CVC Cablevision Systems Corp. Class A

Cablevision Systems Corporation (NYSE:CVC) today reported financial results for the third quarter ended September 30, 2010.

Third quarter consolidated net revenues grew 5.6% to $1.808 billion compared to the prior year period, reflecting solid revenue growth in Telecommunications Services and Rainbow, offset slightly by a decline at Newsday. Consolidated adjusted operating cash flow (“AOCF”)1 grew 3.6% to $661.7 million and consolidated operating income grew 8.3% to $401.2 million, both compared to the prior year period. Third quarter 2009 AOCF and operating income include favorable adjustments of $25.7 million relating to the resolution of regulatory and legal matters at Cable. If excluded, consolidated AOCF and operating income would have grown 8.0% and 16.4%, respectively, compared to the prior year period.

Operating highlights for the third quarter 2010 include:

• Year-to-date Consolidated Free Cash Flow from Continuing Operations1 of $656.4 million
• Average Monthly Revenue per Basic Video Customer (“RPS”) of $149.04 in the third quarter of 2010
• Cable advertising revenue growth of 30.2% in the third quarter of 2010, compared to the prior year period.

Cablevision President and CEO James L. Dolan commented: “Cablevision continued to perform well in the third quarter as the ongoing strength of our core businesses led to solid increases in both revenue and AOCF. The company’s cable operations generated a significant increase in advertising revenue of 30 percent, while continuing to enjoy industry-leading penetration rates. Meanwhile, Rainbow achieved double-digit revenue growth for the third quarter thanks to impressive gains in both advertising and affiliate revenue. Also noteworthy this quarter, Cablevision generated an additional $225 million in free cash flow, bringing our year-to-date number to $656 million,” concluded Mr. Dolan.

Results from Continuing Operations2

Segment results for the quarters ended September 30, 2010 and 2009 are as follows:

  Revenues, Net     AOCF    

Operating Income(Loss)

$ millions Q3 2010   Q3 2009     Q3 2010   Q3 2009     Q3 2010   Q3 2009   Telecommunications $ 1,433.5 $ 1,362.0 $ 591.9 $ 575.0 $ 378.1 $ 354.3 Rainbow 291.4 260.1 96.4 85.9 63.0 53.4 Newsday 76.5 79.9 4.0 5.6 (1.7 ) (0.8 ) Other (including eliminations)   6.2     9.2       (30.6 )     (28.0 )       (38.2 )     (36.5 ) Total Company $ 1,807.6   $ 1,711.2     $ 661.7     $ 638.5       $ 401.2     $ 370.4   1.  

See definition of adjusted operating cash flow (“AOCF”) and Consolidated Free Cash Flow fromContinuing Operations included in the discussion of non-GAAP financial measures on page 4 ofthis earnings release.

2.

Operating results of Madison Square Garden are included in discontinued operations for allperiods presented as applicable.

Telecommunications Services – Cable Television and Lightpath

Telecommunications Services includes Cable Television – Cablevision’s “Optimum” branded video, high-speed data, and voice residential and commercial services offered over its cable infrastructure -- and its “Optimum Lightpath” branded commercial data and voice services.

Telecommunications Services net revenues for the third quarter 2010 rose 5.2% to $1.433 billion, AOCF grew 2.9% to $591.9 million and operating income increased 6.7% to $378.1 million, all compared to the prior year period. Third quarter 2009 AOCF and operating income include favorable adjustments of $25.7 million relating to the resolution of regulatory and legal matters at Cable. Excluding these items, the growth in AOCF and operating income would have been 7.8% and 15.1%, respectively.

Cable Television

Cable Television third quarter 2010 net revenues increased 4.8% to $1.366 billion, AOCF rose 2.3% to $563.3 million and operating income increased 6.3% to $372.4 million, each compared to the prior year period. The third quarter 2010 increases in net revenues, AOCF and operating income were principally driven by the twelve month growth in digital video, high-speed data, and voice customers as well as higher rates. (Third quarter 2009 AOCF and operating income include the items discussed above. Excluding these items, the growth in AOCF and operating income would have been 7.3% and 14.8%, respectively.)

The third quarter 2010 results reflect:

• Basic video customers down 24,500 or 0.8% from June 2010 and down 23,500 or 0.8% from September 2009
• iO: Interactive Optimum digital video customers down 4,200 or 0.1% from June 2010 and up 33,700 or 1.2% from September 2009
• Optimum Online high-speed data customers up 9,600 or 0.4% from June 2010 and 125,000 or 5.0% from September 2009
• Optimum Voice customers up 9,300 or 0.4% from June 2010 and 128,000 or 6.4% from September 2009
• Revenue Generating Units down 9,800 or 0.1% from June 2010 and up 263,200 or 2.5% from September 2009
• Cable Television RPS of $149.04, down $0.08 or 0.1% from the second quarter of 2010 and up $8.01 or 5.7% from the third quarter of 2009.

Optimum Lightpath

For third quarter 2010, Lightpath net revenues increased 12.1% to $72.9 million, AOCF increased 18.6% to $28.5 million and operating income increased 38.0% to $5.7 million, each as compared to the prior year period. The improved results were driven primarily by a 33.1% increase in revenue from Ethernet services offset in part by higher operating expenses to support the increase in Ethernet installations.

Rainbow

Rainbow consists of Rainbow National Services (“RNS”) – AMC, WE tv and IFC – as well as Other Programming which includes: Sundance Channel, News 12 Networks, IFC Entertainment, Rainbow Network Communications, Rainbow Advertising Sales Corp. and other Rainbow ventures.

Rainbow net revenues for the third quarter of 2010 increased 12.0% to $291.4 million, AOCF rose 12.2% to $96.4 million, and operating income grew 18.1% to $63.0 million, all compared to the prior year period.

AMC/WE tv/IFC

Third quarter 2010 net revenues grew 10.7% to $228.2 million, AOCF rose 3.8% to $99.5 million, and operating income grew 3.9% to $82.3 million, each compared to the prior year period.

The third quarter 2010 AOCF results reflect:

• Viewing subscriber increases of 2.8% at AMC, 2.5% at IFC and 2.8% at WE tv, all compared to September 2009
• A 12.9% increase in advertising revenue, as compared to the prior year period, driven principally by higher pricing at AMC and WE tv
• A 16.6% increase in operating costs compared to the prior year period, primarily due to increased programming and marketing costs at AMC.

Other Programming

Third quarter 2010 net revenues increased 13.5% to $68.3 million, AOCF deficit improved 68.4% to a deficit of $3.1 million and operating loss improved 25.5% to a loss of $19.3 million, all as compared to the prior year period. Revenue growth was primarily due to increases at Sundance Channel, IFC Entertainment and News 12 Networks. Improved operating results were primarily driven by the aforementioned increase in revenue as well as lower litigation costs relating to VOOM.

Newsday

The Newsday segment consists of Newsday, a daily newspaper that primarily serves Long Island; amNewYork, a free daily serving New York City; various Internet properties including Newsday.com; and Star Community Publishing, a group of weekly shopper publications.

Newsday's third quarter 2010 net revenues decreased 4.3% to $76.5 million, AOCF decreased 28.3% to $4.0 million and operating loss increased $0.9 million to a loss of $1.7 million, all compared to the prior year period. The revenue decline was primarily driven by a 7.6% decrease in advertising revenue. The decrease in AOCF was due to the revenue decline partially offset by lower compensation costs.

Other Matters

On November 3, 2010, the Board of Directors of Cablevision declared a quarterly dividend of $0.125 per share on each outstanding share of both its Cablevision NY Group Class A Stock and its Cablevision NY Group Class B Stock. This quarterly dividend is payable on December 6, 2010 to shareholders of record at the close of business on November 15, 2010.

Non-GAAP Financial Measures

We define adjusted operating cash flow (“AOCF”), which is a non-GAAP financial measure, as operating income (loss) before depreciation and amortization (including impairments), excluding share-based compensation expense or benefit and restructuring charges or credits. Because it is based upon operating income (loss), AOCF also excludes interest expense (including cash interest expense) and other non-operating income and expense items. We believe that the exclusion of share-based compensation expense or benefit allows investors to better track the performance of the various operating units of our business without regard to the distortive effects of fluctuating stock prices in the case of stock appreciation rights and, in the case of restricted shares and stock options, the settlement of an obligation that is not expected to be made in cash.

We present AOCF as a measure of our ability to service our debt and make continuing investments, including in our capital infrastructure. We believe AOCF is an appropriate measure for evaluating the operating performance of our business segments and the company on a consolidated basis. AOCF and similar measures with similar titles are common performance measures used by investors, analysts and peers to compare performance in our industry. Internally, we use net revenues and AOCF measures as the most important indicators of our business performance, and evaluate management’s effectiveness with specific reference to these indicators. AOCF should be viewed as a supplement to and not a substitute for operating income (loss), net income (loss), cash flows from operating activities, and other measures of performance and/or liquidity presented in accordance with U.S. generally accepted accounting principles ("GAAP"). Since AOCF is not a measure of performance calculated in accordance with GAAP, this measure may not be comparable to similar measures with similar titles used by other companies. For a reconciliation of AOCF to operating income (loss), please see page 5 of this release.

We define Consolidated Free Cash Flow from Continuing Operations, (“Free Cash Flow”), which is a non-GAAP financial measure, as net cash from operating activities (continuing operations) less capital expenditures (continuing operations), both of which are reported in our Consolidated Statement of Cash Flows. Net cash from operating activities excludes net cash from operating activities of our discontinued operations. We believe the most comparable GAAP financial measure of our liquidity is net cash from operating activities. We believe that Free Cash Flow is useful as an indicator of our overall liquidity, as the amount of Free Cash Flow generated in any period is representative of cash that is available for debt repayment and other discretionary and non-discretionary cash uses. It is also one of several indicators of our ability to make investments and/or return capital to our shareholders. We also believe that Free Cash Flow is one of several benchmarks used by analysts and investors who follow our industry for comparison of our liquidity with other companies in our industry, although our measure of Free Cash Flow may not be directly comparable to similar measures reported by other companies.

COMPANY DESCRIPTION

Cablevision Systems Corporation is one of the nation's leading telecommunications, media and entertainment companies. In addition to its Optimum-branded cable, Internet, and voice offerings, the company owns and operates News 12 Networks, MSG Varsity and Newsday Media Group. Cablevision's assets also include Rainbow Media Holdings LLC and its programming and entertainment businesses, AMC, IFC, Sundance Channel, WE tv and IFC Entertainment, as well as Clearview Cinemas. Additional information about Cablevision is available on the Web at http://www.cablevision.com.

This earnings release may contain statements that constitute forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Investors are cautioned that any such forward-looking statements are not guarantees of future performance or results and involve risks and uncertainties, and that actual results or developments may differ materially from those in the forward-looking statements as a result of various factors, including financial community and rating agency perceptions of the company and its business, operations, financial condition and the industries in which it operates and the factors described in the company’s filings with the Securities and Exchange Commission, including the sections entitled "Risk Factors" and "Management’s Discussion and Analysis of Financial Condition and Results of Operations" contained therein. The company disclaims any obligation to update any forward-looking statements contained herein.

Cablevision’s Web site: www.cablevision.com

The conference call will be Webcast live today at 10:00 a.m. ET

Conference call dial-in number is (888) 694-4641/ Conference ID Number 18672455

Conference call replay number (706) 645-9291/ Conference ID Number 18672455 until November 11, 2010

 

CABLEVISION SYSTEMS CORPORATION

CONDENSED CONSOLIDATED OPERATIONS DATA AND RECONCILIATION

(Dollars in thousands, except per share data)

(Unaudited)

    Three Months Ended

September 30,

    Nine Months Ended

September 30,

2010(a)

 

2009(a)

2010(a)

 

2009(a)

  Revenues, net $ 1,807,551   $ 1,711,245   $ 5,362,132   $ 5,079,714     Adjusted operating cash flow $ 661,748 $ 638,454 $ 1,949,764 $ 1,827,181 Share-based compensation expense (15,633 ) (14,745 ) (45,348 ) (47,271 ) Restructuring (expense) credit   568     (1,834 )   667     (5,690 ) Operating income before depreciation and amortization 646,683 621,875 1,905,083 1,774,220 Depreciation and amortization (including impairments)   245,497     251,498     732,041     772,962   Operating income 401,186 370,377 1,173,042 1,001,258 Other income (expense): Interest expense, net (194,501 ) (182,438 ) (584,263 ) (561,804 ) Gain on sale of programming interests, net 103 455 307 1,674 Gain (loss) on investments, net 15,326 51,543 26,254 (349 ) Loss on equity derivative contracts, net (7,060 ) (43,833 ) (9,801 ) (1,095 ) Loss on interest rate swap contracts, net (24,921 ) (44,146 ) (81,801 ) (63,975 ) Loss on extinguishment of debt and write-off of deferred financing costs(b) - - (110,049 ) (22,044 ) Miscellaneous, net   431     240     857     569   Income from continuing operations before income taxes 190,564 152,198 414,546 354,234 Income tax expense   (78,201 )   (59,942 )   (162,792 )   (157,436 ) Income from continuing operations 112,363 92,256 251,754 196,798 Income (loss) from discontinued operations, net of income taxes   -     6,343     (4,122 )   9,878   Net income 112,363 98,599 247,632 206,676 Net loss (income) attributable to noncontrolling interests   (302 )   343     (547 )   491   Net income attributable to Cablevision Systems Corporation shareholders $ 112,061   $ 98,942   $ 247,085   $ 207,167     Basic net income (loss) per share attributable to Cablevision Systems Corporation shareholders: Income from continuing operations $ 0.38   $ 0.32   $ 0.85   $ 0.68   Income (loss) from discontinued operations $ -   $ 0.02   $ (0.01 ) $ 0.03   Net income $ 0.38   $ 0.34   $ 0.84   $ 0.71   Basic weighted average common shares (in thousands)   293,671     292,346     294,438     291,418     Diluted net income (loss) per share attributable to Cablevision Systems Corporation shareholders: Income from continuing operations $ 0.37   $ 0.31   $ 0.83   $ 0.66   Income (loss) from discontinued operations $ -   $ 0.02   $ (0.01 ) $ 0.03   Net income $ 0.37   $ 0.33   $ 0.82   $ 0.70   Diluted weighted average common shares (in thousands)   302,143     300,079     302,958     297,418     Amounts attributable to Cablevision Systems Corporation shareholders: Income from continuing operations, net of income taxes $ 112,061 $ 92,599 $ 251,207 $ 197,289 Income (loss) from discontinued operations, net of income taxes   -     6,343     (4,122 )   9,878   Net income $ 112,061   $ 98,942   $ 247,085   $ 207,167   (a)   Operating results of Madison Square Garden are included in discontinued operations for all periods presented as applicable. (b) The 2010 amount represents premiums paid to repurchase a portion of Cablevision senior notes due April 2012 and related fees associated with the tender offer and the write-off of unamortized deferred financing costs related to such repurchases.    

CABLEVISION SYSTEMS CORPORATION

CONDENSED CONSOLIDATED OPERATIONS DATA AND RECONCILIATION (Cont’d)

(Dollars in thousands, except per share data)

(Unaudited)

 

ADJUSTMENTS TO RECONCILE ADJUSTED OPERATING CASH FLOW TO OPERATING INCOME (LOSS)

  The following is a description of the adjustments to operating income (loss) in arriving at adjusted operating cash flow included in this earnings release:

• Depreciation and amortization (including impairments). This adjustment eliminates depreciation and amortization and impairments of long-lived assets in all periods.
• Restructuring credit (expense). This adjustment eliminates the expense or credit associated with restructuring activities related to the elimination of positions, facility realignment, asset impairments and other related activities in all periods.
• Share-based compensation benefit (expense). This adjustment eliminates the compensation benefit (expense) relating to stock options, stock appreciation rights, restricted stock, and restricted stock units granted under our employee stock plans and non-employee director plans in all periods.

    Nine Months Ended September 30,

2010(a)

   

2009(a)

CONSOLIDATED FREE CASH FLOW FROM CONTINUING OPERATIONS(b)

  Net cash provided by operating activities(c) $ 1,238,795 $ 1,141,096 Less: capital expenditures(d)   (582,395 )   (545,920 ) Consolidated free cash flow from continuing operations $ 656,400   $ 595,176   (a)   Operating results of Madison Square Garden are included in discontinued operations for all periods presented as applicable. Discontinued operations used a total of $9.2 million in cash for the nine months ended September 30, 2010 and provided a total of $19.9 million in cash for the nine months ended September 30, 2009. (b) See non-GAAP financial measures on page 4 of this release for a definition and discussion of Free Cash Flow from continuing operations. (c) The level of net cash provided by operating activities will continue to depend on a number of variables in addition to our operating performance, including the amount and timing of our interest payments and other working capital items. (d) See page 11 of this release for additional details relating to capital expenditures.  

CABLEVISION SYSTEMS CORPORATION

CONSOLIDATED RESULTS FROM CONTINUING OPERATIONS

(Dollars in thousands)

(Unaudited)

 

REVENUES, NET

    Three Months Ended

September 30,

   

2010(a)

   

2009(a)

%

Change

Cable Television $ 1,365,965 $ 1,303,074 4.8 % Optimum Lightpath 72,946 65,077 12.1 % Eliminations(b)   (5,461 )   (6,191 ) 11.8 % Total Telecommunications   1,433,450     1,361,960   5.2 % AMC/WE tv/IFC 228,157 206,175 10.7 % Other Programming(c) 68,300 60,166 13.5 % Eliminations(b)   (5,073 )   (6,236 ) 18.6 % Total Rainbow   291,384     260,105   12.0 % Newsday 76,484 79,944 (4.3 )% Other(d) 19,140 21,274 (10.0 )% Eliminations(e)   (12,907 )   (12,038 ) (7.2 )%

Total Cablevision

$

1,807,551

 

$

1,711,245

 

5.6

%

   

 

Nine Months Ended

September 30,

2010(a)

2009(a)

%

Change

  Cable Television $ 4,080,870 $ 3,873,477 5.4 % Optimum Lightpath 211,857 189,234 12.0 % Eliminations(b)   (16,111 )   (16,467 ) 2.2 % Total Telecommunications   4,276,616     4,046,244   5.7 % AMC/WE tv/IFC 663,449 599,322 10.7 % Other Programming(c) 188,768 179,517 5.2 % Eliminations(b)   (15,285 )   (17,140 ) 10.8 % Total Rainbow   836,932     761,699   9.9 % Newsday 231,278 252,032 (8.2 )% Other(d) 54,845 59,224 (7.4 )% Eliminations(e)   (37,539 )   (39,485 ) 4.9 % Total Cablevision $ 5,362,132   $ 5,079,714   5.6 % (a)   Operating results of Madison Square Garden are included in discontinued operations for all periods presented as applicable. (b) Represents intra-segment revenues. (c) Includes News 12 Networks, VOOM HD Networks (domestic programming discontinued in January 2009), Sundance, IFC Entertainment, Rainbow Network Communications, Rainbow Advertising Sales Corp. and other Rainbow businesses. (d) Represents net revenues primarily from Clearview Cinemas and PVI Virtual Media. (e) Represents inter-segment revenues.    

CABLEVISION SYSTEMS CORPORATION

CONSOLIDATED RESULTS FROM CONTINUING OPERATIONS

(Dollars in thousands)

(Unaudited)

 

ADJUSTED OPERATING CASH FLOW AND OPERATING INCOME (LOSS)

      Adjusted Operating

Cash Flow

      Operating Income

(Loss)

  Three Months Ended

September 30,

% Three Months Ended

September 30,

%

2010(a)

 

2009(a)

Change

2010(a)

 

2009(a)

Change   Cable Television $ 563,323 $ 550,917 2.3 % $ 372,393 $ 350,185 6.3 % Optimum Lightpath   28,548     24,075   18.6 %   5,676     4,112   38.0 % Total Telecommunications   591,871     574,992   2.9 %   378,069     354,297   6.7 % AMC/WE tv/IFC 99,516 95,864 3.8 % 82,309 79,230 3.9 % Other Programming(b)   (3,133 )   (9,927 ) 68.4 %   (19,283 )   (25,867 ) 25.5 % Total Rainbow   96,383     85,937   12.2 %   63,026     53,363   18.1 % Newsday 3,998 5,573 (28.3 )% (1,729 ) (824 ) (109.8 )% Other(c)   (30,504 )   (28,048 ) (8.8 )%   (38,180 )   (36,459 ) (4.7 )%

Total Cablevision

$

661,748

 

$

638,454

 

3.6

%

$

401,186

 

$

370,377

 

8.3

%

   

 

Adjusted Operating

Cash Flow

Operating Income

(Loss)

Nine Months Ended

September 30,

% Nine Months Ended

September 30,

%

2010(a)

2009(a)

Change

2010(a)

2009(a)

Change   Cable Television $ 1,694,929 $ 1,579,294 7.3 % $ 1,123,206 $ 966,015 16.3 % Optimum Lightpath   82,344     70,111   17.4 %   16,724     9,712   72.2 % Total Telecommunications   1,777,273     1,649,405   7.8 %   1,139,930     975,727   16.8 % AMC/WE tv/IFC 302,531 276,422 9.4 % 251,276 224,802 11.8 % Other Programming(b)   (37,865 )   (30,803 ) (22.9 )%   (86,854 )   (83,878 ) (3.5 )% Total Rainbow   264,666     245,619   7.8 %   164,422     140,924   16.7 % Newsday 10,416 10,684 (2.5 )% (7,700 ) (10,654 ) 27.7 % Other(c)   (102,591 )   (78,527 ) (30.6 )%   (123,610 )   (104,739 ) (18.0 )% Total Cablevision $ 1,949,764   $ 1,827,181   6.7 % $ 1,173,042   $ 1,001,258   17.2 % (a)   Operating results of Madison Square Garden are included in discontinued operations for all periods presented as applicable. (b) Includes News 12 Networks, VOOM HD Networks (domestic programming discontinued in January 2009), Sundance, IFC Entertainment, Rainbow Network Communications, Rainbow Advertising Sales Corp. and other Rainbow businesses. (c) Includes unallocated corporate general and administrative costs and costs related to the acquisition of Bresnan Cable, in addition to the operating results of MSG Varsity (launched in September 2009), Clearview Cinemas and PVI Virtual Media. In addition, 2009 amounts include costs historically allocated to Madison Square Garden that were not eliminated as a result of the MSG Distribution.    

CABLEVISION SYSTEMS CORPORATION

SUMMARY OF OPERATING STATISTICS

(Unaudited)

 

CABLE TELEVISION

    September 30,

2010

    June 30,

2010

    September 30,

2009

Revenue Generating Units

(in thousands)

Basic Video Customers 3,043 3,067 3,066 iO Digital Video Customers 2,921 2,926 2,888 Optimum Online High-Speed Data Customers 2,647 2,637 2,522 Optimum Voice Customers   2,129     2,120     2,001   Total Revenue Generating Units   10,740     10,750     10,477     Customer Relationships (in thousands)(a) 3,321 3,336 3,305       Homes Passed (in thousands) 4,867 4,853 4,803   Penetration Basic Video to Homes Passed 62.5 % 63.2 % 63.8 % iO Digital to Basic Penetration 96.0 % 95.4 % 94.2 % Optimum Online to Homes Passed 54.4 % 54.3 % 52.5 % Optimum Voice to Homes Passed 43.7 % 43.7 % 41.7 %       Revenues for the three months ended

(dollars in millions)

Video(b) $ 805 $ 814 $ 771 High-Speed Data 296 300 287 Voice 205 202 194 Advertising 36 33 28 Other(c)   24     23     23   Total Cable Television Revenue $ 1,366   $ 1,372   $ 1,303    

Average Monthly Revenue per Basic Video Customer (“RPS”)(d)

$

149.04

$

149.12

$

141.03

     

(a) Number of customers who receive at least one of the company’s services.

(b) Includes analog, digital, PPV, VOD and DVR revenue.

(c) Includes installation revenue, NY Interconnect, home shopping and other product offerings.

(d) RPS is calculated by dividing average monthly cable television GAAP revenue for the quarter by the average number of basic video customers for the quarter.

     

RAINBOW

September 30,

2010

June 30,

2010

September 30,

2009

 

Viewing Subscribers

(in thousands)

AMC 89,300 88,500 86,900 WE tv 64,000 63,700 62,200 IFC 51,100 51,200 49,800 Sundance 39,100 39,000 34,000    

CABLEVISION SYSTEMS CORPORATION

CAPITALIZATION AND LEVERAGE

(Dollars in thousands)

(Unaudited)

 

CAPITALIZATION

      September 30, 2010   Cash and cash equivalents $ 428,391   Bank debt $ 5,156,342 Senior notes and debentures 5,612,794 Senior subordinated notes 324,007 Collateralized indebtedness 352,605 Capital lease obligations   52,958

Debt

$

11,498,706

 

LEVERAGE

 

Debt

$

11,498,706

Less: Collateralized indebtedness of unrestricted subsidiaries(a) 352,605 Cash and cash equivalents   428,391 Net debt $ 10,717,710   Leverage Ratios(b) Consolidated net debt to AOCF leverage ratio(a)(c) 4.1x Restricted Group leverage ratio (Bank Test)(d)(e) 3.4x CSC Holdings notes and debentures leverage ratio(d)(e) 3.4x Cablevision senior notes leverage ratio(e)(f) 4.7x Rainbow National Services notes leverage ratio(g) 2.7x

(a)

 

Collateralized indebtedness is excluded from the leverage calculation because it is viewed as a forward sale of the stock of unaffiliated companies and the company's only obligation at maturity is to deliver, at its option, the stock or its cash equivalent.

(b)

Leverage ratios are based on face amount of outstanding debt.

(c)

AOCF is annualized based on the third quarter 2010 results, as reported.

(d)

Reflects the debt to cash flow ratios applicable under CSC Holdings’ bank credit agreement and senior notes indentures (which exclude Cablevision’s approximately $2.2 billion of senior notes and the debt and cash flows related to CSC Holdings’ unrestricted subsidiaries which are primarily comprised of Rainbow and Newsday). The annualized AOCF (as defined) used in the Restricted Group leverage ratio and the CSC Holdings notes and debentures leverage ratio is $2.34 billion and $2.33 billion, respectively.

(e)

Includes CSC Holdings’ guarantee of Newsday LLC’s $650 million senior secured credit facility.

(f)

Adjusts the debt to cash flow ratio as calculated under the CSC Holdings notes and debentures leverage ratio to include Cablevision’s approximately $2.2 billion of senior notes plus the $754 million of senior notes Cablevision contributed to Newsday Holdings LLC.

(g)

Reflects the debt to cash flow ratio under the Rainbow National Services notes indentures. The annualized AOCF (as defined) used in the notes ratio is $429.3 million.

   

CABLEVISION SYSTEMS CORPORATION

CAPITAL EXPENDITURES

(Dollars in thousands)

(Unaudited)

      Three Months Ended

September 30,

2010(a)

   

2009(a)

CAPITAL EXPENDITURES   Consumer premise equipment $ 75,738 $ 84,989 Scalable infrastructure 59,892 37,151 Line extensions 8,768 8,289 Upgrade/rebuild 5,164 5,541 Support   32,833     23,335   Total Cable Television 182,395 159,305 Optimum Lightpath   28,328     19,121   Total Telecommunications 210,723 178,426 Rainbow 7,120 4,404 Newsday 1,025 2,133 Other (Corporate, Theatres, MSG Varsity and PVI)   8,286     5,921  

Total Cablevision

$

227,154

 

$

190,884

     

 

Nine Months Ended

September 30,

2010(a)

2009(a)

CAPITAL EXPENDITURES   Consumer premise equipment $ 242,660 $ 262,836 Scalable infrastructure 111,165 101,305 Line extensions 25,453 22,734 Upgrade/rebuild 13,752 14,181 Support   82,329     60,780   Total Cable Television 475,359 461,836 Optimum Lightpath   72,779     55,738   Total Telecommunications 548,138 517,574 Rainbow 12,706 8,835 Newsday 3,342 5,704 Other (Corporate, Theatres, MSG Varsity and PVI)   18,209     13,807   Total Cablevision $ 582,395   $ 545,920  

(a) Capital expenditures of Madison Square Garden, now reflected in discontinued operations, are not included in the table above.