture with NBC
relating to the 1992 Summer Olympics, which the Company paid in January
1993.
(4) In connection with the 1992 V Cable Reorganization (as defined under "The
Company--Cable Television"), the Company redeemed A-R Cable's redeemable
preferred stock on May 11, 1992, incurring a loss of $20 million.
(5) In connection with the 1992 V Cable Reorganization, the Company wrote off
approximately $7.5 million of deferred financing costs related to the debt
of V Cable, Inc. Also, a portion of the Company's deferred financing costs
of approximately $4.8 million in 1992 and $1.0 million in 1993, related to
the replacement of bank debt with subordinated debt, were written off. In
October 1994, the Company entered into a new bank credit agreement and
redeemed $200 million of its reset debentures. The related deferred
financing costs and unamortized discount relating to each were written off
and approximately $2.0 million in redemption fees was incurred in
connection with the redemption of the reset debentures. In January 1995,
Rainbow Programming amended its credit agreement to refinance its existing
borrowings and to provide funds for the acquisition of SportsChannel (New
York) Associates and Rainbow News 12 Company, resulting in an approximately
$2.3 million write-off of deferred financing costs.
(6) Homes passed is based upon homes passed by cable actually marketed and does
not include multiple dwelling units passed by the cable plant that are not
connected to it.
(7) Basic penetration represents basic service subscribers at the end of the
period as a percentage of homes passed at the end of the period.
(8) Based on recurring service revenues, excluding installation charges and
certain other revenues such as advertising, pay-per-view and home shopping
revenues, for the last month of the period, divided by average basic
subscribers for that month.
S-8
<PAGE>
SUPPLEMENTAL FINANCIAL AND OPERATING DATA
The following tables set forth information concerning the Company's Core
Restricted Group, Cablevision of NYC, combined Restricted Group (which includes
Cablevision of NYC), V Cable and Monmouth Cable and Riverview Cable. In October
1994, Cablevision of NYC became a member of Cablevision's Restricted Group. The
data should be read in conjunction with the Company's Consolidated Financial
Statements and "Management's Discussion and Analysis".
<TABLE>
<CAPTION>
SIX MONTHS ENDED
JUNE 30, YEAR ENDED DECEMBER 31,
------------------------- ----------------------------------
FINANCIAL DATA 1995 1994 1994 1993 1992
-------------- ---------- ---------- ---------- --------- ---------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C> <C> <C>
CORE RESTRICTED GROUP:
STATEMENT OF OPERATIONS
DATA:
Net revenues........... $ 229,381 $ 212,632 $ 435,171 $ 393,815 $ 378,171
Operating profit before
depreciation and amor-
tization(1)(2)........ 107,014 107,007 212,388 196,760 192,553
Depreciation and amor-
tization.............. 60,846 53,667 119,760 90,407 85,939
Operating profit(2).... 46,168 53,340 92,628 106,353 106,614
Total interest expense. 75,829 66,259 138,154 129,799 112,137
BALANCE SHEET DATA:
Total assets........... $1,018,329 $ 847,397 $ 929,376 $ 661,303 $ 547,373
Senior debt............ 1,014,375(3) 469,252 829,895(3) 359,022 585,381
Subordinated debt...... 623,571 822,855 623,534 822,781 474,247
Total debt............. 1,637,946(3) 1,292,107 1,453,429(3) 1,181,803 1,059,628
FINANCIAL RATIOS AND
OTHER DATA:
Operating profit before
depreciation and
amortization to net
revenues.............. 46.7% 50.3% 48.8% 50.0% 50.9%
Total debt to operating
profit before
depreciation and
amortization.......... 7.6x(4) 6.0x(4) 6.8x 6.0x 5.5x
Operating profit before
depreciation and
amortization to total
interest expense...... 1.41x 1.61x 1.54x 1.52x 1.72x
Capital expenditures... $ 52,015 $ 66,842 $ 147,534 $ 106,379 $ 65,331
CABLEVISION OF NYC:
STATEMENT OF OPERATIONS
DATA:
Net revenues........... $ 97,725 $ 68,402 $ 149,396 $ 101,539 $ 67,409
Operating profit before
depreciation and
amortization(1)....... 26,796 16,125 36,928 18,803 11,731
FINANCIAL RATIOS AND
OTHER DATA:
Operating profit before
depreciation and
amortization to net
revenues.............. 27.4% 23.6% 24.7% 18.5% 17.4%
Capital expenditures... $ 45,213 $ 48,406 $ 103,544 $ 86,669 $ 55,652
RESTRICTED GROUP:
STATEMENT OF OPERATIONS
DATA:
Net revenues........... $ 327,106 $ 281,034 $ 584,567 $ 495,354 $ 445,580
Operating profit before
depreciation and
amortization(1)....... 133,810 123,132 249,316 215,563 204,284
Depreciation and
amortization.......... 81,483 68,523 154,187 111,366 102,015
Operating profit....... 52,327 54,609 95,129 104,197 102,269
Total interest expense. 82,036 71,676 150,626 137,960 118,230
BALANCE SHEET DATA:
Total assets........... $1,212,428 $1,052,675 $1,119,882 $ 838,746 $ 660,002
Senior debt............ 1,152,975(3) 631,475 969,895(3) 488,128 664,081
Subordinated debt...... 623,571 822,855 623,534 822,781 474,247
Obligation to related
party................. 190,212 88,748 193,079 91,619 67,000
Total debt............. 1,966,758(3) 1,543,078 1,786,508(3) 1,402,528 1,205,328
FINANCIAL RATIOS AND
OTHER DATA:
Operating profit before
depreciation and
amortization to net
revenues.............. 40.9% 43.8% 42.6% 43.5% 45.8%
Total debt to operating
profit before
depreciation and
amortization.......... 7.3x(4) 6.3x(4) 7.2x 6.5x 5.9x
Operating profit before
depreciation and
amortization to total
interest expense...... 1.6x 1.7x 1.7x 1.6x 1.7x
Capital expenditures... $ 97,228 $ 115,248 $ 251,078 $ 193,048 $ 120,983
</TABLE>
S-9
<PAGE>
<TABLE>
<CAPTION>
SIX MONTHS ENDED
JUNE 30, YEAR ENDED DECEMBER 31,
--------------------- ----------------------------
FINANCIAL DATA 1995 1994 1994 1993 1992
-------------- -------- -------- -------- -------- --------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C> <C> <C>
V CABLE:
STATEMENT OF OPERATIONS
DATA:
Net revenues........... $ 72,789 $ 70,018 $140,691 $137,853 $129,409
Operating profit before
depreciation and amor-
tization(1)........... 32,929 34,796 68,592 65,789 63,773
Depreciation and amor-
tization.............. 33,965 40,012 83,671 80,287 69,148
Operating loss......... (1,036) (5,216) (15,079) (14,498) (5,375)
Total interest expense. 51,496 46,897 96,723 94,452 79,494
BALANCE SHEET DATA:
Total assets........... $411,907 $490,087 $447,381 $536,629 $558,988
Total debt............. 880,888 844,091 862,440 832,964 799,098
FINANCIAL RATIOS AND
OTHER DATA:
Operating profit before
depreciation and amor-
tization to net reve-
nues.................. 45.2% 49.7% 48.8% 47.7% 49.3%
Total debt to operating
profit before depreci-
ation and amortization 13.3x(4) 12.0x(4) 12.6x 12.7x 12.5x
Operating profit before
depreciation and
amortization to total
interest expense...... 0.64x 0.74x 0.71x 0.70x 0.80x
Capital expenditures... $ 13,163 $ 6,793 $ 19,981 $ 20,304 $ 17,608
MONMOUTH CABLE AND RIV-
ERVIEW CABLE:
BALANCE SHEET DATA:
Total assets........... $348,574 -- $375,982 -- --
Senior debt............ 209,000 -- 230,000 -- --
Subordinated debt...... 141,268 -- 141,268 -- --
Total debt............. 350,268 -- 371,268 -- --
</TABLE>
<TABLE>
<CAPTION>
AS OF DECEMBER 31,
AS OF JUNE 30, ---------------------------------
STATISTICAL DATA 1995 1994 1993 1992
---------------- -------------- --------- --------- ---------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C> <C>
CORE RESTRICTED GROUP:
Homes passed(5)............. 1,315,000 1,309,000 1,086,000 1,079,000
Basic service subscribers at
end of period.............. 950,000 928,000 815,000 790,000
Basic penetration(6)........ 72.2% 70.9% 75.0% 73.2%
Number of premium television
units...................... 1,459,000 1,572,000 1,504,000 1,586,000
Average number of premium
units per basic subscriber. 1.5 1.7 1.8 2.0
Average revenue per basic
subscriber(7).............. $37.82 $37.10 $38.01 $38.85
CABLEVISION OF NYC:
Homes passed(5)............. 912,000 829,000 645,000 436,000
Basic service subscribers at
end of period.............. 371,000 315,000 214,000 134,000
Basic penetration(6)........ 40.7% 37.9% 33.1% 30.7%
Number of premium television
units...................... 1,272,000 1,127,000 1,053,000 730,000
Average number of premium
units per basic subscriber. 3.4 3.6 4.9 5.4
Average revenue per basic
subscriber(7).............. $42.18 $41.84 $41.12 $46.62
RESTRICTED GROUP:
Homes passed(5)............. 2,227,000 2,138,000 1,731,000 1,515,000
Basic service subscribers at
end of period.............. 1,321,000 1,243,000 1,029,000 924,000
Basic penetration(6)........ 59.3% 58.1% 59.4% 61.0%
Number of premium television
units...................... 2,731,000 2,699,000 2,557,000 2,316,000
Average number of premium
units per basic subscriber. 2.1 2.2 2.5 2.5
Average revenue per basic
subscriber(7).............. $39.03 $38.29 $38.65 $39.96
V CABLE:
Homes passed(5)............. 515,000 513,000 509,000 504,000
Basic service subscribers at
end of period.............. 372,000 364,000 350,000 338,000
Basic penetration(6)........ 72.2% 71.1% 68.7% 67.1%
Number of premium television
units...................... 360,000 375,000(8) 446,000 485,000
Average number of premium
units per basic subscriber. 1.0 1.0 1.3 1.4
Average revenue per basic
subscriber(7).............. $31.10 $30.41 $30.56 $31.30
MONMOUTH CABLE AND RIVERVIEW
CABLE:
Homes passed(5)............. 262,000 248,000 -- --
Basic service subscribers at
end of period.............. 173,000 161,000 -- --
Basic penetration(6)........ 66.0% 65.1% -- --
Number of premium television
units...................... 132,000 133,000 -- --
Average number of premium
units per basic subscriber. 0.8 0.8 -- --
Average revenue per basic
subscriber(7).............. $35.70 $34.67 -- --
</TABLE>
(footnotes on following page)
S-10
<PAGE>
FOOTNOTES
(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) Includes management fees from Cablevision of NYC of $3.4 million, $2.4
million, $5.2 million, $3.5 million and $2.4 million, respectively.
(3) Excludes Cablevision MFR Inc. seller note in the amount of approximately
$141.3 million that is guaranteed by the Core Restricted Group (as defined
under "The Company--Cable Television').
(4) Operating profit before depreciation and amortization is annualized for
purposes of preparing interim financial ratios that include balance sheet
items.
(5) Homes passed is based upon homes passed by cable actually marketed and does
not include multiple dwelling units passed by the cable plant that are not
connected to it.
(6) Basic penetration represents basic service subscribers at the end of the
period as a percentage of homes passed at the end of the period.
(7) Based on recurring service revenues, excluding installation charges and
certain other revenues such as advertising, pay-per-view and home shopping
revenues, for the last month in the period presented, divided by the
average number of basic subscribers for that month.
(8) Reflects the reclassification of units of Madison Square Garden Network
subscribers to non-premium units in February 1994.
S-11
<PAGE>
THE COMPANY
The Company is one of the largest operators of cable television systems in
the United States, with approximately 2,753,000 subscribers in 19 states as of
June 30, 1995 based on the number of basic subscribers in systems which the
Company manages and which it owns or in which it has investments. The Company
also has ownership interests in companies that produce and distribute national
and regional programming services and provide advertising sales services for
the cable television industry.
For financing purposes, the Company is structured as a restricted group
(collectively, the "Restricted Group"), consisting of Cablevision Systems
Corporation and certain of its subsidiaries, including Cablevision of New York
City ("Cablevision of NYC"), and an unrestricted group of subsidiaries,
consisting primarily of V Cable, Inc. ("V Cable"), Cablevision MFR, Inc.
("Cablevision MFR") and Rainbow Programming Holdings, Inc., including Rainbow
Advertising Sales Corporation ("Rainbow Advertising") (together, "Rainbow
Programming"). In addition, the Company has an unrestricted group of
investments, consisting of investments in A-R Cable Services, Inc. ("A-R
Cable"), U.S. Cable Television Group, L.P. ("U.S. Cable"), Cablevision of
Framingham Holding, Inc. ("CFHI"), A-R Cable Partners, Cablevision of Boston
Limited Partnership ("Cablevision of Boston") and Cablevision of Newark. As
discussed below under "Risk Factors", the Cablevision of Chicago system, which
was managed by the Company and includes approximately 91,000 subscribers, was
sold in August 1995 and is no longer managed by the Company. The Company's
unrestricted subsidiaries and investments are collectively referred to herein
as the "Unrestricted Group". The Restricted Group and each member of the
Unrestricted Group that operates cable television systems are individually and
separately financed. The indebtedness of V Cable and A-R Cable is non-recourse
to the Company, other than with respect to the capital stock of such entities
owned by the Company. Rainbow Programming's cash requirements have been
financed to date by the Restricted Group, by sales of equity interests in the
programming businesses and, as set forth below under "--Programming Services",
through separate external debt financing. See "Management's Discussion and
Analysis--Liquidity and Capital Resources" for a discussion of the
restrictions on investments by the Restricted Group and certain other matters.
STRATEGY
The Company's strategy has been to concentrate its cable television systems
in and around two major metropolitan areas, New York City and Cleveland, Ohio,
with a view to being the largest cable provider in each of these markets; to
maximize its revenue per subscriber through the use of "tiered" packaging
strategies for marketing premium services; to develop and promote niche
programming services; and to remain an industry leader in upgrading the
technological capabilities of its systems.
The Company believes that its cable television systems on Long Island, New
York comprise the largest contiguous group of cable television systems under
common ownership in the United States (measured by number of subscribers). By
developing systems in and around major metropolitan areas, including expansion
through acquisitions in areas in which the Company has existing systems, the
Company has been able to realize economies of scale in the operation and
management of its systems, and capitalize on opportunities to create and
market programming of regional interest.
Through the current and planned upgrade of its cable plant, including the
utilization of fiber optic cable and associated electronics, the Company is
seeking to significantly increase its analog channel capacity and add new
digital channel capacity that will facilitate the development of such adjunct
new businesses as video on demand, near video on demand, information services,
interactive services, including Internet access, residential telephony and
commercial telephony. To implement successfully and roll out these adjunct new
businesses beyond the initial development phases, the Company will require
additional capital from the sale of equity in the capital markets or to a
strategic investor.
CABLE TELEVISION
The cable television systems that are majority owned and managed by the
Company (the "Company's cable televisions systems") served approximately
1,866,000 subscribers as of June 30, 1995 in New York, Ohio,
S-12
<PAGE>
Connecticut, New Jersey, Michigan and Massachusetts. In addition, the Company
has non-majority investments in and manages cable television systems which
served approximately 887,000 subscribers as of June 30, 1995 in Alabama,
Arkansas, Florida, Illinois, Kansas, Kentucky, Maine, Massachusetts,
Mississippi, Missouri, New Jersey, New York, North Carolina, Oklahoma,
Pennsylvania and Tennessee. The Company's cable television systems have
generally been characterized by relatively high revenues per subscriber
($37.14 for June 1995) and ratios of premium service units to basic
subscribers (1.7:1 for June 1995). In calculating revenue per subscriber, the
Company includes only recurring service revenues and excludes installation
charges and certain other revenues such as advertising, pay-per-view and home
shopping revenues.
The cable television operations in the Restricted Group (other than those of
Cablevision of NYC) (such operations, the "Core Restricted Group") served
approximately 950,000 subscribers as of June 30, 1995, primarily on Long
Island, New York, in Connecticut (principally Fairfield County), in northern
New Jersey, in Westchester County, New York and in Cleveland, Ohio. The
revenue per subscriber and ratio of premium service units to basic subscribers
for cable television systems in the Core Restricted Group for June 1995 were
$37.82 and 1.5:1, respectively.
In July 1992, the Company acquired from Charles F. Dolan, the Company's
Chairman, substantially all of Cablevision of NYC (the "Cablevision of NYC
Acquisition"), a cable television system under development in The Bronx and in
parts of Brooklyn, New York. Prior to the acquisition, the Company had a 15%
interest in Cablevision of NYC. Mr. Dolan remains a partner in Cablevision of
NYC with a 1% interest and the right to certain preferential payments. See
"Business--Consolidated Cable Affiliates--Cablevision of New York City" in the
Form 10-K. As of June 30, 1995, Cablevision of NYC passed approximately
912,000 homes and served approximately 371,000 subscribers. Construction of
the systems in The Bronx and in Brooklyn has been substantially completed. The
Company expects that the remaining costs to complete the construction of the
Cablevision of NYC systems will be financed by cash flow generated from the
operations of Cablevision of NYC and the amounts available under the Company's
principal bank credit agreement (the "Credit Agreement"). See "Management's
Discussion and Analysis--Liquidity and Capital Resources--Cablevision of NYC".
The cable television operations of the Unrestricted Group are conducted
through the Company's unrestricted subsidiaries, V Cable and Cablevision MFR,
through its unrestricted investments, consisting of A-R Cable, U.S. Cable,
CFHI, A-R Cable Partners, Cablevision of Boston, and Cablevision of Newark.
In August 1994, Cablevision MFR, a wholly-owned subsidiary of the Company,
acquired substantially all of the assets of Monmouth Cablevision Associates
("Monmouth Cable") and Riverview Cablevision Associates, L.P. ("Riverview
Cable"), consisting of cable television systems in New Jersey. Also in August
1994, CFHI, a corporation jointly-owned by the Company and E.M. Warburg Pincus
Investors, L.P., acquired substantially all of the assets of Framingham
Cablevision Associates Limited Partnership ("Framingham Cable"), consisting of
a cable television system in Massachusetts. Additionally, in June 1994, a
partnership comprised of subsidiaries of the Company and E.M. Warburg, Pincus
& Co. Inc. completed the purchase of certain assets of Nashoba Communications,
a group of three limited partnerships that operate three cable television
systems in Massachusetts.
V Cable was formed by the Company in February 1989 and served approximately
372,000 subscribers as of June 30, 1995, principally in the suburbs of
Cleveland, Ohio and on Long Island. The revenue per subscriber and ratio of
premium service units to basic subscribers for V Cable's systems for June 1995
were $31.10 and 1.0:1, respectively. As described under "Business--
Consolidated Cable Affiliates--V Cable" in the Form 10-K, the Company
consummated a significant restructuring and reorganization involving V Cable
and U.S. Cable (the "1992 V Cable Reorganization") on December 31, 1992. See
also "Recent Developments--Proposed V Cable Transactions" for a description of
certain transactions involving V Cable.
PROGRAMMING SERVICES
The Company conducts its programming activities through Rainbow Programming,
its wholly-owned subsidiary and member of the Unrestricted Group, and through
subsidiaries of Rainbow Programming in
S-13
<PAGE>
partnership with certain unaffiliated entities, including National
Broadcasting Company, Inc. ("NBC") and Liberty Media Corporation ("Liberty").
Rainbow Programming's businesses include eight regional SportsChannel
services, four national entertainment services (American Movie Classics
Company ("AMCC"), Bravo Network ("Bravo"), MuchMusic ("MM") and the
Independent Film Channel ("IFC")), Rainbow News 12 Company (a regional news
service serving Long Island) and the national backdrop sports services of
Prime SportsChannel Networks ("Prime SportsChannel"). Rainbow Programming also
owns an interest in Madison Square Garden Corporation (discussed below).
Rainbow Programming's SportsChannel services provide regional sports
programming to the New York, Philadelphia, New England, Chicago, Cincinnati,
Cleveland, San Francisco and Florida areas. AMCC is a national program service
featuring classic, unedited and non-colorized films from the 1930s through the
1970s. Bravo is a national program service offering international films and
performing arts programs, including jazz, dance, classical music, opera and
theatrical programs. See "Business--Programming Operations--General" in the
Form 10-K. MM is a Canadian music service featuring music primarily from
Canadian artists. IFC is a national program service that airs independent
films made outside the traditional Hollywood system.
In July 1994, Rainbow Programming purchased Liberty's 50% interest in AMCC
for a purchase price of approximately $181.0 million pursuant to a buy-sell
procedure set forth in the Partnership Agreement of AMCC. In July 1995,
Rainbow Programming purchased NBC's interest in SportsChannel (New York)
Associates and Rainbow News 12 Company (the "NBC Option") for an aggregate
purchase price of approximately $95.5 million, and, effective as of such date,
consolidated the results of operations of SportsChannel (New York) Associates
and Rainbow News 12 Company with those of the Company. See "Recent
Developments--NBC Option" and "Business--Programming Services" in the
Form 10-K.
On March 10, 1995, MSG Holdings, L.P. ("MSG Holdings"), a partnership
between a subsidiary of Rainbow Programming and a subsidiary of ITT
Corporation ("ITT"), acquired Madison Square Garden Corporation ("MSG") in a
transaction in which MSG was merged with and into MSG Holdings. MSG owns the
Madison Square Garden Arena and the adjoining Paramount Theater, the New York
Rangers professional hockey team, the New York Knicks professional basketball
team and the Madison Square Garden Network, a sports programming network with
over five million subscribers. Rainbow Programming has the option until March
10, 1996 to (i) acquire interests in MSG Holdings from ITT sufficient to
equalize the interests of ITT and Rainbow Programming in MSG Holdings, (ii)
maintain its investment at the initial level, or (iii) require ITT to purchase
50% of Rainbow Programming's initial interest in MSG Holdings at the price
paid by Rainbow Programming for such interest plus an adjustment for Rainbow
Programming's share of MSG Holdings' operating income after interest expense,
if any, following the closing of the acquisition of MSG. Rainbow Programming
has not determined which alternative it will pursue. See "Business--
Programming Services" in the Form 10-K.
ADVERTISING SERVICES
Rainbow Advertising sells advertising time to national, regional and local
advertisers on behalf of the Company's cable television systems and the
SportsChannel and Rainbow News 12 Company programming services, as well as on
behalf of unaffiliated cable television systems.
RECENT DEVELOPMENTS
PROPOSED V CABLE TRANSACTIONS
The Company, V Cable and VC Holding, Inc. ("VC Holding") have entered into a
general, non-binding letter of intent with General Electric Capital
Corporation ("GECC"), the principal creditor of V Cable. In the transactions
proposed by the letter of intent, the Company would issue to GECC preferred
stock having an initial aggregate liquidation preference of $500 million for
an aggregate purchase price of $500 million. It is anticipated that such
preferred stock would be redeemable at the option of the Company and would be
convertible at the option of the holder at certain times and in certain
circumstances in whole or in part into Class A Common Stock
S-14
<PAGE>
at a conversion rate based upon the trading value of the Class A Common Stock
at the time of such conversion. The Company would make an equity capital
contribution to V Cable of the gross proceeds from such issuance and V Cable
would apply such amounts as set forth below.
As part of the proposed transactions contemplated by the letter of intent
(together with the issuance of the preferred stock to GECC, the "Proposed V
Cable Transactions"), the $500 million capital contribution received by V
Cable would be applied as follows: (i) approximately $26 million to repay V
Cable's outstanding indebtedness to GECC; (ii) approximately $93 million to
repay to GECC a portion of U.S. Cable's debt payable by V Cable under certain
circumstances; (iii) approximately $331 million to repay to GECC a portion of
VC Holding's indebtedness; and (iv) $50 million would be used by VC Holding to
make a preferred capital contribution to U.S. Cable as discussed below. The
Company's $500 million capital contribution to V Cable has received the
requisite approval of a majority of the Company's banks under the Credit
Agreement.
The Proposed V Cable Transactions also contemplate that V Cable will enter
into one or more agreements pursuant to which, following the receipt of any
required franchise and regulatory approvals, V Cable or one or more of its
subsidiaries (i) will purchase the 80% of U.S. Cable that V Cable does not
already own for approximately $4 million, (ii) will make a preferred capital
contribution to U.S. Cable of $50 million, and (iii) will assume approximately
$165 million of U.S. Cable indebtedness payable to GECC.
As part of the Proposed V Cable Transactions, GECC would also agree to
provide two new credit facilities, a $325 million three year revolving credit
facility for V Cable's Ohio subsidiary (approximately $210 million of which
would be drawn upon entering into such agreement) and a $260 million two year
revolving credit facility for V Cable's Long Island subsidiary (approximately
$220 million of which would be drawn upon entering into such agreement). The
initial amounts drawn under the respective revolving credit facilities will be
used to repay all remaining VC Holding debt to GECC. Both the Ohio and Long
Island credit facilities would be entered into upon completion of final
documentation and the receipt of any required franchise or regulatory
approvals.
The letter of intent between the Company and GECC is a general, non-binding
letter of intent. There can be no assurance that the Proposed V Cable
Transactions will be consummated or will be consummated in the form described
in the letter of intent. If the Proposed V Cable Transactions, or similar
transactions with respect to V Cable, fail to occur, then V Cable believes
that it is likely that it will be unable to meet certain of its financial
covenants as of December 31, 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 $2.3
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 either 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 credit line will be sufficient to service its debt, to fund its
capital expenditures and to meet its working capital requirements through
1996.
NBC OPTION
On July 12, 1995, Rainbow Programming consummated the purchase of NBC's
interest in SportsChannel (New York) Associates and Rainbow News 12 Company
pursuant to the NBC Option, which Rainbow Programming entered into with NBC in
connection with the MSG Acquisition, for an aggregate purchase price of
approximately $95.5 million, and, effective as of such date, consolidated the
results of operations of SportsChannel (New York) Associates and Rainbow News
12 Company with those of the Company. The purchase was financed principally by
a drawdown of approximately $94.0 million under Rainbow Programming's $202
million amended and restated credit facility and an equity contribution by the
Company of the balance of the purchase price.
ISSUANCE OF SERIES G PREFERRED STOCK
On September 26, 1995, the Company issued 2.5 million shares of its 11 3/4%
Series G Redeemable Exchangeable Preferred Stock (the "Series G Preferred
Stock") with an aggregate liquidation preference of
S-15
<PAGE>
$250 million. The Company is required to redeem the Series G Preferred Stock
on October 1, 2007 at a redemption price per share equal to the liquidation
preference of $100, plus accrued and unpaid dividends thereon. Before October
1, 2000, dividends may, at the option of the Company, be paid in cash or by
issuing fully paid and nonassessable shares of the Series G Preferred Stock
with an aggregate liquidation preference equal to the amount of such
dividends. On and after October 1, 2000, dividends must be paid in cash. The
terms of the Series G Preferred Stock permit the Company, at its option, after
January 1, 1996 to exchange the Series G Preferred Stock for the Company's
11 3/4% Senior Subordinated Debentures due 2007 (the "11 3/4% Debentures") in an
aggregate principal amount equal to the aggregate liquidation preference of
the shares of Series G Preferred Stock.
Of the net proceeds of approximately $239.3 million received by the Company
from the issuance and sale of the Series G Preferred Stock, $136.2 million has
been applied to repay borrowings under the Company's Credit Agreement and
$103.1 million will be used to redeem the Company's outstanding Series E
Redeemable Exchangeable Convertible Preferred Stock (the "Series E Preferred
Stock") on November 2, 1995 at a redemption price equal to the aggregate
liquidation preference plus accrued and unpaid dividends thereon.
CABLEVISION OF BOSTON ACQUISITION
In June 1994, the Company and Cablevision of Boston entered into an
agreement which is designed to give the Company full ownership of Cablevision
of Boston. The agreement provides for the acquisition by the Company of the
interests of Cablevision of Boston which it does not already own in a series
of transactions. See "Condensed Pro Forma Consolidated Financial Information".
Consummation of the transactions would result in the limited partners in
Cablevision of Boston receiving Class A Common Stock of the Company with an
expected aggregate market value of approximately $40 million. Upon
consummation of the acquisition of Cablevision of Boston, the Company expects
Cablevision of Boston to become a member of the Restricted Group. All
outstanding subordinated advances made by the Company to Cablevision of Boston
will become intercompany indebtedness if the acquisition of Cablevision of
Boston is consummated. In addition, the Company, along with certain of its
affiliates, are parties to a lawsuit filed with respect to the Company's
acquisition of Cablevision of Boston. The action is brought on behalf of a
purported class consisting of limited partners in Cablevision of Boston and
seeks, among other matters, to enjoin the proposed acquisition of Cablevision
of Boston and damages. The Company, along with the other defendants, is
defending the action.
IMPACT OF PENDING TELECOMMUNICATIONS LEGISLATION ON FCC CABLE RATE REGULATION
Both the U.S. Senate and the House of Representatives have passed
legislation that would significantly relax cable rate regulation. The Senate
bill would modify the 1992 Cable Act's definition of "effective competition"
to deregulate all cable rates, including basic service rates, whenever a
telephone company begins to offer comparable video programming services to
subscribers in a cable operator's franchise area. The Senate bill also limits
the FCC's ability to regulate rates for non-basic services offered by an
operator not subject to "effective competition" only to instances in which an
operator's rates for such services substantially exceed the national average.
The House bill would deregulate non-basic rates charged by a cable operator,
on a franchise area by franchise area basis, as soon as a telephone company
has been authorized to construct video dialtone facilities or has been
authorized by the FCC or local franchising authorities to provide video
programming to subscribers in the operator's franchise area by any means. Non-
basic rates in all franchise areas would be deregulated 15 months after the
date of enactment, whether or not a telephone company has been so authorized
in a particular franchise area. The regulation of rates for basic service
offered by an operator not subject to "effective competition" would remain
unchanged.
The differences between the Senate and House passed bills would need to be
reconciled before the legislation could become law. The Company cannot at this
point predict whether any legislation ultimately will be enacted into law or
the final form any such legislation would take.
S-16
<PAGE>
COMPANY'S THIRD QUARTER RESULTS
The Company's net revenues for the three and nine months ended September 30,
1995 increased 24% and 33%, respectively, over the corresponding 1994 periods.
Increases of 12% and 21%, respectively, for the three and nine month periods
were attributable to acquisitions made during 1994 and 1995. The remaining
increases of 12% in each period came primarily from internal growth in the
average number of subscribers (approximately 147,500 (10%) for the nine month
1995 period over the same 1994 period).
Net losses for the three and nine months ended September 30, 1995 amounted
to $41.7 million and $237.1 million, or $1.85 and $10.29 per common share
(after preferred dividend requirements), as compared to net losses of $66.9
million and $178.7 million, or $2.93 and $7.82 per common share (after
preferred dividend requirements), for the same periods in 1994. The increase
in net loss for the nine month 1995 period was primarily due to the net losses
of companies acquired during 1994. The decrease in net loss for the three
month 1995 period reflects gains related to the sale of one cable affiliate
and interests in one programming partnership aggregating approximately $36.2
million.
At September 30, 1995, the Company's cable television systems served
approximately 1,887,000 subscribers, representing 62% penetration of homes
passed and an increase of 119,000 subscribers in the first nine months of
1995. Recurring average monthly revenue per subscriber was $36.69 in September
1995.
NET REVENUES
<TABLE>
<CAPTION>
THREE MONTHS
ENDED NINE MONTHS ENDED
SEPTEMBER 30, SEPTEMBER 30,
----------------- -----------------
(DOLLARS IN THOUSANDS)
1995 1994 1995 1994
-------- -------- -------- --------
<S> <C> <C> <C> <C>
Core Restricted Group....................... $119,392 $110,008 $348,773 $322,640
CNYC........................................ 53,387 37,868 151,112 106,270
-------- -------- -------- --------
Total Restricted Group.................... 172,779 147,876 499,885 428,910
V Cable..................................... 37,823 34,925 110,612 104,943
Monmouth/Riverview.......................... 19,956 10,786 57,526 10,786
-------- -------- -------- --------
Subtotal--Cable........................... 230,558 193,587 668,023 544,639
Other Unrestricted.......................... 47,600 29,881 119,270 47,006
-------- -------- -------- --------
Total..................................... $278,158 $223,468 $787,293 $591,645
======== ======== ======== ========
</TABLE>
OPERATING PROFIT BEFORE DEPRECIATION AND AMORTIZATION
<TABLE>
<CAPTION>
THREE MONTHS
ENDED NINE MONTHS ENDED
SEPTEMBER 30, SEPTEMBER 30,
---------------- -----------------
(DOLLARS IN THOUSANDS)
1995 1994 1995 1994
-------- ------- -------- --------
<S> <C> <C> <C> <C>
Core Restricted Group........................ $ 59,668 $55,595 $166,682 $162,602
CNYC......................................... 15,815 10,097 42,611 26,222
-------- ------- -------- --------
Total Restricted Group..................... 75,483 65,692 209,293 188,824
V Cable...................................... 17,801 16,971 50,730 51,767
Monmouth/Riverview........................... 10,237 6,332 29,683 6,332
-------- ------- -------- --------
Subtotal--Cable............................ 103,521 88,995 289,706 246,923
Other Unrestricted........................... 2,285 4,514 381 3,413
-------- ------- -------- --------
Total...................................... $105,806 $93,509 $290,087 $250,336
======== ======= ======== ========
</TABLE>
S-17
<PAGE>
USE OF PROCEEDS
The net proceeds to be received by the Company from the Offering are
estimated to be $243.5 million. The Company will initially apply the net
proceeds from the Offering to the repayment of borrowings under the Company's
Credit Agreement. The Company expects to raise additional amounts under the
Credit Agreement in the future for general corporate purposes. See
"Management's Discussion and Analysis--Liquidity and Capital Resources" for
information concerning the Company's significant expected expenditures.
The borrowings under the Credit Agreement being repaid bear interest at
floating rates, currently 8.4%, and mature in installments over the 1997-2003
time period. See "Management's Discussion and Analysis--Liquidity and Capital
Resources".
The Company is concurrently with the offering of the Notes offering its
Series I Preferred Stock represented by Depositary Shares with an aggregate
liquidation preference of $300 million. The Company expects to use the net
proceeds from that offering (estimated to be $289.3 million) to repay
borrowings under the Credit Agreement.
The consummation of the offering of the Depositary Shares is not a condition
to the consummation of the offering of the Notes offered hereby, nor is the
consummation of the offering of the Notes a condition to the offering of the
Depositary Shares.
S-18
<PAGE>
CAPITALIZATION
The following table sets forth the consolidated capitalization of the
Company and its consolidated subsidiaries at June 30, 1995 and as adjusted to
reflect the pro forma consolidated capitalization of the Company and its
consolidated subsidiaries at June 30, 1995, adjusted to give effect to (i) the
proposed acquisition of Cablevision of Boston, (ii) the Proposed V Cable
Transactions and (iii) the issuance on September 26, 1995 of 2.5 million
shares of the Company's Series G Preferred Stock and the use of the proceeds
therefrom to redeem the Company's Series E Preferred Stock and to repay bank
indebtedness, as further adjusted to reflect the issuance of $250,000,000
principal amount of the Notes offered hereby and the Series I Preferred Stock
being offered by the Company concurrently, and the application of the
estimated net proceeds to the Company from such offerings. See "Recent
Developments", "Use of Proceeds" and "Condensed Pro Forma Consolidated
Financial Statements".
<TABLE>
<CAPTION>
AS OF JUNE 30, 1995
-----------------------------------
PRO AS ADJUSTED
HISTORICAL FORMA PRO FORMA
---------- ---------- -----------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C>
LONG-TERM DEBT:
Restricted Group:
Bank indebtedness(1)................... $1,142,749 $1,084,222 $ 551,372
10 3/4% Senior Subordinated Debentures
due 2004.............................. 275,000 275,000 275,000
% Senior Subordinated Notes due 2005
offered hereby........................ -- -- 250,000
9 7/8% Senior Subordinated Debentures
due 2013.............................. 198,898 198,898 198,898
9 7/8% Senior Subordinated Debentures
due 2023.............................. 149,673 149,673 149,673
Capitalized lease obligations.......... 10,226 12,274 12,274
---------- ---------- ----------
Total................................ 1,776,546 1,720,067 1,437,217
---------- ---------- ----------
V Cable:
Senior debt............................ 880,888 430,888 430,888
MFR:
Senior bank debt....................... 209,000 209,000 209,000
Subordinated notes..................... 141,268 141,268 141,268
---------- ---------- ----------
Total................................ 350,268 350,268 350,268
---------- ---------- ----------
Other Unrestricted Subsidiaries:
Other indebtedness(2).................. 148,028 313,028 313,028
Obligation to related party(3)......... 190,212 190,212 190,212
---------- ---------- ----------
Total................................ 338,240 503,240 503,240
---------- ---------- ----------
Total long-term debt............... 3,345,942 3,004,463 2,721,613
---------- ---------- ----------
REDEEMABLE PREFERRED STOCK:
Series G Preferred Stock................. -- 250,000 250,000
---------- ---------- ----------
STOCKHOLDERS' DEFICIENCY:
Series C Cumulative Preferred Stock:
Authorized--225,000 shares
Outstanding--110,622 shares............ 1 1 1
Series E Redeemable Exchangeable
Convertible Preferred Stock:
Authorized--100,000 shares
Outstanding--100,000 shares............ 1 -- --
Series I Cumulative Convertible
Exchangeable Preferred Stock............. -- -- 12
Series J Redeemable Convertible Preferred
Stock(4)................................. -- 5 5
Class A Common Stock:
Authorized--50,000,000 shares
Outstanding--12,116,867 shares......... 121 127 127
Class B Common Stock:
Authorized--20,000,000 shares
Outstanding--11,673,922 shares......... 117 117 117
Capital contributed in excess of (less
than) par value......................... (71,888) 354,011 643,229
Accumulated deficit...................... (1,941,878) (1,975,495) (1,975,495)
---------- ---------- ----------
(2,013,526) (1,621,234) (1,331,934)
Treasury stock........................... (3,237) (3,237) (3,237)
---------- ---------- ----------
Total stockholders' deficiency....... (2,016,763) (1,624,471) (1,335,171)
---------- ---------- ----------
Total capitalization............... $1,329,179 $1,629,992 $1,636,442
========== ========== ==========
</TABLE>
(footnotes on following page)
S-19
<PAGE>
FOOTNOTES
(1) See "Management's Discussion and Analysis--Liquidity and Capital
Resources" and the Consolidated Financial Statements for a description of
the bank indebtedness. This indebtedness consists of the Company's
indebtedness under its principal bank credit agreement, the New Jersey
subsidiary credit agreement and the Cablevision of NYC credit agreement.
These amounts do not include approximately $22.7 million reserved under
the Company's bank credit agreements for certain letters of credit issued
on behalf of the Company. The Company and its New Jersey subsidiary are
jointly and severally liable under the New Jersey subsidiary credit
agreement.
(2) On July 12, 1995, Rainbow Programming incurred an additional approximately
$94.0 million of indebtedness in connection with the exercise of the NBC
Option.
(3) Obligation of NYC LP Corp., a wholly-owned Unrestricted Group subsidiary,
relating to the acquisition of Cablevision of NYC, which obligation has
been guaranteed by the Company. NYC LP Corp.'s obligation under such
guarantee may be paid in cash or, at the Company's option, shares of the
Company's Common Stock. Under the Credit Agreement, the Company is
currently prohibited from paying all but $40.0 million of this obligation
in cash and, accordingly, without the consent of the Company's bank
lenders, would be required to pay it in shares of the Company's Common
Stock.
(4) Issuable in connection with the Proposed V Cable Transactions. See "Recent
Developments--Proposed V Cable Transactions" for a discussion of such
transactions.
S-20
<PAGE>
CONDENSED PRO FORMA CONSOLIDATED FINANCIAL INFORMATION
The following condensed pro forma consolidated balance sheet as of June 30,
1995 presents the Company's financial position as adjusted to give effect to
the proposed acquisition of Cablevision of Boston and the Proposed V Cable
Transactions, as if they had occurred as of that date. The following condensed
pro forma consolidated statement of operations for the year ended December 31,
1994 presents the Company's consolidated results of operations as adjusted to
give effect to (i) the acquisition (the "AMCC Acquisition") of partnership
interests in AMCC, (ii) the acquisition of substantially all of the assets of
Monmouth Cable, Riverview Cable and Framingham Cablevision Associates, Limited
Partnership ("Framingham Cable"), (iii) the proposed acquisition of
Cablevision of Boston, and (iv) the Proposed V Cable Transactions as if the
acquisition of interests in AMCC, the acquisition of Monmouth Cable, Riverview
Cable and Framingham Cable, the acquisition of Cablevision of Boston and the
Proposed V Cable Transactions had occurred at the beginning of the periods
presented. The following condensed pro forma consolidated statement of
operations for the six months ended June 30, 1995 presents the Company's
consolidated results of operations as adjusted to give effect to the proposed
acquisition of Cablevision of Boston and the Proposed V Cable Transactions as
if the proposed acquisition of Cablevision of Boston and the Proposed V Cable
Transactions had occurred at the beginning of the periods presented. The
condensed pro forma consolidated financial statements should be read in
conjunction with the notes thereto and the historical consolidated financial
statements and notes thereto incorporated herein by reference. The pro forma
financial information is not necessarily indicative of what the actual
financial position or results of operations of the Company would have been had
the transactions occurred on the dates indicated nor does it purport to
indicate the future results of operations or the future financial condition of
the Company.
S-21
<PAGE>
CONDENSED PRO FORMA CONSOLIDATED BALANCE SHEET
JUNE 30, 1995
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
PRO FORMA ADJUSTMENTS*
---------------------------
PROPOSED
CABLEVISION OF V CABLE
HISTORICAL BOSTON TRANSACTION PRO FORMA
----------- -------------- ----------- ----------
<S> <C> <C> <C> <C>
ASSETS
Cash and cash equiva-
lents.................. $ 23,487 $ 5,967 (1) $ 236 (4) $ 22,690
(3,000)(2) (4,000)(5)
Accounts receivable,
trade.................. 71,406 2,165 (1) 331 (4) 73,902
Notes and other receiv-
ables.................. 17,872 601 (1) 502 (4) 18,975
Prepaid expenses and
other current assets... 13,256 470 (1) 464 (4) 14,190
Property, plant and
equipment, net......... 916,312 35,863 (1) 103,604 (4) 1,055,779
Investments in and ad-
vances to affiliates... 182,080 (17,462)(1) 324 (4) 164,942
Feature film inventory.. 151,113 151,113
Intangible assets, net.. 795,631 114,188 (2) 133,610 (6) 1,042,204
(1,225)(3)
Deferred financing, in-
terest expense and
other costs, net....... 83,711 1,000 (2) (33,617)(5) 51,094
----------- -------- -------- ----------
$ 2,254,868 $138,567 $201,454 $2,594,889
=========== ======== ======== ==========
LIABILITIES AND STOCKHOLDERS' DEFICIENCY
Accounts payable........ $ 117,203 $ 9,286 (1) $ 9,381 (4) $ 135,870
Accrued expenses........ 213,562 9,186 (1) 10,690 (4) 233,438
Accounts payable to af-
filiates............... 27,577 665 (1) 28,242
Feature film rights pay-
able................... 131,026 131,026
Bank debt............... 1,499,762 80,773 (2) 1,580,535
Senior debt............. 880,888 215,000 (4) 595,888
(500,000)(5)
Subordinated debentures. 623,571 623,571
Subordinated notes pay-
able................... 141,268 141,268
Obligation to related
party.................. 190,212 190,212
Capital lease obliga-
tions and other debt... 10,241 2,048 (1) 12,289
----------- -------- -------- ----------
3,835,310 101,958 (264,929) 3,672,339
----------- -------- -------- ----------
Deficit investment in
affiliates............. 436,321 436,321
----------- -------- -------- ----------
Stockholders' deficien-
cy:
Preferred stock....... 2 5 (5) 7
Common stock.......... 238 6 (2) 244
Par value in excess of
capital contributed.. (71,888) 37,828 (2) 499,995 (5) 464,710
(1,225)(3)
Accumulated deficit... (1,941,878) (33,617)(5) (1,975,495)
----------- -------- -------- ----------
(2,013,526) 36,609 466,383 (1,510,534)
Less treasury stock, at
cost (50,000 shares)... (3,237) (3,237)
----------- -------- -------- ----------
(2,016,763) 36,609 466,383 (1,513,771)
----------- -------- -------- ----------
$ 2,254,868 $138,567 $201,454 $2,594,889
=========== ======== ======== ==========
</TABLE>
- --------
*See Note A of Notes to Condensed Pro Forma Consolidated Financial Statements.
S-22
<PAGE>
CONDENSED PRO FORMA CONSOLIDATED STATEMENT OF OPERATIONS
FOR THE YEAR ENDED DECEMBER 31, 1994
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA)
<TABLE>
<CAPTION>
PRO FORMA ADJUSTMENTS*
--------------------------------------------------------
MONMOUTH
CABLE,
RIVERVIEW
CABLE
AMERICAN AND CABLEVISION PROPOSED
MOVIE FRAMINGHAM OF V CABLE
HISTORICAL CLASSICS CABLE BOSTON TRANSACTIONS PRO FORMA
---------- -------- ---------- ----------- ------------ ----------
<S> <C> <C> <C> <C> <C> <C>
Net Revenues............ $ 837,169 $50,951 (7) $ 47,286 (13) $59,239 (19) $ 71,960 (22) $1,066,605
--------- ------- -------- ------- -------- ----------
Operating expenses:
Technical.............. 302,885 16,262 (7) 15,127 (13) 26,749 (19) 29,674 (22) 390,697
Selling, general and
administrative........ 195,942 16,105 (7) 9,199 (13) 17,119 (19) 20,776 (22) 254,162
Restructuring charge... 4,306 4,306
Depreciation and amor-
tization.............. 271,343 142 (7) 12,488 (13) 8,428 (19) 41,861 (22) 379,478
--------- ------- -------- ------- -------- ----------
10,827 (12) 27,273 (14) 11,038 (20) (3,922)(26)
774,476 42,477 62,059 61,242 88,389 1,028,643
--------- ------- -------- ------- -------- ----------
Operating profit
(loss)................ 62,693 8,474 (14,773) (2,003) (16,429) 37,962
Other income (expense)
Interest expense....... (263,299) (1,510)(7) (4,657)(13) (8,955)(19) (24,195)(22) (266,443)
(7,615)(9) (11,093)(15) 1,552 (21) 47,323 (23)
6,006 (25)
Interest income........ 1,518 305 (7) 59 (13) 216 (19) 236 (22) 2,334
Share of affiliates'
net loss.............. (82,864) (4,304)(10) (521)(17) 8,594 (22) (79,367)
(272)(18)
Write off of deferred
financing costs....... (9,884) (9,884)
Loss on redemption of
debt.................. (7,088) (7,088)
Provision for preferen-
tial payment to re-
lated party........... (5,600) (5,600)
Minority interest...... (3,429) (4,321)(8) (7,750)
Miscellaneous, net..... (7,198) (23)(7) (131)(13) (307)(19) (1,280)(22) (8,939)
--------- ------- -------- ------- -------- ----------
Loss before extraordi-
nary item.............. (315,151) (8,994) (31,388) (9,497) 20,255 (344,775)
Extraordinary item:
Loss on redemption of
debt.................. (40,457)(23) (40,457)
--------- ------- -------- ------- -------- ----------
Net loss................ (315,151) (8,994) (31,388) (9,497) (20,202) (385,232)
Preferred stock dividend
requirement............ (6,385) (43,403)(24) (49,788)
--------- ------- -------- ------- -------- ----------
Net loss applicable to
common
shareholders........... $(321,536) $(8,994) $(31,388) $(9,497) $(63,605) $ (435,020)
========= ======= ======== ======= ======== ==========
Loss per common share
before
extraordinary item..... $ (13.72) $ (16.42)
Extraordinary item...... -- (1.68)
--------- ----------
Net loss per common
share.................. $ (13.72) $ (18.10)
========= ==========
Average number of common
shares
outstanding (in thou-
sands)................. 23,444 593 (19) 24,037
========= ======= ==========
</TABLE>
- --------
* See Note B of Notes to Condensed Pro Forma Consolidated Financial
Statements.
S-23
<PAGE>
CONDENSED PRO FORMA CONSOLIDATED STATEMENT OF OPERATIONS
FOR THE SIX MONTHS ENDED JUNE 30, 1995
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA)
<TABLE>
<CAPTION>
PRO FORMA ADJUSTMENTS*
---------------------------
CABLEVISION PROPOSED
OF V CABLE
HISTORICAL BOSTON TRANSACTIONS PRO FORMA
---------- ----------- ------------ ---------
<S> <C> <C> <C> <C>
Net Revenues............... $ 509,135 $30,671 (27) $37,892 (30) $ 577,698
Operating expenses:
Technical................. 193,243 14,334 (27) 16,596 (30) 224,173
Selling, general and ad-
ministrative............. 131,611 9,510 (27) 11,004 (30) 151,035
(1,090)(28)
Depreciation and amortiza-
tion..................... 159,537 4,421 (27) 19,560 (30) 187,419
5,519 (28) (1,618)(34)
--------- ------- ------- ---------
484,391 32,694 45,542 562,627
--------- ------- ------- ---------
Operating profit (loss).... 24,744 (2,023) (7,650) 15,071
Other income (expense)
Interest expense.......... (155,318) (5,397)(27) (12,642)(30) (137,566)
1,753 (29) 30,477 (31)
3,561 (33)
Interest income........... 790 162 (27) 38 (30) 990
Share of affiliates' net
income (loss)............ (52,692) 2,840 (30) (49,852)
Write off of deferred fi-
nancing costs............ (2,888) (2,888)
Provision for preferential
payment to related party. (2,800) (2,800)
Minority interest......... (4,276) (4,276)
Miscellaneous, net........ (2,999) (89)(27) (237)(30) (3,325)
--------- ------- ------- ---------
Net loss.................. (195,439) (5,594) 16,387 (184,646)
Preferred stock dividend
requirement.............. (4,918) (21,075)(32) (25,993)
--------- ------- ------- ---------
Net loss applicable to
common
shareholders............. $(200,357) $(5,594) $(4,688) $(210,639)
========= ======= ======= =========
Net loss per common share. $ (8.45) $ (8.67)
========= =========
Average number of common
shares
outstanding (in thou-
sands)................... 23,710 593 (27) 24,303
========= ======= =========
</TABLE>
- --------
* See Note C of Notes to Condensed Pro Forma Consolidated Financial
Statements.
NOTE A--NOTES TO CONDENSED PRO FORMA BALANCE SHEET AS OF JUNE 30, 1995
CABLEVISION OF BOSTON ACQUISITION
(1) As a result of the acquisition of Cablevision of Boston, the assets and
liabilities purchased will be combined with the Company's consolidated
balance sheet amounts. The adjustments referenced by this Note (1)
reflect the consolidation of such amounts as of the balance sheet date.
(2) Represents (a) the total cost of interests in Cablevision of Boston not
owned by the Company to be paid by the issuance of Class A Common Stock
of the Company valued at $37,834,000, (b) estimated transaction costs of
$2,000,000 and financing costs of $1,000,000, (c) bank borrowings of
$80,773,000 to be used to refinance Cablevision of Boston's bank debt and
accrued interest thereon of $61,106,000 and repay amounts owed to Mr.
Dolan aggregating $19,667,000 for management fees, loans, accrued
interest thereon and preferred equity and (d) the excess ($114,188,000)
of the purchase price over the value of the net liabilities acquired.
(3) Represents the amount paid to Mr. Dolan for his general partnership
interest and the assumption of his share of the excess liabilities over
net assets of Cablevision of Boston ($1,225,000) (such amount to be
charged to par value in excess of capital contributed). Interests in the
Dolan-owned assets and liabilities are recorded in the pro forma balance
sheet at Cablevision of Boston's historical cost.
S-24
<PAGE>
PROPOSED V CABLE TRANSACTIONS
(4) As a result of the proposed acquisition of 80% of the partnership
interests in U.S. Cable not already owned by V Cable to be effected in
connection with the Proposed V Cable Transactions, the assets and
liabilities of U.S. Cable will be combined with the Company's
consolidated balance sheet amounts. The adjustments referenced by this
Note (4) reflect the consolidation of such amounts as of the balance
sheet date.
(5) In connection with the Proposed V Cable Transactions, the Company will
redeem the outstanding preferred stock on the books of U.S. Cable for
$4,000,000 and will issue $500,000,000 of its preferred stock to GECC.
The proceeds from this issuance will be used to repay $450,000,000 of V
Cable and/or VC Holding debt to GECC and provide V Cable with $50,000,000
to make a preferred capital contribution to U.S. Cable, which will repay
an equivalent amount of its debt to GECC. Deferred interest expense of
$33,617,000 related to V Cable's assumption of U.S. Cable's debt in the
1992 V Cable Reorganization will be written off in connection with the
repayment of such debt.
(6) Represents the excess ($133,610,000) of the purchase price of U.S. Cable
over the value of the net liabilities acquired.
NOTE B--NOTES TO CONDENSED PRO FORMA CONSOLIDATED STATEMENT OF OPERATIONS FOR
THE YEAR ENDED DECEMBER 31, 1994
AMERICAN MOVIE CLASSICS COMPANY ACQUISITION
(7) As a result of the AMCC Acquisition, which was consummated on July 11,
1994, the results of operations of AMCC are combined with the Company's
consolidated results of operations. The adjustments referenced by this
Note (7) reflect the consolidation of such amounts for the period January
1, 1994 through July 10, 1994.
(8) Represents the 25.1% minority partnership interest in the results of
operations of AMCC owned by National Broadcasting Company, Inc. and
Liberty Media Corporation.
(9) Represents interest expense, at 8.0% per annum, on the $181,903,000 of
debt incurred by the Company to fund the purchase of the additional
approximate 50% interest in AMCC. NBC will not share in this expense.
(10) Represents the income of AMCC previously recorded by the Company using
the equity method of accounting.
(11) Represents the elimination of management fees paid to the former partner
by AMCC. In connection with the purchase of the approximate 50% interest
in AMCC, the Company also purchased the right to receive such fees in the
future.
(12) Represents the amortization, based on an average 10-year life, of the
excess cost over fair value of assets acquired resulting from the
purchase of the additional approximate 50% interest in AMCC. NBC will not
share in this expense.
MONMOUTH CABLE, RIVERVIEW CABLE AND FRAMINGHAM CABLE ACQUISITION
(13) As a result of the acquisition of Monmouth Cable and Riverview Cable,
which was consummated on August 8, 1994, the results of operations of
Monmouth Cable and Riverview Cable are combined with the Company's
consolidated results of operations. The adjustments referenced by this
Note (13) reflect the consolidation of such amounts for the period
January 1, 1994 through August 7, 1994.
(14) Represents the depreciation and amortization, based on an average 10-year
life, of the step-up in property, plant and equipment, franchise costs
and the excess cost over fair value of assets acquired of $39,761,000 for
the period, offset by the elimination of pre-acquisition depreciation and
amortization of $12,488,000.
(15) Represents interest expense of $15,750,000 attributable to $237,800,000
of bank borrowings (interest expense of $10,444,000 at a 7.32% interest
rate); $132,158,000 of 6% senior subordinated notes (interest expense of
$4,758,000); $9,110,000 of a 6% indemnification note (interest expense of
$328,000); and
S-25
<PAGE>
amortization of deferred finance costs of $220,000 offset by pre-
acquisition interest expense of $4,657,000 incurred by Monmouth Cable and
Riverview Cable.
(16) Represents the elimination of management fees of $2,378,000 paid to
former general partners by Monmouth Cable and Riverview Cable and the
elimination of an adjustment ($350,000) made in the first half of 1994 to
reduce prior period overaccruals of franchise fees.
(17) As a result of the acquisition of Framingham Cable, which was consummated
on August 8, 1994, by the Company and Warburg Pincus Investors, L.P., a
30% Pre-Payout Interest in the results of Framingham Cable will be
combined with the Company's consolidated results of operations. The
adjustment referenced by this Note (17) reflects the 30% Pre-Payout
Interest for the period January 1, 1994 through August 7, 1994.
(18) Represents the Company's 30% share of reduced costs for Framingham Cable
management fees of $56,000, offset by additional expenses relating to the
Framingham Cable acquisition for depreciation and amortization of
$249,000 and interest of $79,000.
CABLEVISION OF BOSTON ACQUISITION
(19) As a result of the acquisition of Cablevision of Boston (and related
issuance of approximately 593,000 shares of the Company's Class A Common
Stock), the results of operations of Cablevision of Boston will be
combined with the Company's consolidated results of operations. The
adjustments referenced by this Note (19) reflect the consolidation of
such amounts for the year ended December 31, 1994.
(20) Represents the amortization, based on an average 10-year life, of the
excess cost over fair value of assets acquired of $11,296,000 for the
period, offset by the elimination of amortization of previous intangibles
of $258,000 and the elimination from selling, general and administrative
expenses of management fees payable by Cablevision of Boston to
Cablevision Systems Services Corporation ($2,092,000).
(21) Represents interest expense of $7,188,000 attributable to $80,773,000 of
bank debt (8.9% interest rate) reduced by pre-acquisition interest
expense of $8,740,000 incurred by Cablevision of Boston on its bank debt
and debt owed to Mr. Dolan and the Company.
PROPOSED V CABLE TRANSACTIONS
(22) As a result of the proposed acquisition of 80% of the partnership
interests in U.S. Cable not already owned by V Cable to be effected in
connection with the Proposed V Cable Transactions, the results of
operations of U.S. Cable will be combined with the Company's consolidated
results of operations. The adjustments referenced by this Note (22)
reflect the consolidation of such amounts for the year ended December 31,
1994 and the elimination of the Company's share of losses in U.S. Cable
previously recorded on the equity basis.
(23) Represents the reduction in interest expense of $47,323,000, at an
average interest rate of 10.5%, resulting from the net repayment of
$450,000,000 of V Cable and/or VC Holding debt from the proceeds of the
issuance of the preferred stock in the Proposed V Cable Transactions. In
addition, the Company will write off deferred interest and financing
costs of $40,457,000 in connection with the repayment of U.S. Cable debt
assumed by V Cable in the 1992 V Cable Reorganization.
(24) Represents the dividends payable to GECC on the preferred stock to be
issued in the Proposed V Cable Transactions. This amount does not take
into account any gross up required to be paid to a holder of preferred
stock failing to obtain a dividends received deduction.
(25) Represents the reduction in interest expense, at an average interest rate
of 12.0%, resulting from the repayment of $50,000,000 of U.S. Cable debt
from the proceeds of the issuance of preferred stock and certain
reductions in U.S. Cable's debt resulting from the Proposed V Cable
Transactions.
(26) Represents the depreciation and amortization, based on an average 10-year
life, of the step-up in property, plant and equipment, franchise costs
and the excess cost over fair value of assets acquired of $37,939,000 for
the period, offset by the elimination of pre-acquisition depreciation and
amortization of $41,861,000.
S-26
<PAGE>
NOTE C--NOTES TO CONDENSED PRO FORMA CONSOLIDATED STATEMENT OF OPERATIONS FOR
THE SIX MONTHS ENDED JUNE 30, 1995
CABLEVISION OF BOSTON ACQUISITION
(27) As a result of the acquisition of Cablevision of Boston (and related
issuance of approximately 593,000 shares of the Company's Class A Common
Stock), the results of operations of Cablevision of Boston will be
combined with the Company's consolidated results of operations. The
adjustments referenced by this Note (27) reflect the consolidation of
such amounts for the six months ended June 30, 1995.
(28) Represents the amortization, based on an average 10-year life, of the
excess cost over fair value of assets acquired of $5,648,000 for the
period, offset by the elimination of amortization of previous intangibles
of $129,000 and the elimination from selling, general and administrative
expenses of management fees payable by Cablevision of Boston to
Cablevision Systems Services Corporation ($1,090,000).
(29) Represents interest expense of $3,565,000 attributable to $80,773,000 of
bank debt (8.9% interest rate) reduced by pre-acquisition interest
expense of $5,318,000 incurred by Cablevision of Boston on its bank debt
and debt owed to Mr. Dolan and the Company.
PROPOSED V CABLE TRANSACTIONS
(30) As a result of the proposed acquisition of 80% of the partnership
interests in U.S. Cable not already owned by V Cable to be effected in
connection with the Proposed V Cable Transactions, the results of
operations of U.S. Cable will be combined with the Company's consolidated
results of operations. The adjustments referenced by this Note (30)
reflect the consolidation of such amounts for the six months ended June
30, 1995 and the elimination of the Company's share of losses in U.S.
Cable previously recorded on the equity basis.
(31) Represents the reduction in interest expense of $23,672,000, at an
average interest rate of 10.6%, resulting from the net repayment of
$450,000,000 of V Cable and/or VC Holding debt from the proceeds of the
issuance of the preferred stock in the Proposed V Cable Transactions. In
addition, amortization of deferred interest and financing costs of
$6,805,000 is eliminated in connection with the repayment of U.S. Cable
debt assumed by V Cable in the 1992 V Cable Reorganization. Because the
write-off of deferred interest and financing costs related to this
transaction has been reflected in the Condensed Pro Forma Consolidated
Statement of Operations for the year ended December 31, 1994, no such
write-off has been made in the Condensed Pro Forma Consolidated Statement
of Operations for the six months ended June 30, 1995.
(32) Represents the dividends payable to GECC on the preferred stock to be
issued in the Proposed V Cable Transactions. This amount does not take
into account any gross up required to be paid to a holder of preferred
stock failing to obtain a dividends received deduction.
(33) Represents the reduction in interest expense, at an average interest rate
of 11.6%, resulting from the repayment of $50,000,000 of U.S. Cable debt
from the proceeds of the issuance of preferred stock and certain
reductions in U.S. Cable's debt resulting from the Proposed V Cable
Transactions.
(34) Represents the depreciation and amortization, based on an average 10-year
life, of the step-up in property, plant and equipment, franchise costs
and the excess cost over fair value of assets acquired of $17,942,000 for
the period, offset by the elimination of pre-acquisition depreciation and
amortization of $19,560,000.
S-27
<PAGE>
DESCRIPTION OF THE NOTES
The following description of the particular terms of the Notes supplements
and, to the extent inconsistent therewith, supersedes the description of the
general terms of the Debt Securities set forth under the heading "Description
of Debt Securities" in the accompanying Prospectus, to which description
reference is made.
The Notes will be issued under an Indenture to be dated as of November 1,
1995 (the "Indenture"), between the Company and The Bank of New York, as
trustee (the "Trustee"). The Indenture is subject to and is governed by the
Trust Indenture Act of 1939, as amended. The following summaries of certain
provisions of the Indenture do not purport to be complete, and where reference
is made to particular provisions of the Indenture, such provisions, including
the definitions of certain terms, are incorporated by reference as a part of
such summaries or terms, which are qualified in their entirety by such
reference. The definitions of certain capitalized terms used in the Indenture
and in the following summary are set forth below under "Description of Debt
Securities--Certain Definitions" in the accompanying Prospectus.
GENERAL
The Notes are limited to $250,000,000 aggregate principal amount and will be
issued in fully registered form, without coupons, in denominations of $1,000
and integral multiples thereof. The Notes will mature on November , 2005.
The Notes will bear interest from November , 1995 at a rate of % per
annum, payable semi-annually on May and November of each year,
commencing May , 1996. Interest on the Notes will be computed on the basis of
a 360-day year of twelve 30-day months and is payable to the person in whose
name each Note was registered at the close of business on the preceding
and , respectively, subject to certain exceptions. The Notes will be
unsecured obligations of the Company. The Notes will be subordinated to all
existing and future Senior Indebtedness of the Company.
Principal of and premium, if any, and interest on the Notes will be payable,
and the Notes will be exchangeable and transferable, at the office or agency
of the Company in The City of New York (which initially will be the Corporate
Trust Office of the Trustee); provided, however, that payment of interest, to
the extent paid in cash, may be made at the option of the Company by check
mailed to the person entitled thereto as shown on the Register of the Notes.
No service charge will be made for any registration of transfer or exchange of
Notes, except for any tax or other governmental charge that may be imposed in
connection therewith.
The Indenture will not contain any provisions that limit the ability of the
Company to incur indebtedness or that afford Holders of the Notes protection
in the event of a highly leveraged or similar transaction involving the
Company, other than as described under "Description of Debt Securities--
Certain Covenants of the Company--Limitation on Indebtedness" in the
accompanying Prospectus.
SINKING FUND
The Notes will not be entitled to the benefits of a sinking fund.
OPTIONAL REDEMPTION
The Notes will be subject to redemption at any time on or after November ,
2000, at the option of the Company, in whole or in part, on not less than 30
nor more than 60 days' prior notice at the following redemption prices
(expressed as percentages of the principal amount), if redeemed during the 12-
month period beginning November of the years indicated:
<TABLE>
<CAPTION>
REDEMPTION
YEAR PRICe
---- ----------
<S> <C>
2000.............................. %
2001..............................
2002..............................
</TABLE>
S-28
<PAGE>
and thereafter at 100% of the principal amount, in each case together with
accrued interest to the redemption date (subject to the right of Holders of
record on relevant record dates to receive interest due on an interest payment
date). If less than all of the Notes are to be redeemed, the Trustee shall
select the Notes or portions thereof to be redeemed either pro rata or by lot.
The Credit Agreement currently prohibits the Company from making optional
redemptions of the Notes other than through the issuance of subordinated
indebtedness, preferred stock or common stock.
SUBORDINATION
The indebtedness represented by the Notes will be subordinated in right of
payment to the prior payment in full of all Senior Indebtedness.
Upon the maturity of any Senior Indebtedness, by lapse of time, acceleration
or otherwise, or upon any payment default (with or without the giving of
notice or lapse of time or both in accordance with the terms of the instrument
governing such Senior Indebtedness, and without any waiver or forgiveness)
with respect to any Senior Indebtedness, all obligations with respect to such
Senior Indebtedness must first be paid in full, or such payment duly provided
for, before any payment is made with respect to the Notes or before any
acquisition of Notes by the Company.
Upon (i) a default with respect to any Senior Indebtedness (other than under
circumstances when the terms of the previous paragraph are applicable), as
such default is defined therein or in the instrument under which it is
outstanding, permitting the holders of Senior Indebtedness to accelerate the
maturity thereof, and (ii) written notice thereof ("Default Notice") given to
the Company and the Trustee by the agent or agents under the Credit Agreement,
then, unless and until such default shall have been cured or waived by the
holders of such Senior Indebtedness or shall have ceased to exist, no direct
or indirect payment may be made by the Company with respect to the principal
of, premium, if any, or interest on the Notes (other than payments made in
Junior Securities) or to acquire any of the Notes or on account of the
redemption provisions of the Notes (except mandatory redemption payments made,
in accordance with the terms of the Notes, in Notes acquired by the Company
before the Default Notice; provided, however, that such provision shall not
prevent the making of any payment (which is not otherwise prohibited by the
previous paragraph) for more than 120 days after the Default Notice shall have
been given unless the Senior Indebtedness in respect of which such event of
default exists has been declared due and payable in its entirety, in which
case no such payment may be made until such acceleration has been rescinded or
annulled or such Senior Indebtedness has been paid in full. Notwithstanding
the foregoing, not more than one Default Notice may be given with respect to
Senior Indebtedness within a period of 240 consecutive days.
The Indenture will provide that, upon any payment by or distribution of the
assets of the Company to creditors upon any dissolution, winding up,
liquidation, bankruptcy, reorganization, assignment for the benefit of
creditors, or any insolvency, receivership or similar proceeding relating to
the Company, all Senior Indebtedness must be paid in full, or such payment
duly provided for, before any payment or distribution (other than in Junior
Securities) is made on account of the principal of or premium, if any, or
interest on the Notes.
By reason of such subordination, in the event of liquidation or insolvency,
creditors of the Company who are holders of Senior Indebtedness may recover
more, ratably, than other creditors of the Company and creditors of the
Company who are not holders of Senior Indebtedness or of the Notes (or the
Company's 10 3/4% Debentures due 2004, the 9 7/8% Debentures due 2013 and the
9 7/8% Debentures due 2023 (collectively, the "Existing Debentures")) may
recover more, ratably, than the Holders of the Notes.
S-29
<PAGE>
A Holder of Notes by his acceptance of Notes agrees to be bound by such
provisions and authorizes and expressly directs the Trustee, on his behalf, to
take such action as may be necessary or appropriate to effectuate the
subordination provided for in the Indenture and appoints the Trustee his
attorney-in-fact for such purpose.
The amount of Senior Indebtedness outstanding at June 30, 1995, adjusted to
give pro forma effect to the transactions described under "Capitalization" and
the application of the net proceeds to the Company from the Offerings, would
have been approximately $563.6 million.
CERTAIN COVENANTS OF THE COMPANY
Limitation on Indebtedness. The Indenture provides that the Company shall
not, and shall not permit any Restricted Subsidiary to, directly or indirectly
incur, create, issue, assume, guarantee or otherwise become liable for,
contingently or otherwise, or become responsible for the payment of,
contingently or otherwise, any Indebtedness (other than Indebtedness between
or among any of the Company and Restricted Subsidiaries) unless, after giving
effect thereto, the Cash Flow Ratio shall be less than or equal to 9 to 1. At
June 30, 1995, such Cash Flow Ratio was approximately 7.7 to 1.
Limitation on Senior Subordinated Indebtedness. The Indenture provides that
the Company shall not, and shall not permit any Restricted Subsidiary to,
directly or indirectly, create, incur, issue, assume, guarantee or otherwise
become liable for, contingently or otherwise, or become responsible for the
payment of, contingently or otherwise, any Indebtedness which is both (i)
senior in right of payment to the Notes and (ii) expressly subordinate in
right of payment to any other Indebtedness of the Company. For purposes of
this covenant, Indebtedness is deemed to be senior in right of payment of the
Notes if it is not subordinate in right of payment to Senior Indebtedness at
least to the same extent as the Notes are subordinate to Senior Indebtedness.
Limitation on Restricted Payments. The Indenture provides that, so long as
any of the Notes remain outstanding, the Company will not, and will not permit
any Restricted Subsidiary to, make any Restricted Payment if (a) at the time
of such proposed Restricted Payment, a Default or Event of Default shall have
occurred and be continuing or shall occur as a consequence of such Restricted
Payment or (b) immediately after giving effect to such Restricted Payment, the
aggregate of all Restricted Payments that shall have been made on or after
July 1, 1988 would exceed the sum of:
(i) $25,000,000, plus
(ii) an amount equal to the difference between (A) the Cumulative Cash
Flow Credit and (B) 1.2 multiplied by Cumulative Interest Expense.
Notwithstanding the foregoing, so long as no Default or Event of Default
shall have occurred and be continuing, the Company may make any Permitted
Restricted Payment; provided, however, that such Permitted Restricted Payment
shall thereafter be counted as a Restricted Payment solely for purposes of
calculating whether any future Restricted Payments are permitted under clause
(b) of the preceding sentence.
For purposes of the "Limitation on Restricted Payments" covenant, the amount
of any Restricted Payment or Permitted Restricted Payment, if other than cash,
shall be based upon fair market value as determined by the Board of Directors
of the Company, whose good faith determination shall be conclusive.
The foregoing provisions do not prevent: (i) the payment of any dividend
within 60 days after the date of declaration thereof, if at such date of
declaration such payment complied with the above provisions; (ii) the
retirement or redemption of any shares of the Company's capital stock or
warrants, rights or options to acquire capital stock of the Company, in
exchange for, or out of the proceeds of a substantially concurrent sale of,
other shares of the Company's capital stock or warrants, rights or options to
acquire capital stock of the Company (other than Disqualified Stock); and
(iii) the redemption of or payments of cash dividends on the Company's 8%
S-30
<PAGE>
Series C Cumulative Preferred Stock (the "Series C Preferred Stock")
outstanding on January 1, 1995, which redemptions or dividends are provided
for by the terms of the Series C Preferred Stock in effect on such date (or
the redemption of or payment of cash dividends on any security of the Company
issued in exchange for or upon the conversion of such Series C Preferred
Stock; provided that the aggregate amount payable pursuant to the terms of
such security is no greater than the aggregate amount payable pursuant to the
terms of the Series C Preferred Stock). For purposes of determining the
aggregate permissible amount of Restricted Payments in accordance with clause
(b) of the first paragraph of this covenant, all amounts expended pursuant to
clauses (i) and (iii) of this paragraph shall be included and all amounts
expended or received pursuant to clause (ii) of this paragraph shall be
excluded; provided, however, that amounts paid pursuant to clause (i) of this
paragraph shall be included only to the extent that such amounts were not
previously included in calculating Restricted Payments.
For the purposes of the foregoing provisions, the net proceeds from the
issuance of shares of capital stock of the Company upon conversion of
Indebtedness shall be deemed to be an amount equal to (i) the accreted value
of such Indebtedness on the date of such conversion and (ii) the additional
consideration, if any, received by the Company upon such conversion thereof,
less any cash payment on account of fractional shares (such consideration, if
in property other than cash, to be determined by the Board of Directors of the
Company, whose good faith determination shall be conclusive). If the Company
makes a Restricted Payment which, at the time of the making of such Restricted
Payment, would in the good faith determination of the Company be permitted
under the requirements of this covenant, such Restricted Payment shall be
deemed to have been made in compliance with this covenant notwithstanding any
subsequent adjustments made in good faith to the Company's financial
statements affecting Cumulative Cash Flow Credit or Cumulative Interest
Expense for any period.
As of June 30, 1995, the Company would have been permitted to make
Restricted Payments of $332.0 million, and after giving effect to the offering
of the Depositary Shares and the redemption of the Series E Preferred Stock,
approximately $519 million.
Limitation on Investments in Unrestricted Subsidiaries and Affiliates. The
Indenture provides that the Company will not, and will not permit any
Restricted Subsidiary to, directly or indirectly (i) make any Investment or
(ii) allow any Restricted Subsidiary to become an Unrestricted Subsidiary (a
"redesignation of a Restricted Subsidiary"), in each case unless (a) no
Default or Event of Default shall have occurred and be continuing or shall
occur as a consequence of such Investment or such redesignation of a
Restricted Subsidiary, and (b) after giving effect thereto, the Cash Flow
Ratio shall be less than or equal to 9:1.
The foregoing provisions of this covenant shall not prohibit (i) any renewal
or reclassification of any Investment existing on the date hereof or (ii)
trade credit extended on usual and customary terms in the ordinary course of
business.
Transactions with Affiliates. The Indenture provides that the Company shall
not, and shall not permit any of its subsidiaries to, sell, lease, transfer or
otherwise dispose of any of its properties or assets to or purchase any
property or assets from, or enter into any contract, agreement, understanding,
loan, advance or guarantee with, or for the benefit of, an Affiliate of the
Company that is not a subsidiary of the Company, having a value, or for
consideration having a value, in excess of $10,000,000 individually or in the
aggregate unless the Board of Directors of the Company shall make a good faith
determination that the terms of such transaction are, taken as a whole, no
less favorable to the Company or such subsidiary, as the case may be, than
those which might be available in a comparable transaction with an unrelated
Person. For purposes of clarification, this provision shall not apply to
Restricted Payments or Permitted Restricted Payments permitted under
"Limitation on Restricted Payments".
REGARDING THE TRUSTEE
The Bank of New York ("BONY") will be the Trustee under the Indenture and is
the trustee under the indentures relating to the Company's Existing
Debentures. BONY is a party to certain credit agreements with the Company and
its subsidiaries, including the Credit Agreement, borrowings under which
constitute Senior Indebtedness under the Indenture. BONY may also maintain
other banking arrangements with the Company in the ordinary course of
business.
S-31
<PAGE>
UNDERWRITING
Subject to the terms and conditions set forth in the Purchase Agreement, the
Company has agreed to sell to each of the Underwriters named below, and each
of the Underwriters has severally agreed to purchase, the principal amount of
the Notes set forth opposite its name below. The Underwriters have agreed to
purchase all the Notes if any are purchased.
<TABLE>
<CAPTION>
PRINCIPAL
UNDERWRITER AMOUNT
----------- ---------
<S> <C>
Merrill Lynch, Pierce, Fenner & Smith
Incorporated.......................................... $
Bear, Stearns & Co. Inc. ......................................
Morgan Stanley & Co. Incorporated..............................
Toronto Dominion Securities (USA) Inc. ........................
------------
Total..................................................... $250,000,000
============
</TABLE>
The Underwriters have advised the Company that they propose initially to
offer the Notes directly to the public at the public offering price set forth
on the cover page of this Prospectus Supplement, and to certain dealers at
such price less a concession not in excess of % of the principal amount of
the Notes. The Underwriters may allow, and such dealers may reallow, a
discount not in excess of % of the principal amount of the Notes to certain
other dealers. After the initial public offering, the public offering price,
concession and reallowance may be changed by the Underwriters.
There is no public market for the Notes. The Company does not intend to list
the Notes on any securities exchange or to arrange for their quotation on
NASDAQ. The Company has been advised by the Underwriters that they presently
intend to make a market in the Notes after the consummation of the Offering,
although they are under no obligation to do so. No assurance can be given,
however, as to the liquidity of the trading market for the Notes or that an
active public market for the Notes will develop. If an active public market
does not develop, the market prices and liquidity of the Notes may be
adversely affected.
Each of Merrill Lynch, Pierce, Fenner & Smith Incorporated ("Merrill Lynch")
and Bear, Stearns & Co. Inc. ("Bear Stearns") has from time to time provided
investment banking services to the Company (and in the case of Merrill Lynch,
Charles F. Dolan) in connection with various transactions and proposed
transactions. In addition, Merrill Lynch, Bear Stearns and Morgan Stanley &
Co. Incorporated were the initial purchasers in the offering of the Company's
Series G Preferred Stock in September 1995 and are prospective underwriters of
the Company's Series I Preferred Stock represented by depositary shares. An
affiliate of Toronto Dominion Securities (USA) Inc. is an agent and lender
under the Company's Credit Agreement and is a lender to certain affiliates of
the Company. In addition, such affiliate is the holder of the Company's Series
E Preferred Stock which will be redeemed on November 2, 1995 by the Company
out of the proceeds of the Company's issuance and sale of the Series G
Preferred Stock.
In connection with the Offering, the Company has agreed to indemnify the
Underwriters against certain liabilities, including liabilities under the
Securities Act of 1933, as amended.
VALIDITY OF NOTES
The validity of the Notes will be passed upon for the Company by Sullivan &
Cromwell, New York, New York and for the Underwriters by Shearman & Sterling,
New York, New York.
S-32
<PAGE>
================================================================================
NO DEALER, SALESPERSON OR ANY OTHER INDIVIDUAL HAS BEEN AUTHORIZED TO GIVE ANY
INFORMATION OR TO MAKE ANY REPRESENTATIONS OTHER THAN THOSE CONTAINED OR
INCORPORATED BY REFERENCE IN THIS PROSPECTUS SUPPLEMENT OR THE PROSPECTUS IN
CONNECTION WITH THE OFFER MADE BY THIS PROSPECTUS SUPPLEMENT AND THE PROSPECTUS
AND, IF GIVEN OR MADE, SUCH INFORMATION OR REPRESENTATIONS MUST NOT BE RELIED
UPON AS HAVING BEEN AUTHORIZED BY THE COMPANY OR THE UNDERWRITERS. NEITHER THE
DELIVERY OF THIS PROSPECTUS SUPPLEMENT AND THE PROSPECTUS NOR ANY SALE MADE
HEREUNDER OR THEREUNDER SHALL UNDER ANY CIRCUMSTANCES CREATE AN IMPLICATION
THAT THERE HAS NOT BEEN A CHANGE IN THE AFFAIRS OF THE COMPANY SINCE THE DATE
HEREOF. THIS PROSPECTUS SUPPLEMENT AND THE PROSPECTUS DO NOT CONSTITUTE AN
OFFER OR SOLICITATION BY ANYONE IN ANY JURISDICTION IN WHICH SUCH OFFER OR
SOLICITATION IS NOT AUTHORIZED OR IN WHICH THE PERSON MAKING SUCH OFFER OR
SOLICITATION IS NOT QUALIFIED TO DO SO OR TO ANYONE TO WHOM IT IS UNLAWFUL TO
MAKE SUCH OFFER OR SOLICITATION.
----------------
TABLE OF CONTENTS
PROSPECTUS SUPPLEMENT
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Summary.................................................................... S-3
The Company................................................................ S-12
Recent Developments........................................................ S-14
Use of Proceeds............................................................ S-18
Capitalization............................................................. S-19
Condensed Pro Forma Consolidated Financial Information..................... S-21
Description of the Notes................................................... S-28
Underwriting............................................................... S-32
Validity of Notes.......................................................... S-32
PROSPECTUS
Available Information...................................................... 2
Incorporation of Certain Documents by Reference............................ 2
The Company................................................................ 3
Risk Factors............................................................... 3
Use of Proceeds............................................................ 8
Ratio of Earnings to Fixed Charges......................................... 9
Description of Debt Securities............................................. 9
Description of Capital Stock............................................... 23
Description of Depositary Shares........................................... 29
Description of Warrants.................................................... 31
Plan of Distribution....................................................... 32
Validity of the Securities................................................. 33
Experts.................................................................... 33
</TABLE>
================================================================================
================================================================================
$250,000,000
[LOGO] CABLEVISION
CABLEVISION SYSTEMS
CORPORATION
% SENIOR SUBORDINATED
NOTES DUE 2005
----------------
PROSPECTUS SUPPLEMENT
----------------
MERRILL LYNCH & CO.
BEAR, STEARNS & CO. INC.
MORGAN STANLEY & CO.
INCORPORATED
TORONTO DOMINION
SECURITIES (USA) INC.
NOVEMBER , 1995
================================================================================
