<PAGE>
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-K/A
(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, 1997
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 REGISTRANT; STATE (I.R.S. EMPLOYER
NUMBER: OF INCORPORATION IDENTIFICATION NO.)
ADDRESS AND TELEPHONE
NUMBER
1-14764 CABLEVISION SYSTEMS 11-3415180
CORPORATION
(FORMERLY CSC
PARENT CORPORATION)
DELAWARE
ONE MEDIA CROSSWAYS,
WOODBURY, NY 11797
(516) 364-8450
1-9046 CSC HOLDINGS, INC. 11-2776686
(FORMERLY CABLEVISION
SYSTEMS CORPORATION)
DELAWARE
ONE MEDIA CROSSWAYS,
WOODBURY, NY
11797
(516) 364-8450
Securities registered pursuant
to Section 12(b) of the Act:
Title of each class:
CABLEVISION SYSTEMS CORPORATION American Stock Exchange
Class A Common Stock
CSC Holdings, Inc. American Stock Exchange
8-1/2% SERIES I CUMULATIVE
CONVERTIBLE EXCHANGEABLE
PREFERRED STOCK
Securities registered pursuant to
Section 12(g) of the Act: Name of each exchange on which
registered:
NONE
<PAGE>
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 12 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.
Cablevision Systems Corporation Yes X No
----- -----
CSC Holdings, Inc. 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 the 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, 1998: $3,412,394,343
Number of shares of Common Stock outstanding as of April 1, 1998:
Cablevision Systems Corporation Class A Common Stock - 52,676,806
Cablevision Systems Corporation Class B Common Stock - 22,193,418
CSC Holdings, Inc. Common Stock - 1,000
<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
CSC HOLDINGS, INC.
AMENDMENT NO. 1
The undersigned registrants hereby amends the following items,
financial statements, exhibits or other portions of their Annual Report on
Form 10-K for the fiscal year ended December 31, 1997 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 Cablevision Systems Corporation (the
"Company") met, or acted by written consent in lieu of meeting, one time in 1997
and presently consists of 15 members, 9 of whom are officers of the Company or
its subsidiaries. The Board of Directors of CSC Holdings, Inc. met, or acted by
written consent in lieu of meeting, seventeen times in 1997 and has the same
membership as the Company's Board of Directors.
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 committees of the Board of Directors of the Company were
constituted on March 3, 1998. The Executive Committee was reconstituted on April
20, 1998. Meetings of committees of the Board of Directors referred to below
were meetings of the equivalent committees of the Board of Directors of CSC
Holdings, Inc.
The Executive Committee consists of Messrs. James L. Dolan,
John Tatta, William J. Bell, Marc A. Lustgarten, Robert S. Lemle, John C.
Malone and Richard H. Hochman. 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. The Executive Committee met, or acted by written consent in
lieu of meeting, two times in 1997.
The Audit Committee of the Board of Directors consists of Messrs.
Richard H. Hochman and Victor 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, or acted by written
consent in lieu of meeting, two times in 1997.
The Compensation Committee consists of Messrs. Oristano, 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 plan 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. A
subcommittee of the Compensation Committee consisting of Messrs. Oristano and
Hochman, has exclusive authority and responsibility for, and with respect to,
any grants or awards under the Company's employee stock plans to any executive
officer of the Company, and to the Company's other most senior employees. The
Compensation Committee met, or acted by written consent in lieu of meeting,
eight times in 1997.
<PAGE>
In addition to its standing committees, the Board of Directors from
time to time convenes a Special Committee, in accordance with the Company's
By-laws, to consider any proposed investment in, or advance to, a Dolan
Affiliate (as defined below). The Special Committee is comprised of (a) two
directors who are neither (i) officers or employees of the Company, (ii)
officers or directors of the Dolan Affiliate which is a party to the transaction
at issue, nor (iii) directors nominated by TCI, and (b) for so long as TCI is
entitled to nominate two directors to the Company's Board of Directors, two
directors nominated by TCI. A "Dolan Affiliate" is defined in the by-laws to
include Charles F. Dolan, certain members of Charles F. Dolan's family and
certain trusts for members of Charles F. Dolan's family, and any other
corporation, partnership, association or other organization owned or controlled
by Charles F. Dolan, other than any entity which is a subsidiary of the Company.
The Special Committee currently consists of Messrs. John C. Malone, Leo J.
Hindery, Jr., Victor Oristano and Vincent Tese.
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 of the Company or CSC Holdings, Inc. and of each Board
committee of which he or she was a member, during 1997.
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 the Special Committee and members
of the Compensation Committee and the Executive Committee who are not officers
of the Company are paid an annual fee of $2,500 ($5,000 in the case of the
Chairman of each such committee), and 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 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 dated January 27, 1998, expiring in 2001, which continues Mr.
Tatta's consulting arrangement with the Company. The agreement provides for an
annual consulting fee of $350,000, 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.
2
<PAGE>
The following table sets forth the directors and executive officers
of the Company as of April 1, 1998.
NAME AGE POSITION
- - ---- --- --------
Charles F. Dolan....... 71 Chairman and Director
James L. Dolan......... 42 Chief Executive Officer and Director
William J. Bell........ 58 Vice Chairman and Director
Marc A. Lustgarten..... 51 Vice Chairman and Director
Robert S. Lemle........ 45 Executive Vice President, General Counsel,
Secretary and Director
Andrew B. Rosengard.... 40 Executive Vice President, Financial
Planning and Controller
Thomas C. Dolan........ 45 Senior Vice President and Chief
Information Officer and Director
Margaret Albergo....... 44 Senior Vice President, Planning and
Performance
Joseph W. Cece......... 45 Senior Vice President, Strategic Planning
Sheila A. Mahony....... 56 Senior Vice President and Director
Barry J. O'Leary....... 54 Senior Vice President, Finance
and Treasurer
Patrick F. Dolan....... 47 Vice President of News and Director
John Tatta............. 78 Director
Charles D. Ferris...... 64 Director
Richard H. Hochman..... 52 Director
Victor Oristano........ 81 Director
Vincent Tese........... 55 Director
John C. Malone......... 57 Director
Leo J. Hindery, Jr. ... 50 Director
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.
Charles F. Dolan -- Chairman and Director of the Company since
January 12, 1998. Chairman and Director of the Company's subsidiary,
CSC Holdings, Inc. ("CSC Holdings") since 1985. Chief Executive Officer
of CSC Holdings from 1985 to October 1995. Founded and acted as the General
Partner of CSC Holdings' 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.
James L. Dolan -- Chief Executive Officer and Director of the Company
since January 12, 1998. Chief Executive Officer of CSC Holdings since October
1995 and Director of CSC
3
<PAGE>
Holdings since 1991. Chief Executive Officer of Rainbow Media Holdings, Inc.,
a subsidiary of CSC Holdings, from September 1992 to October 1995. Vice
President of CSC Holdings from 1987 to September 1992. James L. Dolan is the
son of Charles F. Dolan and the brother of Patrick F. Dolan and Thomas C. Dolan.
William J. Bell -- Vice Chairman and Director of the Company since
January 12, 1998. Vice Chairman and Director of CSC Holdings since 1985.
Joined CSC Holdings' predecessor in 1979. Mr. Bell is a member of the Board
of Governors of the American Stock Exchange.
Marc A. Lustgarten -- Vice Chairman and Director of the Company since
January 12, 1998. Director of CSC Holdings since 1985. Vice Chairman of CSC
Holdings since 1989. Executive Vice President of CSC Holdings from 1985 to
1989.
Robert S. Lemle - Executive Vice President, General Counsel and
Secretary and Director of the Company since January 12, 1998. Director of CSC
Holdings since 1988. Executive Vice President, General Counsel and Secretary
of CSC Holdings since February 1994. Senior Vice President, General Counsel
and Secretary of CSC Holdings from 1986 to February 1994.
Andrew B. Rosengard - Executive Vice President, Financial Planning and
Controller of the Company since January 12, 1998. Executive Vice President,
Financial Planning and Controller of CSC Holdings since November 1997. Senior
Vice President and Controller of CSC Holdings since February 1996 to November
1997. Senior Vice President, Finance for Rainbow Programming Holdings, Inc.,
a subsidiary of CSC Holdings, from 1990 to February 1996.
Margaret Albergo -- Senior Vice President, Planning and Performance of
the Company since January 12, 1998. Senior Vice President, Planning and
Performance of CSC Holdings since October 1996. Senior Vice President,
Operations of Rainbow Programming Holdings, Inc., a subsidiary of CSC
Holdings, from August 1995 to October 1996. Vice President, Corporate
Development of Rainbow Programming Holdings, Inc. from 1993 until August
1995. Director of Operations and Administration of News 12 Long Island from
1991 to 1993.
Joseph W. Cece -- Senior Vice President, Strategic Planning of the
Company since January 12, 1998. Senior Vice President, Strategic Planning of
CSC Holdings since February 1996. President and Chief Operating Officer of
Cablevision Lightpath, Inc., a subsidiary of CSC Holdings, from January 1994
to February 1996. Vice President, New Business of CSC Holdings from September
1993 to January 1994. President and Publisher of T.V. Guide from October
1988 to August 1993.
Thomas C. Dolan -- Senior Vice President and Chief Information Officer
and Director of the Company since January 12, 1998. Senior Vice President and
Chief Information Officer of CSC Holdings since February 1996. Vice President
and Chief Information Officer of CSC Holdings from July 1994 to February
1996. General Manager of CSC Holdings' East End Long Island cable system from
November 1991 through July 1994. Thomas C. Dolan is the son of
Charles F. Dolan and the brother of Patrick F. Dolan and James L. Dolan.
4
<PAGE>
Sheila A. Mahony - Senior Vice President and Director of the Company
since January 12, 1998. Director of CSC Holdings since 1988. Senior Vice
President of CSC Holdings since June 1995. Vice President of Government
Relations and Public Affairs of CSC Holdings and its predecessor from 1980 to
June 1995.
Barry J. O'Leary -- Senior Vice President, Finance and Treasurer of the
Company since January 12, 1998. Senior Vice President, Finance CSC Holdings
since 1986. Vice President of CSC Holdings from 1985 to 1986 and Treasurer of
CSC Holdings since December 1985. Prior to joining CSC Holdings' predecessor
in 1984, Mr. O'Leary spent sixteen years with Toronto-Dominion Bank.
Patrick F. Dolan - Director of the Company since January 12, 1998.
Director of CSC Holdings since August 1991. Vice President of News since
September 1995. News Director of News 12 Long Island, a subsidiary of CSC
Holdings, from December 1991 to September 1995. 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 January 12, 1998. Director
of CSC Holdings since 1985. Consultant to CSC Holdings since January 1992.
President of CSC Holdings from 1985 through December 1991. Chief Operating
Officer of CSC Holdings from 1985 to 1989.
Charles D. Ferris -- Director of the Company since January 12, 1998.
Director of CSC Holdings 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 January 12, 1998.
Director of CSC Holdings since 1986. Managing Partner of Regent Capital
Partners, L.P. since April 1995. Managing Director of PaineWebber
Incorporated from 1990 to April 1995. Mr. Hochman is also a director of
Talton Holding, Inc. and R.A.B. Enterprises, Inc.
Victor Oristano -- Director of the Company since January 12, 1998.
Director of CSC Holdings since 1985. Chairman of Alda Limited Partners, a
holding company which has built and operated cable television systems in
Connecticut, Florida, New Jersey, Pennsylvania and England since 1966. Mr.
Oristano is also a member of the Board of Directors of People's Choice TV,
Corp.
Vincent Tese -- Director of the Company since January 12, 1998.
Director of CSC Holdings since July 1996. Director of The Bear Stearns
Companies, Inc. since December 1994. Chairman of Wireless Cable
International, Inc. since July 1995. Chairman of Cross Country Wireless from
December 1994 to July 1995. Mr. Tese served as Chairman and Chief Executive
Officer of the New York State Urban Development Corporation from 1985 to
1987, and as Director of Economic Development for New York State from 1987 to
December 1994. Mr. Tese also serves on the Board of Directors of Quintel
Entertainment, Inc., Custodial Trust Company and Bowne & Co., Inc.
5
<PAGE>
John C. Malone - Director of the Company and of CSC Holdings since
March 4, 1998. Director of Tele-Communications, Inc. since June 1994.
Chairman of the Board of Tele-Communications, Inc. from November 1996. Chief
Executive Officer of Tele-Communications, Inc. from January 1994. President
of Tele-Communications, Inc. from January 1994 through March 1997. Chief
Executive Officer of TCI Communications, Inc. from March 1992 to October 1994
and President of TCI Communications, Inc. from 1973 to October 1994. Chairman
of the Board of Directors of TCI International, Inc. since May 1995. Director
of TCI Pacific Communications, Inc. since July 1996. Director of BET
Holdings, Inc., The Bank of New York and TCI Satellite Entertainment, Inc.
Director of TCI Communications, Inc. since 1973.
Leo J. Hindery, Jr. -- Director of the Company and of CSC Holdings
since March 4, 1998. Director of Tele-Communications, Inc. since May 1997.
President and Chief Operating Officer of Tele-Communications, Inc. from March
1997. President, Chief Executive Officer and Director of TCI Communications,
Inc. since March 1997. Founder, Managing General Partner and Chief Executive
Officer of InterMedia Partners and its affiliated entities since 1988 and a
Director and Chairman of the Board of TCI Music, Inc. and director of TCI
Pacific Communications, Inc.
ITEM 11 - EXECUTIVE COMPENSATION
SUMMARY COMPENSATION TABLE
The following table shows, for the fiscal years ended December 31,
1997, 1996 and 1995, the cash compensation paid by the Company, and a summary
of certain other compensation paid or accrued for such years, to Charles F.
Dolan, to 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 1997 (the "named executive officers") for service in all capacities
with the Company.
<TABLE>
<CAPTION>
AWARD COMPENSATION LONG TERM
------------------ COMPENSATION
AWARDS
------------- ALL OTHER
NAME AND PRINCIPAL OPTIONS/ COMPEN-
POSITION YEAR SALARY($) BONUS($) SARS(#) SATION($)(1)
<S> <C> <C> <C> <C> <C>
Charles F. Dolan 1997 525,000 525,000 0 315,962
Chairman and 1996 525,000 225,000 0 150,934
Director 1995 516,667 390,000 0 150,796
James L .Dolan 1997 550,000 2,750,000 0 213,684
Chief Executive 1996 555,206 225,000 0 43,188
Officer and Director 1995 360,000 275,000 0 5,425
William J. Bell 1997 525,000 2,150,000 350,000 117,275
Vice Chairman and 1996 500,000 330,000 0 100,239
6
<PAGE>
Director 1995 500,000 390,000 0 94,092
Marc A. Lustgarten 1997 525,000 2,250,000 360,000 64,386
Vice Chairman and 1996 525,000 330,000 0 58,635
Director 1995 500,000 390,000 0 52,866
Robert S. Lemle 1997 475,000 1,250,000 287,600 51,753
Executive Vice 1996 475,000 315,000 0 49,999
President, General 1995 425,000 372,000 15,200 43,271
Counsel, Secretary
and Director
Andrew Rosengard 1997 348,154 800,000 70,000 15,588
Executive Vice 1996 278,876 226,250 0 0
President, Financial 1995 214,389 140,000 0 0
Planning and
Controller
</TABLE>
(1) For 1997, represents the sum of (i) for each individual, $2,400
contributed by CSC Holdings on behalf of such individual under CSC
Holdings' Money Purchase Pension Plan (the "Pension Plan"), (ii) for
each individual, $25,200 credited to such individual (other than Mr.
James Dolan and Mr. Rosengard) on the books of CSC Holdings pursuant to
the defined contribution portion of CSC Holdings' Supplemental Benefit
Plan (the "Supplemental Plan"), (iii) for each individual, $2,400
contributed by CSC Holdings on behalf of such individual as a basic
company contribution under CSC Holdings' 401(k) Plan, (iv) for each
individual, the following amounts contributed by CSC Holdings on behalf
of such individual as a matching contribution under CSC Holdings' 401(k)
Plan: Mr. Charles Dolan $1,063, Mr. James Dolan $952; Mr. Bell $875; Mr.
Lustgarten $1,063; Mr. Lemle $792 and Mr. Rosengard $713, (v) for each
individual, the following amounts paid as a premium on individual life
insurance policies purchased by CSC Holdings for the executive officer
to replace coverage under the integrated policy previously provided by
CSC Holdings: Mr. Charles Dolan $164,983; Mr. James Dolan $39,847; Mr.
Bell $86,400; Mr. Lustgarten $33,323; Mr. Lemle $20,961 and Mr.
Rosengard $10,075, and (vi) for Mr. Charles Dolan and Mr. James Dolan,
$119,916 and $168,085, respectively, representing the value of personal
use of CSC Holdings' aircraft, determined in accordance with the
Standard Industry Fare Level as promulgated by the Internal Revenue
Service.
7
<PAGE>
OPTION/SAR GRANTS TABLE
The following table contains certain information with respect to stock
options and SAR's granted to the named executive officers in 1997 under CSC
Holdings' First Amended and Restated 1996 Employee Stock Plan.
<TABLE>
<CAPTION>
OPTION/SAR GRANTS IN LAST FISCAL YEAR
-----------------------------------------------------------------------
POTENTIAL REALIZABLE VALUE
AT ASSUMED ANNUAL RATES
OF STOCK PRICE APPRECIATION
INDIVIDUAL GRANTS FOR OPTION TERM (1)
-----------------------------------------------------------------------
-----------------------------------------------------------------------
% OF TOTAL
OPTIONS/SARS
GRANTED TO
EMPLOYEES EXERCISE OR MARKET PRICE EXPIR-
OPTION/SARS IN FISCAL BASE PRICE ON DATE OF ATION
GRANTED(#) YEAR 1997 ($/SHARE) GRANT($) DATE 5%($) 10%($)
- - ---------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
Charles F. Dolan -- -- -- -- -- -- --
James L. Dolan -- -- -- -- -- -- --
William Bell 350,000(2)(3) 15.8% 14.25 14.25 04/17/07 3,136,000 7,948,500
Marc Lustgarten 360,000(2)(4) 16.2% 14.25 14.25 04/17/07 3,225,600 8,175,600
Robert S. Lemle 287,600(2)(5) 13.6% 14.25 14.25 04/17/07 2,576,896 6,531,396
Andrew Rosengard 70,000(2)(6) 3.2% 14.25 14.25 04/17/07 627,200 1,589,700
</TABLE>
(1) The dollar amounts 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 April 17, 1997 under CSC Holdings'
Amended and Restated 1996 Employee Stock Plan and assumed by the
Company under CSC Parent Corporation's Employee Stock Plan. Such
options and SARs become exercisable in annual installments of 33 1/3
percent per year, beginning on December 31, 1997 and on each of the
first two anniversaries of that 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).
8
<PAGE>
(3) Includes 75,000 options and 75,000 SARs granted in replacement of 150,000
options and 150,000 SARs granted on November 18, 1994 at an exercise
price of $28.25 (adjusted for the Stock Split).
(4) Includes 80,000 options and 80,000 SARs granted in replacement of 160,000
options and 160,000 SARs granted on November 18, 1994 at an exercise
price of $28.25 (adjusted for the Stock Split).
(5) Includes 63,800 options and 63,800 SARs granted in replacement of
120,000 options and 120,000 SARs granted on November 18, 1994 at an
exercise price of $28.25 (adjusted for Stock Split), and 7,600
options and 7,600 SARs granted on November 2, 1995 at an exercise
price of $26.0625 (adjusted for the Stock Split).
(6) Includes 35,000 options and 35,000 SARs granted in replacement of 27,500
options and 27,500 SARs granted on May 1, 1996 at an exercise price of
$24.75 (adjusted for the Stock Split).
AGGREGATED OPTION/SAR EXERCISES AND FISCAL YEAR END OPTION/SAR VALUE TABLE
The following table shows certain information with respect to the
named executive officers concerning (i) each exercise of stock options or SARs
during 1997, and (ii) unexercised stock options and SARs held as of December 31,
1997.
<TABLE>
<CAPTION>
AGGREGATED OPTION/SAR EXERCISES IN LAST FISCAL YEAR AND
FISCAL YEAR-END OPTION/SAR VALUES
- - --------------------------------------------------------------------------------------------------------------------
Number of Securities
Underlying Unexercised Value of Unexercised
Options/SARs at In-The-Money Options/
Shares 12/31/97 (#) SARs at 12/31/97 ($)
Acquired On Value ------------------------------- -------------------------------
Name Exercise (#) Realized ($) Exercisable / Unexercisable Exercisable / Unexercisable
- - --------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Charles F. Dolan -- -- -- -- -- --
James L. Dolan -- -- 54,750 18,250 1,471,406 490,469
William J. Bell 75,000 (1) 1,047,656 280,864 254,336 9,151,202 8,410,298
Marc A. Lustgarten 75,000 (1) 1,047,656 280,864 261,004 9,263,240 8,634,509
Robert S. Lemle 52,500 (1) 718,125 245,796 212,804 7,921,681 6,987,669
Andrew Rosengard 37,532 (2) 691,339 23,332 55,236 784,538 1,790,464
- - --------------------------------------------------------------------------------------------------------------------
</TABLE>
(1) Exercise of SARs granted under CSC Holdings, Inc. Amended and Restated
Employee Stock Plan.
(2) Exercise of stock options and SARs granted under CSC Holdings, Inc.
Amended and Restated Employee Stock Plan and CSC Holdings, Inc. First
Amended and Restated 1996 Employee Stock Plan.
9
<PAGE>
LONG-TERM INCENTIVE PLAN AWARDS TABLE
The following table contains certain information with respect to
awards granted to the named executive officers in 1997 under CSC Holdings 1997
Long-Term Incentive Plan.
<TABLE>
<CAPTION>
LONG-TERM INCENTIVE PLANS - AWARDS IN LAST FISCAL YEAR
Estimated Future Payouts under Non-Stock
Price-Based Plans
- - -----------------------------------------------------------------------------------------------------
Performance
Number of or Other
Shares, units Period Until
or other Maturation Threshold Target Maximum
NAME Rights(#) or Payout ($) ($) ($)
- - -----------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Charles F. Dolan N/A N/A -- -- --
- - -----------------------------------------------------------------------------------------------------
James Dolan (1) N/A 12-36 mos. -- 4,000,000 --
- - -----------------------------------------------------------------------------------------------------
Marc Lustgarten (2) N/A 12-36 mos. -- 2,250,000 --
- - -----------------------------------------------------------------------------------------------------
William Bell (2) N/A 12-36 mos. -- 2,000,000 --
- - -----------------------------------------------------------------------------------------------------
Robert Lemle (2) N/A 12-36 mos. -- 1,650,000 --
- - -----------------------------------------------------------------------------------------------------
Andrew Rosengard (3) N/A 12-72 mos. -- 1,200,000 --
- - -----------------------------------------------------------------------------------------------------
</TABLE>
(1) Such individual received a contingent cash award, granted as of
January 1, 1997, under the Company's 1997 Long-Term Incentive Plan,
in the amount indicated. The indicated amount is payable in full
upon the attainment of specified performance objectives, including
(a) incremental cash flow in respect of calendar years 1997, 1998
and 1999 in excess of specified targets, and (b) private market
value of the Company at the end of any calendar quarter starting
with the fourth quarter of 1997, in excess of specified targets.
(2) Each individual received a contingent cash award, granted as of
January 1, 1997, under the Company's 1997 Long-Term Incentive Plan,
in the amount indicated. These awards were granted in conjunction
with certain stock option awards and SARs granted during 1997, as
described in the Option/SAR Grants Table. The indicated amount is
payable in full upon the attainment of specified "minimum
performance objectives" or of specified "exemplary performance
objectives." If the recipient elects to receive payment of the award
following attainment of the minimum performance objectives but prior
to the attainment of the exemplary performance objectives, then the
related stock options and SARs are canceled. Minimum performance
objectives include growth in cash flows and revenues in respect of
calendar years 1997, 1998 and 1999 in excess of specified targets.
Exemplary performance objectives include (a) incremental cash flows
in respect of calendar years 1997, 1998 and 1999 in excess of
specified targets, and (b) private market
10
<PAGE>
value of the Company at the end of any calendar quarter starting
with the fourth quarter of 1997, in excess of specified targets.
(3) The amount indicated includes (a) a $700,000 contingent cash award
payable upon the terms described in footnote (2) above, and (b) a
$500,000 cash award, increased annually through and including
December 31, 2003 by an amount equal to 20% of the recipient's base
salary earned during such calendar year, and accruing interest at
6.75% per annum. The award described in (b) above, is payable 50% on
January 1, 2002 and 50% on January 1, 2004, so long as the recipient
has remained in the continuous employ of the Company through such
date.
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 or its subsidiaries 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.
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 1997 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, $144,463; Mr. James Dolan, $0; Mr. Bell, $101,765, Mr.
Lustgarten, $109,330; Mr. Lemle, $114,484 and Mr. Rosengard $0.
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<PAGE>
EMPLOYMENT CONTRACTS AND SEVERANCE AND CHANGE-IN-CONTROL ARRANGEMENTS
Charles Dolan has an employment agreement with the Company expiring
in January 1999 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 Rosengard, 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 with the approval of the Company, may receive a benefit in
an amount determined by the Company.
In March 1998, the Company entered into employment agreements with
each of Messrs. Bell, Lustgarten and Lemle, which agreements replaced previous
employment agreements. The agreements are each for a three year term ending
December 31, 2000 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 $700,000 in the case of Mr. Bell, $750,000 in the case of Mr.
Lustgarten, and $525,000 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
12
<PAGE>
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) an annual bonus of
not less than 100% of annual salary for Messrs. Bell and Lustgarten and 65%
of annual salary for Mr. Lemle, pro rated for the months worked during such
year, (3) the right to receive payment of all bonus shares and deferred
compensation awards, and to exercise all stock option and conjunctive rights
awards for the remainder of the term of the agreement, or a period of 180
days, if greater, whether or not such awards are due or exercisable at the
time, (4) the right to receive payment of all outstanding long-term
performance awards, at such time, if any, as such awards shall be earned (as
if such employee remained in the continuous employ of the Company through the
payment date), (5) three years payment of life insurance premiums and (6) 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. James Dolan, Bell, Lustgarten, Lemle and
Rosengard 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.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
As disclosed above, the Compensation Committee of the Board of
Directors is comprised of Messrs. Oristano, Tatta and Hochman. (See "Report
of Compensation Committee," above.) Mr. Tatta, the Chairman of the Company's
Executive Committee and the former President of the Company, is currently a
consultant to the Company. Mr. Oristano and Mr. Hochman are not employees of
the Company. Certain relationships and transactions between the Company and
these individuals of their affiliates is described under ITEM 13 - CERTAIN
RELATIONSHIPS AND RELATED TRANSACTIONS.
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<PAGE>
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, 1998 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.
<PAGE>
<TABLE>
<CAPTION>
Combined Voting
Power of
Class A Class B Class A & Class B Class A & Class B
Common Stock Common Stock Common Stock Common Stock
Beneficially Beneficially Beneficially Beneficially
Name and Address Owned (1) Owned (1)(2) Owned (1)(2) Owned (1)(2)
---------------- --------- ------------- ------------- -------------
<S> <C> <C> <C> <C>
Charles F. Dolan (3) (4)(5)
One Media Crossways
Woodbury, NY 11797 797,616 1.5% 12,198,562 55.0% 12,996,178 17.4% 44.7%
Charles F. Dolan
1997 Grantor Retained
Annuity Trust ( 5 ) -- -- 2,267,012 3.0% 2,267,012 3.0% 8.3%
The Capital Group
Companies, Inc. (6)
Capital Research and
Management Company (6)
Capital Guardian Trust Company (6)
333 South Hope Street
Los Angeles, CA 90071 4,812,820 9.1% - - 4,812,820 6.4% 1.8%
Gabelli Funds, Inc. (7)
GAMCO Investors, Inc. (7)
One Corporate Center
Rye, NY 10580 7,982,850 15.2% - - 7,982,850 10.7% 2.9%
Harris Associates L.P. (8)
Harris Associates Inc. (8)
Two Lasalle Street, Suite 500
Chicago, IL 60602-3790 2,899,000 5.5% 2,899,000 3.9% 1.1%
Tele-Communications, Inc. (9)
Country Cable III, Inc. (9)
TCI CSC II, Inc. (9)
5619 DTC Parkway
Englewood, CO 80111 24,991,286 47.4% - - 24,991,286 33.4% 9.1%
14
<PAGE>
John Tatta (10) 40,000 * - - 40,000 * *
William J. Bell (11) (12) 151,530 * - - 151,530 * *
Robert S. Lemle (11) (12) 133,780 * - - 133,780 * *
Marc Lustgarten (11) (12) 154,624 * - - 154,624 * *
Sheila A. Mahony (12) 39,758 * - - 39,758 * *
Charles D. Ferris (13) 19,000 * - - 19,000 * *
Richard H. Hochman (13) 21,188 * - - 21,188 * *
Victor Oristano (13) (14) 19,000 * - - 19,000 * *
James L. Dolan (12) (15) (23) (24) 38,500 * 1,490,482 6.7% 1,528,982 2.0% 5.4%
Patrick F. Dolan (12) (16)(21)(25) 11,750 * 1,634,820 7.4% 1,646,570 2.2% 6.0%
Thomas C. Dolan (12)(17)(22)(26)(27) 11,800 * 1,287,372 1.7% 1,299,172 1.7% 4.7%
Vincent Tese (13) 6,000 * - - 6,000 * *
Leo J. Hindery, Jr. (9) - * - - - * *
John C. Malone (9) - * - - * *
All executive officers
and directors as a group
(19 persons)(3)(4)(5)(9)(10)(11)
(12)(13)(14)(15)(16)(17)(21)
(22) (23)(24)(25)(26)(27) 1,526,202 2.9% 16,611,236 74.8% 18,137,438 24.2% 61.0%
Paul J. Dolan(18)(23)(24)
(25)(26)(27)
100 Corporate Place Suite 150
Chardon, OH 44024 3,700 * 3,748,104 16.9% 3,750,304 5.0% 13.6%
Kathleen M. Dolan(18)(25)(28)
One Media Crossways
Woodbury, NY 11797 272,000 * 1,433,482 6.5 1,469,482 2.1% 5.3%
Mary S. Dolan(19)(21)
300 So. Riverside Plaza
Suite 1480
Chicago, IL 60606 3,000 * 1,194,802 5.4% 1,196,302 1.6% 4.4%
Deborah A. Dolan(19)(25)(28)
One Media Crossways
Woodbury, NY 11797 272,000 * 1,633,482 7.4% 1,769,482 2.4% 6.0%
Matthew J. Dolan(20) (22)
231 Main Street
Court House Annex
Chardon, OH 44024 3000 * 1,194,802 5.4% 1,196,302 1.6% 4.4%
Marianne E. Weber(20)(26)(27)(28)
One Media Crossways
Woodbury, NY 11797 272,000 * 1,269,710 5.7% 1,405,710 1.9% 4.7%
John MacPherson (29)
21 Old Town Lane
Halesite, NY 10019 76,000 * 3,780,148 17.0% 3,823,148 5.1% 13.8%
</TABLE>
15
<PAGE>
(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 369,660 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 A. 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 10,000 shares of Class A
Common Stock owned directly by Mrs. Dolan. The number of shares held
as indicated includes 135,676 shares resulting from the assumed
conversion of 183,000 shares of 8.5% Series I Convertible
Exchangeable Preferred Stock ("Series I Preferred Stock") (0.7414
shares of Common Stock for each share of Series I Preferred Stock).
(4) Does not include an aggregate 9,917,856 shares of Class B Common
Stock held by trusts for the benefit of Dolan family interests (the
"Dolan Family Trusts"). 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.
(5) Includes 2,267,012 shares of Class B Common Stock by the Charles F.
Dolan 1997 Grantor Retained Annuity Trust (the "GRAT"). The GRAT was
established on April 30, 1997 by Charles F. Dolan for estate planning
purposes. The GRAT, through its trustees, has the sole power to vote
and dispose of such shares. The two co-trustees of the trust are
Charles F. Dolan and his wife, Helen A. Dolan. For three years, the
GRAT will pay to Charles F. Dolan, and in the event of his death, to
Mrs. Dolan, a certain percentage of the fair market value of the
property initially contributed to the GRAT (the "Annuity"). If Mr.
Dolan is living at the expiration of the term of the GRAT, the
remainder will pass into another trust for the benefit of Mrs. Dolan
and the descendants of Charles F. Dolan. If Mr. Dolan is not living at
the expiration of the term of the GRAT, the then principal of the GRAT
will pass to his estate or to Mrs. Dolan.
16
<PAGE>
(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 March 31, 1998,
4,812,820 shares of Class A Common Stock. Capital Research and
Management Company, a registered investment adviser has investment
discretion with respect to 3,003,460 of such shares. The number of
shares held as indicated includes 877,820 shares resulting from the
assumed conversion of 1,184,000 shares of Series I Preferred Stock.
(7) The Company has been informed that certain operating subsidiaries of
Gabelli Funds, Inc. ("GFI") beneficially held, or exercise
investment discretion over various institutional accounts which
beneficially held as of March 27, 1998, an aggregate of 7,692,060
shares of Class A Common Stock, including approximately 32,572
shares of Class A Common Stock that may be obtained upon conversion
of shares of Series I Preferred Stock held by such entities on such
date. The Company has been informed that GAMCO Investors, Inc., an
investment advisor registered under the Investment Advisors Act of
1940 and a wholly-owned subsidiary of GFI, held sole dispositive
power over 6,177,402 of such shares and sole voting power over
5,988,802 of such shares.
(8) The Company has been informed that Harris Associates L.P. and Harris
Associates, Inc. have shown voting power of 2,899,000 shares of
Class A Common Stock, sole dispositive power over 58,400 shares of
Class A Common Stock, and shared dispositive power over 2,840,600
shares of Class A Common Stock (in each case, after giving effect to
the Stock Split).
(9) The Company has been informed that TCI beneficially owns, through
subsidiaries, an aggregate of 24,991,286 shares of Class A Common
Stock on March 2 ,1998. These shares include 8,959,012 shares held
directly by Country Cable III, Inc. and 13,397,096 shares held
directly by TCI CSC II, Inc. Each of Country Cable III, Inc. and TCI
CSC II, Inc. is an indirect wholly owned subsidiary of TCI. TCI or
its subsidiaries have sole voting and investment power with respect
to all such shares. TCI is a party to a Stockholders Agreement with
the Company and holders of Class B Common Stock, which agreement,
among other things, requires the Class B Stockholders to vote to
elect for director, up to two persons nominated by TCI, and requires
TCI to vote its shares of Class A Common Stock in proportion to the
vote of the other, non-affiliated Class A Stockholders, on certain
matters. Each of Messrs. John Malone and Leo Hindery, each a
Director and Nominee for Director of the Company is an officer and a
director of TCI. Each of Messrs. Malone and Hindery disclaim any
beneficial ownership interest in these shares.
(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
17
<PAGE>
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 March
31, 1998, was the holder of 40,000 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 Class A Common Stock issuable upon the exercise of
options granted pursuant to CSC Holdings' First Amended and Restated
1996 Employee Stock Plan or its predecessor plans which on April 1,
1998 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 36,500; Mr. Bell
150,932; Mr. Lemle 133,332; Mr. Lustgarten 152,598; Ms. Mahony 39,466;
Mr. Patrick Dolan 7,950 and Mr. Thomas Dolan 9,800; all executive
officers and directors as a group 688,102.
(13) Includes shares of Class A Common Stock issuable upon the exercise of
options granted pursuant to the 1996 Stock Option Plan for Non-Employee
Directors, which on April 1, 1998 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. Ferris
17,000; Mr. Hochman 17,000; Mr. Oristano 17,000; Mr. Tese 6,000.
(14) The shares listed are owned by the Oristano Foundation, a charitable
trust the trustees of which are members of the Oristano family.
(15) Includes 57,000 shares of Class B Common Stock owned by trusts for
minor children as to which James L. Dolan disclaims beneficial
ownership. Also includes 1,433,482 shares of Class B Common Stock
held by two family trusts of which James L. Dolan is a contingent
beneficiary and a co-trustee, as to which James L. Dolan disclaims
beneficial ownership, which shares are also described in footnotes
(23) and (24).
(16) Includes 19,000 shares of Class B Common Stock owned by trust for a
minor child as to which Patrick F. Dolan disclaims beneficial
ownership. Also includes 1,615,820 shares of Class B Common Stock
held by two family trusts of which Patrick F. Dolan is a contingent
beneficiary and a co-trustee, as to which Patrick F. Dolan disclaims
beneficial ownership, which shares are also described in footnotes
(21) and (25).
(17) Includes 663,686 shares of Class B Common Stock held by three family
trusts of which Thomas C. Dolan is a contingent beneficiary and a
co-trustee, as to which Thomas C. Dolan disclaims beneficial
ownership, which shares are also described in footnotes (21) (25)
and (26).
(18) Includes 606,232 shares of Class B Common Stock held by the DC Kathleen
Trust, the co-trustees of which are Kathleen Dolan and Paul Dolan.
18
<PAGE>
(19) Includes 606,232 shares of Class B Common Stock held by the DC Deborah
Trust, the co-trustees of which are Deborah Dolan and Mary Dolan.
(20) Includes 588,570 shares of Class B Common Stock held by the DC Marianne
Trust, the co-trustees of which are Marianne E. Weber and Matthew Dolan.
(21) Includes 588,570 shares of Class B Common Stock held by the DC Patrick
Trust, the co-trustees of which are Patrick Dolan and Mary Dolan.
(22) Includes 606,232 shares of Class B Common Stock held by the DC Thomas
Trust, the co-trustees of which are Thomas Dolan and Matthew Dolan.
(23) Includes 606,232 shares of Class B Common Stock held by the DC James
Trust, the co-trustees of which are James Dolan and Paul Dolan.
(24) Includes 827,250 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.
(25) Includes 1,027,250 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.
(26) Includes 595,250 shares of Class B Common Stock held by the Dolan
Grandchildren Trust, the co-trustees of which are Thomas Dolan,
Marianne E. Weber and Paul Dolan.
(27) Includes 85,890 shares of Class B Common Stock held by the Dolan Spouse
Trust, the co-trustees of which are Thomas Dolan, Marianne E. Weber and
Paul Dolan.
(28) Includes 270,000 shares of Class A Common Stock owned by the Dolan
Children's Foundation, a New York not-for-profit corporation, the
sole members of which are Marianne Dolan Weber, Kathleen M. Dolan
and Deborah Dolan Sweeney. Each of which do not have an economic
interest in such shares, but each share the ultimate power to vote
and dispose of such shares.
(29) Includes an aggregate of 3,780,148 shares of Class B Common Stock
held by various trusts for the benefit of family members of Charles
F. Dolan's family for which Mr. John MacPherson serves as Trustee
and, in such capacity, exercises sole voting power and dispositive
power with respect to such shares.
-------------------------------
The Dolan family interests (other than Charles Dolan) have agreed
with the Company that in the case of any sale or disposition by Dolan family
interests (other than Charles Dolan) 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.
19
<PAGE>
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 up to 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 and S-4 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 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 the Stockholders Agreement, dated as of March 4, 1998,
among the Company, TCI and certain holders of Class B Common Stock, the Company
granted to TCI certain registration rights with respect to shares of Class A
Common Stock held by TCI or certain of its affiliates. TCI is permitted to
request that the Company file a registration statement registering not less than
2,000,000 shares, on a demand basis, not more than once each year. In addition,
TCI was granted "piggy-back" registration rights on any registration of at least
$100,000,000 of shares of Class A Common Stock (based on the market value
thereof on the date of filing) by the Company, subject to certain limitations.
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
20
<PAGE>
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, which have been subsequently retired 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 ("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.
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,
1997, the Company had advanced an aggregate of approximately $16.7 million to
Atlantic Publishing, reflecting approximately $0.1 million, $1.0 million and
$0.6 million, net, paid back during 1996, 1995 and 1994, 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.
On November 25, 1997, Charles F. Dolan and the Company entered into
a letter agreement (i) to defer the commencement of the period during which Mr.
Dolan could elect, pursuant to the Company's pre-existing obligations under the
Purchase and Reorganization
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Agreement, dated as of December 20, 1991, as amended, between Mr. Dolan and
the Company, to require the Company to purchase Mr. Dolan's remaining
partnership interests in Cablevision of New York City -Master, L.P., from
December 1, 1997 to the date of the consummation of the Merger and the
Contribution Agreement with TCI and (ii) to provide for cash payment for such
partnership interests of approximately $190 million. On March 4 ,1998, the
Company acquired Charles F. Dolan's remaining 1% interest in Cablevision of
New York City - Master, L.P. and satisfied certain payment obligations for a
cash payment of $194 million.
On August 23, 1996, the Company entered into an agreement with
Northcoast Operating Co., Inc. ("Northcoast") and certain of its affiliates, to
form a limited liability company (the "LLC") to participate in the auctions
conducted by the Federal Communications Commission ("FCC") for certain licenses
to conduct a personal communications service ("PCS") business. The Company has
contributed an aggregate of approximately $31 million to the LLC (either
directly or through a loan to Northcoast) and holds a 49.9% interest in the LLC
and certain preferential distribution rights. Northcoast is a Delaware
corporation controlled by John Dolan. John Dolan is a nephew of Charles F. Dolan
and cousin of James Dolan.
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 April, 1995, 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.
Vincent Tese, a director and a nominee for director, is a director
of The Bear Stearns Companies, Inc. Bear Stearns has performed investment
banking services for the Company.
Each of John C. Malone and Leo J. Hindery, Jr., each a director and
a nominee for director, is an officer and a director of TCI. As described above,
TCI holds approximately 33% of the Company's Common Stock and has certain
contractual rights under the Stockholders Agreement, including rights of
consultation concerning certain transactions including transfers of stock by
Class B stockholders and transfers of assets by the Company. TCI also owns, or
holds ownership interests in, various companies that transact business with the
Company on a regular basis.
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:
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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 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 which
the Company elects not to acquire under its right of first refusal. 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 1997, substantially all 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.
The Company's by-laws provide that the Company shall make any
investment in or advance, other than any investment or advance that
constitutes compensation for services rendered to the Company, to Charles
Dolan and affiliates of Charles Dolan (as defined therein) only if such
investment or advance is approved by a Special Committee of the Board of
Directors comprised of two non-employee directors and, subject to the
provisions of the TCI Stockholders Agreement, two directors nominated by TCI.
As noted above, (i) Atlantic Publishing holds an interest in a
company that publishes a weekly cable television guide that is sold to the
Company's subscribers, (ii) the Company has entered into agreement with, and
contributed funds to, a joint venture formed with
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a relative of Charles Dolan for the purpose of operating a personal
communications service business and (iii) TCI has certain contractual rights
under the Stockholders Agreement, including right of consultation concerning
certain transactions, including certain transfers of stock by Class B
stockholders and certain transfers of assets by the Company.
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CABLEVISION SYSTEMS CORPORATION
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
CABLEVISION SYSTEMS CORPORATION
Registrant
Date: April 30, 1998 /s/ Robert S. Lemle
-----------------------------------
By: Robert S. Lemle
Executive Vice President, General Counsel and
Secretary
Date: April 30, 1998 /s/ Andrew Rosengard
-----------------------------------
By: Andrew Rosengard
Executive Vice President, Financial
Planning and Controller
