0000912057-95-006114.txt : 19950810 0000912057-95-006114.hdr.sgml : 19950810 ACCESSION NUMBER: 0000912057-95-006114 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19950630 FILED AS OF DATE: 19950809 SROS: AMEX FILER: COMPANY DATA: COMPANY CONFORMED NAME: CABLEVISION SYSTEMS CORP CENTRAL INDEX KEY: 0000784681 STANDARD INDUSTRIAL CLASSIFICATION: CABLE & OTHER PAY TELEVISION SERVICES [4841] IRS NUMBER: 112776686 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 001-09046 FILM NUMBER: 95559898 BUSINESS ADDRESS: STREET 1: ONE MEDIA CROSSWAYS CITY: WOODBURY STATE: NY ZIP: 11797 BUSINESS PHONE: 5163648450 10-Q 1 FORM 10-Q FORM 10-Q (Mark One) [ X ] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended June 30, 1995 ---------------------------------------- OR [ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from to -------------------- -------------------- Commission File Number: 1-9046 ---------------------- Cablevision Systems Corporation --------------------------------------------------------------- (Exact name of registrant as specified in its charter) Delaware 11-2776686 ------------------------------- ----------------------- (State or other jurisdiction of (I.R.S. Employer incorporation or organization) Identification No.) One Media Crossways, Woodbury, New York 11797 --------------------------------------- ------------- (Address of principal executive offices) (Zip Code) Registrant's telephone number, including area code: (516) 364-8450 ------------------ Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes X No ----- ----- Number of shares of common stock outstanding as of August 4, 1995: Class A Common Stock 12,220,055 Class B Common Stock 11,573,922 -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- PART I - FINANCIAL INFORMATION Item 1. Financial Statements CABLEVISION SYSTEMS CORPORATION AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF OPERATIONS (Dollars in thousands, except per share data) (Unaudited)
Six Months Ended Three Months Ended June 30, June 30, ---------------- ------------------ 1995 1994 1995 1994 ---- ---- ---- ---- Revenues . . . . . . . . . . . . . .$ 509,135 $ 368,177 $ 263,734 $ 192,090 --------- --------- --------- --------- Operating expenses: Technical . . . . . . . . . . . . . 193,243 134,640 100,018 68,604 Selling, general and administrative . . . . . . . . . . 131,611 72,404 75,794 42,585 Restructuring charge. . . . . . . . - 4,306 - - Depreciation and amortization . . . 159,537 110,095 76,883 55,322 --------- --------- --------- --------- 483,391 321,445 252,695 166,511 --------- --------- --------- --------- Operating profit. . . . . . . . 24,744 46,732 11,039 25,579 --------- --------- --------- --------- Other income (expense): Interest expense. . . . . . . . . .(155,318) (118,586) (79,590) (59,918) Interest income . . . . . . . . . . 790 492 390 271 Share of affiliates' net losses . . (52,692) (34,257) (23,587) (16,975) Write off on deferred financing costs . . . . . . . . . . . . . . (2,888) - - - Provision for preferential payment to related party. . . . . (2,800) (2,800) (1,400) (1,400) Minority interest . . . . . . . . . (4,276) - (2,166) - Miscellaneous . . . . . . . . . . . (2,999) (3,432) (1,623) (2,281) --------- --------- --------- --------- (220,183) (158,583) (107,976) (80,303) --------- --------- --------- --------- Net loss . . . . . . . . . . . . . (195,439) (111,851) (96,937) (54,724) Dividend requirements applicable to preferred stocks. . . . . . . (4,918) (2,054) (2,447) (1,833) --------- --------- --------- --------- Net loss applicable to common shareholders. . . . . . . . . . . $(200,357) $(113,905) $ (99,384) $ (56,557) --------- --------- --------- --------- --------- --------- --------- --------- Net loss per common share. . . . . $ (8.45) $ (4.88) $ (4.18) $ (2.42) --------- --------- --------- --------- --------- --------- --------- --------- Average number of common shares outstanding (in thousands). . . . 23,710 23,323 23,751 23,368 --------- --------- --------- --------- --------- --------- --------- ---------
See accompanying notes to consolidated financial statements. (2) CABLEVISION SYSTEMS CORPORATION AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS (Dollars in thousands)
ASSETS June 30, December 31, 1995 1994 -------- -------- (unaudited) Cash and cash equivalents. . . . . . . . . . . . . . . . . $ 23,487 $ 11,350 Accounts receivable trade (less allowance for doubtful accounts of $11,210 and $10,087) . . . . . . . . . . . . 71,406 72,881 Notes receivable affiliates. . . . . . . . . . . . . . . . 1,786 2,143 Notes and other receivables. . . . . . . . . . . . . . . . 16,086 14,280 Prepaid expenses and other assets. . . . . . . . . . . . . 13,256 18,950 Property, plant and equipment, net . . . . . . . . . . . . 916,312 886,028 Investments in affiliates. . . . . . . . . . . . . . . . . 144,541 42,954 Advances to affiliates . . . . . . . . . . . . . . . . . . 37,539 36,681 Acquisition related costs and deposits . . . . . . . . . . - 1,844 Feature film inventory . . . . . . . . . . . . . . . . . . 151,113 129,496 Franchises, net of accumulated amortization of $278,674 and $240,609. . . . . . . . . . . . . . . . . . 398,621 436,686 Excess costs over fair value of net assets acquired and other intangible assets, net of accumulated amortization of $509,299 and $475,673. . . . . . . . . . 397,010 430,028 Deferred financing, acquisition and other costs, net of accumulated amortization of $21,887 and $18,422. . . . . 48,592 50,949 Deferred interest expense, net of accumulated amortization of $35,119 and $28,095. . . . . . . . . . . 35,119 42,143 ----------- ----------- $ 2,254,868 $ 2,176,413 ----------- ----------- ----------- -----------
See accompanying notes to consolidated financial statements. (3) CABLEVISION SYSTEMS CORPORATION AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS (Dollars in thousands)
June 30, December 31, 1995 1994 ----------- ----------- (unaudited) LIABILITIES AND STOCKHOLDERS' DEFICIENCY Accounts payable $ 117,203 $ 120,627 Accrued liabilities: Interest . . . . . . . . . . . . . . . . . . . . . . . 42,250 39,322 Payroll and related benefits . . . . . . . . . . . . . 41,445 34,085 Franchise fees . . . . . . . . . . . . . . . . . . . . 16,854 19,179 Other. . . . . . . . . . . . . . . . . . . . . . . . . 113,013 86,047 Accounts payable to affiliates . . . . . . . . . . . . . 27,577 22,273 Feature film rights payable. . . . . . . . . . . . . . . 131,026 110,542 Bank debt. . . . . . . . . . . . . . . . . . . . . . . . 1,499,762 1,335,419 Senior debt. . . . . . . . . . . . . . . . . . . . . . . 880,888 862,440 Subordinated debentures. . . . . . . . . . . . . . . . . 623,571 623,534 Subordinated notes payable . . . . . . . . . . . . . . . 141,268 141,268 Obligation to related party. . . . . . . . . . . . . . . 190,212 193,079 Capital lease obligations and other debt . . . . . . . . 10,241 13,496 ------------- ----------- Total liabilities. . . . . . . . . . . . . . . . . . . 3,835,310 3,601,311 ------------ ----------- Deficit investment in affiliates . . . . . . . . . . . . 436,321 393,637 ------------ ----------- Commitments and contingencies Stockholders' deficiency: 8% Series C Cumulative Preferred Stock, $.01 par value, 112,500 shares authorized, 110,622 shares issued ($100 per share liquidation preference) . . . 1 1 8% Series D Cumulative Preferred Stock, $.01 par value, 112,500 shares authorized, none issued ($100 per share liquidation preference). . . . . . . - - Series E Redeemable Exchangeable Convertible Preferred Stock, $.01 par value, 100,000 shares authorized and issued ($1,000 per share liquidation preference). . . . . . . . . . . . . . . . . . . . . 1 1 Class A Common Stock, $.01 par value, 50,000,000 shares authorized, 12,116,867 and 11,850,242 shares issued . . . . . . . . . . . . . . . . . . . . . . . 121 119 Class B Common Stock, $.01 par value, 20,000,000 shares authorized, 11,673,922 and 11,787,622 shares issued . . . . . . . . . . . . . . . . . . . . . . . 117 118 Par value in excess of capital contributed . . . . . . (71,888) (74,016) Accumulated deficit. . . . . . . . . . . . . . . . . . (1,941,878) (1,741,521) ----------- ----------- (2,013,526) (1,815,298) Less treasury stock, at cost (50,000 shares) . . . . . (3,237) (3,237) ----------- ----------- Total stockholders' deficiency . . . . . . . . . . . . (2,016,763) (1,818,535) ----------- ----------- $ 2,254,868 $ 2,176,413 ----------- ----------- ----------- -----------
See accompanying notes to consolidated financial statements. (4) CABLEVISION SYSTEMS CORPORATION AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS SIX MONTHS ENDED JUNE 30, 1995 AND 1994 (Dollars in thousands) (Unaudited)
1995 1994 -------- -------- Cash flows from operating activities: Net loss. . . . . . . . . . . . . . . . . . . . . . . ($195,439) $(111,851) Adjustments to reconcile net loss to net cash provided by operating activities: Depreciation and amortization. . . . . . . . 159,537 110,095 Share of affiliates' net losses. . . . . . . . 52,692 34,257 Minority interest. . . . . . . . . . . . . . . . . 4,276 - Amortization of deferred financing . . . . . . . . 2,619 2,105 Amortization of deferred interest. . . . . . . . . 7,024 7,024 Amortization of debenture discount . . . . . . 37 74 Accretion of interest on debt. . . . . . . . 19,065 17,190 Write off of deferred finance costs. . . . . . . . 2,888 - Loss on sale of equpiment. . . . . . . . . . . . 1,933 1,405 Changes in assets and liabilities net of effects of acquisitions: Decrease (increase) in accounts receivable trade . . . . . . . . . . . . . . . . . . . . 1,475 (4,202) Decrease in notes receivable, affiliates . . . 357 354 Increase in notes and other receivables. . . . (2,424) (2,513) Decrease in prepaid expenses and other assets. 1,418 258 Decrease (increase) in advances to affiliates. (858) 7 Increase in feature film inventory . . . . . . (21,617) - Decrease in accounts payable . . . . . . . . . (3,424) (6,776) Increase in accrued interest . . . . . . . . . 2,928 609 Increase in accrued payroll and related benefits. . . . . . . . . . . . . . . . . . . 7,360 2,882 Decrease in accrued franchise fees . . . . . . (2,325) (4,475) Increase (decrease) in accrued liabilities, other 26,966 (9,457) Increase in accounts payable to affiliates . . 5,304 6,958 Increase in feature film rights payable. . . . 20,484 - --------- --------- Total adjustments. . . . . . . . . . . . . . 285,715 155,795 --------- --------- Net cash provided by operating activities. . . . . . . $ 90,276 $ 43,944 --------- ---------
See accompanying notes to consolidated financial statements. (5) CABLEVISION SYSTEMS CORPORATION AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS SIX MONTHS ENDED JUNE 30, 1995 AND 1994 (Dollars in thousands) (Unaudited) continued
1995 1994 ---------- ---------- Cash flows from investing activities: Capital expenditures. . . . . . . . . . . . . . . . . $ (119,180) $(122,575) Proceeds from sale of plant and equipment . . . . . . 397 832 Additions to intangible assets. . . . . . . . . . . . (928) (44) (Increase) decrease in acquisition related costs and deposits. . . . . . . . . . . . . . . . . . . . 1,844 (26,483) (Increase) decrease in investments in affiliates, net . . . . . . . . . . . . . . . . . . 249 2,513 Payments for acquisition, net of cash acquired. . . . (110,906) (120,848) --------- -------- Net cash used in investing activities. . . . . . . . (228,524) (266,605) --------- -------- Cash flows from financing activities: Proceeds from bank debt . . . . . . . . . . . . . . . 319,078 261,325 Repayment of bank debt. . . . . . . . . . . . . . . . (154,735) (125,079) Proceeds from senior debt . . . . . . . . . . . . . . 6,500 2,500 Repayment of senior debt. . . . . . . . . . . . . . . (7,117) (8,500) Preferred stock dividends . . . . . . . . . . . . . . (4,918) (2,054) Issuance of Redeemable Exchangeable Convertible Preferred Stock . . . . . . . . . . . . . . . . . . - 98,625 Issuance of common stock. . . . . . . . . . . . . . . 2,629 6,661 Decrease in obligation to related party . . . . . . . (2,867) (2,871) Payments of capital lease obligations and other debt. (3,255) (1,323) Additions to deferred financing and other costs . . . (4,930) (2,168) -------- -------- Net cash provided by financing activities . . . . . 150,385 227,116 -------- -------- Net increase in cash and cash equivalents. . . . . . . 12,137 4,455 Cash and cash equivalents at beginning of year . . . . 11,350 12,944 -------- -------- Cash and cash equivalents at end of period . . . . . . $ 23,487 $ 17,399 -------- -------- -------- --------
See accompanying notes to consolidated financial statements. (6) CABLEVISION SYSTEMS CORPORATION AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Dollars in thousands) (Unaudited) Note 1. BASIS OF PRESENTATION The accompanying unaudited consolidated financial statements of Cablevision Systems Corporation and its majority owned subsidiaries (the "Company") have been prepared in accordance with the rules and regulations of the Securities and Exchange Commission. Certain information and footnote disclosures normally included in financial statements prepared in accordance with generally accepted accounting principles have been condensed or omitted. Note 2. RESPONSIBILITY FOR INTERIM FINANCIAL STATEMENTS The consolidated financial statements as of June 30, 1995 presented in this Form 10-Q are unaudited; however, in the opinion of management, such statements include all adjustments, consisting solely of normal recurring adjustments, necessary for a fair presentation of the results for the periods presented. The interim financial statements should be read in conjunction with the audited financial statements and notes thereto included in the Company's Annual Report on Form 10-K for the fiscal year ended December 31, 1994. The results of operations for the interim periods are not necessarily indicative of the results that might be expected for future interim periods or for the full year ending December 31, 1995. Note 3. LOSS PER COMMON SHARE Net loss per common share is computed based on the weighted average number of common shares outstanding. Common stock equivalents were not included in the computation as their effect would be to decrease net loss per share. Note 4. CASH FLOWS For purposes of the consolidated statements of cash flows, the Company considers short-term investments with a maturity at date of purchase of three months or less to be cash equivalents. The Company paid cash interest expense of approximately (7) CABLEVISION SYSTEMS CORPORATION AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Dollars in thousands except per share amounts) (Unaudited) Note 4. CASH FLOWS (continued) $123,645 and $91,262 for the six months ended June 30, 1995 and 1994, respectively. The Company's noncash financing activities for the six months ended June 30, 1994 included capital lease obligations of $4,020 incurred when the Company entered into leases for new equipment. Note 5. RECENT DEVELOPMENTS Pursuant to an agreement between Rainbow Programming and National Broadcasting Company, Inc. ("NBC"), NBC had the right to require Rainbow Programming, by notice given on or before April 13, 1995, to purchase its interests in SportsChannel (New York) Associates ("SCNY") and Rainbow News 12 Company ("RN12") at a predetermined purchase price, subject to certain adjustments. On April 7, 1995 NBC elected to require Rainbow Programming to purchase such interests. On July 12, 1995, Rainbow Programming consummated the purchase of such interests, and, effective that date, the Company will consolidate the results of operations of SCNY and RN12. The aggregate purchase price amounted to approximately $95,500. Funds for the purchase and related fees were made available under Rainbow Programming's $202,000 amended and restated credit agreement and by an equity contribution of $2,500 from the Company. See Item 2. - "Management's Discussion and Analysis of Financial Condition and Results of Operations - Liquidity and Capital Resources - Rainbow Programming". (8) CABLEVISION SYSTEMS CORPORATION Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations RESULTS OF OPERATIONS The following tables set forth on a historical basis certain items related to operations as a percentage of net revenues for the periods indicated.
STATEMENT OF OPERATIONS DATA ---------------------------- Six Months Ended June 30, ----------------------------------------- 1995 1994 ------------------ ------------------- (Increase) % of % of Decrease Amount Revenues Amount Revenues in Net loss ------ -------- ------ -------- ----------- (Dollars in thousands) Revenues . . . . . . . . . . . . . . $ 509,135 100% $ 368,177 100% $140,958 Operating expenses: Technical. . . . . . . . . . . . . 193,243 38 134,640 37 (58,603) Selling, general & administrative . . . . . . . . . 131,611 26 72,404 20 (59,207) Restructuring charge . . . . . . . - - 4,306 1 4,306 Depreciation and amortization . . . . . . . . . . 159,537 31 110,095 30 (49,442) --------- --------- -------- Operating profit . . . . . . . . . . 24,744 5 46,732 13 (21,988) Other expense: Interest expense, net. . . . . . . (154,528) (30) (118,094) (32) (36,434) Share of affiliates' net loss. . . (52,692) (10) (34,257) (9) (18,435) Write-off of deferred financing costs. . . . . . . . . . . . . . (2,888) (1) - - (2,888) Provision for preferential payment to related party . . . . (2,800) (1) (2,800) (1) - Minority interest. . . . . . . . . (4,276) (1) - - (4,276) Miscellaneous, net . . . . . . . . (2,999) (1) (3,432) (1) 433 --------- --------- -------- Net loss . . . . . . . . . . . . . . $(195,439) (38)% $(111,851) (30)% $(83,588) --------- --------- -------- --------- --------- -------- OTHER OPERATING DATA: --------------------- Operating profit before depreciation and amortization (1) . . . . . . . $184,281 $ 156,827 Currently payable interest expense, net. . . . . . . . . . . . . . . . 126,573 92,193 Net cash provided by operating activities (2) . . . . . . . . . . 90,276 43,944 Net cash used in investing activities (2) . . . . . . . . . . 228,524 266,605 Net cash provided by financing activities (2) . . . . . . . . . . 150,385 227,116 (1) Operating profit before depreciation and amortization is presented here to provide additional information about the Company's ability to meet future debt service, capital expenditures and working capital requirements. Operating profit before depreciation and amortization should be considered in addition to and not as a substitute for net income and cash flows as indicators of financial performance and liquidity as reported in accordance with generally accepted accounting principles. (2) See Item 1. - "Consolidated Statements of Cash Flows".
(9) CABLEVISION SYSTEMS CORPORATION
STATEMENT OF OPERATIONS DATA ---------------------------- Three Months Ended June 30, ----------------------------------------- 1995 1994 ------------------ ------------------- (Increase) % of % of Decrease Amount Revenues Amount Revenues in Net loss ------ -------- ------ -------- ----------- (Dollars in thousands) Revenues . . . . . . . . . . . . . . $ 263,734 100% $ 192,090 100% $ 71,644 Operating expenses: Technical . . . . . . . . . . . . . 100,018 38 68,604 36 (31,414) Selling, general & administrative. . . . . . . . . . 75,794 29 42,585 22 (33,209) Depreciation and amortization. . . . . . . . . . . 76,883 29 55,322 29 (21,561) --------- --------- -------- Operating profit . . . . . . . . . . 11,039 4 25,579 13 (14,540) Other expense: Interest expense, net . . . . . . . (79,200) (30) (59,647) (31) (19,553) Share of affiliates' net loss . . . (23,587) (9) (16,975) (9) (6,612) Provision for preferential payment to related party. . . . . (1,400) - (1,400) (1) - Minority interest . . . . . . . . . (2,166) (1) - - (2,166) Miscellaneous, net. . . . . . . . . (1,623) (1) (2,281) (1) 658 --------- --------- -------- Net loss . . . . . . . . . . . . . . $ (96,937) (37)% $ (54,724) (28)% $(42,213) --------- --------- -------- --------- --------- -------- OTHER OPERATING DATA: Operating profit before depreciation and amortization (1). . . . . . . . $ 87,922 $ 80,901 Currently payable interest expense, net . . . . . . . . . . . . . . . . 65,090 46,730 Net cash provided by operating activities. . . . . . . . . . . . . 48,927 20,618 Net cash used in investing activities. . . . . . . . . . . . . 67,260 105,270 Net cash provided by financing activities. . . . . . . . . . . . . 20,287 70,457 (1) Operating profit before depreciation and amortization is presented here to provide additional information about the Company's ability to meet future debt service, capital expenditures and working capital requirements. Operating profit before depreciation and amortization should be considered in addition to and not as a substitute for net income and cash flows as indicators of financial performance and liquidity as reported in accordance with generally accepted accounting principles.
(10) CABLEVISION SYSTEMS CORPORATION 1994 ACQUISITIONS In March 1994, the Company completed the acquisition of North Coast Cable; in July 1994, the Company through Rainbow Programming purchased an additional approximate 50% interest in American Movie Classics Company ("AMCC"), giving Rainbow Programming a 75% ownership interest in AMCC; and in August 1994, the Company consummated the acquisition of Monmouth Cablevision and Riverview Cablevision. The foregoing acquisitions will collectively be referred to as the "1994 Acquisitions". REVENUES for the six and three months ended June 30, 1995 increased $141.0 million (38%) and $71.6 million (37%), respectively, when compared to the same periods in 1994. Increases of 26% and 24%, respectively, for the six and three month periods were attributable to the 1994 Acquisitions, with the remaining increases of 12% and 13%, respectively, resulting primarily from internal growth in the average number of subscribers (approximately 148,500 (11%) for the six month period). TECHNICAL EXPENSES increased 43% and 46%, respectively, for the six and three months ended June 30, 1995 over the corresponding 1994 periods. Increases of approximately 25% and 23% for the respective six and three month periods were directly attributable to the 1994 Acquisitions. The remaining 18% and 23% increases were due primarily to increases in those costs directly associated with the internal growth in the average number of subscribers mentioned above. As a percentage of revenues, technical expenses increased 1% and 2%, respectively, for the six and three months ended June 30, 1995 over the same 1994 periods. SELLING, GENERAL AND ADMINISTRATIVE EXPENSES increased 82% and 78%, respectively, for the six and three months ended June 30, 1995 over the comparable 1994 periods. Increases of 35% and 29% for the respective periods resulted from the 1994 Acquisitions. During 1995 and 1994, adjustments were made related to an incentive stock plan. Excluding these adjustments, and the effects of the 1994 Acquisitions, discussed above, selling, general and administrative expenses would have increased 14% and 18%, respectively, for the six and three months ended June 30, 1995 over the same 1994 periods primarily due to higher administrative and customer service costs, and as a percentage of revenues, would have increased less than 1% for each of the periods presented. RESTRUCTURING CHARGE The Company recorded a one time charge in the first quarter of 1994 to provide for employee severance and related costs, resulting from a restructuring of its operations, which was undertaken in response to FCC- mandated rate reductions in substantially all of the Company's cable television systems. (11) CABLEVISION SYSTEMS CORPORATION OPERATING PROFIT BEFORE DEPRECIATION AND AMORTIZATION increased 18% and 9%, respectively, for the six and three months ended June 30, 1995 compared to the same periods in 1994 as a result of the combined effect of the revenue and expense changes discussed above. Operating profit before depreciation and amortization is presented here to provide additional information about the Company's ability to meet future debt service, capital expenditures and working capital requirements. Operating profit before depreciation and amortization should be considered in addition to and not as a substitute for net income and cash flows as indicators of financial performance and liquidity as reported in accordance with generally accepted accounting principles. DEPRECIATION AND AMORTIZATION EXPENSE increased 45% and 39%, respectively, for the six and three months ended June 30, 1995 over the comparable 1994 periods. Approximately 36% and 32% of the respective increases were attributable to the 1994 Acquisitions, with the remaining 9% and 7% increases resulting from increased depreciation charges on capital expenditures made during 1995 and 1994, offset to some extent by decreased depreciation and amortization charges on assets which became fully depreciated or amortized during the periods. NET INTEREST EXPENSE increased 31% and 33%, respectively, for the six and three months ended June 30, 1995 compared to the same 1994 periods. Increases of 18% and 16%, respectively, were related to the 1994 Acquisitions. Remaining increases of 13% and 17%, respectively, resulted primarily from higher average debt levels, reflecting the increased capital expenditures referred to above, as well as from generally higher interest rates. SHARE OF AFFILIATES' NET LOSSES increased from $34.3 million to $52.7 million for the six months ended June 30, 1995 compared to the same 1994 period. Such amounts consist primarily of the Company's share in the net losses of certain cable affiliates which, for the six months ended June 30, 1995 and 1994 amounted to $47.7 million and $35.5 million, respectively, and in the net (income) losses of certain programming businesses, in which the Company has varying ownership interests, which aggregated $5.0 million and $(1.2) million for the respective periods. WRITE OFF OF DEFERRED FINANCING COSTS in 1995 relates primarily to costs associated with Rainbow Programming's original $105 million credit facility which was replaced in January 1995 with a new $202 million facility. PROVISION FOR PREFERENTIAL PAYMENT TO RELATED PARTY consists of the expensing of the proportionate amount due with respect to an annual payment ($5.6 million) made in connection with the acquisition of Cablevision of New York City ("CNYC") in 1992. MINORITY INTEREST in 1995 represents NBC's share of the net income of AMCC. (12) CABLEVISION SYSTEMS CORPORATION LIQUIDITY AND CAPITAL RESOURCES For financing purposes, the Company is structured as the Restricted Group, consisting of Cablevision Systems Corporation and certain of its subsidiaries and an unrestricted group of certain subsidiaries which includes V Cable, Inc., Rainbow Programming and Cablevision MFR, Inc. On October 14, 1994, CNYC, formerly an unrestricted subsidiary, became a member of the Restricted Group. The following table presents selected historical results of operations and other financial information related to the captioned groups or entities for the six months ended June 30, 1995. (Rainbow Programming, Rainbow Advertising, AMCC, and a radio station located in Cleveland, Ohio are included in "Other Unrestricted Subsidiaries").
Core Total Other Cablevision Restricted Restricted Cablevision Unrestricted Systems Group CNYC Group V Cable,Inc. MFR Subsidiaries Corporation ---------- ------ ---------- ------------ ----------- ------------ ----------- (Dollars in thousands) Net revenues $ 229,381 $ 97,725 $ 327,106 $ 72,789 $ 37,570 $ 71,670 $ 509,135 Operating expenses: Technical 85,261 45,150 130,411 29,016 12,200 21,616 193,243 Selling, general and administrative 37,106 25,779 62,885 10,844 5,924 51,958 131,611 Depreciation and amortization 60,846 20,637 81,483 33,965 32,657 11,432 159,537 ---------- -------- ---------- -------- --------- --------- ---------- Operating profit (loss) $ 46,168 (1) $ 6,159 (1) $ 52,327 $ (1,036) $ (13,211) $ (13,336) $ 24,744 ---------- -------- ---------- -------- --------- --------- ---------- ---------- -------- ---------- -------- --------- --------- ---------- Currently payable interest expense $ 74,541 $ 5,751 $ 80,292 $ 25,450 $ 14,119 $ 6,712 $ 126,573 ---------- -------- ---------- -------- --------- --------- ---------- ---------- -------- ---------- -------- --------- --------- ---------- Total interest expense $ 75,829 $ 6,207 $ 82,036 $ 51,496 $ 14,328 $ 7,458 $ 155,318 ---------- -------- ---------- -------- --------- --------- ---------- ---------- -------- ---------- -------- --------- --------- ---------- Senior debt $1,014,375 $138,600 $1,152,975 $880,888 $ 209,000 $ 148,028 $2,390,891 ---------- -------- ---------- -------- --------- --------- ---------- ---------- -------- ---------- -------- --------- --------- ---------- Subordinated debt $ 623,571 $ - $ 623,571 $ - $ 141,268 (3) $ - $ 764,839 ---------- -------- ---------- -------- --------- --------- ---------- ---------- -------- ---------- -------- --------- --------- ---------- Obligation to related party $ - $190,212 (2) $ 190,212 $ - $ - $ - $ 190,212 ---------- -------- ---------- -------- --------- --------- ---------- ---------- -------- ---------- -------- --------- --------- ---------- Deficit investment in affiliates $ 420,098 $ - $ 420,098 $ - $ - $ 16,223 $ 436,321 ---------- -------- ---------- -------- --------- --------- ---------- ---------- -------- ---------- -------- --------- --------- ---------- Capital expenditures $ 52,015 $ 45,213 $ 97,228 $ 13,163 $ 5,840 $ 2,955 $ 119,180 (4) ---------- -------- ---------- -------- --------- --------- ---------- ---------- -------- ---------- -------- --------- --------- ---------- Ending Cable subscribers 950,000 371,000 1,321,000 372,000 173,000 - 1,866,000 ---------- -------- ---------- -------- --------- --------- ---------- ---------- -------- ---------- -------- --------- --------- ---------- (1) Includes management fees from CNYC of $3,420. (2) Obligation of NYC LP Corp., a wholly-owned Restricted Group subsidiary, relating to the CNYC acquisition. (3) Guaranteed by the Restricted Group. (4) Includes intercompany elimination of $6
(13) CABLEVISION SYSTEMS CORPORATION RESTRICTED GROUP On March 10, 1995 the Company, through Rainbow Programming, invested $110 million in the MSG acquisition. The funds were provided by borrowings under the Restricted Group's $1.5 billion credit agreement (the "Credit Agreement"). On August 4, 1995 the Restricted Group, including CNYC, had total usage under the Credit Agreement of $1,149.6 million and Letters of Credit of $22.4 million issued on behalf of the Company and CNYC. Unrestricted and undrawn funds available to the Restricted Group under the Credit Agreement amounted to approximately $328 million at August 4, 1995. The Credit Agreement contains certain financial covenants that may limit the Restricted Group's ability to utilize all of the undrawn funds available thereunder, including covenants requiring the Restricted Group to maintain certain financial ratios and restricting the permitted uses of borrowed funds. As of August 4, 1995 the Company and CNYC had entered into interest exchange (swap and interest rate cap) agreements with several of their banks on a notional amount of $275 million, on which the Company pays a fixed rate of interest and receives a variable rate of interest for specified periods, with an average maturity of two years. The average effective annual interest rate on all bank debt outstanding as of July 31, 1995 was approximately 8.4%. The Company believes that, for the Restricted Group, internally generated funds together with funds available under its existing Credit Agreement will be sufficient through December 31, 1996 (i) to meet its debt service requirements including its amortization requirements under the Credit Agreement, (ii) to fund its ongoing capital expenditures, including CNYC and the required upgrades under the New York Upgrade Agreement, (iii) to fund its anticipated investments including the $5.6 million Annual Payment to Charles Dolan in connection with the CNYC acquisition, (iv) to fund payments with respect to the proposed Cablevision of Boston transactions and (v) to fund any anticipated equity requirements through 1996 in A-R Cable and/or V Cable. Further acquisitions and other investments by the Company, if any, will be funded by undrawn borrowing capacity and by possible increases in the amount available under the Credit Agreement, additional borrowings from other sources, and/or possible future sales of debt, equity or equity related securities. (14) CABLEVISION SYSTEMS CORPORATION V CABLE The long-term credit facilities extended by General Electric Capital Corporation ("GECC") to V Cable and VC Holding on December 31, 1992, refinanced all of V Cable's pre-existing debt. Under the credit agreement between V Cable and GECC (the "V Cable Credit Agreement"), GECC has provided a term loan (the "V Cable Term Loan") in the amount of $25.9 million, as of June 30, 1995, which loan accretes interest at a rate of 10.62% compounded semi-annually until December 31, 1997 (the reset date) and is payable in full on December 31, 2001. Under the credit agreement between VC Holding and GECC, GECC has extended to VC Holding a $501.9 million term loan (the "Series A Term Loan"), a $258.4 million term loan (the "Series B Term Loan") and a $25 million revolving line of credit (the "Revolving Line"). The Series A Term Loan and any amounts drawn under the Revolving Line pay current cash interest and mature on December 31, 2001. The Series B Term Loan does not pay cash interest but rather accretes interest at a rate of 10.62% compounded semi-annually until December 31, 1997 (the reset date) and is payable in full on December 31, 2001. On August 1, 1995 VC Holding had $2.5 million outstanding under the Revolving Line and had letters of credit issued approximating $1.1 million. Accordingly, unrestricted and undrawn funds under the VC Holding Revolving Line amounted to approximately $21.4 million on August 1, 1995. The VC Holding Credit Agreement also provides for the assumption by VC Holding of certain loans of U.S. Cable, the present value of which amounted to $92.2 million at June 30, 1995. VC Holding and V Cable are required to apply all consolidated available cash flow (as defined), as well as the net proceeds of any disposition of assets, to the reduction of the VC Holding Term Loans and the V Cable Term Loan. A mandatory prepayment of the Series A Term Loan amounting to approximately $3.1 million was made on April 14, 1995 in accordance with this requirement. After taking into account the reductions to regulated revenue arising from the latest round of FCC regulation, V Cable believes that it is likely that it will be unable to meet certain of its financial covenants during 1995. To remedy the anticipated covenant defaults, V Cable may request waivers and/or amendments to its credit agreement and/or seek equity contributions from the Restricted Group. During 1995, the Restricted Group has made equity contributions aggregating $1.9 million to enable V Cable to meet certain of its financial covenants. There can be no assurance as to V Cable's ability to accomplish any of these alternatives in the future or the terms or timing of such alternatives. Assuming any covenant defaults are waived or cured, V Cable anticipates that its cash flow from operations and amounts available under the VC Holding Revolving Line will be sufficient to service its debt, to fund its capital expenditures and to meet its working capital requirements through 1996. (15) CABLEVISION SYSTEMS CORPORATION MONMOUTH AND RIVERVIEW Monmouth/Riverview are party to a credit facility, as amended on May 12, 1995, with a group of banks led by NationsBank of Texas, N.A., as agent (the "Monmouth/Riverview Credit Facility"). The maximum amount available to Monmouth/Riverview under the Monmouth/Riverview Credit Facility is $285 million with a final maturity at June 30, 2003. The facility is a reducing revolving loan, with scheduled facility reductions beginning on March 31, 1996 resulting in a 15% reduction by December 31, 1998. As of August 4, 1995, Monmouth/Riverview had outstanding bank borrowings of $207 million. Unrestricted and undrawn funds available to Monmouth/Riverview under the Monmouth/Riverview Credit Facility amounted to approximately $78 million at August 4, 1995. The Monmouth/Riverview Credit Facility contains certain financial covenants that may limit Monmouth/Riverview's ability to utilize all of the undrawn funds available thereunder, including covenants requiring Monmouth/Riverview to maintain certain financial ratios. Under the terms of the Monmouth/Riverview Credit Facility, Monmouth/Riverview is prohibited from transferring funds to Cablevision MFR. The weighted average interest rate on all bank indebtedness as of July 31, 1995 was approximately 8.6%. Monmouth/Riverview have entered into interest rate swap and cap agreements with several banks on a notional amount of $130 million on which the Company pays a fixed rate of interest and receives a variable rate of interest for specified periods, with an average maturity of 16 months. The Company believes that for Monmouth/Riverview, internally generated funds together with funds available under its existing credit agreement will be sufficient to meet its debt service requirements including its amortization requirements and to fund its capital expenditures through 1996. RAINBOW PROGRAMMING In July 1994, Rainbow Programming entered into a $105 million credit facility with a group of banks. On January 27, 1995 Rainbow entered into an amended and restated credit facility with Toronto-Dominion (Texas), Inc., and Canadian Imperial Bank of Commerce, as co-agents and a group of banks for $202 million of which $108 million was drawn on such date to refinance the original facility. On July 12, 1995 Rainbow Programming consummated the purchase of National Broadcasting Company's (NBC") interests in SCNY and RN12 for approximately $95.5 million, giving Rainbow Programming a 100% interest in SCNY and RN12. The purchase was financed by an additional drawdown of $94 million under Rainbow's $202 million amended and restated credit facility and by a $2.5 million equity contribution from the Company for the balance of the purchase price and related fees. The proceeds of the initial $105 million loan plus $76 million of equity from the Company were used to purchase Liberty Media's 50% interest in AMCC giving Rainbow Programming a 75% (16) CABLEVISION SYSTEMS CORPORATION ownership interest in AMCC. The credit facility is payable in full at maturity on December 31, 1996 and bears interest at varying rates based upon the banks' Base Rate or Eurodollar Rate, as defined in the credit agreement. Repayment of the loan is anticipated to be made by Rainbow Programming from one or a combination of the following: (i) internally generated funds; (ii) refinancing the existing Rainbow Programming $202 million credit facility; (iii) refinancing the existing $57 million credit agreement of AMCC; (iv) the sale of equity interests in, or assets of, the programming businesses; and (v) advances from the Restricted Group. The loan is secured by a pledge of the Company's stock in Rainbow Programming and is guaranteed by the subsidiaries of Rainbow Programming as permitted. Rainbow Programming's financing needs have been funded by the Restricted Group's investments in and advances to Rainbow Programming, by sales of equity interests in the programming businesses and, in the case of one of the programming businesses, through separate external debt financing. The Company expects that the future cash needs of Rainbow Programming's current programming partnerships will increasingly be met by internally generated funds, although certain of such partnerships will at least in the near future rely to some extent upon their partners (including Rainbow Programming) for certain cash needs. The partners' contributions may be supplemented through the sale of additional equity interests in, or through the incurrence of indebtedness by, such programming businesses. (17) CABLEVISION SYSTEMS CORPORATION Part II. Other Information Item 1. Legal Proceedings The Company is party to various lawsuits, some involving substantial amounts. Management does not believe that such lawsuits will have a material adverse impact on the financial position of the Company. Item 4. Submission of Matters to a Vote of Security-Holders. The Company's Annual Meeting of Shareholders was held on June 20, 1995. The following matters were voted upon at the company's Annual Meeting of Shareholders, indicating the number of votes cast for and against as well as the number of abstentions: Election of Directors: --------------------- Class A Directors: Charles D. Ferris: For: 10,034,840 Votes withheld: 97,196 Richard H. Hochman: For: 10,050,240 Votes withheld: 81,796 Victor Oristano: For: 10,049,740 Votes withheld: 82,296 A. Jerrold Perenchio: For: 10,050,340 Votes withheld: 81,696 Class B Directors: For: 116,404,220 Against: 0 Each nominee for election by the Class B common stockholders received the same vote on each proxy. (18) CABLEVISION SYSTEMS CORPORATION AUTHORIZE AND APPROVE THE AMENDMENT TO THE COMPANY'S AMENDED AND RESTATED EMPLOYEE STOCK PLAN PERMITTING THE EXTENSION OF THE DURATION OF CERTAIN NONQUALIFIED STOCK OPTIONS AND/OR SARS GRANTED UNDER THE PLAN FOR UP TO TWO YEARS: Class A Common Stock: For: 7,424,251 Against: 2,650,322 Abstain: 37,129 Broker non-vote: 20,334 Class B Common Stock: For: 116,404,220 Against: 0 Abstain: 0 RATIFICATION AND APPROVAL OF KPMG PEAT MARWICK LLP Class A Common Stock: For: 10,121,380 Against: 6,400 Abstain: 4,256 Class B Common Stock For: 116,404,220 Against: 0 Abstain: 0 Item 6. Exhibits and Reports on Form 8-K (a) Exhibits. The index to exhibits is on page 21. (b) The Company has not filed any Current Reports on Form 8-K with the Commission during the quarter for which this report is filed. (19) CABLEVISION SYSTEMS CORPORATION SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized. CABLEVISION SYSTEMS CORPORATION Registrant Date: August 8, 1995 /s/William J. Bell -------------------- ----------------------------------------- By: William J. Bell, as Vice Chairman of Cablevision Systems Corporation Date: August 8, 1995 /s/Barry J. O'Leary -------------------- ----------------------------------------- By: Barry J. O'Leary, as Senior Vice President - Finance and Treasurer and Principal Financial Officer of Cablevision Systems Corporation Date: August 8, 1995 /s/Jerry Shaw -------------------- ----------------------------------------- By: Jerry Shaw, as Vice President and Controller and Chief Accounting Officer of Cablevision Systems Corporation (20) CABLEVISION SYSTEMS CORPORATION INDEX TO EXHIBITS EXHIBIT PAGE NO. DESCRIPTION NO. ------- ----------- ---- 27 Financial Data Schedule (21) EX-27 2 EXHIBIT 27
5 1,000 6-MOS DEC-31-1995 JUN-30-1995 23,487 0 82,616 (11,210) 151,113 0 1,671,630 (755,318) 2,263,708 0 3,375,942 238 0 2 (2,017,003) 2,263,708 0 509,135 0 193,243 159,537 (6,556) 155,318 (195,439) 0 (195,439) 0 0 0 (195,439) (8.45) 0 Not presented as the resultant computation would be a decrease in net loss per share and therefore not meaningful.