<PAGE>
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
(Mark One)
X ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
- --------- EXCHANGE ACT OF 1934 [FEE REQUIRED]
For the Fiscal year ended December 31, 1995
OR
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
- --------- EXCHANGE ACT OF 1934 [NO FEE REQUIRED]
For the transition period from _______ to ________.
Commission File Number: 1-9046
------
Cablevision Systems Corporation
-------------------------------
(Exact name of registrant as specified in its charter)
Delaware 11-2776686
- -------- ----------
(State of other jurisdiction (I.R.S. Employer
incorporation or organization Identification No.)
One Media Crossways, Woodbury, New York 11797
- --------------------------------------- -----
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (516) 364-8450
--------------
Securities registered pursuant to Section 12(b) of the Act:
Title of each class: Class A Common Stock
Name of each exchange on which registered: American Stock Exchange
Securities
Securities registered pursuant to Section 12(g) of the Act: None
Indicate by check mark whether the registrant(1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days. Yes X No
Indicate by a check mark if disclosure of delinquent filers pursuant to Item 405
of Regulation S-K is not contained herein, and will not be contained, to the
best of the Registrant's knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this Form 10-K or any
amendment to this Form 10-K. ____
Aggregate market value of voting stock held by nonaffiliates of the registrant
based on the closing price at which such stock was sold on the American Stock
Exchange on April 1, 1996: $766,312,472.
Number of shares of common stock outstanding as of April 1, 1996:
Class A Common Stock - 14,345,569
Class B Common Stock - 11,572,709
<PAGE>
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
AMENDMENT TO APPLICATION OR REPORT
FILED PURSUANT TO SECTION 12, 13, OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
CABLEVISION SYSTEMS CORPORATION
AMENDMENT NO. 1
The undersigned registrant hereby amends the following items, financial
statements, exhibits or other portions of its Annual Report on Form 10-K for the
fiscal year ended December 31, 1995 as set forth in the pages attached hereto:
Item 10. - Directors and Executive Officers of the Registrant.
Item 11. - Executive Compensation.
Item 12. - Security Ownership of Certain Beneficial Owners and
Management.
Item 13. - Certain Relationships and Related Transactions.
<PAGE>
ITEM 10 - DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
The Board of Directors of the Company met, or acted by written consent in
lieu of meeting, seventeen times in 1995 and presently consists of 13 members,
7 of whom are officers of the Company or its subsidiaries.
BOARD COMMITTEES
The Board of Directors has an Executive Committee, an Audit Committee and a
Compensation Committee. The Board of Directors does not have a nominating
committee.
The Executive Committee consists of Messrs. Tatta, Bell, Lustgarten, Lemle
and James Dolan. The Executive Committee is authorized to exercise, between
meetings of the Board of Directors, all the powers thereof except as limited by
Delaware law and except for certain specified exceptions including authorization
of contracts with officers or directors, significant acquisitions, investments
or guarantees, entering new businesses, the approval of operating budgets or the
issuance of capital stock. The Executive Committee met, or acted by written
consent in lieu of meeting, six times in 1995.
The Audit Committee of the Board of Directors consists of Messrs. Hochman
and Oristano. The functions of the Audit Committee are to review and report to
the Board of Directors with respect to selection and the terms of engagement of
the Company's independent public accountants, and to maintain communications
among the Board of Directors, such independent public accountants and the
Company's internal accounting staff with respect to accounting and audit
procedures, the implementation of recommendations by such independent public
accountants, the adequacy of the Company's internal audit controls and related
matters. The Audit Committee met two times in 1995.
The Compensation Committee consists of Messrs. Charles Dolan, Hochman and
Tatta. The functions of the Compensation Committee are (i) to represent the
Board in discharging its responsibilities with respect to the Company's employee
stock plans and, in doing so, to administer such plans with regard to, among
other things, the determination of eligibility of employees, the granting of
stock, SARs and/or options, and the termination of such plans and (ii) to
determine the appropriate levels of compensation, including salaries, bonuses,
stock and option rights and retirement benefits for members of the Company's
senior management, subject to the approval of the Board of Directors. The
Compensation Committee met, or acted by written consent in lieu of meeting, two
times in 1995.
Each member of the Board of Directors participated in not less than 75% of
the aggregate number of meetings or consents in lieu of meeting of the Board of
Directors and of each Board committee of which he or she was a member, during
1995.
COMPENSATION OF DIRECTORS
Directors who are not employees are paid a fee of $20,000 per year for
services rendered in that capacity, a fee of $1,000 for each meeting attended in
person and a fee of $500 for each meeting participated in by telephone. Members
of the Audit Committee and members of the Compensation Committee who are not
officers of the Company are paid a fee of $1,000 for each meeting attended in
person and a fee of $500 for each meeting participated in by telephone. Non-
employee members of the Board of Directors who serve
<PAGE>
on the Cablevision Employee Benefit Plans Investment Committee receive a fee of
$1,000 for each meeting attended in person and a fee of $500 for each meeting
participated in by telephone.
John Tatta, a non-employee director, has a consulting agreement with the
Company expiring in 1998 which provides for an annual consulting fee of
$485,000, reimbursement of certain expenses and the continuation of certain life
insurance and supplemental pension benefits provided to him when he was an
employee. Pursuant to this consulting agreement, under which Mr. Tatta assists
senior management of the Company in strategic planning and performs special
projects relating to the Company's business, Mr. Tatta is to provide not more
than 50 percent of his professional time to the Company.
The following table sets forth the directors and executive officers of the
Company as of April 1, 1995.
<TABLE>
<CAPTION>
NAME AGE POSITION
- ---- --- --------
<S> <C> <C>
James L. Dolan . . . . . 40 Chief Executive Officer and Director
Charles F. Dolan . . . . 69 Chairman and Director
William J. Bell. . . . . 56 Vice Chairman and Director
Marc A. Lustgarten . . . 49 Vice Chairman and Director
Robert S. Lemle. . . . . 43 Executive Vice President, General Counsel, Secretary
and Director
William J. Quinn . . . . 49 President, Cable Operations
Joseph W. Cece . . . . . 43 Senior Vice President, Strategic Planning
Patrick F. Dolan . . . . 44 Director and Vice President of News
Thomas C. Dolan. . . . . 43 Senior Vice President and Chief Information Officer
Sheila A. Mahony . . . . 54 Senior Vice President and Director
Barry J. O'Leary . . . . 52 Senior Vice President, Finance and Treasurer
Andrew B. Rosengard. . . 38 Senior Vice President and Controller
John Tatta . . . . . . . 75 Chairman of the Executive Committee and Director
Charles D. Ferris. . . . 62 Director
Richard H. Hochman . . . 50 Director
Victor Oristano. . . . . 79 Director
Francis F. Randolph, Jr. 68 Director
Daniel T. Sweeney. . . . 66 Director
</TABLE>
All directors hold office until the annual meeting of stockholders of the
Company next following their election and until their successors are elected and
qualified. All executive officers are elected to serve until the meeting of the
Board of Directors following the next annual meeting of stockholders and until
their successors have been elected and qualified.
Information with respect to the business experience and affiliations of the
directors and executive officers of the Company is set forth below.
James L. Dolan -- Chief Executive Officer of the Company since October 1995
and Director of the Company since 1991. Vice President of the Company from 1987
to September 1992. Chief Executive Officer of Rainbow Programming Holdings,
Inc., a subsidiary of the Company from September 1992 to October 1995.
Director of Advertising Sales from 1985 to September 1992.
2
<PAGE>
Manager of Advertising Sales from 1983 to 1985. James L. Dolan is the son of
Charles F. Dolan and the brother of Patrick F. Dolan and Thomas C. Dolan.
Charles F. Dolan -- Chairman and Director of the Company since 1985. Chief
Executive Officer of the Company from 1985 to October 1995. Founded and acted
as the General Partner of the Company's predecessor from 1973 until 1985.
Established Manhattan Cable Television in 1961 and Home Box Office in 1971.
Charles F. Dolan is the father of James L. Dolan, Patrick F. Dolan and Thomas C.
Dolan.
William J. Bell -- Vice Chairman and director of the Company since 1985.
Joined the Company's predecessor in 1979.
Marc A. Lustgarten -- Director of the Company since 1985. Vice Chairman of
the Company since 1989. Executive Vice President of the Company from 1985 to
1989.
Robert S. Lemle -- Director of the Company since 1988. Executive Vice
President, General Counsel and Secretary since February 1994. Senior Vice
President, General Counsel and Secretary of the Company from 1986 to February
1994 and Vice President, General Counsel and Secretary of the Company from
1985 to 1986.
William J. Quinn -- President, Cable Operations of the Company since
September 1991. Vice President, Cable Operations and General Manager of the
Company's Long Island cable television systems from 1986 to September 1991.
Joseph W. Cece -- Senior Vice President, Strategic Planning of the Company
since February 1996. President and Chief Operating Officer of Cablevision
Lightpath, Inc. from January 1994 to February 1996. Vice President, New
Business of the Company from September 1993 to January 1994. President and
Publisher of T.V. Guide from October 1988 to August 1993.
Patrick F. Dolan -- Director of the Company since August 1991. Vice
President of News since March 1995. News Director of News 12 Long Island, a
subsidiary of the
Thomas C. Dolan -- Senior Vice President and Chief Information Officer of
the Company since February 1996. Vice President and Chief Information Officer
of the Company from 1994 to February 1996. General Manager of the Company's
East End Long Island cable system from 1991 through 1994. Thomas C. Dolan is
the son of Charles F. Dolan and the brother of Patrick F. Dolan and James L.
Dolan.
Sheila A. Mahony -- Director of the Company since 1988. Senior Vice
President of the Company since June 1995. Vice President of Government
Relations and Public Affairs of the Company and its predecessor from 1980 to
June 1995.
Barry J. O'Leary -- Senior Vice President of the Company since 1986, Vice
President of the Company from 1985 to 1986 and Treasurer of the Company
since December 1985. Joined the Company's predecessor in 1984.
Andrew B. Rosengard -- Senior Vice President and Controller of the
Company since February 1996. Senior Vice President, Finance for Rainbow
Programming Holdings, Inc. from 1990 to February 1996.
3
<PAGE>
company, from 1991 to March 1995 and Special Projects Director of News 12 Long
Island from 1986 to 1991. Patrick F. Dolan is the son of Charles F. Dolan and
the brother of James L. Dolan and Thomas C. Dolan.
John Tatta -- Director of the Company since 1985. Chairman of the
Executive Committee of the Company and consultant to the Company since January
1992. President of the Company from 1985 through December 1991. Chief
Operating Officer of the Company from 1985 to 1989 and of the Company's
predecessor since 1973.
Charles D. Ferris -- Director of the Company since 1985. Member of the law
firm of Mintz, Levin, Cohn, Ferris, Glovsky and Popeo, P.C. since 1981.
Chairman of the FCC from October 1977 until April 1981.
Richard H. Hochman -- Director of the Company since February 1986.
Managing Partner of Regent Capital Partners, L.P. since April 1995. Managing
Director of Paine Webber Incorporated from 1990 to April 1995. Mr. Hochman
is also a member of the Board of Directors of Alliance Entertainment
Corporation, Western Publishing Group, Inc. and The Cronos Group.
Victor Oristano -- Director of the Company since 1985. Chairman of Alda
Communications Corp., a holding company which has built and operated cable
television systems in Connecticut, Florida, New Jersey, Pennsylvania and
England since 1975. Mr. Oristano is also a member of the Board of Directors of
People's Choice TV, Corp.
Francis F. Randolph, Jr. -- Director of the Company since 1985. Vice
Chairman of the Company from 1985 to June 1994.
Daniel T. Sweeney -- Director of the Company since 1985. Senior Vice
President of the Company from 1985 through June 1995.
COMPLIANCE WITH SECTION 16(a) OF THE SECURITIES EXCHANGE ACT OF 1934.
Pursuant to regulations promulgated by the Securities and Exchange
Commission, the Company is required to identify, based solely on a review of
reports filed under Section 16(a) of the Securities Exchange Act of 1934, each
person who, at any time during its fiscal year ended December 31, 1995, was a
director, officer or beneficial owner of more than ten percent of the Company's
Class A Common Stock that failed to file on a timely basis any such reports.
Based on such review, the Company is aware of no such failure other than (i) a
report on Form 3 filed by Joseph Cece on March 26, 1996 with respect to his
election as an executive officer of the Company on February 13, 1996, (ii)
reports on Form 3 filed by Thomas Dolan, the DC Thomas Trust, the Dolan
Grandchildren Trust and the Dolan Spouse Trust, on March 22, 1996 with respect
to Thomas Dolan's election as an executive officer of the Company on
February 13, 1996, and (iii) reports on Form 4 filed by Sheila Mahony, Barry
O'Leary, Robert Lemle and Patrick Dolan on April 26, 1996, with respect to
stock awards granted to such individuals under the Company's Amended and
Restated Employee Stock Plan.
ITEM 11 - EXECUTIVE COMPENSATION
SUMMARY COMPENSATION TABLE
The following table shows, for the fiscal years ended December 31, 1995,
1994 and 1993, the cash compensation paid by the Company, and a summary of
certain other compensation paid or accrued for such years, to Charles F. Dolan
and James L. Dolan and to each of the Company's four other most highly
compensated executive officers who were serving as executive officers at the end
of 1995 (the "named executive officers") for service in all capacities with the
Company.
<TABLE>
<CAPTION>
ANNUAL COMPENSATION LONG TERM COMPENSATION AWARDS
------------------- -----------------------------
RESTRICTED ALL OTHER
NAME AND PRINCIPAL STOCK OPTIONS/ COMPEN-
POSITION YEAR SALARY($) BONUS($) AWARDS($) SARS (#) SATION($)(1)
- ---------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
James L. Dolan 1995 360,000 275,000 0 0 5,425
Chief Executive
Officer and Director
Charles F. Dolan 1995 516,667 390,000 0 0 150,796
Chairman and Director 1994 600,000 375,000 0 0 150,861
1993 600,000 375,000 0 0 150,861
William J. Bell 1995 500,000 390,000 0 0 94,092
Vice Chairman 1994 450,000 360,000 0 192,000 100,197
and Director 1993 450,000 340,000 0 0 100,324
Marc A. Lustgarten 1995 500,000 390,000 0 0 52,866
Vice Chairman 1994 450,000 360,000 0 202,000 54,183
and Director 1993 450,000 340,000 0 0 54,182
Robert S. Lemle 1995 425,000 372,000 0 7,600 43,271
Executive Vice President, 1994 330,000 290,000 0 152,000 44,094
General Counsel, Secretary 1993 330,000 250,000 0 0 44,092
and Director
William J. Quinn 1995 360,000 250,000 0 0 53,801
President of Cable Operations 1994 320,000 250,000 0 32,000 55,886
</TABLE>
(1) For 1995, represents the sum of (i) for each individual, $2,250
contributed by the Company on behalf of such individual under the
Company's Money Purchase Pension Plan (the "Pension Plan"), (ii) for each
individual, $25,500 credited to such individual (other than Mr. James
Dolan) on the books of the Company pursuant to the defined contribution
portion of the Company's Supplemental Benefit Plan (the "Supplemental
Plan"), (iii) for each individual, $2,250 in each case contributed by the
Company on behalf of such individual as a basic company contribution under
the Company's
4
<PAGE>
401(k) Plan, (iv) for each individual, the following amounts contributed by
the Company on behalf of such individual as a matching contribution under
the Company's 401(k) Plan: Mr. James Dolan $925; Mr. Charles Dolan $935;
Mr. Bell $792; Mr. Lustgarten $1,202, Mr. Lemle $983, and Mr. Quinn $1,010
and (v) for each individual, the following amounts paid as a premium on
individual life insurance policies purchased by the Company for the
executive officer to replace coverage under the integrated policy
previously provided by the Company: Mr. Charles Dolan $119,861; Mr. Bell
$63,300; Mr. Lustgarten $21,664, Mr. Lemle $12,288 and Mr. Quinn $22,791.
OPTION/SAR GRANTS TABLE
The following table contains certain information with respect to stock
options and SAR's granted to the named executive officers in 1995 under the
Company's Amended and Restated Employee Stock Plan.
<TABLE>
<CAPTION>
OPTION/SAR GRANTS IN LAST FISCAL YEAR
- ----------------------------------------------------------------------------------------------------------------------
POTENTIAL REALIZABLE VALUE
AT ASSUMED ANNUAL RATES
OF STOCK PRICE APPRECIATION
INDIVIDUAL GRANTS FOR OPTION TERM (1)
- ----------------------------------------------------------------------------------------------------------------------
% OF TOTAL
OPTIONS/SARS
GRANTED TO
EMPLOYEES EXERCISE OR MARKET PRICE EXPIR-
OPTION/SARS IN FISCAL BASE PRICE ON DATE OF ATION
GRANTED(#) YEAR 1995 ($/SHARE) GRANT($) DATE 5%($) 10%($)
- ----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
Robert S. Lemle 7,600(2) 8.7% 52.125 52.125 11/02/05 249,130 631,330
</TABLE>
(1) The dollar amounts shown under these columns are the result of calculations
at 5% and 10% rates set by the SEC, and therefore are not intended to
forecast possible future appreciation of the Company's stock price. In all
cases the appreciation is calculated from the award date to the end of the
option term.
(2) Options and SARs granted on November 2, 1995 under the Company's Amended
and Restated Employee Stock Plan. Such options and SARs become exercisable
in annual installments of 33 1/3 percent per year on each of the first
three anniversaries of the grant date. One half of the amounts set forth
are options and one half are SARs. Options and SARs may be independently
exercised. Vesting of options and SARs may be accelerated upon a change
of control of the Company (SEE "EMPLOYEE CONTRACTS AND SEVERANCE AND
CHANGE-IN-CONTROL ARRANGEMENTS" below).
5
<PAGE>
FISCAL YEAR END OPTION/SAR VALUE TABLE
The following table shows certain information with respect to the named
executive officers concerning unexercised stock options and SARs held as of
December 31, 1995. None of the named executive officers exercised stock options
or SARs during 1995.
<TABLE>
<CAPTION>
AGGREGATED OPTION/SAR EXERCISES IN LAST FISCAL YEAR AND
FISCAL YEAR-END OPTION/SAR VALUES
NUMBER OF SECURITIES VALUE OF UNEXERCISED
UNDERLYING UNEXERCISED IN-THE-MONEY OPTIONS/
OPTIONS/SARS AT 12/31/95(#) SARS AT 12/31/95($)
SHARES ACQUIRED
NAME ON EXERCISE (#) VALUE REALIZED($) EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
- ---- --------------- ----------------- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
James L. Dolan 0 0 9,125 27,375 111,781 335,344
Charles F. Dolan 0 0 0 0 0
William J. Bell 0 0 130,500 224,600(1) 3,853,937 1,754,506
Marc A. Lustgarten 0 0 135,500 237,100(2) 4,042,062 1,848,569
Robert S. Lemle 0 0 102,150 185,850(3) 3,020,994 1,396,744
William J. Quinn 0 0 48,550 28,250 1,406,269 407,156
</TABLE>
(1) Includes (i) an aggregate of 150,000 options and SARs that may be exercised
only when the Fair Market Value (as defined) of a share of Class A Common
Stock exceeds the exercise price of $56.50 by at least 20 percent and (ii)
37,500 SARs as to which the distribution of proceeds upon any exercise is
automatically deferred without interest until October 15, 1996.
(2) Includes (i) an aggregate of 160,000 options and SARs that may be exercised
only when the Fair Market Value (as defined) of a share of Class A Common
Stock exceeds the exercise price of $56.50 by at least 20 percent and (ii)
40,000 SARs as to which the distribution of proceeds upon any exercise is
automatically deferred without interest until October 15, 1996.
(3) Includes (i) an aggregate of 120,000 options and SARs that may be exercised
only when the Fair Market Value (as defined) of a share of Class A Common
Stock exceeds the exercise price of $56.50 by at least 20 percent and (ii)
30,000 SARs as to which the distribution of proceeds is automatically
deferred without interest until October 15, 1996.
DEFINED BENEFIT PENSION PLAN
The Company's, nonqualified Supplemental Benefit Plan provides
actuarially-determined pension benefits, among other types of benefits, for 21
employees of the Company who were previously employed by Cablevision Systems
Services Corporation ("CSSC"). CSSC, which is wholly-owned by Charles Dolan,
provided management services to Cablevision Company (the Company's predecessor)
and to certain affiliates of the Company. The Supplemental Plan is designed to
provide these employees, in combination with certain qualified benefit plans
maintained by the Company and certain qualified retirement plans formerly
maintained by CSSC, with the same retirement benefit formulae they would have
enjoyed had they remained employees of CSSC and continued to participate in the
former CSSC qualified plans. The Supplemental Plan provides that the Company
may set aside assets for the purpose of paying benefits under the Supplemental
Plan, but that any such assets remain subject to the claims of general creditors
of the Company.
6
<PAGE>
The defined benefit feature of the Supplemental Plan provides that, upon
attaining normal retirement age (the later of age 65 or the completion of five
years of service), a participant will receive an annual benefit equal to the
lesser of 75% of his or her average compensation (not including bonuses and
overtime) for his or her three most highly compensated years and the maximum
benefit permitted by the Code (the maximum in 1995 is $120,000 for employees who
retire at age 65), reduced by the amount of any benefits paid to such individual
pursuant to the qualified defined benefit plan formerly maintained by CSSC. This
benefit will be reduced proportionately if the participant retires or otherwise
terminates employment before reaching normal retirement age.
The following sets forth the estimated annual benefits payable upon normal
retirement under the defined benefit portion of the Supplemental Plan (reduced
by any retirement benefits paid in connection with the termination of the CSSC
Defined Benefit Pension Plan) to the following persons: Mr. Charles Dolan,
$52,000; Mr. Bell, $92,431, Mr. Lustgarten, $99,996; Mr. Lemle, $105,150 and Mr.
Quinn, $103,720.
EMPLOYMENT CONTRACTS AND SEVERANCE AND CHANGE-IN-CONTROL ARRANGEMENTS
Charles Dolan has an employment agreement with the Company expiring in
January 1997 with automatic renewals for successive one-year terms unless
terminated by either party at least three months prior to the end of the then
existing term. The agreement provides for annual compensation of not less than
$400,000 per year to Mr. Dolan. The agreement also provides for payment to Mr.
Dolan's estate in the event of his death during the term of such agreement, of
an amount equal to the greater of one year's base salary or one-half of the
compensation that would have been payable to Mr. Dolan during the remaining term
of such agreement.
Under the applicable award agreements, the vesting of the bonus award
shares, stock options and SARs granted to employees, including Messrs. James
Dolan, Bell, Lustgarten, Lemle and Quinn, under the Company's Amended and
Restated Employee Stock Plan and its predecessor plans, may be accelerated, in
certain circumstances, upon a "change of control" of the Company. A "change of
control" is defined as the acquisition by any person or group, other than
Charles Dolan or members of his immediate family (or trusts for the benefit of
Charles Dolan or his immediate family) or any employee benefit plan sponsored or
maintained by the Company, of (1) the power to direct the management of
substantially all of the cable television systems then owned by the Company in
the New York City metropolitan area, or (2) after any fiscal year of the Company
in which the Company's cable television systems in the New York City
metropolitan area contributed in the aggregate less than a majority of the net
revenues of the Company and its consolidated subsidiaries, the power to direct
the management of the Company or substantially all of its assets. Upon such a
change in control, the bonus award shares, stock options and SARs may be
converted into either a right to receive an amount of cash based upon the
highest price per share of common stock paid in the transaction resulting in the
change of control, or into a corresponding award with equivalent profit
potential in the surviving entity, at the election of the Compensation
Committee.
The Company adopted as of May 1, 1994, a severance pay plan pursuant to
which an employee whose employment is involuntary terminated (other than for
cause) or who resigns
7
<PAGE>
with the approval of the Company, may receive a benefit in an amount determined
by the Company.
In November 1994, the Company entered into employment agreements with each
of Messrs. Bell, Lustgarten and Lemle. The agreements are each for a three year
term ending December 31, 1997 and may each be extended for additional one-year
periods up until December 31, 2000, unless the Company or the executive notifies
the other of its election not to extend by the preceding October 31. Under
their respective agreements, these executives are to receive annual salaries of
not less then $450,000 in the case of Mr. Bell, $450,000 in the case of Mr.
Lustgarten, and $330,000 in the case of Mr. Lemle. Each agreement also provides
that in the event that the executive leaves the Company involuntarily (other
than for cause), following a change of control (as defined above), or because
such executive's compensation, title or responsibilities are reduced without his
consent, such executive shall be entitled to receive (1) a severance payment of
not less than the salary due for the remainder of the employment agreement or
one year's annual salary (or three times the sum of his annual salary plus his
prior year's annual bonus in the event of a change of control), whatever is
greater, (2) a pro-rated portion of his annual bonus, (3) acceleration of
unvested stock options, conjunctive rights and bonus award shares, (4) three
years payment of life insurance premiums and (5) the right to participate in the
Company's health plan for retired executives.
In February 1996, the Compensation Committee adopted the Cablevision
Systems Corporation Supplemental Life Insurance Premium Payment Plan (the
"Supplemental Life Insurance Premium Payment Plan"). Under the Supplemental
Life Insurance Premium Payment Plan, at all times following a change of control
(as detailed above) the Company would pay on behalf of certain executive
officers of the Company, including Messrs. Charles Dolan, Bell, Lustgarten,
Lemle and Quinn all premiums on life insurance policies purchased by the Company
for such executive officers, up to the aggregate amount of additional premiums,
if any, necessary to fund fully the face amount of such executive officer's
policy as in effect immediately prior to the change of control.
INDEMNIFICATION AGREEMENT
Charles Dolan has entered into an agreement pursuant to which he has agreed
to guarantee the Company's obligation to indemnify its officers and directors to
the fullest extent permitted by Delaware law. In addition, subject to certain
limitations, Mr. Dolan has agreed to indemnify such officers and directors
against any loss or expense such person may incur in connection with any
transaction involving Mr. Dolan or entities affiliated with Mr. Dolan to the
extent indemnification is not provided by the Company. Any payment required to
be made by Mr. Dolan pursuant to such agreement will be reduced by any proceeds
of insurance or reimbursement under any other form of indemnification
reimbursement available to such officer or director.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
As disclosed above, the Compensation Committee of the Board of Directors is
comprised of Messrs. Charles Dolan, Tatta and Hochman. (See "Report of
Compensation Committee," above.) Charles Dolan is the Chairman of the Company
and also serves as an officer of certain of the Company's subsidiaries. Mr.
Tatta, the Chairman of the Company's Executive
8
<PAGE>
Committee and the former President of the Company, is currently a consultant to
the Company. Mr. Hochman is not an employee of the Company. Certain
relationships and transactions between the Company and these individuals or
their affiliates and described under ITEM 13- CERTAIN RELATIONSHIPS AND RELATED
TRANSACTIONS.
ITEM 12 - SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth (i) the number and percent of shares of
Class A and Class B Common Stock owned of record and beneficially as of March
31, 1996 by each director and each executive officer of the Company named in the
summary compensation table below and (ii) the name, address and the number and
percent of shares of Class A and Class B Common Stock owned of record and
beneficially by persons beneficially owning more than five (5%) percent of any
class.
<TABLE>
<CAPTION>
COMBINED VOTING
CLASS A CLASS B CLASS A & CLASS POWER OF CLASS A
COMMON STOCK COMMON STOCK B COMMON STOCK & CLASS B COMMON
BENEFICIALLY BENEFICIALLY BENEFICIALLY STOCK BENEFICIALLY
NAME AND ADDRESS OWNED (1) OWNED (1) (2) OWNED (1) (2) OWNED (1) (2)
- ---------------- ------------ ------------- --------------- ------------------
<S> <C> <C> <C> <C> <C> <C> <C>
Charles F. Dolan (3)(4)(5) 259,306 1.8% 6,346,281 54.8% 6,605,587 25.5% 49.0%
One Media Crossways
Woodbury, NY 11797
Charles F. Dolan --- 1,852,378 16.0% 1,852,378 7.1% 14.2%
1994 Grantor Retained
Annuity Trust (5)
Charles F. Dolan --- 2,147,622 18.6% 2,147,622 8.3% 16.6%
1996 Grantor Retained
Annuity Trust (5)
The Capital Group Companies 1,856,110 12.9% ___ ___ 1,856,110 7.2% 1.4%
Inc. (6)
Capital Research and
Management Company (6)
Capital Guardian Trust Company (6)
333 South Hope Street
Los Angeles, CA 90071
Putnam Investments, Inc. (7) 963,862 6.7% ___ ___ 963,862 3.7% *
Putnam Investment Management, Inc. (7)
One Post Office Square
Boston, MA 02109
The Equitable Companies 1,724,320 12.0% --- --- 1,724,320 6.7% 1.3%
Incorporated (8)
787 Seventh Avenue
New York, NY 10019
Gabelli Funds, Inc. (9) 1,405,926 9.8% ___ ___ 1,405,926 5.4% 1.1%
Mario Gabelli (9)
One Corporate Center
Rye, New York 10580
John Tatta (10) 20,000 * --- --- 20,000 * *
William J. Bell(11)(12) 111,099 * --- --- 111,099 * *
Francis F. Randolph, Jr.(13) 58,500 * --- --- 58,500 * *
Robert S. Lemle (12) 88,678 * --- --- 88,678 * *
Marc Lustgarten(11)(12) 116,813 * --- --- 104,313 * *
Sheila A. Mahony (12) 16,330 * --- --- 16,330 * *
Daniel T. Sweeney(12) 37,061 * --- --- 37,061 * *
Charles D. Ferris 1,000 * --- --- 1,000 * *
Richard H. Hochman 2,094 * --- --- 2,094 * *
Victor Oristano (14) 1,000 * --- --- 1,000 * *
James L. Dolan (12)(15)(24)(25) 10,125 * 745,241 6.4% 755,366 2.9% 5.8%
Patrick F. Dolan (12)(16)(22)(26) 2,425 * 817,410 7.1% 819,835 3.2% 6.3%
William J. Quinn(12) 39,858 * ---- --- 39,858 * *
All executive officers 804,539 5.4% 8,778,618 75.9% 9,583,157 36.3% 67.9%
and directors as a group
(18) persons)(3)(4)(5)(10)
(11)(12)(13)(14)(15)(16)(17)
(22)
(23)(24)(25)(26)(27)(28)
</TABLE>
9
<PAGE>
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C>
Helen A. Dolan(5)(18) 243,425 1.7% 4,000,000 34.6% 4,246,150 16.4% 30.9%
One Media Crossways
Woodbury, NY 11797
Lawrence Dolan(5) - - 4,000,000 34.6% 4,000,000 15.4% 30.7%
100 Corporate Place Suite 150
Chardon, OH 44024
Paul J. Dolan(19)(24)(25)(26)(27)(28) 1,200 * 2,100,052 18.1% 2,101,252 8.1% 16.1%
100 Corporate Place Suite 150
Chardon, OH 44024
Kathleen M. Dolan(19)(25) 1,000 * 716,741 6.2% 717,741 2.8% 5.5%
One Media Crossways
Woodbury, NY 11797
Mary S. Dolan(20)(22) 2,500 * 597,401 5.2% 599,901 2.3% 4.6%
300 So. Riverside Plaza
Suite 1480
Chicago, IL 60606
Deborah A. Dolan(20)(26) 1,000 * 816,741 7.1% 817,741 3.2% 6.3%
One Media Crossways
Woodbury, NY 11797
Matthew J. Dolan(21)(23) 1,500 * 597,401 5.2% 598,901 2.3% 4.6%
231 Main Street
Court House Annex
Chardon, OH 44024
Marianne E. Weber(21)(27)(28) 1,000 * 860,855 7.4% 861,855 3.3% 6.6%
One Media Crossways
Woodbury, NY 11797
Thomas C. Dolan(12)(17)(23)(27)(28) 1,883 * 869,686 7.5% 871,569 3.4% 6.7%
One Media Crossways
Woodbury, NY 11797
John MacPherson (29) 3,000 * 1,893,074 16.4% 1,896,074 7.3% 14.6%
21 Old Town Lane
Halesite, NY 10019
</TABLE>
- -----------------
(1) Beneficial ownership of a security consists of sole or shared voting power
(including the power to vote or direct the vote) and/or sole or shared
investment power (including the power to dispose or direct the disposition)
with respect to the security through any contract, arrangement,
understanding, relationship or otherwise. Unless indicated, beneficial
ownership disclosed consists of sole voting and investment power.
Beneficial ownership of Class A Common Stock is exclusive of the shares of
Class A Common Stock that are issuable upon conversion of shares of Class B
Common Stock.
(2) Class B Common Stock is convertible into Class A Common Stock at the option
of the holder on a share for share basis. The holder of one share of Class
A Common Stock is entitled to one vote at a meeting of stockholders of the
Company, and the holder of one share of Class B Common Stock is entitled to
ten votes at a meeting of stockholders of the Company except in the
election of directors.
(3) Includes 238,475 shares of Class A Common Stock owned by the Dolan Family
Foundation, a New York not-for-profit corporation, the sole members of
which are Charles Dolan and his wife, Helen Dolan. Neither Mr. Dolan
nor Mrs. Dolan has an economic interest in such shares, but Mr. Dolan and
his wife share the ultimate power to vote and dispose of such shares. Under
certain rules of the Securities and Exchange Commission, so long as Mr.
Dolan and his wife retain such powers, each of Mr. Dolan and his wife is
deemed to have beneficial ownership thereof. Also includes 5,000 shares of
Class A Common Stock owned directly by Mrs. Dolan.
(4) Does not include an aggregate of 5,225,928 shares of Class B Common Stock
held by trusts for the benefit of Dolan family interests (the "Dolan Family
Trusts"). The Dolan Family Trusts also own an aggregate of 94,026 shares
of Series C Preferred Stock which, commencing on December 30, 1997, may be
converted by the Company into shares of Class B Common Stock, in lieu of
redeeming such shares for cash.
10
<PAGE>
Mr. Dolan disclaims beneficial ownership of the shares owned by the Dolan
Family Trusts, in that he has neither voting nor investment power with
respect to such shares. The amount shown includes the 1,852,378 shares of
Class B Common Stock held by the Charles F. Dolan 1994 Grantor Retained
Annuity Trust (the "1994 GRA Trust") and the 2,147,622 shares of Class B
Common Stock held by the Charles F. Dolan 1996 Grantor Retained Annuity
Trust (the "1996 GRA Trust", and together with the 1994 GRA Trust, the "GRA
Trusts") described in footnote (5) below.
(5) Includes 1,852,378 shares of Class B common stock by the 1994 GRA Trust and
2,147,622 shares of Class B common stock by the 1996 GRA Trust. The GRA
Trusts were created on December 31, 1994 and February 6, 1996,
respectively by Charles Dolan for estate planning purposes. The GRA
Trusts, through their trustees, have the sole power to vote and dispose of
such shares. The two co-trustees of the GRA Trusts are Helen A. Dolan, the
wife of Charle Dolan, and Lawrence Dolan. For two years, the GRA Trusts
will pay to Charles Dolan, and in the event of his death, to his wife,
Helen Dolan, a certain percentage of the fair market value of the property
initially contributed to the GRA Trusts (the "Annuity"). In addition, the
Trustees may pay to Mr. Dolan (or, if Mr. Dolan dies within such two-year
term, to Mrs. Dolan) such amounts in excess of the Annuity as the Trustees
in their discretion may deem advisable. If Mr. Dolan is living at the
expiration of the term of a GRA Trust, the remainder will pass into
another trust for the benefit of Mrs. Dolan and the descendants of Charles
Dolan. If Mr. Dolan is not living at the expiration of the term of a GRA
Trust, the then principal of the GRA Trust will revert to his estate.
(6) The Company has been informed that certain operating subsidiaries of The
Capital Group Companies, Inc., exercised investment discretion over various
institutional accounts which held as of December 29, 1995, 1,856,110 shares
of Class A common stock. Capital Guardian Trust Company, a bank, and one
of such operating companies, exercised investment discretion over 650,850
of said shares. Capital Research and Management Company, a registered
investment adviser, and Capital International Limited and Capital
International, S.A., other operating subsidiaries, have investment
discretion with respect to 1,144,660, 30,100 and 30,500 shares,
respectively, of the above shares.
(7) The Company has been informed that certain operating subsidiaries of
Putnam Investments, Inc., a wholly owned subsidiary of Marsh & McLennan
Companies, Inc., including Putnam Investment Management Inc., hold an
aggregate of 963,862 shares of Class A Common Stock. Of these, 906,262
are held by Putnam Investment Management, Inc., which holds shared
dispositive and voting power with respect to all such shares. The number
of shares held as indicated includes 600,010 shares resulting from the
assumed conversion of 1,618,600 shares of $2.125 Series I Convertible
Preferred Stock (0.37070 shares of common stock for each share of $2.125
Series I Convertible Preferred Stock).
(8) The Company has been informed that certain operating subsidiaries of The
Equitable Companies Incorporated exercise sole investment discretion over
various institutional accounts which own 1,724,320 shares of Class A Common
Stock, and that such
11
<PAGE>
operating subsidiaries exercise sole voting power with respect to 1,468,380
of such shares and sole dispositive power with respect to all of such
shares.
(9) The Company has been informed that certain operating subsidiaries of
Gabelli Funds, Inc, ("GFI") beneficially held, or exercised investment
discretion over various institutional accounts which beneficially held as
of February 28, 1996, an aggregate of 1,405,926 shares of Class A Common
Stock, including approximately 137,255 shares of Class A Common Stock
that may be obtained upon conversion of shares of the Company's Series I
Cumulative Convertible Exchangeable Preferred Stock held by such entities
on such date. The Company has been informed that Mario Gabelli, the
majority stockholder and Chief Executive Officer of GFI, may be deemed to
have beneficial ownership of the shares of Class A Common Stock
beneficially held by such entities.
(10) Does not include 40,000 shares of Class A Common Stock held by the Tatta
Family Group. The Tatta Family Group is a New York limited partnership,
the general partners of which are six trusts for the benefit of Tatta
family interests (the co-trustees of each of which are Stephen A. Carb,
Esq. and either Deborah T. DeCabia or Lisa T. Crowley, each a daughter of
John Tatta who has been a director since 1985 and was the President of the
Company from 1985 until 1991), and the limited partners of which are trusts
for the benefit of Mr. Tatta and Tatta family interests (the trustee of
each of which is Stephen A. Carb, Esq.). Mr. Tatta, who, as of April 1,
1996, was the holder of 20,000 shares of Class A Common Stock, disclaims
beneficial ownership of the stock beneficially owned by trusts for the
benefit of his family, in that he has neither voting nor investment power
with respect to such shares.
(11) Includes shares owned by children of the individuals listed, which shares
represent less than 1% of the outstanding Class A Common Stock.
(12) Includes shares of Common Stock issuable upon the exercise of options
granted pursuant to the Company's Amended and Restated Employee Stock Plan
or its predecessor plans which on April 1, 1996 were unexercised but were
exercisable within a period of 60 days from that date. These amounts
include the following number of shares for the following individuals: Mr.
James Dolan 9,125; Mr. Bell 110,800; Mr. Lemle 88,467; Mr. Lustgarten
115,800; Ms. Mahony 16,183; Mr. Sweeney 28,300; Mr. Quinn 39,400; Mr.
Patrick Dolan 425 and Mr. Thomas Dolan 833; all executive officers and
directors as a group 447,700. Certain of these options held by Messrs.
Bell, Lustgarten and Lemle may be exercised only when the Fair Market Value
(as defined) of a share of Class A Common Stock exceeds $67.80. These
Options (which are include in the aggregate option amounts set forth above
in this footnote (12) as follows: Mr. Bell 75,000; Mr. Lustgarten 80,000
and Mr. Lemle 60,000.
(13) Includes 500 shares of Class A Common Stock held by The Utopia Fund and 500
shares of Class A Common Stock held by The Sarah Tod Fund. The Utopia Fund
12
<PAGE>
and The Sarah Tod Fund are both private charitable trusts of which Mr.
Randolph is the sole trustee. Mr. Randolph disclaims beneficial ownership
of the shares of Class A Common Stock held by The Utopia Fund and The Sarah
Tod Fund in that neither Mr. Randolph nor any member of his immediate
family has a vested interest in the income or corpus of such trusts.
(14) The shares listed are owned by Alda Investment Company, a Florida
partnership consisting of members of the Oristano family.
(15) Includes 28,500 shares of Class B Common Stock owned by trusts for minor
children as to which James Dolan disclaims beneficial ownership. Also
includes 716,741 shares of Class B Common Stock held by two family trusts
of which James Dolan is a contingent beneficiary and a co-trustee, as to
which James Dolan disclaims beneficial ownership, which shares are also
described in footnotes (24) and (25).
(16) Includes 9,500 shares of Class B Common Stock owned by trust for a minor
child as to which Patrick Dolan disclaims beneficial ownership. Also
includes 807,910 shares of Class B Common Stock held by two family trusts
of which Patrick Dolan is a contingent beneficiary and a co-trustee, as to
which Patrick Dolan disclaims beneficial ownership, which shares are
also described in footnotes (22) and (26).
(17) Includes 869,686 shares of Class B Common Stock held by three family trusts
of which Thomas Dolan is a contingent beneficiary and a co-trustee, as
to which Thomas Dolan disclaims beneficial ownership, which shares are
also described in footnotes (23) (27) and (28).
(18) Includes 238,475 shares of Class A Common Stock owned by the Dolan Family
Foundation, 5,000 shares of Class A Common stock owned directly by Mrs.
Dolan and 4,000,000 shares of Class B Common Stock held by the GRA Trusts
for which Mrs. Dolan is co-trustee, respectively.
(19) Includes 303,116 shares of Class B Common Stock held by the DC Kathleen
Trust, the co-trustees of which are Kathleen Dolan and Paul Dolan.
(20) Includes 303,116 shares of Class B Common Stock held by the DC Deborah
Trust, the co-trustees of which are Deborah Dolan and Mary Dolan.
(21) Includes 294,285 shares of Class B Common Stock held by the DC Marianne
Trust, the co-trustees of which are Marianne Weber and Matthew Dolan.
(22) Includes 294,285 shares of Class B Common Stock held by the DC Patrick
Trust, the co-trustees of which are Patrick Dolan and Mary Dolan.
(23) Includes 303,116 shares of Class B Common Stock held by the DC Thomas
Trust, the co-trustees of which are Thomas Dolan and Matthew Dolan.
(24) Includes 303,116 shares of Class B Common Stock held by the DC James Trust,
the co-trustees of which are James Dolan and Paul Dolan.
13
<PAGE>
(25) Includes 413,625 shares of Class B Common Stock held by the Dolan
Descendants Trust, the co-trustees of which are James Dolan, Kathleen Dolan
and Paul Dolan.
(26) Includes 513,625 shares of Class B Common Stock held by the Dolan Progeny
Trust, the co-trustees of which are Patrick Dolan, Deborah Dolan and Paul
Dolan.
(27) Includes 513,625 shares of Class B Common Stock held by the Dolan
Grandchildren Trust, the co-trustees of which are Thomas Dolan, Marianne
Weber and Paul Dolan.
(28) Includes 52,945 shares of Class B Common Stock held by the Dolan Spouse
Trust, the co-trustees of which are Thomas Dolan, Marianne Weber and
Paul Dolan.
(29) Includes an aggregate of 1,893,074 shares of Class B Common Stock held by
various trusts for the benefit of family members of Charles Dolan's
family for which Mr. MacPherson serves as Trustee and, in such capacity,
exercises sole voting power and dispositive power with respect to such
shares. Such trusts also own an aggregate of 38,724 shares of Series C
Preferred Stock.
The Dolan family interests (other than Charles Dolan and the GRA Trusts)
have agreed with the Company that in the case of any sale or disposition by
Dolan family interests (other than Charles Dolan and the GRA Trusts) of shares
of Class B Common Stock to a holder other than Charles Dolan or Dolan family
interests, the Class B Common Stock will be converted on the basis of one share
of Class A Common Stock for each share of Class B Common Stock.
Charles Dolan and trusts for the benefit of members of his family, by
virtue of their ownership of Class B common stock, are able collectively to
control stockholder decisions on matters in which holders of Class A and Class B
common stock vote together as a class, and to elect 75% of the Company's Board
of Directors.
REGISTRATION RIGHTS. The Company has granted to each of Charles Dolan,
certain Dolan family interests and the Dolan Family Foundation the right to
require the Company to register, at any time prior to the death of both Mr.
Dolan and his wife, the shares of Class A Common Stock held by them provided
that the shares requested to be registered shall have an aggregate market value
of at least $3,000,000. There is no limitation on the number or frequency of
the registrations that such parties can demand pursuant to the preceding
sentence. After the death of both Mr. Dolan and his wife, such parties will be
permitted one additional registration. In addition, the Company has granted
such parties "piggyback" rights pursuant to which they may require the Company
to register their holdings of Class A Common Stock on any registration statement
under the Act with respect to an offering by the Company or any security holder
thereof (other than a registration statement on Form S-8, S-4, S-15 or any
successor form thereto).
The Company has granted Mr. Tatta and certain Tatta family interests the
right to require the Company, on any date, with the consent of Charles Dolan,
his widow or the representative of the estate of Mr. Dolan or his wife, to
register the shares of Class A Common Stock held by them provided that the
shares requested to be registered have an aggregate market value of at least
$3,000,000. After the death of both Charles Dolan and
14
<PAGE>
his wife, such parties will be permitted to demand only one registration. Such
parties have also been granted piggyback registration rights identical to those
described above, provided that in certain instances they receive written consent
of Mr. Dolan, his widow or the representative of the estate of Mr. Dolan or his
wife.
Pursuant to an Agreement of Sale and Assignment, dated as of February 14,
1989 among the A. Jerrold Perenchio Living Trust (the "Perenchio Trust"), the
Company, Mr. Tatta and certain Tatta family interests, the Perenchio Trust was
assigned registration rights with respect to the 270,000 shares of Class A
Common Stock purchased under such agreement. In connection with an option
granted to Mr. Randolph to acquire 840,000 shares of Class A Common Stock
pursuant to the Company's 1986 Nonqualified Stock Option Plan, the Company
granted to Mr. Randolph a limited right to require the Company to register such
shares. Pursuant to these agreements, in 1990 the Company filed a registration
statement on Form S-3 with respect to these shares and has agreed to use its
best efforts to keep such registration statement continuously effective until
such time as all the shares covered thereby have been publicly sold.
The demand and piggyback registration rights described above are subject to
certain limitations which are intended to prevent undue interference with the
Company's ability to distribute securities.
ITEM 13 - CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Cablevision of Boston Limited Partnership, a Massachusetts limited
partnership ("Cablevision Boston"), is engaged in the construction, ownership
and operation of cable television systems in Boston and Brookline,
Massachusetts. On December 15, 1995, the Company acquired the interests in
Cablevision Boston that it did not previously own pursuant to an agreement
entered into by the Company and Cablevision Boston. In connection with the
acquisition, the limited partners (other than the Company) of Cablevision Boston
received 682,454 shares (of which 680,266 shares were issued by December 31,
1995) of the Company's Class A Common Stock and the Company paid approximately
$83 million, (including fees and expenses) primarily with funds borrowed under
the Company's credit agreement, to repay existing Cablevision Boston
indebtedness and to make certain payments to Charles F. Dolan, referred to
below. Upon consummation of the acquisition of Cablevision Boston, all
outstanding subordinated advances made by the Company to Cablevision Boston
became intercompany indebtedness. Mr. Dolan, a former general partner of
Cablevision Boston and the Chairman of the Board of the Company, received 7,357
shares of the Company's Class A Common Stock and approximately $20.8 million in
cash to repay a portion of Cablevision Boston's indebtedness to him in
connection with the acquisition. The Company and its affiliates (other than
Cablevision Boston's former general partners and their affiliates) received
1,041,553 shares of the Company's Class A Common Stock (such shares are
reflected as treasury shares at December 31, 1995) and assumed approximately
$42.9 million of intercompany indebtedness referred to above. As part of the
acquisition of Cablevision Boston, the Company entered into an agreement with
Mr. Dolan with respect to his 0.5% general partnership interest in Cablevision
of Brookline Limited Partnership
15
<PAGE>
("Cablevision Brookline"), a partnership affiliated with Cablevision Boston. The
Company acquired the remaining 99.5% of the partnership interests in Cablevision
Brookline in the acquisition of Cablevision Boston. Under the Agreement, the
Company has a right of first refusal to acquire Mr. Dolan's general partnership
interest and a right to acquire such interest on the earlier to occur of Mr.
Dolan's death or January 1, 2002 at the greater of $10,000 or the book value of
such interest,. Mr. Dolan's estate has the right to put the interest to the
Company at the same price. Additionally, in the event of a change of control of
the Company or Cablevision Brookline, Mr. Dolan will have the right to put his
general partnership interest in Cablevision Brookline to the Company at the
greater of (i) prices declining from $3.9 million for the year ended December
15, 1996 to $10,000 for the year ended December 15, 2002 and (ii) the book value
of such interest.
Cablevision of Chicago ("Cablevision Chicago"), an Illinois limited
partnership in which Charles F. Dolan held, directly or indirectly, an
approximate 1% prepayout and a 32.7% postpayout general partnership interest,
owned cable television systems operating in the suburban Chicago area. The
Company did not have a material ownership interest in Cablevision Chicago but
had loans and advances outstanding to Cablevision Chicago in the amount of $12.3
million (plus accrued interest which the Company had fully reserved). In August
1995, Cablevision Chicago sold its cable television systems to Continental
Cablevision, Inc. and the loans from the Company to Cablevision Chicago,
together with accrued interest reserved by the Company, were repaid in full.
Accordingly, the Company recognized a net gain of approximately $15.3 million
representing the accrued interest which the Company had reserved.
Atlantic Publishing holds a minority equity interest in a company that
publishes a cable television guide which is offered to the Company's subscribers
and to unaffiliated cable television operators. As of December 31, 1995, the
Company had advanced an aggregate of approximately $16.7 million to Atlantic
Publishing, reflecting approximately $1.0 million, $0.6 million and $0.5
million, net paid back during 1995, 1994 and 1993, respectively. The Company
has written off all of its advances to Atlantic Publishing other than $2.4
million. Atlantic Publishing is owned by a trust for certain Dolan family
members; however, the Company has the option to purchase Atlantic Publishing for
an amount equal to the owner's net investment therein plus interest. The
current owner has made only a nominal investment in Atlantic Publishing to date.
In July 1992, the Company acquired (the "CNYC Acquisition") substantially
all of the remaining interests in Cablevision of New York City - Phase I through
Phase V (collectively, "CNYC"), the operator of a cable television system in The
Bronx and parts of Brooklyn, New York City. Prior to the CNYC Acquisition, the
Company had a 15% interest in CNYC and Charles Dolan owned the remaining
interests. Mr. Dolan remains a partner in CNYC with a 1% interest and the right
to certain preferential payments.
Under the agreement between the Company and Mr. Dolan, a new limited
partnership ("CNYC LP") was formed and holds 99% of the partnership interests in
CNYC. The remaining 1% interest in CNYC is owned by the existing corporate
general partner which is a wholly-owned subsidiary of the Company. The Company
owns 99% of the partnership interests in CNYC LP and Mr. Dolan retains a 1%
partnership interest in CNYC LP plus certain preferential rights. Mr. Dolan's
preferential rights entitle him to an annual cash payment (the "Annual Payment")
of 14% multiplied by the outstanding balance of his
16
<PAGE>
"Minimum Payment". The Minimum Payment is $40.0 million and is to be paid to
Mr. Dolan prior to any distributions from CNYC LP to partners other than Mr.
Dolan. In addition, Mr. Dolan has the right, exercisable on December 31, 1997,
and as of the earlier of (1) December 31, 2000 and (2) December 31 of the first
year after 1997 during which CNYC achieves an aggregate of 400,000 subscribers,
to require the Company to purchase (Mr. Dolan's "put") his interest in CNYC LP.
The Company has the right to require Mr. Dolan to sell his interest in CNYC LP
to the Company (the Company's "call") during the three-year period commencing
one year after the expiration of Mr. Dolan's second put. In the event of a put,
Mr. Dolan will be entitled to receive from the Company the Minimum Payment, any
accrued but unpaid Annual Payments, a guaranteed return on certain of his
investments in CNYC LP and a Preferred Payment defined as a payment (not
exceeding $150.0 million) equal to 40% of the Appraised Equity Value (as defined
in the agreement) of CNYC LP after making certain deductions including a
deduction of a 25% compound annual return on approximately 85% of the Company's
investments with respect to the construction of Phases III, IV and V of the CNYC
cable television system and 100% of certain of the Company's other investments
in CNYC, including Mr. Dolan's Annual Payment. In the event the Company
exercises its call, the purchase price will be computed on the same basis as for
a put except that there will be no payment in respect of the Appraised Equity
Value amount.
The Company has the right to make payment of the put or call exercise price
in shares of the Company's Class B Common Stock or, if Mr. Dolan so elects,
Class A Common Stock, except that all Annual Payments must be paid in cash to
the extent permitted under the Company's senior credit agreement. Under the
Company's senior credit agreement, the Company is currently prohibited from
paying the Preferred Payment in cash and, accordingly, without the consent of
the bank lenders, would be required to pay it in shares of the Company's Common
Stock. The Company has agreed to invest in CNYC LP sufficient funds to permit
CNYC LP to make the required Annual Payments to Mr. Dolan and to make certain
equity contributions to CNYC.
The Company's by-laws prohibit the making of further investments in or
advances to entities owned or controlled by Charles Dolan without the approval
of a majority of the members of the Board of Directors who are not employees of
the Company or any of its affiliates.
Richard H. Hochman, a director and a nominee for director, was, until
recently, a Managing Director of PaineWebber Incorporated. PaineWebber
Incorporated has performed investment banking services for entities affiliated
with Charles Dolan.
Charles D. Ferris, a director and a nominee for director, is a partner in
the law firm of Mintz, Levin, Cohn, Ferris, Glovsky and Popeo, P.C. Mintz,
Levin, Cohn, Ferris, Glovsky and Popeo, P.C. provides legal services to the
Company and certain of its subsidiaries.
Conflicts of Interest
- ---------------------
Charles Dolan and certain other principal officers of the Company and
various affiliates of the Company are subject to certain conflicts of interest.
These conflicts include, but are not limited to, the following:
BUSINESS OPPORTUNITIES. Charles Dolan may from time to time be presented
with business opportunities which would be suitable for the Company and
affiliates of the Company in
17
<PAGE>
which Mr. Dolan and his family have varying interests. Mr. Dolan has agreed
that he will own and operate cable television systems only through the Company,
except for cable television systems owned and operated under franchises held by
Mr. Dolan or affiliates of Mr. Dolan as of January 27, 1986, any expansions of
such systems within the same county or an adjacent county, and systems which the
Company elects not to acquire under its right of first refusal. Except for any
such expansions, Mr. Dolan will offer to the Company the opportunity to acquire
or invest in any cable television system or franchise therefor or interest
therein that is offered or available to him or his family interests. If a
majority of the members of the Board of Directors, who are not employees of the
Company or any of its affiliates (the "Independent Directors") rejects such
offer, Mr. Dolan or such family interests may acquire or invest in such cable
television system or franchise therefor or interest therein individually or with
others on terms no more favorable to Mr. Dolan than those offered to the
Company. Mr. Dolan's interests in companies other than the Company, may
conflict with his interest in the Company.
Except for the limitations on the ownership and operation of cable
television systems as described above, Mr. Dolan is not subject to any
contractual limitations with respect to his other business activities and may
engage in programming and other businesses related to cable television. A
significant portion of Mr. Dolan's time may be spent, from time to time, in the
management of such affiliates. Mr. Dolan will devote as much of his time to the
business of the Company as is reasonably required to fulfill the duties of his
office. During 1995, approximately 90% of Mr. Dolan's professional time was
devoted to the business of the Company.
In the event that Charles Dolan or any Dolan family interest decides to
offer (other than to any Dolan family interest or an entity affiliated with Mr.
Dolan) for sale for his, her or its account any of his, her or its ownership
interest in any cable television system or franchise therefor, he, she or it
will (subject to the rights of third parties existing at such time) offer such
interest to the Company. Mr. Dolan or such Dolan family interest may elect to
require that, if the Company accepts such offer, up to one-half of the
consideration for such interest would consist of shares of Class B Common Stock,
which shares will be valued at the prevailing market price of the Class A Common
Stock and the remainder would consist of shares of Class A Common Stock and/or
cash. If a majority of the Independent Directors rejects such offer, Mr. Dolan
or such Dolan family interest may sell such interest to third parties on terms
no more favorable to such third parties than those offered to the Company.
SERVICES RENDERED TO AFFILIATES. Cablevision Systems Services Corporation,
a corporation wholly owned by Charles Dolan ("CSSC") was, during 1995, a party
to management agreements with various affiliates of the Company. The agreements
generally provided for payment of a specified percentage of revenues to CSSC
for management services rendered to such affiliates and the reimbursement of
certain expenses. The employees of CSSC have become employees of the Company.
Accordingly, the Company paid the compensation of such employees and incured
related overhead expenses. To the extent that such employees (other than
Charles Dolan) rendered services to affiliated entities, such entities
reimbursed the Company for an allocable portion of such employees'
compensation and related expenses. The affiliated entities were not otherwise
obligated to reimburse the Company for such employees' compensation and related
expenses.
18
<PAGE>
The executive officers of the Company devote such time to the business of
the Company as is reasonably required to fulfill the duties of their offices.
However, pursuant to management agreements in effect during 1995, certain of
the executive officers of the Company were involved in the management of
affiliated entities, which required significant amounts of their time and
which could have conflicted with their duties to the Company. To the extent
that there were conflicting demands for the services of such executive
officers, such conflicts were resolved in favor of the Company.
CONTRACTS WITH AFFILIATES. The Company also entered into other
arrangements with affiliates for the joint purchase or lease of equipment.
The terms of any such agreements were not fixed pursuant to arm's-length
negotiations but were at least as favorable as arrangements which could be made
with third parties.
As noted above, Atlantic Publishing holds an interest in a company that
publishes a weekly cable television guide that is sold to the Company's
subscribers.
19
<PAGE>
CABLEVISION SYSTEMS CORPORATION
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
CABLEVISION SYSTEMS CORPORATION
Registrant
/S/ Robert S. Lemle
Date: April 30, 1996 ------------------------------------------
By: Robert S. Lemle
Executive Vice President, General Counsel and
Secretary
/S/ Andrew B. Rosengard
Date: April 30, 1996 ------------------------------------------
By: Andrew B. Rosengard
Sr. Vice President and Controller
