1
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON APRIL 27, 2001
REGISTRATION NO. 333-
- --------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM S-4
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
CSC HOLDINGS, INC.
(Exact name of registrant as specified in its charter)
DELAWARE 4841 11-2776686
(State or other jurisdiction of (Primary Standard Industrial (I.R.S. Employer
Incorporation or Organization) Classification Code Number) Identification No.)
1111 STEWART AVENUE
BETHPAGE, NEW YORK 11714
(516) 803-2300
(Address, including zip code, and telephone
number, including area code, of the
registrant's principal executive
offices)
ROBERT S. LEMLE, ESQ.
VICE CHAIRMAN, GENERAL COUNSEL AND SECRETARY
1111 STEWART AVENUE
BETHPAGE, NEW YORK 11714
(516) 803-2300
(Name, address, including zip code, and telephone number, including area code,
of agent for service)
COPY TO:
JOHN P. MEAD, ESQ.
SULLIVAN & CROMWELL
125 BROAD STREET
NEW YORK, NEW YORK 10004
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED OFFER TO THE PUBLIC: As soon
as practicable after the effective date of this registration statement.
If the securities being registered on this form are being offered in
connection with the formation of a holding company and there is
compliance with General Instruction G, check the following box. / /
If this form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, check the following box
and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering. / /
If this form is a post-effective amendment filed pursuant to Rule 462(d)
under the Securities Act, check the following box and list the Securities
Act registration statement number of the earlier effective registration
statement for the same offering. / /
CALCULATION OF REGISTRATION FEE
==================================================================================================================================
PROPOSED PROPOSED
TITLE OF EACH CLASS MAXIMUM OFFERING MAXIMUM
OF SECURITIES TO AMOUNT TO BE PRICE AGGREGATE OFFERING AMOUNT OF
BE REGISTERED REGISTERED PER UNIT (1) PRICE (1) REGISTRATION FEE
- ----------------------------------------------------------------------------------------------------------------------------------
7 5/8% Series B Senior Notes $1,000,000,000 100% $1,000,000,000 $250,000
==================================================================================================================================
(1) Estimated in accordance with Rule 457(f) under the Securities Act of 1933
solely for purposes of calculating the registration fee.
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL
FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(a) OF
THE SECURITIES ACT OF 1933 OR UNTIL THIS REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SECTION 8(a), MAY
DETERMINE.
- --------------------------------------------------------------------------------
2
The information in this prospectus is not complete and may be changed. We may
not sell these securities until the registration statement filed with the
Securities and Exchange Commission is effective. This prospectus is not an offer
to sell these securities and is not soliciting an offer to buy these securities
in any state where the offer or sale is not permitted.
PROSPECTUS (Subject to Completion)
Dated May ___, 2001
CSC HOLDINGS, INC.
OFFER TO EXCHANGE
$1,000,000,000
7 5/8% SERIES B SENIOR NOTES DUE 2011
WHICH HAVE BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933
FOR
ALL OUTSTANDING UNREGISTERED
7 5/8% SENIOR NOTES DUE 2011
We are offering to exchange $1,000,000,000 aggregate principal amount
of the outstanding, unregistered CSC Holdings 7 5/8% Senior Notes due 2011 that
you now hold for new, substantially identical 7 5/8% Series B Senior Notes due
2011 that will be free of the transfer restrictions of the old notes. THIS OFFER
WILL EXPIRE AT 5:00 P.M., NEW YORK CITY TIME, ON [DATE], 2001, UNLESS WE EXTEND
THE DEADLINE. You must tender your old, unregistered notes by the deadline to
obtain new, registered notes and the liquidity benefits the new notes offer.
We agreed with the initial purchasers of the old notes to make this
offer and to register the issuance of the new notes after the initial sale of
the old notes. This offer applies to any and all old notes tendered by the
deadline.
We will not list the new notes on any established exchange. The new
notes will have the same financial terms and covenants as the old notes, and are
subject to the same business and financial risks.
SEE "RISK FACTORS", BEGINNING ON PAGE 15 FOR A DISCUSSION OF THE
FACTORS THAT YOU SHOULD CONSIDER IN CONNECTION WITH THE EXCHANGE OFFER AND AN
EXCHANGE OF OLD NOTES FOR NEW NOTES.
Neither the SEC nor any state securities commission has approved or
disapproved of these securities or passed on the adequacy or accuracy of this
prospectus. It is illegal for anyone to tell you otherwise.
The date of this prospectus is May___, 2001
3
TABLE OF CONTENTS
PAGE
----
Additional Information About CSC Holdings.................................................................... 4
Summary...................................................................................................... 5
Risk Factors................................................................................................. 15
Use of Proceeds.............................................................................................. 22
CSC Holdings, Inc............................................................................................ 22
The Exchange Offer........................................................................................... 24
How to Tender Your Old Notes................................................................................. 30
Description of the New Notes................................................................................. 40
Material U.S. Federal Income Tax Considerations.............................................................. 58
Plan of Distribution......................................................................................... 58
Validity of the New Notes.................................................................................... 60
Experts...................................................................................................... 60
Available Information........................................................................................ 60
Where You Can Find More Information.......................................................................... 61
FORWARD-LOOKING STATEMENTS
This registration statement contains or incorporates by reference statements
that constitute forward-looking information within the meaning of the Private
Securities Litigation Reform Act of 1995. Investors are cautioned that 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 the forward-looking statements as a result of various
factors. Factors that may cause such differences to occur include, but are not
limited to:
- - the level of our revenues,
- - subscriber demand, competition, the cost of programming and industry
conditions,
- - the regulatory environment in which we operate,
- - the level of our capital expenditures and whether our expenses increase
as expected,
- - pending and future acquisitions and dispositions of assets,
- - market demand for new services,
- - whether any pending unconsummated transactions are consummated on the
terms and at the times set forth, if at all,
- - new competitors entering our franchise areas,
- - financial community and rating agency perceptions of our business,
operations, financial condition, and the industry in which we operate,
and
- - other risks and uncertainties inherent in the cable television business
and our other businesses.
-2-
4
We undertake no obligation to update or revise any forward-looking
statements, whether as a result of new information, future events or otherwise.
In light of these risks, uncertainties and assumptions, the forward-looking
events discussed in this registration statement might not occur. See "Risk
Factors" below for more information on the uncertainty of forward-looking
statements.
-3-
5
ADDITIONAL INFORMATION ABOUT CSC HOLDINGS
This document incorporates important business and financial information
about CSC Holdings from documents that are not included in or delivered with
this document. You can obtain documents incorporated by reference in this
document, other than some exhibits to those documents, by requesting them in
writing or by telephone from us at the following:
CSC HOLDINGS, INC.
1111 STEWART AVENUE
BETHPAGE, NEW YORK 11714
ATTENTION: SECRETARY
(516) 803-2300
YOU WILL NOT BE CHARGED FOR ANY OF THE DOCUMENTS THAT YOU REQUEST. IF
YOU WOULD LIKE TO REQUEST DOCUMENTS, PLEASE DO SO BY [DATE], 2001 IN ORDER TO
RECEIVE THEM BEFORE THE EXCHANGE OFFER EXPIRES ON [DATE], 2001.
Financial and other information relating to our business is contained
in this document including "Selected Financial Data" below.
See "Where You Can Find More Information" below to learn how you can
obtain this additional information.
WE ARE NOT MAKING THIS EXCHANGE OFFER TO, NOR WILL WE ACCEPT SURRENDERS
FOR EXCHANGE FROM, HOLDERS OF OLD NOTES IN ANY JURISDICTION IN WHICH THE
EXCHANGE OFFER WOULD VIOLATE SECURITIES OR BLUE SKY LAWS.
-4-
6
SUMMARY
This brief summary highlights selected information contained in this
document and documents we have incorporated in this document by reference. It
does not contain all of the information that is important to you. We urge you to
read carefully the entire document, the documents incorporated in this document
by reference and the other documents to which this document refers, including
our consolidated financial statements and the notes to those financial
statements, which are incorporated in this document by reference.
CSC HOLDINGS, INC.
We served approximately 3,193,000 cable television subscribers as of
December 31, 2000. Giving effect to the consummation of our transactions with
AT&T Corp. on January 5, 2001 we would have served approximately 2,961,000 cable
television subscribers as of December 31, 2000. Through Rainbow Media Holdings,
Inc., a company owned 74% by us and 26% by a subsidiary of National Broadcasting
Company, Inc., we own interests in and manage numerous national and regional
programming networks, the Madison Square Garden sports and entertainment
business and cable television advertising sales companies. Through Cablevision
Lightpath, Inc., our wholly owned subsidiary, we provide switched telephone
service. We also own Cablevision Electronics Investments, Inc., doing business
as The Wiz, an electronics retailer operating 42 retail locations in the New
York City metropolitan area, and CCG Holdings, Inc., doing business as Clearview
Cinemas, an owner and operator of motion picture theaters in the New York City
metropolitan area.
Our cable television systems serve subscribers in and around
metropolitan New York City, including in the boroughs of Brooklyn and the Bronx,
on Long Island, in Fairfield County, Connecticut, in New Jersey and in
Westchester, Rockland, Putnam, Orange, Ulster and Dutchess Counties, New York.
Our cable television systems have generally been characterized by relatively
high revenues per subscribers, which were $47.38 for December 2000, and a high
ratio of premium service units to basic subscribers, which was 2.6:1 as of
December 31, 2000 for the cable television systems in the New York metropolitan
area. In calculating revenues per subscriber, we include only recurring service
revenues and exclude installation charges and certain other revenues such as
advertising, pay-per-view and home shopping revenues.
For financing purposes, we are structured as a Restricted Group, which
includes all of our cable television systems and the commercial telephone
operations of Cablevision Lightpath on Long Island, and an Unrestricted Group,
which includes, among other subsidiaries and investments, Rainbow Media,
Cablevision Electronics and CCG Holdings. Our Restricted Group and our
Unrestricted Group are described more fully below under "CSC Holdings, Inc."
Our principal executive offices are located at 1111 Stewart Avenue,
Bethpage, New York 11714, and our main telephone number is (516) 803-2300.
For a further discussion of our businesses, we urge you to read our
Form 10-K incorporated by reference herewith. See "Where You Can Find More
Information" below.
-5-
7
THE EXCHANGE OFFER
THE EXCHANGE OFFER
We are offering to exchange $1,000 principal amount of our 7 5/8 Series B Senior
Notes due 2011 registered under the Securities Act of 1933, which we refer to as
"new notes", for each $1,000 principal amount of our outstanding 7 5/8% Senior
Notes due 2011 issued on March 22, 2001 in a private offering, which we refer to
as "old notes". In order to exchange an old note, you must follow the required
procedures and we must accept the old note for exchange. We will exchange all
notes validly offered for exchange, or "tendered", and not validly withdrawn. As
of the date of this document, there is $1 billion aggregate principal amount of
old notes outstanding.
EXPIRATION AND EXCHANGE DATES
Our offer expires at 5:00 p.m., New York City time, on [DATE], 2001, unless we
extend the deadline. We will complete the exchange and issue the new notes as
soon as possible after that date.
ACCRUED INTEREST ON THE NEW NOTES AND THE OLD NOTES
The new notes will bear interest from March 22, 2001, the date we issued the old
notes. If you hold old notes and they are accepted for exchange:
- - you will waive your right to receive any interest on your old notes
accrued from March 22, 2001 to the date the new notes are issued
- - you will receive the same interest payment on October 1, 2001, which is
the first interest payment date with respect to the old notes and the
new notes, that you would have received had you not accepted the
exchange offer.
REGISTRATION RIGHTS
You have the right to exchange old notes that you now hold for new notes. We
intend to satisfy this right by this exchange offer. The new notes will have
substantially identical terms to the old notes, except the new notes will be
registered under the Securities Act and will not have any registration rights.
After the exchange offer is complete, you will no longer be entitled to any
exchange or registration rights with respect to your notes.
CONDITIONS
The only condition to this offer is that the exchange offer does not violate the
securities laws. This offer applies to any and all notes validly tendered by the
deadline.
RESALE WITHOUT FURTHER REGISTRATION
We believe that you may offer for resale, resell and otherwise transfer the new
notes without complying with the registration and prospectus delivery provisions
of the Securities Act if the following is true:
- - you acquire the new notes issued in the exchange offer in the
ordinary course of your business,
- - you are not an "affiliate", as defined under Rule 405 of the
Securities Act, of CSC Holdings,
-6-
8
- - you are not participating, and do not intend to participate, and have
no arrangement or understanding with any person to participate, in the
distribution of the new notes issued to you in the exchange offer.
By signing the letter of transmittal and exchanging your notes as described
below, you will be making representations to this effect.
If you are a broker-dealer that acquired old notes as a result of market-making
or other trading activities, you must deliver a prospectus in connection with
any resale of the new notes as described in this summary under "Restrictions on
Sale by Broker-Dealers" below.
We base our belief on interpretations by the SEC staff in no-action letters
issued to other issuers in exchange offers like ours. We cannot guarantee that
the SEC would make a similar decision about our exchange offer. If our belief is
wrong, you could incur liability under the Securities Act. We will not protect
you against any loss incurred as a result of this liability under the Securities
Act.
LIABILITY UNDER THE SECURITIES ACT
You also may incur liability under the Securities Act if:
(1) any of the representations listed above are not true and
(2) you transfer any new note issued to you in the exchange offer
without:
- delivering a prospectus meeting the requirements of the
Securities Act
or
- an exemption from the requirements of the Securities
Act to register your new notes.
We will not protect you against any loss incurred as a result of this
liability under the Securities Act.
RESTRICTIONS ON SALE BY BROKER-DEALERS
If you are a broker-dealer that has received new notes for your own account in
exchange for old notes that were acquired as a result of market-making or other
trading activities, you must acknowledge in a letter of transmittal that you
will deliver a prospectus meeting the requirements of the Securities Act in
connection with any resale of the new notes. A broker-dealer may use this
prospectus for 90 days after the last exchange date for an offer to resell, a
resale or other retransfer of the new notes issued to it in the exchange offer.
PROCEDURES FOR TENDERING OLD NOTES
If you hold old notes and want to accept the exchange offer, you must either:
-7-
9
- - complete, sign and date the accompanying letter of transmittal, and
deliver it, together with your old notes and any other required
documents, to the exchange agent
or
- - if you hold old notes registered in the name of a broker-dealer,
arrange for The Depository Trust Company to give the exchange agent the
required information for a book-entry transfer.
You must mail or otherwise deliver this documentation or information to The Bank
of New York, as exchange agent, or The Depository Trust Company at the address
under "How to Tender Your Old Notes--Exchange Agent" below.
SPECIAL PROCEDURES FOR BENEFICIAL OWNERS
If you hold old notes registered in the name of a broker-dealer, commercial
bank, trust company or other nominee and you wish to exchange your old notes in
the exchange offer, you should promptly contact the registered holder of the old
notes and instruct it to tender on your behalf.
If you wish to tender on your own behalf, you must, before completing and
executing the letter of transmittal for the exchange offer and delivering your
old notes, either arrange to have your old notes registered in your name or
obtain a properly completed bond power from the registered holder. The transfer
of registered ownership may take a long time.
FAILURE TO EXCHANGE WILL AFFECT YOU ADVERSELY
If you are eligible to participate in the exchange offer and you do not tender
your old notes, you will not have any further registration or exchange rights
and your old notes will continue to be subject to transfer restrictions. These
transfer restrictions and the availability of new notes could adversely affect
the trading market for your old notes.
GUARANTEED DELIVERY PROCEDURES
If you wish to exchange your old notes and:
- - you cannot send the required documents to the exchange agent by
the expiration date of the exchange offer
or
- - you cannot complete the procedure for book-entry transfer on
time
or
- - your old notes are not immediately available
then you must follow the procedures described under "How to Tender Your Old
Notes--Guaranteed Delivery Procedures" below.
-8-
10
WITHDRAWAL RIGHTS
You may withdraw your tender at any time before 5:00 p.m., New York City time,
on [DATE - THE BUSINESS DAY BEFORE THE DAY THE OFFER EXPIRES], 2001, unless we
have already accepted your offer to exchange your old notes.
ACCOUNTING TREATMENT
We will not recognize a gain or loss for accounting purposes as a result of the
exchange.
FEDERAL INCOME TAX CONSEQUENCES
The exchange will not be a taxable event for U.S. federal income tax purposes.
This means you will not recognize any taxable gain or loss or any interest
income as a result of the exchange.
EXCHANGE AGENT
The Bank of New York is the exchange agent for the exchange offer. The Bank of
New York is also the trustee under the indenture governing the notes.
ABSENCE OF APPRAISAL RIGHTS
As a holder of old notes you are not entitled to appraisal or dissenters' rights
under Delaware law, the indenture governing the old notes or the indenture that
will govern the new notes. See "The Exchange Offer - Terms of the Exchange
Offer - No Appraisal or Dissenters' Rights" for more information.
THE NEW NOTES
The new notes have the same financial terms and covenants as the old
notes. In this document we sometimes refer to the old notes and the new notes
together as the "notes". The terms of the new notes are as follows:
ISSUER CSC Holdings, Inc.
SECURITIES OFFERED $1,000,000,000 principal amount of 7 5/8% Series B Senior Notes due
2011.
MATURITY April 1, 2011.
INTEREST RATE 7 5/8% per year.
INTEREST PAYMENT DATES Interest on the old notes began accruing on March 22, 2001, the date we
issued the old notes. Interest is payable on the old notes, and will be
payable on the new notes, on April 1 and October 1 of each year. Before
the date of this document no interest payments have been made on the old
notes. The first interest payment date for the new notes will be
October 1, 2001.
RANKING The new notes will be senior unsecured obligations and will rank equally
in right of payment with all of our other existing and future
unsubordinated indebtedness. All of our secured indebtedness will have a
prior claim with respect to the assets securing that indebtedness. The
liabilities, including trade payables, of our subsidiaries will have a
prior
-9-
11
claim with respect to the assets of those subsidiaries. In that regard,
certain of our subsidiaries have guaranteed our indebtedness under our
principal bank credit agreement, but these subsidiaries will not be
guarantors of the new notes.
As of December 31, 2000, as adjusted to reflect the AT&T exchange, the
impact of the MGM transaction (including the repayment of the loan from
Rainbow Media to CSC Holdings) and the monetization of our shares of
Charter, Adelphia and AT&T common stock (assuming $1,384 million of net
proceeds based on current stock prices), in each case as described in our
Form 10-K, as well as the sale of the old notes and the application of
the net proceeds thereof on March 22, 2001,
- we would have had no borrowings under our credit agreement,
$3,690 million of senior unsecured indebtedness, $1,049
million of senior subordinated indebtedness, $54 million of
capitalized leases and $1,006 million in cash,
- our Restricted Subsidiaries would have had no debt or capital
leases but, in accordance with the terms of our credit
agreement, certain of the subsidiaries would be guarantors of
any borrowings thereunder, and
- our Unrestricted subsidiaries would have had $437 million of
indebtedness and capitalized leases, and $1,384 million in
collateralized indebtedness reflecting monetization activity.
We have guaranteed the indebtedness of certain Restricted Subsidiaries
under their existing credit facility on a senior basis. We have also
guaranteed certain obligations of Unrestricted Subsidiaries that are
parties to the monetization transactions.
RESTRICTIONS The indenture for the notes, among other things, contains restrictions on
our ability and the ability of our Restricted Subsidiaries to:
- incur additional indebtedness,
- make certain dividend payments or payments to redeem or
retire capital stock,
- invest in unrestricted subsidiaries or affiliates,
- engage in certain transactions with affiliates,
- incur liens and
- merge or consolidate with or transfer all or substantially all of
our assets to another entity.
-10-
12
These covenants are described in greater detail under "Description
of the New Notes" below. These covenants are subject to important
exceptions and qualifications, which are also described under
"Description of the New Notes" below.
-11-
13
SELECTED FINANCIAL DATA
CSC HOLDINGS, INC.
The historical consolidated statement of operations data, except for
the deficiency of earnings available to cover fixed charges and the ratio of
earnings to fixed charges, and consolidated balance sheet data for each year
ended and as of December 31 in each year in the five-year period ended December
31, 2000, included in the following selected financial data, have been derived
from our consolidated financial statements, which were audited by KPMG LLP,
independent certified public accountants.
YEARS ENDED DECEMBER 31,
------------------------------------------------------------------------------------
2000 1999 1998 1997 1996
---------- ---------- ---------- ---------- ----------
DOLLARS IN THOUSANDS
CONSOLIDATED STATEMENT OF
OPERATIONS DATA(1):
Revenues, net......................... $4,411,048 $3,942,985 $3,265,143 $1,949,358 $1,315,142
Operating expenses:
Technical and operating........... 1,696,907 1,535,423 1,268,786 853,800 538,272
Retail electronics cost of sales(2) 549,978 484,760 367,102 -- --
Selling, general and
administrative.................. 1,178,934 1,203,119 906,465 514,574 313,476
Depreciation and amortization..... 1,018,246 893,797 734,107 499,809 388,982
---------- ---------- ---------- ---------- ----------
Operating income (loss)............... (33,017) (174,114) (11,317) 81,175 74,412
Other income (expense):
Interest expense, net............. (562,615) (465,740) (402,374) (363,208) (265,015)
Provision for preferential payment
to related party............. -- -- (980) (10,083) (5,600)
Write-off of deferred interest and
financing costs(3)........... (5,209) (4,425) (23,482) (24,547) (37,784)
Gain on redemption of subsidiary
preferred stock.............. -- -- -- 181,738 (4) --
Equity in net loss of affiliates.. (16,685) (19,234) (37,368) (27,165) (82,028)
Gain on sale of programming interests
and cable assets, net........ 1,209,865 -- 170,912 372,053 --
Impairment charges on investments. (146,429) (15,100) -- -- --
Minority interests................ 625 49,563 37,195 (60,694) (9,417)
Miscellaneous, net................ (51,978) (1,470) (19,218) (12,606) (6,647)
---------- ---------- ---------- ---------- ----------
Net income (loss)..................... 394,557 (630,520) (286,632) 136,663 (332,079)
Dividend requirements applicable to
preferred stock................... (165,304) (170,087) (161,872) (148,767) (127,780)
---------- ---------- ---------- ---------- ----------
Net income (loss) applicable to common
stockholder....................... 229,253 $(800,607) $(448,504) $(12,104) (459,859)
========== ========== ========== ========== ==========
Deficiency of earnings available to cover
fixed charges..................... -- $(630,520) $(286,632) -- $(332,079)
========== ========== ========== ========== ==========
Ratio of earnings to fixed charges.... 1.65x -- -- 1.36x --
========== ========== ========== ========== ==========
-12-
14
AS OF DECEMBER 31,
------------------------------------------------------------------------------------
2000 1999 1998 1997 1996
---- ---- ---- ---- ----
(DOLLARS IN THOUSANDS)
CONSOLIDATED BALANCE SHEET DATA(1):
Total assets........................ $8,273,290 $7,130,308 $7,061,025 $5,614,788 $3,034,725
Total debt.......................... 6,539,461 6,094,701 5,357,608 4,694,062 3,334,701
Redeemable preferred stock.......... 1,544,294 1,404,511 1,256,339 1,123,808 1,005,265
Stockholder's deficiency............ (2,566,803) (3,078,413) (2,286,744) (2,711,514) (2,707,026)
AS OF DECEMBER 31,
----------------------------------------------------------------------------------------
2000 1999 1998 1997 1996
---- ---- ---- ---- ----
(DOLLARS IN THOUSANDS)
STATISTICAL DATA (UNAUDITED)(1):
Homes passed by cable(5).......... 4,698,000 5,200,000 5,115,000 4,398,000 3,858,000
Basic service subscribers......... 3,193,000 3,492,000 3,412,000 2,844,000 2,445,000
Basic penetration(6).............. 68.0% 67.2% 66.7% 64.7% 63.4%
Number of premium television units 7,767,000 7,715,000 6,754,000 4,471,000 4,221,000
Average number of premium units per
basic subscriber............. 2.4 2.2 2.0 1.6 1.7
Average monthly revenue per basic
subscriber(7)................ $46.57 $44.38 $42.56 $38.53 $36.71
FINANCIAL RATIO AND OTHER DATA
(UNAUDITED)(1):
Operating profit before depreciation
and amortization to revenues. 22.3% 18.3% 22.1% 29.8% 35.2%
Total debt to operating profit before
depreciation and
amortization................. 6.6x 8.5x 7.4x 8.1x 7.2x
Operating profit before depreciation
and amortization to interest
expense...................... 1.7x 1.5x 1.8x 1.6x 1.7x
- --------------------------
(1) The consolidated statement operations, balance sheet, statistical,
financial ratio and other data reflect various acquisitions and
dispositions of cable television systems and other businesses during the
periods presented from the time of acquisition. Acquisitions during the
periods presented were accounted for under the purchase method of
accounting and, accordingly, the acquisition costs were allocated to the
net assets acquired based on their fair value, except for assets previously
owned by Mr. Dolan or affiliates of Mr. Dolan which were recorded at
historical cost.
(2) Beginning with the acquisition of the assets associated with The Wiz
consumer electronics store locations in February 1998, we record costs of
sales related to these operations, which includes the costs of merchandise
sold , including associated freight costs, as well as store occupancy and
buying costs.
(3) In April 1996, we wrote off approximately $24.0 million of deferred
interest and financing costs in connection with the refinancing of all
indebtedness of V Cable and VC Holding, Inc. and the formation of
Cablevision of Ohio. In September 1996, we wrote off approximately $10.7
million of deferred financing costs in connection with the refinancing of
our credit agreement, and in the fourth quarter of 1996, an additional $3.1
million of deferred financing costs relating to our MFR subsidiary were
written off in connection with a reorganization and refinancing of
Cablevision MFR, Inc. In July 1997, we paid a premium of approximately $8.4
million to redeem our 10% Senior Subordinated Debentures due 2004 and wrote
off deferred financing costs of approximately $5.3 million in connection
therewith. Also in 1997, we wrote off deferred financing costs of $4.1
million in connection with the repayment of Cablevision of Ohio's bank debt
and $6.5 million in connection with the amendment to and repayment of the
terms loans under the Madison Square Garden credit facility. In 1998, we
paid a premium of $14.9 million to
-13-
15
redeem the senior notes assumed by our CCG Holdings subsidiary in the
Clearview Cinemas acquisition and wrote off deferred financing costs of
$4.7 million in connection with the refinancing of our credit agreement. In
1999, we wrote off $4.4 million of deferred financing costs in connection
with amendments to our credit agreement. In 2000, we wrote off $5.2 million
of deferred financing costs in connection with amendments to, or
termination of, our credit agreements.
(4) In July 1997, we redeemed the Series A preferred stock of A-R Cable and
recognized a gain principally representing the reversal of accrued
preferred dividends in excess of amounts paid.
(5) Homes passed is based upon homes passed by cable actually marketed and does
not include multiple dwelling units passed by the cable plant that are not
connected to it.
(6) Basic penetration represents basic service subscribers at the end of the
period as a percentage of homes passed at the end of the period.
(7) Based on recurring service revenues, excluding installation charges and
certain other revenues such as advertising, pay-per-view and home shopping
revenues, for the month of December divided by the average number of basic
subscribers for that month.
-14-
16
RISK FACTORS
You should consider carefully the risk factors described below,
together with the other matters described in this document or incorporated by
reference, before deciding to exchange your old notes for new notes. The risk
factors below apply to both the old notes and the new notes.
RISK FACTORS RELATING TO THE NOTES
WE HAVE SUBSTANTIAL INDEBTEDNESS AND WE ARE HIGHLY LEVERAGED AS A RESULT
We have incurred, and we will continue to incur in the future,
substantial amounts of indebtedness to finance operations, expand and upgrade
cable operations and acquire other cable television systems, programming
networks, sources of programming and other businesses. We also have incurred,
and we will continue to incur, indebtedness in order to offer new services such
as high-speed Internet access, digital video service and commercial telephone
service to present and potential customers. In addition, we have borrowed, and
we will continue to borrow, money from time to time to refinance existing
indebtedness and redeem our mandatorily redeemable preferred stock. At December
31, 2000, our consolidated debt plus the amount of our two series of mandatorily
redeemable preferred stock totaled $8.1 billion. We urge you to read carefully
our consolidated financial statements contained in our Form 10-K which provides
more information about our indebtedness and our mandatorily redeemable preferred
stock.
Because of our substantial indebtedness and mandatorily redeemable
preferred stock, we are highly leveraged. This means that our payments on our
borrowings and our mandatorily redeemable preferred stock are significant in
relation to our revenues and cash flow. This leverage exposes us to significant
risk in the event of downturns in our businesses, in our industries or in the
economy generally, since our cash flows could decrease in this scenario, but our
required payments in respect of indebtedness and preferred stock will not
decrease.
THE NEW NOTES WILL BE EFFECTIVELY SUBORDINATED TO ALL EXISTING AND FUTURE
INDEBTEDNESS OF OUR SUBSIDIARIES
We are a holding company whose assets consist primarily of investments
in subsidiaries. Our principal subsidiaries are various entities that own cable
television systems, own interests in programming networks and own or operate
retail electronics stores and motion picture theaters. Our ability to pay
interest on and repay principal of our indebtedness and to make dividend
payments on and redemptions of our preferred stock is dependent primarily upon
the earnings of our subsidiaries and the distribution or other payment of these
earnings to us in the form of dividends, loans or advances.
Our subsidiaries are separate and distinct legal entities and have no
obligation, contingent or otherwise, to pay amounts due on our public
indebtedness or preferred stock or to make any funds available to us to do so.
Certain subsidiaries of Rainbow Media Holdings, Inc. are parties to credit
agreements that contain various financial and operating covenants that restrict
the payment of dividends or other distributions.
-15-
17
In addition, our subsidiaries' creditors would be entitled to a claim
on the assets of such subsidiaries prior to any of our claims as a stockholder.
Consequently, in the event of a liquidation or reorganization of any subsidiary,
creditors of that subsidiary are likely to be paid in full before any
distribution is made to us. To the extent that we are a creditor of such
subsidiary, our claims would be subordinated to any security interest in the
assets of such subsidiary and/or any indebtedness of such subsidiary senior to
that held by us.
SIGNIFICANT RESTRICTIVE COVENANTS IN OUR FINANCING AGREEMENTS LIMIT OUR
FLEXIBILITY
Our credit agreement and some of our debt instruments contain various
financial and operating covenants which, among other things, require the
maintenance of some financial ratios and restrict our ability to incur debt from
other sources and to use funds for various purposes, including investments in
some subsidiaries. Violation of these covenants could result in a default which
would permit the parties who have lent money under our credit agreement and
other debt instruments to:
- restrict our ability to borrow undrawn funds under our credit
agreement and
- require the immediate repayment of the borrowings under our
credit agreement and other debt instruments.
IF YOU DO NOT PARTICIPATE IN THE EXCHANGE OFFER, IT MAY BE HARDER FOR YOU TO
RESELL AND TRANSFER YOUR OLD NOTES
The old notes were not registered under the Securities Act or under the
securities laws of any state. Thus, you may not resell the old notes, offer them
for resale or otherwise transfer them unless they are subsequently registered or
resold under an exemption from the registration requirements of the Securities
Act and applicable state securities laws. If you do not exchange your old notes
for new notes by this exchange offer, or if you do not properly tender your old
notes in this exchange offer, you will not be able to resell, offer to resell or
otherwise transfer your old notes unless they are registered under the
Securities Act or unless you resell them, offer to resell or otherwise transfer
them under an exemption from the registration requirements of, or in a
transaction not subject to, the Securities Act. In addition, you will no longer
be able to obligate us to register your old notes under the Securities Act.
RISKS RELATING SPECIFICALLY TO CSC HOLDINGS
OUR FINANCIAL STATEMENTS REFLECT NET LOSSES AND A STOCKHOLDER'S DEFICIENCY
We have reported recent net losses applicable to our common stockholder
as follows:
FOR THE YEAR ENDED:
December 31, 1999.................................................... $800.6 million
December 31, 1998.................................................... $448.5 million
-16-
18
Net losses applicable to common stockholder are calculated by
subtracting (1) operating expenses, including depreciation and amortization, (2)
interest expense, (3) preferred stock dividends, (4) other income and expenses,
and (5) net profit or loss from affiliate operations from gross revenues.
As a result of $1.2 billion in gains from the exchange of our cable
television systems with Charter Communications, Inc. and Adelphia Communications
Corporation for common stock and cash, we had net income applicable to our
common stockholder of $229.3 million in 2000.
The net losses applicable to common stockholder described above
primarily reflect our high interest expense, preferred stock dividends and
depreciation and amortization charges, which we expect to continue. As a result
of these net losses applicable to common stockholder, at December 31, 2000, we
had a stockholder's deficiency of $2.6 billion. We urge you to read carefully
our consolidated financial statements contained in our Form 10-K, which provide
more detailed information about these net losses.
We expect our net losses to continue and to remain substantial for the
foreseeable future because:
- interest expense, preferred stock dividends and depreciation
and amortization charges relating to our existing indebtedness
and preferred stock and completed acquisitions and capital
expenditures will remain high for the foreseeable future,
- we expect that future indebtedness incurred to fund the
development of our existing and new businesses, including, but
not limited to, capital expenditures and additional
investments in our cable television plant and programming
operations, as well as potential future acquisitions, will
result in higher levels of interest expense, and
- we expect expenses and depreciation relating to each new
service we offer to be particularly high in relation to the
amount of revenues the new service will generate in its first
years of operations, resulting in significant net losses each
time we begin offering a new service or supporting a new
business we acquire.
WE WILL NEED SIGNIFICANT ADDITIONAL BORROWINGS AND WE HAVE COMMITTED TO
SIGNIFICANT FUTURE CAPITAL EXPENDITURES AND OTHER CAPITAL COMMITMENTS.
Our business is very capital-intensive. Operating, maintaining and
upgrading our cable television plant require significant amounts of cash
payments to third parties. In addition, we are incurring, and will continue to
incur, significant expenses to start up and operate new businesses, like
high-speed Internet access, digital video service and residential telephone
service, and to roll out the non-Long Island based commercial telephone
businesses. Capital expenditures for our cable, commercial telephone and New
Media businesses were $598 million in 1999 and $1,033 million in 2000 and, as
previously announced, are forecasted to be between $1.0 billion and $1.1 billion
in 2001. We expect these expenses to continue to grow over the next several
years, as we continue to introduce these and possibly other new services to our
customers.
-17-
19
Some of our subsidiaries have substantial future capital commitments in
the form of long-term contracts that require substantial payments over a long
period of time. For example, rights agreements with sports teams under which
their games are carried on the networks of certain of our programming
subsidiaries almost always involve multi-year contracts that are difficult and
expensive to terminate. Accordingly, if we are forced to cancel or scale back
current and future spending programs as described above, our choice of which
spending programs to cancel or scale back may be limited.
We also incur significant start-up costs in funding new cable
programming services before they have positive cash flow, typically during their
start-up and development. Our acquisition and development of programming,
entertainment facilities and other businesses, like electronics retailing and
movie theaters, also result in significant expenditures. We also pay a
significant amount of interest in respect of our outstanding indebtedness, and
significant amounts of cash will be required to repay our existing indebtedness
and redeem our mandatorily redeemable preferred stock.
We will not be able to generate sufficient cash internally to finance
these projects, to repay our indebtedness at maturity and to redeem our
mandatorily redeemable preferred stock at the mandatory redemption date. Because
we will be unable to generate sufficient cash internally for these purposes, we
will have to do one of the following:
- raise additional capital, through debt or equity issuances or
both,
- expand credit availability under our existing credit
agreement,
- cancel or scale back current and future spending programs, or
- sell or monetize assets.
However, you should not assume that we will be able to raise any additional
capital. Moreover, if we are unable to pursue our current and future spending
programs, we may not be able to compete effectively.
A SIGNIFICANT AMOUNT OF OUR BOOK VALUE CONSISTS OF INTANGIBLE ASSETS
At December 31, 2000 we reported $8.3 billion of consolidated total
assets, of which $2.4 billion were intangible. Intangible assets include assets
like franchises from city and county governments to operate cable television
systems, affiliation agreements, amounts representing the cost of some acquired
assets in excess of their fair value and some deferred costs associated with
past financings, acquisitions and other transactions.
You should not assume that we would receive any cash from the voluntary
or involuntary sale of these intangible assets. We urge you to read carefully
our consolidated financial statements contained in our Form 10-K, which provide
more detailed information about these intangible assets.
WE ARE CONTROLLED BY THE DOLAN FAMILY
-18-
20
We are a wholly owned subsidiary of Cablevision. Cablevision has two
classes of common stock:
- Class B common stock, which is generally entitled to ten votes
per share and is entitled collectively to elect 75% of the
Cablevision board of directors, and
- Class A common stock, which is entitled to one vote per share
and is entitled collectively to elect the remaining 25% of the
Cablevision board of directors.
Cablevision's two classes of common stock each consist of two series,
the Cablevision NY Group and the Rainbow Media Group, and both series within a
class generally vote together.
Our chairman, Charles F. Dolan, as of January 1, 2001, owned less than
1% of the Class A common stock, 54.2% of the Class B common stock and 41.4% of
the total voting power of both classes of common stock. In addition, certain
trusts for the benefit of members of his family, as of January 1, 2001, owned
2.4% of the Class A common stock, 45.8% of the Class B common stock and 35.4% of
the total voting power of both classes of common stock. The Dolan family is
therefore able to prevent or cause a change in control of Cablevision and no
person interested in acquiring Cablevision or CSC Holdings will be able to do so
without obtaining the consent of the Dolan family.
As a result of Mr. Dolan's stock ownership and the stock ownership of
his family members, Mr. Dolan has the power to elect all the directors of
Cablevision subject to election by holders of Class B stock. In addition, Dolan
family members may control stockholder decisions on matters in which holders of
Cablevision common stock vote together as a class. These matters include the
amendment of some provisions of Cablevision's certificate of incorporation and
the approval of fundamental corporate transactions, including mergers. Because
the tracking stock distribution, described under "CSC Holdings, Inc.", was a pro
rata distribution, the tracking stock distribution will not alter the control
rights of Mr. Dolan and his family members.
In addition, because the affirmative vote or consent of the holders of
at least 66 2/3% of the outstanding shares of the Class B stock, voting
separately as a class, is required to approve:
- the authorization or issuance of any additional shares of
Class B stock and
- any amendment, alteration or repeal of any of the provisions
of Cablevision's certificate of incorporation that adversely
affects the powers, preferences or rights of the Class B
stock.
Dolan family members also have the power to prevent such issuance or amendment.
The voting rights of the Class B stock beneficially owned by Mr. Dolan and his
spouse will not be modified as a result of any transfer of legal or beneficial
ownership of the Class B stock.
REGULATORY RISKS ARE INHERENT AND SUBSTANTIAL IN OUR BUSINESSES
-19-
21
General. The FCC and state and local governments extensively regulate
the basic rates we may charge our customers for video services. They also
regulate us in other ways that affect the daily conduct of our video delivery
and video programming businesses, our telephone business and possibly in the
future, our high-speed Internet access business. Any action by the FCC, the
states of New York, New Jersey or Connecticut, or concerted action by local
regulators, the likelihood or extent of which we cannot predict, could have a
material financial effect on us.
For example, in 1992, Congress enacted the Cable Television Protection
and Competition Act of 1992 (the "1992 Cable Act"), which was a significant
change in the regulatory framework under which cable television systems operate.
In 1993 and 1994, the FCC ordered reductions in cable television rates based on
the 1992 Cable Act. Congress subsequently enacted the Telecommunications Act of
1996, which relaxed the regulation of higher tier cable television rates. This
higher tier rate deregulation went into effect on March 31, 1999. The regulation
by local governments of basic cable rates will continue in most communities in
which we operate.
Recent FCC and Congressional issues may affect our businesses. A
federal appellate court recently held unconstitutional the FCC's national 30%
limit on the number of households that any cable company can serve. This ruling
could affect us because of AT&T's investment in Cablevision through its
acquisition of TCI.
Some parties have proposed statutory and regulatory requirements that
would force cable systems to provide carriage to third-party Internet service
providers. The FCC thus far has rejected these requests, but legislation has
been introduced in Congress and several state legislatures that would
effectively require that this access be provided. We cannot predict at this time
whether or to what extent this legislation might be successful or whether the
FCC might reevaluate its initial conclusion not to impose such regulation.
Several federal court decisions have invalidated local franchising authority
requirements that the cable system in the community provide access to all
third-party Internet service providers. Some local franchising authorities where
we operate might attempt to impose a similar requirement on us. These local
franchising authority actions, and the subsequent court decisions, have led the
FCC to open an inquiry into how to classify the provision of this service by a
cable system or other multichannel video provider, and whether to impose any
regulatory obligations on such a service.
Our current franchises are generally non-exclusive, and our franchisors
need not renew our franchises. Our cable television systems are operated
primarily under non-exclusive franchise agreements with local government
franchising authorities, in some cases with the approval of state cable
television authorities. Consequently, our business is dependent on our ability
to obtain and renew our franchises. Although we have never lost a franchise as a
result of a failure to obtain a renewal, our franchises are subject to
non-renewal or termination under some circumstances. In some cases, franchises
have not been renewed at expiration, and we operate under either temporary
operating agreements or without a license while negotiating renewal terms with
the franchising authorities.
WE ARE EXPOSED TO A SIGNIFICANT AND CREDIBLE RISK OF COMPETITION.
-20-
22
General. Cable operators compete with a variety of television
programming distribution systems, including:
- broadcast television stations,
- direct broadcasting satellite systems,
- multichannel multipoint distribution services,
- satellite master antenna systems and
- private home dish earth stations.
For example, two direct broadcasting satellite systems are now operational in
the United States. Companies with substantial resources like Hughes Electronics
Corp. have invested in direct broadcast satellite systems. Cable systems also
compete with the entities that make videotaped movies and programs available for
home rental.
The Telecommunications Act of 1996 gives telephone companies and other
video providers the option of providing video programming to subscribers through
"open video systems," a wired video delivery system similar to a cable
television system that may not require a local cable franchise. RCN, an open
video system operator that teams with electric utilities, is currently operating
systems in parts of New York City and New Jersey that compete with us.
Additional video competition to cable systems is possible from new wireless
local multipoint distribution services authorized by the FCC, for which spectrum
was recently auctioned by the FCC.
The 1992 Cable Act prohibits a cable programmer that is owned by or
affiliated with a cable operator, like our subsidiary Rainbow Media, from:
- unreasonably discriminating among or between cable operators
and other multichannel video distribution systems with respect
to the price, terms and conditions of sale or distribution of
the programmer's service and
- unreasonably refusing to sell service to any multichannel
video programming distributor.
Competition from telephone companies. The Cable Communications Policy
Act of 1984 barred co-ownership of telephone companies and cable television
systems operating in the same service areas. The Telecommunications Act of 1996
repealed this restriction and permits a telephone company to provide video
programming directly to subscribers in its telephone service territory, subject
to some regulatory requirements. Southern New England Telephone Co. in
Connecticut has obtained a statewide franchise to construct and operate cable
television systems in several communities in which we currently hold cable
franchises, and began offering service in competition with us, but has now
petitioned the state to discontinue its video operations. In addition to now
-21-
23
being able to compete with us for video customers, telephone companies are
substantial competitors to our high-speed Internet access and switched telephone
businesses.
USE OF PROCEEDS
We will not receive any cash proceeds from the issuance of the new
notes as described in this document. We will receive in exchange old notes in
like principal amount. The old notes surrendered in exchange for the new notes
will be retired and canceled and cannot be reissued. Therefore, the issuance of
the new notes will not result in any change in our indebtedness.
We used the cash proceeds from the issuance of the old notes to repay
borrowings under our credit agreement and for general corporate purposes. The
borrowings under our credit agreement bear interest at floating rates, and the
amount of commitment available under the credit agreement begins to decrease in
June 2001. The average effective annual interest rate on all borrowings under
our credit agreement as of December 31, 2000 was 8.03%. For more information
about our credit agreement, see "Management's Discussion and Analysis--Liquidity
and Capital Resources" in our Form 10-K.
CSC HOLDINGS, INC.
We are one of the largest operators of cable television systems in the
United States, with approximately 2,831,000 subscribers as of December 31, 2000
in the New York metropolitan area, based on the number of basic subscribers in
systems that we majority own and manage. We also have ownership interests in
companies that produce and distribute national and regional programming services
and provide advertising sales services for the cable television industry and in
the Madison Square Garden sports and entertainment business, also known as
"MSG". Through Cablevision Lightpath, Inc., our wholly owned subsidiary, we
provide switched telephone service. We also own Cablevision Electronics
Investments, Inc., doing business as The Wiz, an electronics retailer operating
42 retail locations in the New York City metropolitan area, and CCG Holdings,
Inc., doing business as Clearview Cinemas, an owner and operator of motion
picture theaters in the New York City metropolitan area.
For financing purposes, we are structured as a Restricted Group and an
Unrestricted Group. Our Restricted Group includes (1) all of our cable
operations, which are located primarily in and around metropolitan New York
City, including Long Island, and (2) the commercial telephone operations of our
subsidiary, Cablevision Lightpath, on Long Island, New York.
Our Unrestricted Group includes primarily:
- Rainbow Media, our 74%-owned subsidiary that conducts our
programming and entertainment activities and includes an 80%
interest in each of AMC, Bravo, The Independent Film Channel
and WE: Women's Entertainment; a 60% general partnership
interest in Regional Programming Partners; a 50% general
partnership interest in National Sports Partners; and a 50%
general partnership interest in National Advertising Partners,
-22-
24
- Rainbow Advertising, which sells advertising time on behalf of
our cable television systems, certain of Rainbow Media's
programming networks and some unaffiliated cable television
systems,
- CSC Technology, Inc., our subsidiary engaged in research and
development of new technology,
- Cablevision Electronics Investments, Inc., doing business as
The Wiz,
- CSC At Home Holding Corporation, our subsidiary that holds
warrants to acquire approximately 20.4 million shares of
common stock of At Home Corporation,
- CCG Holdings, doing business as Clearview Cinemas,
- our interest in Northcoast Communications, LLC, an entity that
holds certain licenses to conduct a personal communications
service business, and
- our shares of common stock of AT&T, Adelphia and Charter.
Our Restricted Group and certain members of our Unrestricted Group are
individually and separately financed. The indebtedness of each entity in our
Unrestricted Group is non-recourse to us, except that, in certain cases, we have
pledged our capital stock in such entities to the relevant lenders or provided
guarantees of certain obligations. Rainbow Media's historical cash requirements
have been financed by sales of equity interests in its programming businesses
and through separate external debt financing of AMC and MSG, which are, as to
the assets of Rainbow Media and such subsidiaries, structurally senior to the
notes offered by this registration statement and our other indebtedness. We
refer you to "Management's Discussion and Analysis--Liquidity and Capital
Resources" in our Form 10-K for a discussion of the restrictions on investments
by the Restricted Group and certain other matters. See "Where You Can Find More
Information" below.
In February 2001, Cablevision's shareholders approved amendments to
Cablevision's charter to allow the creation of a series of Cablevision stock
called the Rainbow Media Group tracking stock. On March 29, 2001, we made a pro
rata distribution of the Rainbow Media Group tracking stock to holders of
Cablevision common stock, which was redesignated as Cablevision NY Group common
stock. The Rainbow Media Group tracking stock is a separate class of Cablevision
common stock. The Rainbow Media Group is not a separate legal entity. All of the
businesses and assets included in the Rainbow Media Group are held by
Unrestricted Subsidiaries of CSC Holdings and those subsidiaries will continue
to be Unrestricted Subsidiaries following the tracking stock distribution.
-23-
25
STRATEGY
Our strategy is to concentrate our cable television systems in and
around the New York metropolitan area with a view to being a significant cable
provider in this market, to maximize our revenue per subscriber by marketing
premium services, to develop and promote niche programming and entertainment
services, and to remain an industry leader in upgrading the technological
capabilities of our systems.
We believe that our cable television systems on Long Island, New York
comprise the largest contiguous group of cable television systems under common
ownership in the United States as measured by number of subscribers. By
developing systems in and around the New York metropolitan area, including
expansion through acquisitions in areas in which we have existing systems, we
have been able to realize economies of scale in the operation and management of
our systems and to capitalize on opportunities to create and market programming
of regional interest.
Through the current and planned upgrade of our cable plant, including
the utilization of fiber optic cable and associated electronics, we are seeking
to significantly increase our analog channel capacity and add new digital
channel capacity that will facilitate the startup of such adjunct businesses as
information services, interactive services, including Internet access, near
video on demand, video on demand, residential telephone and commercial
telephone. To successfully roll out these adjunct new businesses significantly
beyond the initial development phases, we will require additional capital. For
more information regarding the capital needed for our future expenditures, see
"Risk Factors--We Will Need Significant Additional Borrowings and We Have
Committed to Significant Future Capital Expenditures and Other Capital
Commitments".
THE EXCHANGE OFFER
WHY WE ARE OFFERING TO EXCHANGE YOUR OLD NOTES FOR NEW NOTES
We originally sold the outstanding 7 5/8% Senior Notes due 2011 on
March 22, 2001, in a transaction exempt from the registration requirements of
the Securities Act. Banc of America Securities LLC, Bear, Stearns & Co. Inc.,
Merrill Lynch, Pierce, Fenner & Smith Incorporated, Chase Securities Inc., TD
Securities (USA) Inc., BMO Nesbitt Burns Corp., BNY Capital Markets, Inc.,
Barclays Capital Inc., Credit Lyonnais Securities (USA) Inc., First Union
Securities, Inc., Fleet Securities, Inc., RBC Dominion Securities Corporation
and Scotia Capital (USA) Inc. as the initial purchasers, then resold the notes
to qualified institutional buyers under Rule 144A and to persons in offshore
transactions under Regulation S under the Securities Act. As of the date of this
document, $1 billion aggregate principal amount of old notes is outstanding.
As a condition to the initial sale of the old notes, we entered into a
registration rights agreement with the initial purchasers under which we agreed
that we would, at our own cost:
(1) file an exchange offer registration statement under the
Securities Act with the SEC by May 21, 2001
-24-
26
and
(2) use our reasonable best efforts to:
- cause the exchange offer registration statement to be
declared effective under the Securities Act by September 18,
2001,
and
- keep the exchange offer open for no less than 30 days,
and
- complete the exchange 30-40 days after notice of the
exchange is mailed to holders of old notes.
We agreed to issue and exchange the new notes for all old notes
tendered and not withdrawn before the exchange offer expires.
THE SUMMARY IN THIS DOCUMENT OF THE REGISTRATION RIGHTS AGREEMENT IS
NOT COMPLETE AND IS SUBJECT TO, AND IS QUALIFIED IN ITS ENTIRETY BY, ALL THE
PROVISIONS OF THE REGISTRATION RIGHTS AGREEMENT. WE URGE YOU TO READ THE ENTIRE
REGISTRATION RIGHTS AGREEMENT CAREFULLY.
We filed a copy of the registration rights agreement as an exhibit to
the registration statement of which this document is a part. We intend to
satisfy some of our obligations under the registration rights agreement with the
registration statement.
TERMS OF THE EXCHANGE OFFER
TIMING OF THE EXCHANGE OFFER. We are offering the new notes in exchange
for your old notes. We will keep the exchange offer open for at least 30 days,
or longer if required by applicable law, after the date notice of the exchange
offer is mailed to the holders of the old notes.
YOU MAY TENDER YOUR OLD NOTES ONLY IN MULTIPLES OF $1,000. On the terms
and subject to the conditions in this document and in the accompanying letter of
transmittal, we will accept any and all old notes validly tendered and not
withdrawn before 5:00 p.m., New York City time, on [EXCHANGE DATE]. We will
issue $1,000 principal amount of new notes in exchange for each $1,000 principal
amount of outstanding old notes accepted in the exchange offer. You may tender
some or all of your old notes under the exchange offer. However, you may tender
old notes only in multiples of $1,000.
FORM AND TERMS OF THE NEW NOTES. The form and terms of the new notes
will be the same as the form and terms of the old notes except that:
- the new notes will have a different CUSIP number from the old
notes,
-25-
27
- the new notes will be registered under the Securities Act and
will not have legends restricting their transfer,
- the new notes will not contain terms providing for payment of
liquidated damages under circumstances relating to the timing
of the exchange offer, as described under "Liquidated Damages"
below and
- holders of the new notes will not be entitled to any
registration rights under the registration rights agreement
because these rights will terminate when the exchange offer is
completed.
The new notes will evidence the same debt as the old notes and will be
issued under, and be entitled to the benefits of, the indenture governing the
old notes. We will treat both series of notes as a single class of debt
securities under the indenture.
WHO WILL RECEIVE THIS DOCUMENT. We will mail this document and the
letter of transmittal to all registered holders of the old notes as of [RECORD
DATE].
NO APPRAISAL OR DISSENTERS' RIGHTS. In connection with the exchange
offer, you do not have any appraisal or dissenters' rights under the General
Corporation Law of the State of Delaware or the indenture governing the old
notes. We intend to conduct the exchange offer in accordance with the
registration rights agreement, the applicable requirements of the Securities
Exchange Act of 1934 and the rules and regulations of the SEC related to
exchange offers.
ACCEPTANCE OF TENDERED OLD NOTES. We will be deemed to have accepted
validly tendered old notes when, as and if we have given oral or written notice
of acceptance to The Bank of New York, as the exchange agent for the exchange
offer. The exchange agent will act as agent for the tendering holders for the
purpose of receiving the new notes from us.
If we do not accept your old notes tendered for exchange because you:
- invalidly tendered your old notes
or
- some other events specified in this document have occurred
or
- you submitted your old notes for a greater principal amount
than you wanted to exchange,
we will return the certificates for the unaccepted old notes, without expense,
to you. If you tender old notes by book-entry transfer in the exchange agent
account at The Depository Trust Company in accordance with the book-entry
transfer procedures described below, any non-exchanged old notes
-26-
28
will be credited to an account maintained with The Depositary Trust Company as
soon as possible after the expiration date of the exchange offer.
EXPIRATION DATE
The exchange offer will expire at 5:00 p.m., New York City time, on
[DATE], 2001, unless we extend the exchange offer in our sole discretion. If we
extend the exchange offer, the expiration date is the latest date and time to
which we extend the exchange offer.
WE CAN AMEND OR EXTEND THE EXCHANGE OFFER
We can extend the exchange offer. To do so we must:
- notify the exchange agent of any extension either orally or in
writing
and
- make an announcement of the extension before 9:00 a.m., New
York City time, on the next business day after the previous
date the exchange offer was scheduled to expire.
We also reserve the right to:
- delay accepting any old notes
or
- terminate the exchange offer and refuse to accept any old
notes not previously accepted if any of the conditions
described below under "How to Tender Your Old Notes--
Conditions" shall have occurred and we have not waived them.
If we delay, extend or terminate the exchange offer we must give oral or written
notice to the exchange agent.
We may also amend the terms of the exchange offer in any way we
determine is advantageous to holders of the old notes. If this change is
material, we will promptly disclose that amendment in a manner reasonably
calculated to inform holders of the old notes.
We do not have to publish, advertise or otherwise communicate any
public announcement of any delay, extension, amendment or termination that we
may choose to make, other than by making a timely release to the Dow Jones News
Service.
-27-
29
INTEREST ON THE NEW NOTES
Interest is payable on the old notes, and will be payable on the new
notes, on April 1 and October 1 of each year. The new notes will accrue interest
on the same terms as the old notes, at the rate of 7 5/8% per year from March
22, 2001, the date we issued the old notes. If you hold old notes and they are
accepted for exchange you will waive your right to receive any payment in
respect of interest on your old notes accrued from March 22, 2001 to the date
the new notes are issued. Thus, if you exchange your old notes for new notes you
will receive the same interest payment on October 1, 2001, which is the first
interest payment date with respect to the old notes and the new notes, that you
would have received had you not accepted the exchange offer.
RESALE OF THE NEW NOTES
We believe that you will be allowed to resell the new notes to the
public without registration under the Securities Act and without delivering a
prospectus that satisfies the requirements of the Securities Act, if you can
make the representations set forth in the letter of transmittal, described in
"How To Tender Your Old Notes--Representations on Tendering Old Notes". If you
intend to participate in a distribution of the new notes, however, you must
comply with the registration requirements of the Securities Act and deliver a
prospectus, unless an exemption from registration is otherwise available. In
addition, you cannot be an "affiliate" of CSC Holdings as defined in Rule 405
under the Securities Act. You must represent to us in the letter of transmittal
accompanying this document that you meet these conditions exempting you from the
registration requirements.
We base our view on interpretations by the staff of the SEC in
no-action letters issued to other issuers in exchange offers like ours. We have
not, however, asked the SEC to consider this particular exchange offer in the
context of a no-action letter. Therefore, you cannot be sure that the SEC will
treat this exchange offer in the same way it has treated other exchange offers
in the past. If our belief is wrong, you could incur liability under the
Securities Act. We will not protect you against any loss incurred as a result of
this liability under the Securities Act.
A broker-dealer that has bought old notes for market-making or other
trading activities must deliver a prospectus in order to resell any new notes it
has received for its own account in the exchange. A broker-dealer may use this
prospectus to resell any of its new notes. We agreed in the registration rights
agreement to make this prospectus, and any amendment or supplement to this
prospectus, available to any broker-dealer that requests copies until 90 days
after the last exchange date. See "Plan of Distribution" below for more
information regarding broker-dealers.
SHELF REGISTRATION STATEMENT
We will file a shelf registration statement with the SEC if:
(1) applicable law or SEC policy does not permit the exchange
offer
or
-28-
30
(2) the exchange offer is not completed by September 18, 2001.
The shelf registration statement will register the old notes for public
resale. We will use our best efforts to cause the shelf registration statement
to become effective and to keep the shelf registration statement effective until
March 22, 2003.
LIQUIDATED DAMAGES
We will have to pay higher annual interest rates on the notes if:
- we do not file the exchange offer registration statement by
May 21, 2001
or
the exchange offer is not completed by September 18, 2001
or
- the shelf registration statement is not declared effective by
September 18, 2001
The interest rates will increase as follows:
MAXIMUM
INTEREST RATE
EVENT INTEREST RATE INCREASE INCREASE
----- ---------------------- -------------
The exchange offer registration - 1/4% per year each day 1% per year
statement is not filed by for the first 30 days after
May 21, 2001 May 21, 2001 that the
exchange offer
registration statement is
not filed
- An additional 1/4% per year
each day at the beginning of
each subsequent 30-day period
that the exchange offer
registration statement is not
filed
The exchange offer is not - 1/4% per year each day 1% per year
completed by for the first 180 days
September 18, 2001 after September 18,
2001 that the exchange
offer is not completed
-29-
31
MAXIMUM
INTEREST RATE
EVENT INTEREST RATE INCREASE INCREASE
----- ---------------------- -------------
- An additional 1/4% per
year each day at the
beginning of each
subsequent 90-day
period that the exchange
offer is not completed
The shelf registration statement - 1/4% per year each day 1% per year
is not declared effective by for the first 180 days
September 18, 2001 after September 18,
2001 that the shelf
registration statement is
not declared effective
- An additional 1/4% per
year each day at the
beginning of each
subsequent 90-day
period that the shelf
registration statement is
not declared effective
The interest rate will be reduced to the original rate once we:
- file the exchange offer registration statement
or
- complete the exchange offer
or
- the shelf registration statement is declared effective.
HOW TO TENDER YOUR OLD NOTES
PROCEDURES FOR TENDERING
To tender your old notes in the exchange offer, you must do the
following:
- properly complete, sign and date the letter of transmittal or
a facsimile of the letter of transmittal,
-30-
32
- if the letter of transmittal so requires, have the signatures
on the letter of transmittal or facsimile of the letter of
transmittal guaranteed and
- mail or otherwise deliver the letter of transmittal, or
facsimile, together with your old notes and any other required
documents, to the exchange agent before 5:00 p.m., New York
City time, on the expiration date of the exchange offer.
In order for the tender to be effective, the exchange agent must
receive the old notes, a completed letter of transmittal and all other required
documents before 5:00 p.m., New York City time, on the expiration date.
You may also deliver your old notes by using the book-entry transfer
procedures described below. DTC authorizes its participants that hold old notes
on behalf of beneficial owners of old notes through DTC to tender their old
notes as if they were holders. To effect a tender of old notes, DTC participants
should:
- complete and sign the letter of transmittal or a manually
signed facsimile of the letter,
- have the signature on the letter of transmittal or facsimile
of the letter of transmittal guaranteed if the instructions to
the letter of transmittal so require,
- mail or deliver the letter of transmittal, or the manually
signed facsimile, to the exchange agent according to the
procedure described under "Procedures for Tendering" above
and
- transmit their acceptance to DTC through its automated tender
offer program for which the transaction will be eligible and
follow the procedure for book-entry transfer described below
under "Book-Entry Transfer".
YOU MUST FOLLOW ALL PROCEDURES TO EFFECT A VALID TENDER. DELIVERY OF
DOCUMENTS TO DTC IN ACCORDANCE WITH ITS PROCEDURES DOES NOT CONSTITUTE DELIVERY
TO THE EXCHANGE AGENT.
By tendering, you will make the representations described under the
heading "Representations on Tendering Old Notes". In addition, each
participating broker-dealer must acknowledge that it will deliver a prospectus
in connection with any resale of the new notes. See "Plan of Distribution".
Your tender and our acceptance of the tender will constitute the
agreement between you and us set forth in this document and in the letter of
transmittal.
YOU HAVE THE SOLE RISK OF THE METHOD YOU CHOOSE TO HAVE THE OLD NOTES
AND THE LETTER OF TRANSMITTAL AND ALL OTHER REQUIRED DOCUMENTS DELIVERED TO THE
EXCHANGE AGENT.
As an alternative to delivery by mail, holders may wish to consider
overnight or hand delivery service. IN ALL CASES, YOU SHOULD ALLOW SUFFICIENT
TIME TO ASSURE DELIVERY TO THE EXCHANGE
-31-
33
AGENT BEFORE THE EXPIRATION DATE. No letter of transmittal, old notes or
book-entry confirmation should be sent to us. Holders may request their
respective brokers, dealers, commercial banks, trust companies or nominees to
effect the above transactions on their behalf.
BENEFICIAL OWNERS
If you hold old notes and your old notes are registered in the name of
a broker-dealer, commercial bank, trust company or other nominee and you wish to
tender your old notes, you should contact the registered holder promptly and
instruct it to tender on your behalf. See "Instructions to Registered Holder
and/or Book-Entry Transfer Facility Participant from Beneficial Owner" included
with the letter of transmittal.
If you hold old notes that are registered as described above and you
want to tender on your own behalf, you must, before completing and executing the
letter of transmittal and delivering your old notes, either make appropriate
arrangements to register ownership of the old notes in your name or obtain a
properly completed bond power from the registered holder. The transfer of
registered ownership may take a long time.
SIGNATURES ON LETTER OF TRANSMITTAL
Generally, an eligible guarantor institution must guarantee signatures
on a letter of transmittal or a notice of withdrawal unless the old notes are
tendered:
- by a registered holder who has not completed the box entitled
"Special Issuance Instructions" or "Special Delivery
Instructions" on the letter of transmittal or
- for the account of an eligible guarantor institution.
An "eligible guarantor institution" is:
- a member firm of a registered national securities exchange or
of the National Association of Securities Dealers, Inc.,
- a commercial bank or trust company having an office or
correspondent in the U.S. or
- an "eligible guarantor institution" within the meaning of Rule
17Ad-15 under the Exchange Act which is a member of one of the
recognized signature guarantee programs identified in the
letter of transmittal.
If a person other than the registered holder of any old notes listed in
the letter of transmittal signed the letter of transmittal, the old notes must
be endorsed or accompanied by a properly completed bond power. The bond power
must authorize this person to tender the old notes on behalf of the registered
holder and must be signed by the registered holder as the registered holder's
name appears on the old notes.
-32-
34
If trustees, executors, administrators, guardians, attorneys-in-fact,
officers of corporations or others acting in a fiduciary or representative
capacity sign the letter of transmittal or any old notes or bond powers, these
persons should so indicate when signing, and unless waived by us, submit with
the letter of transmittal evidence satisfactory to us of their authority to so
act.
BOOK-ENTRY TRANSFER
Within two business days after the date of this prospectus the exchange
agent will establish a new account or utilize an existing account with respect
to the old notes at the book-entry transfer facility, The Depository Trust
Company, for the purpose of facilitating the exchange offer. Subject to the
establishment of the accounts, any financial institution that is a participant
in DTC's system may make book-entry delivery of old notes by causing DTC to
transfer the old notes into the exchange agent's account with respect to the old
notes in accordance with DTC's procedures. Although delivery of the old notes
may be effected through book-entry transfer into the exchange agent's account at
DTC, the exchange agent must receive an appropriate letter of transmittal
properly completed and duly executed with any required signature guarantee or an
agent's message and all other required documents at its address listed below
under " Exchange Agent" on or before the expiration date of the exchange offer,
or, if the guaranteed delivery procedures described below are complied with,
within the time period provided under those procedures.
DELIVERY OF DOCUMENTS TO DTC DOES NOT CONSTITUTE DELIVERY TO THE EXCHANGE AGENT
The term "agent's message" means a message transmitted by DTC to, and
received by, the exchange agent, which states that DTC has received an express
acknowledgment from the participant in DTC tendering the old notes stating:
- the aggregate principal amount of old notes which have been
tendered by the participant,
- that the participant has received, and agrees to be bound by,
the terms of the letter of transmittal and
- that we may enforce this agreement against the participant.
Delivery of an agent's message will also constitute an acknowledgment
from the tendering DTC participant that the representations contained in the
letter of transmittal and described below in this document are true and correct.
ACCEPTANCE OF TENDERED NOTES
We will determine, in our sole discretion, all questions as to the
validity, form, acceptance, withdrawal and eligibility, including time of
receipt, of tendered old notes. We reserve the absolute right:
- to reject any and all old notes not properly tendered,
-33-
35
- to reject any old notes if our acceptance would, in the
opinion of our counsel, be unlawful and
- to waive any irregularities or conditions of tender as to
particular old notes.
Our interpretation of the terms and conditions of the exchange offer,
including the instructions in the letter of transmittal, will be final and
binding on all parties.
Unless waived, you must cure any defects or irregularities in
connection with tenders of old notes within a period of time that we will
determine. Neither we, nor the exchange agent, nor any other person will be
liable for failure to give notice of any defect or irregularity with respect to
any tender of old notes. We will not deem a tender of an old note to have been
made until the defects or irregularities mentioned above have been cured or
waived.
The exchange agent will return to the tendering holders any old notes
received by the exchange agent that are not properly tendered and as to which
the defects or irregularities have not been cured or waived, unless otherwise
provided in the letter of transmittal, as soon as practicable after the exchange
offer expires.
REPRESENTATIONS ON TENDERING OLD NOTES
By surrendering old notes in the exchange offer, you will be telling us
that, among other things:
- you are acquiring the new notes issued in the exchange offer
in the ordinary course of your business,
- you are not an "affiliate", as defined in Rule 405 under the
Securities Act, of CSC Holdings,
- you are not participating, do not intend to participate and
have no arrangement or understanding with any person to
participate, in the distribution of the new notes issued to
you in the exchange offer,
- you have full power and authority to tender, sell, assign and
transfer the old notes tendered,
- we will acquire good, marketable and unencumbered title to the
old notes being tendered, free and clear of all security
interests, liens, restrictions, charges, encumbrances,
conditional sale agreements or other obligations relating to
their sale or transfer, and not subject to any adverse claim
when the old notes are accepted by us and
- you acknowledge and agree that if you are a broker-dealer
registered under the Exchange Act or you are participating in
the exchange offer for the purposes of
-34-
36
distributing the new notes, you must comply with the
registration and prospectus delivery requirements of the
Securities Act in connection with a secondary resale of the
new notes, and you cannot rely on the position of the SEC's
staff in their no-action letters.
If you are a broker-dealer and you will receive new notes for your own
account in exchange for old notes that were acquired as a result of
market-making activities or other trading activities, you will be required to
acknowledge in the letter of transmittal that you will deliver a prospectus in
connection with any resale of the new notes.
GUARANTEED DELIVERY PROCEDURES
If you wish to tender your old notes and:
- you cannot deliver your old notes, the letter of transmittal
or any other required documents to the exchange agent before
the expiration date,
- you cannot complete the procedure for book-entry transfer
before the expiration date or
- your old notes are not immediately available in order for you
to meet the expiration date deadline,
then you may participate in the exchange offer if:
(1) the tender is made through an eligible institution,
(2) before the expiration date, the exchange agent receives from
the eligible guarantor institution a properly completed and
duly executed notice of guaranteed delivery, substantially in
the form provided by us, by facsimile transmission, mail or
hand delivery, containing:
- the name and address of the holder of the old notes,
the certificate number or numbers of the old notes
and the principal amount of old notes tendered,
- a statement that the tender is being made thereby and
- a guarantee that, within five business days after the
expiration date, the eligible guarantor institution
will deposit the letter of transmittal or facsimiles
of the letter of transmittal, together with the
certificate or certificates representing the old
notes in proper form for transfer or an agent's
message and a confirmation of book-entry transfer of
the old notes into the exchange agent's account at
DTC, and any other documents required by the letter
of transmittal will be deposited by the eligible
guarantor institution with the exchange agent and
-35-
37
(3) the exchange agent receives, within five business days after
the expiration date:
- a properly completed and executed letter of
transmittal or facsimile or an agent's message in the
case of a book-entry transfer,
- the certificate or certificates representing all
tendered old notes in proper form for transfer or a
confirmation of book-entry transfer of the old notes
into the exchange agent's account at the book-entry
transfer facility, and
- all other documents required by the letter of
transmittal.
WITHDRAWAL OF TENDERS
Except as otherwise provided in this document, you may withdraw your
tender of old notes at any time before 5:00 p.m., New York City time, on the
date the exchange offer expires.
To withdraw a tender of old notes in the exchange offer, the exchange
agent must receive a letter or facsimile notice of withdrawal at its address set
forth below under "Exchange Agent" before 5:00 p.m., New York City time, on the
expiration date. Any notice of withdrawal must:
- specify the name of the person who deposited the old notes to
be withdrawn,
- identify the old notes to be withdrawn including the
certificate number or numbers and aggregate principal amount
of old notes to be withdrawn or, in the case of old notes
transferred by book-entry transfer, the name and number of the
account at DTC to be credited and otherwise comply with the
procedures of the transfer agent,
- be signed by the holder in the same manner as the original
signature on the letter of transmittal by which the old notes
were tendered, including any required signature guarantees, or
be accompanied by documents of transfer sufficient to have the
trustee under the indenture governing the old notes register
the transfer of the old notes into the name of the person
withdrawing the tender; and
- specify the name in which the old notes being withdrawn are to
be registered, if different from that of the person who
deposited the notes.
We will determine in our sole discretion all questions as to the
validity, form and eligibility, including time of receipt, of notices of
withdrawal. Our determination will be final and binding on all parties. Any old
notes withdrawn in this manner will be deemed not to have been validly tendered
for purposes of the exchange offer. We will not issue new notes unless the old
notes withdrawn in this manner are validly retendered. We will return to you any
old notes that you have tendered but that we have not accepted for exchange
without cost as soon as practicable after withdrawal, rejection of tender or
termination of the exchange offer. You may retender properly withdrawn old notes
by following one of the procedures described above under "Procedures for
Tendering" at any time before the expiration date.
-36-
38
CONDITIONS
Despite any other term of the exchange offer, we will not be required
to accept for exchange, or exchange new notes for, any old notes and we may
terminate the exchange offer as provided in this document before the old notes
are accepted, if:
- any action or proceeding is instituted or threatened in any
court or by or before any governmental agency with respect to
the exchange offer which, in our reasonable judgment, might
materially impair our ability to proceed with the exchange
offer
or
- any law, statute, rule or regulation is proposed, adopted or
enacted, or the staff of the SEC interprets any existing law,
statute, rule or regulation in a manner, which, in our
reasonable judgment, might materially impair our ability to
proceed with the exchange offer
or
- we deem it advisable to terminate the exchange offer.
The conditions listed above are for our sole benefit and we may assert
these rights regardless of the circumstances giving rise to any of these
conditions. We may waive these conditions in our reasonable discretion in whole
or in part at any time and from time to time. If we fail at any time to exercise
any of the above rights, the failure will not be deemed a waiver of those
rights, and those rights will be deemed ongoing rights which may be asserted at
any time and from time to time.
If we determine in our reasonable discretion that we may terminate the
exchange offer, we may:
- refuse to accept any old notes and return all tendered old
notes to the tendering holders
or
- extend the exchange offer and retain all old notes tendered
before the exchange offer expires, subject, however, to the
rights of holders to withdraw these old notes
or
- waive unsatisfied conditions with respect to the exchange
offer and accept all properly tendered old notes that have not
been withdrawn. If this waiver constitutes a material change
to the exchange offer, we will disclose this change by means
of a prospectus supplement that will be distributed to the
registered holders of the old notes. If the exchange offer
would otherwise expire, we will extend the exchange offer for
5-10
-37-
39
business days, depending on how significant the waiver is and
the manner of disclosure to registered holders.
EXCHANGE AGENT
We have appointed The Bank of New York as the exchange agent for the
exchange offer. You should direct any questions, requests for assistance and
requests for additional copies of this document or of the letter of transmittal
to The Bank of New York, as follows:
BY MAIL, HAND OR OVERNIGHT COURIER:
The Bank of New York
Corporate Trust Services Window
101 Barclay Street - 21W
New York, New York 10286
Attention: Santino Ginocchietti
BY FACSIMILE:
(212) 815-5915
CONFIRM BY TELEPHONE:
(212) 815-6331
The Bank of New York is also the trustee under the indenture governing
the notes.
FEES AND EXPENSES
We will pay the expenses of this exchange offer. We are making the
principal solicitation for tenders of old notes by mail. Our officers and
regular employees, however, may make additional solicitation by telegraph,
facsimile, e-mail, telephone or in person. We have not retained any
dealer-manager in connection with the exchange offer and will not make any
payments to brokers, dealers or others soliciting acceptances of the exchange
offer. We will, however, pay the exchange agent reasonable and customary fees
for its services and will reimburse it for its reasonable out-of-pocket expenses
in connection with providing the services. We may also reimburse brokerage
houses and other custodians, nominees and fiduciaries for their out-of-pocket
expenses incurred in forwarding copies of this document, letters of transmittal
and related documents to beneficial holders of the old notes.
We will pay any transfer taxes applicable to the exchange of old notes.
If, however, a transfer tax is imposed for any reason other than the exchange,
then the person surrendering the notes will pay the amount of any transfer
taxes. If you do not submit satisfactory evidence of payment of taxes or of an
exemption with the letter of transmittal, we will bill you directly for the
amount of those transfer taxes.
-38-
40
ACCOUNTING TREATMENT
We will record the new notes at the same carrying value as the old
notes as reflected in our accounting records on the date of exchange. Therefore,
we will not recognize a gain or loss for accounting purposes. We will amortize
the expenses of the exchange offer and the unamortized expenses related to the
issuance of the old notes over the term of the notes.
VOLUNTARY PARTICIPATION
YOU DO NOT HAVE TO PARTICIPATE IN THE EXCHANGE OFFER. You should
carefully consider whether to accept the terms and conditions of this offer. We
urge you to consult your financial and tax advisors in deciding what action to
take with respect to the exchange offer. See "Risk Factors--Risk Factors
Relating to the Notes--If You Do Not Participate in the Exchange Offer, It May
Be Harder for You to Resell and Transfer Your Old Notes" for more information
about the risks of not participating in the exchange offer.
CONSEQUENCES OF FAILURE TO EXCHANGE
If you are eligible to participate in the exchange offer but do not
tender your old notes, you will not have any further registration rights and
your old notes will continue to be subject to transfer restrictions.
Accordingly, you may resell your old notes that are not exchanged only:
- to us, on redemption of notes or otherwise,
- so long as the old notes are eligible for resale under Rule
144A under the Securities Act, to a person whom you reasonably
believe is a "qualified institutional buyer" within the
meaning of Rule 144A purchasing for its own account or for the
account of a qualified institutional buyer in a transaction
meeting the requirements of Rule 144A,
- in accordance with Rule 144 under the Securities Act or
another exemption from the registration requirements of the
Securities Act,
- outside the U.S. to a foreign person in accordance with the
requirements of Regulation S under the Securities Act, or
- under an effective registration statement under the Securities
Act, in each case in accordance with all other applicable
securities laws.
REGULATORY APPROVALS
We do not have to comply with any federal or state regulatory
requirements and we do not have to obtain any approvals in connection with the
exchange offer.
-39-
41
DESCRIPTION OF THE NEW NOTES
We issued the old notes, and will issue the new notes, under the
indenture, dated as of March 22, 2001, between us and The Bank of New York, as
trustee. The following description of the material provisions of the indenture
is only a summary. It does not set out the indenture in its entirety. WE URGE
YOU TO READ THE INDENTURE BECAUSE IT, AND NOT THIS DESCRIPTION, DEFINES YOUR
RIGHTS AS A HOLDER OF THE NOTES.
In this section, the term "we" refers to CSC Holdings, Inc. and not to
any of the subsidiaries. The definitions of some capitalized terms used in the
following summary are set forth below under "Certain Definitions".
We will consider the old notes and the new notes collectively to be a
single class for all purposes under the indenture, including waivers,
amendments, redemptions and offers to purchase.
GENERAL
The new notes will mature on April 1, 2011, will be limited to
$1,000,000,000 aggregate principal amount and will be our unsecured obligations.
The new notes will bear interest at the rate of 7-5/8% per year from March 22,
2001 or from the most recent interest payment date to which interest has been
paid. Interest is payable semi-annually on April 1 and October 1 of each year,
commencing October 1, 2001, to the person in whose name the note is registered
at the close of business on the March 15 and September 15, as the case may be,
next preceding the interest payment date.
Principal of and interest on the new notes will be payable, and the new
notes will be exchangeable and transferable, at our office or agency in The City
of New York, which initially will be the corporate trust office of the trustee
at 101 Barclay Street, 21st Floor, New York, New York 10286. The new notes will
be issued only in fully registered form without coupons, in denominations of
$1,000 or any integral multiple thereof. No service charge will be made for any
registration of transfer or exchange of the new notes, except for any tax or
other governmental charge that may be imposed in connection therewith.
The indenture does not contain any provisions that limit our ability to
incur indebtedness or that give holders of the new notes protection in the event
of a highly leveraged or similar transaction, other than as described below
under "Certain Covenants--Limitation on Indebtedness".
OPTIONAL REDEMPTION
The new notes are not subject to redemption at our option prior to
maturity.
SINKING FUND
The new notes will not be entitled to the benefits of a sinking fund.
-40-
42
RANKING
The old notes are, and the new notes will be, senior unsecured
obligations and will rank equally in right of payment with all of our other
existing and future unsubordinated indebtedness. All of our secured indebtedness
will have a prior claim with respect to the assets securing this indebtedness.
The liabilities, including trade payables, of our subsidiaries will have a prior
claim with respect to the assets of those subsidiaries. In that regard, some of
the subsidiaries in our Restricted Group have guaranteed our indebtedness under
our credit agreement, but these subsidiaries will not be guarantors of the new
notes.
As of December 31, 2000, after giving effect to the AT&T transaction,
the impact of the MGM transaction (including the repayment of the loan from
Rainbow Media to us) and the monetization of our shares of Charter, Adelphia and
AT&T common stock (assuming $1,384 million of net proceeds based on current
stock prices), each as described in our form 10-K, as well as the sale of the
old notes and the application of the estimated net proceeds thereof on March 22,
2001:
- we would have had no borrowings under our credit facility,
$3,690 million of senior unsecured indebtedness, $1,049
million of senior subordinated indebtedness and obligations,
$54 million of capitalized leases and $1,006 million in cash,
- our Restricted Subsidiaries would have had no debt or capital
leases, but, in accordance with the terms of our credit
agreement, would be guarantors of any borrowings thereunder,
and
- our Unrestricted Subsidiaries would have had $437 million of
indebtedness and capitalized leases, and $1,384 million in
collateralized indebtedness reflecting monetization activity.
CSC Holdings has guaranteed the indebtedness of certain Restricted
Subsidiaries under an existing credit facility on a senior basis. CSC Holdings
has also guaranteed certain obligations of Unrestricted Subsidiaries that are
parties to the monetization transactions.
CERTAIN DEFINITIONS
The following definitions apply to the indenture relating to the old
notes and the new notes. You should read the indenture for the full definition
of all these terms.
"Acquired Indebtedness" means Indebtedness of a person.
- existing at the time the person is merged with or into CSC
Holdings or a subsidiary or becomes a subsidiary or
- assumed in connection with the acquisition of assets from the
person.
-41-
43
"Affiliate" means, with respect to any specified person, any other
person directly or indirectly controlling or controlled by or under direct or
indirect common control with the specified person. For the purposes of this
definition, "control" when used with respect to any specified person means the
power to direct the management and policies of the person, directly or
indirectly, whether through the ownership of voting securities, by contract or
otherwise, and the terms "controlling" and "controlled" have meanings
correlative to the foregoing.
"Annualized Operating Cash Flow" means, for any period of three
complete consecutive calendar months, an amount equal to Operating Cash Flow for
the period multiplied by four.
"Average Life" means, at any date of determination with respect to any
debt security, the quotient obtained by dividing:
(a) the sum of the products of (1) the number of years from the
date of determination to the dates of each successive
scheduled principal payment of the debt security and (2) the
amount of the principal payment by
(b) the sum of all the principal payments.
"Capitalized Lease Obligation" means any obligation of a person to pay
rent or other amounts under a lease with respect to any property, whether real,
personal or mixed, acquired or leased by the person and used in its business
that is required to be accounted for as a liability on the balance sheet of the
person in accordance with GAAP, and the amount of the Capitalized Lease
Obligation will be the amount so required to be accounted for as a liability.
"Cash Flow Ratio" means, as at any date, the ratio of:
(a) the sum of the aggregate outstanding principal amount of all
Indebtedness of CSC Holdings and the Restricted Subsidiaries
determined on a consolidated basis but excluding all Interest
Swap Obligations entered into by CSC Holdings or any
Restricted Subsidiary and one of the lenders under our credit
agreement outstanding on the date plus (but without
duplication of Indebtedness supported by letters of credit)
the aggregate undrawn face amount of all letters of credit
outstanding on the date to
(b) Annualized Operating Cash Flow determined as at the last day
of the most recent month for which financial information is
available.
"Consolidated Net Tangible Assets" of any person means, as of any date:
(a) all amounts that would be shown as assets on a consolidated
balance sheet of the person and its Restricted Subsidiaries
prepared in accordance with GAAP, less
(b) the amount thereof constituting goodwill and other intangible
assets as calculated in accordance with GAAP.
-42-
44
"Cumulative Cash Flow Credit" means the sum of:
- cumulative Operating Cash Flow during the period commencing on
July 1, 1988 and ending on the last day of the most recent
month preceding the date of the proposed Restricted Payment
for which financial information is available or, if cumulative
Operating Cash Flow for the period is negative, minus the
amount by which cumulative Operating Cash Flow is less than
zero, plus
- the aggregate net proceeds received by CSC Holdings from the
issuance or sale, other than to a Restricted Subsidiary, of
its capital stock, other than Disqualified Stock, on or after
January 1, 1992, plus
- the aggregate net proceeds received by CSC Holdings from the
issuance or sale, other than to a Restricted Subsidiary, of
its capital stock, other than Disqualified Stock, on or after
January 1, 1992, on the conversion of, or exchange for,
indebtedness of CSC Holdings or any Restricted Subsidiary or
from the exercise of any options, warrants or other rights to
acquire capital stock of CSC Holdings.
For purposes of this definition, the net proceeds in property other
than cash received by CSC Holdings as contemplated by the second two bullet
points above will be valued at the fair market value of the property, as
determined by our board of directors, whose good faith determination will be
conclusive, at the date of receipt by CSC Holdings.
"Cumulative Interest Expense" means, for the period commencing on July
1, 1988 and ending on the last day of the most recent month preceding the
proposed Restricted Payment for which financial information is available, the
aggregate of the interest expense of CSC Holdings and its Restricted
Subsidiaries for the period, determined on a consolidated basis in accordance
with GAAP, including interest expense attributable to Capitalized Lease
Obligations.
"Debt" with respect to any person means, without duplication, any
liability, whether or not contingent:
- in respect of borrowed money or evidenced by bonds, notes,
debentures or similar instruments or letters of credit, or
reimbursement agreements with respect thereto, but excluding
reimbursement obligations under any surety bond,
- representing the balance deferred and unpaid of the purchase
price of any property, including under Capitalized Lease
Obligations, except any balance that constitutes a trade
payable,
- under Interest Swap Agreements, as defined in our credit
agreement, entered into under our credit agreement,
- under any other agreement related to the fixing of interest
rates on any Indebtedness, like an interest swap, or collar
agreement, if and to the extent any of the foregoing
-43-
45
would appear as a liability on a balance sheet of the person
prepared on a consolidated basis in accordance with GAAP, or
- guarantees of items of other persons which would be included
within this definition for other persons, whether or not the
guarantee would appear on the balance sheet.
"Debt" does not include:
- Disqualified Stock,
- any liability for federal, state, local or other taxes owed or
owing by the person or
- any accounts payable or other liability to trade creditors
arising in the ordinary course of business, including
guarantees thereof or instruments evidencing these
liabilities.
"Disqualified Stock" means, with respect to the notes, any capital
stock of CSC Holdings or any Restricted Subsidiary which, by its terms, or by
the terms of any security into which it is convertible or for which it is
exchangeable, or on the happening of any event, matures or is mandatorily
redeemable, under a sinking fund obligation or otherwise, or is redeemable at
the option of the holder thereof, in whole or in part, on or before the maturity
date of the notes.
"Generally Accepted Accounting Principles"or "GAAP" means generally
accepted accounting principles in the U.S., consistently applied, which were in
effect as of August 21, 1997.
"Indebtedness" with respect to any person means the Debt of the person,
provided that, for purposes of the definition of "Indebtedness", including the
term "Debt" to the extent incorporated in the definition, and for purposes of
the definition of "Event of Default", the term "guarantee" will not be
interpreted to extend to a guarantee under which recourse is limited to the
capital stock of an entity that is not a Restricted Subsidiary.
"Interest Swap Obligations" means, with respect to any person, the
obligations of the person under any arrangement with any other person whereby,
directly or indirectly, the person is entitled to receive from time to time
periodic payments calculated by applying either a floating or a fixed rate of
interest on a stated notional amount in exchange for periodic payments made by
the person calculated by applying a fixed or a floating rate of interest on the
same notional amount.
"Investment" means any advance, loan, account receivable, other than an
account receivable arising in the ordinary course of business, or other
extension of credit (excluding, however, accrued and unpaid interest in respect
of any advance, loan or other extension of credit) or any capital contribution
to (by means of transfers of property to others, payments for property or
services for the account or use of others, or otherwise), any purchase or
ownership of any stock, bonds, notes, debentures or other securities, including,
without limitation, any interests in any partnership or joint venture, of, or
any bank accounts with or guarantee of any Indebtedness or other obligations of,
any Unrestricted Subsidiary or Affiliate that is not a subsidiary of CSC
Holdings, provided that
-44-
46
- the term "Investment" will not include any transaction that
would otherwise constitute an Investment of CSC Holdings or a
subsidiary of CSC Holdings to the extent that the
consideration provided by CSC Holdings or the subsidiary in
connection therewith consists of capital stock of CSC
Holdings, other than Disqualified Stock, and
- the term "guarantee" will not be interpreted to extend to a
guarantee under which recourse is limited to the capital stock
of an entity that is not a Restricted Subsidiary.
"Lien" means any lien, security interest, charge or encumbrance of any
kind, including any conditional sale or other title retention agreement, any
lease in the nature of a security interest and any agreement to give any
security interest. A person will be deemed to own subject to a Lien any property
which the person has acquired or holds subject to the interest of a vendor or
lessor under a conditional sale agreement, capital lease or other title
retention agreement.
"Mandatorily Redeemable Preferred Stock" means CSC Holdings Series H
Redeemable Exchangeable Preferred Stock, Series M Redeemable Exchangeable
Preferred Stock and any series of preferred stock of CSC Holdings issued in
exchange for, or the proceeds of which are used to repurchase, redeem, defease
or otherwise acquire, all or any portion of the Series H Redeemable Exchangeable
Preferred Stock, Series M Redeemable Exchangeable Preferred Stock or any other
Mandatorily Redeemable Preferred Stock.
"Operating Cash Flow" means, for any period, the sum of the following
for CSC Holdings and the Restricted Subsidiaries for the period, determined on a
consolidated basis in accordance with GAAP, except for the amortization of
deferred installation income which will be excluded from the calculation of
Operating Cash Flow for all purposes of the indenture:
- aggregate operating revenues
minus
- aggregate operating expenses, including technical,
programming, sales, selling, general and administrative
expenses and salaries and other compensation, net of amounts
allocated to Affiliates, paid to any general partner,
director, officer or employee of CSC Holdings or any
Restricted Subsidiary, but excluding interest, depreciation
and amortization and the amount of non-cash compensation in
respect of CSC Holdings employee incentive stock programs for
the period (not to exceed in the aggregate for any calendar
year 7% of the Operating Cash Flow for the previous calendar
year) and, to the extent otherwise included in operating
expenses, any losses resulting from a write-off or write-down
of Investments by CSC Holdings or any Restricted Subsidiary in
Affiliates.
For purposes of determining Operating Cash Flow, all management fees will be
excluded until actually paid to CSC Holdings or any Restricted Subsidiary in
cash.
-45-
47
"Permitted Liens" means the following types of Liens:
- Liens existing on the issuance date of the old notes,
- Liens on shares of the capital stock of an entity that is not
a Restricted Subsidiary, which Liens solely secure a guarantee
by CSC Holdings or a Restricted Subsidiary, or both, of
Indebtedness of the entity,
- Liens on Receivables and Related Assets, and proceeds thereof,
securing only Indebtedness otherwise permitted to be incurred
by a Securitization Subsidiary,
- Liens on shares of the capital stock of a subsidiary of CSC
Holdings securing Indebtedness under our credit agreement or
any renewal of or replacement of our credit agreement,
- Liens granted in favor of CSC Holdings or any Restricted
Subsidiary,
- Liens securing the notes,
- Liens securing Acquired Indebtedness created before, and not
in connection with or in contemplation of, incurrence of the
Indebtedness by CSC Holdings or a Restricted Subsidiary;
provided that the Lien does not extend to any property or
assets of CSC Holdings or any Restricted Subsidiary other than
the assets acquired in connection with the incurrence of
Acquired Indebtedness,
- Liens securing Interest Swap Obligations or "margin stock", as
defined in Regulations G and U of the Board of Governors of
the Federal Reserve System,
- statutory Liens of landlords and carriers, warehousemen,
mechanics, suppliers, materialmen, repairmen or other like
liens arising in the ordinary course of business of CSC
Holdings or any Restricted Subsidiary and with respect to
amounts not yet delinquent or being contested in good faith by
appropriate proceedings,
- Liens for taxes, assessments, government charges or claims not
yet due or that are being contested in good faith by
appropriate proceedings,
- zoning restrictions, easements, rights-of-way, restrictions
and other similar charges or encumbrances or minor defects in
title not interfering in any material respect with the
business of CSC Holdings or any of its Restricted
Subsidiaries,
- Liens arising by reason of any judgment, decree or order of
any court, arbitral tribunal or similar entity so long as any
appropriate legal proceedings that may have been initiated for
the review of the judgment, decree or order have not been
finally terminated or the period within which the proceedings
may be initiated has not expired,
-46-
48
- Liens incurred or deposits made in the ordinary course of
business in connection with workers' compensation, employment
insurance and other types of social security or similar
legislation,
- Liens securing the performance of bids, tenders, leases,
contracts, franchises, public or statutory obligations,
surety, stay or appeal bonds or other similar obligations
arising in the ordinary course of business,
- Leases under which CSC Holdings or any Restricted Subsidiary
is the lessee or the lessor,
- purchase money mortgages or other purchase money liens,
including without limitation any Capital Lease Obligations, on
any fixed or capital assets acquired after the issuance date
of these securities, or purchase money mortgages, including
without limitation Capitalized Lease Obligations, on any like
assets hereafter acquired or existing at the time of
acquisition of these assets, whether or not assumed, so long
as (1) the mortgage or lien does not extend to or cover any
other asset of CSC Holdings or any Restricted Subsidiary and
(2) the mortgage or lien secures the obligation to pay the
purchase price of the asset, interest thereon and other
charges incurred in connection therewith, or the obligation
under the Capitalized Lease Obligation, only,
- Liens securing reimbursement obligations with respect to
commercial letters of credit which encumber documents and
other property relating to the letters of credit and products
and proceeds thereof,
- Liens encumbering deposits made to secure obligations arising
from statutory, regulatory, contractual or warranty
requirements of CSC Holdings or any of its Restricted
Subsidiaries, including rights of offset and set-off,
- Liens to secure other Indebtedness; provided, however, that
the principal amount of any Indebtedness secured by the Liens,
together with the principal amount of any Indebtedness
refinancing any Indebtedness incurred under this clause as
permitted by the immediately following clause, and successive
refinancings thereof, may not exceed 15% of CSC Holdings'
consolidated Net Tangible Assets as of the last day of CSC
Holdings most recently completed fiscal year for which
financial information is available, and
- any extension, renewal or replacement, in whole or in part, of
any Lien described in the immediately preceding clauses;
provided that any extension, renewal or replacement is no more
restrictive in any material respect than the Lien so extended,
renewed or replaced and does not extend to any additional
property or assets.
-47-
49
"Receivables and Related Assets" means:
- accounts receivable, instruments, chattel paper, obligations,
general intangibles, equipment and other similar assets,
including interests in merchandise or goods, the sale or lease
of which gives rise to the foregoing, related contractual
rights, guarantees, insurance proceeds, collections and other
related assets,
- equipment,
- inventory, and
- proceeds of all of the above.
"Refinancing Indebtedness" means, with respect to the notes,
Indebtedness of CSC Holdings incurred to redeem, repurchase, defease or
otherwise acquire or retire for value other Indebtedness that is subordinate in
right of payment to the notes, so long as any new Indebtedness
(1) is made subordinate to these securities at least to the same
extent as the Indebtedness being refinanced and
(2) does not
(a) have an Average Life less than the Average Life of
the Indebtedness being refinanced,
(b) have a final scheduled maturity earlier than the
final scheduled maturity of the Indebtedness being
refinanced or
(c) permit redemption at the option of the holder earlier
than the earlier of (A) the final scheduled maturity
of the Indebtedness being refinanced or (B) any date
of redemption at the option of the holder of the
Indebtedness being refinanced.
"Restricted Payment" means, with respect to the notes:
- any Stock Payment by CSC Holdings or a Restricted Subsidiary,
- any direct or indirect payment to redeem, purchase, defease or
otherwise acquire or retire for value, or permit any
Restricted Subsidiary to redeem, purchase, defease or
otherwise acquire or retire for value, before any scheduled
maturity, scheduled repayment or scheduled sinking fund
payment, any Indebtedness of CSC Holdings that is subordinate
in right of payment to the notes; provided, however, that,
with respect to the notes, any direct or indirect payment to
redeem, purchase, defease or otherwise acquire or retire for
value, or permit any Restricted Subsidiary to redeem,
repurchase, defease or otherwise acquire or retire for value,
before any scheduled
-48-
50
maturity, scheduled repayment or scheduled sinking fund
payment, any Indebtedness that is subordinate in right of
payment to these securities will not be a Restricted Payment
if either:
(1) after giving effect thereto, the ratio of the Senior
Indebtedness of CSC Holdings and the Restricted Subsidiaries
to Annualized Operating Cash Flow determined as of the last
day of the most recent month for which financial information
is available is less than or equal to 5 to 1 or
(2) the subordinate indebtedness is redeemed, purchased,
defeased or otherwise acquired or retired in exchange for, or
out of, (a) the proceeds of a sale, within one year before or
180 days after the redemption, purchase, defeasance,
acquisition or retirement, of Refinancing Indebtedness or
capital stock of CSC Holdings or warrants, rights or options
to acquire capital stock of CSC Holdings or (b) any source of
funds other than the incurrence of Indebtedness, or
- any direct or indirect payment to redeem, purchase, defease or
otherwise acquire or retire for value any Qualified Stock at
its mandatory redemption date or other maturity date if and to
the extent that Indebtedness is incurred to finance the
redemption, purchase, defeasance or other acquisition or
retirement; provided, however, that the redemption, purchase,
defeasance or other acquisition or retirement of Mandatorily
Redeemable Preferred Stock at its mandatory redemption or
other maturity date will not be a Restricted Payment if and to
the extent any Indebtedness incurred to finance all or a
portion of the purchase redemption price does not have a final
scheduled maturity date, or permit redemption at the option of
the holder thereof, earlier than the original scheduled
maturity of the notes.
Notwithstanding the foregoing, Restricted Payments will not include:
- payments by any Restricted Subsidiary to CSC Holdings or any
other Restricted Subsidiary or
- any Investment or designation of a Restricted Subsidiary as an
Unrestricted Subsidiary permitted under the "Limitation on
Investments in Unrestricted Subsidiaries and Affiliates"
covenant.
"Restricted Subsidiary" means any subsidiary of CSC Holdings, whether
existing on the date of the indenture or created subsequent thereto, designated
from time to time by CSC Holdings as a "Restricted Subsidiary"; provided,
however, that no subsidiary that is not a Securitization Subsidiary can be or
remain so designated unless (1) at least 67% of each of the total equity
interest and the voting control of the subsidiary is owned, directly or
indirectly, by CSC Holdings or another Restricted Subsidiary and (2) the
subsidiary is not restricted, under the terms of any loan agreement, note,
indenture or other evidence of indebtedness, from
-49-
51
- paying dividends or making any distribution on the
subsidiary's capital stock or other equity securities or
paying any Indebtedness owed to CSC Holdings or to any
Restricted Subsidiary,
- making any loans or advances to CSC Holdings or any Restricted
Subsidiary or
- transferring any of its properties or assets to CSC Holdings
or any Restricted Subsidiary
It being understood that a financial covenant any of the components of which are
directly impacted by the taking of the action, e.g. the payment of a dividend,
itself, like a minimum net worth test, would be deemed to be a restriction on
the foregoing actions, while a financial covenant none of the components of
which is directly impacted by the taking of the action, e.g., the payment of a
dividend, itself, like a debt to cash flow test, would not be deemed to be a
restriction on the foregoing actions and provided further that CSC Holdings may,
from time to time, redesignate any Restricted Subsidiary as an Unrestricted
Subsidiary in accordance with the provisions of the "Limitation on Investments
in Unrestricted Subsidiaries and Affiliates" covenant.
"Securitization Subsidiary" means a Restricted Subsidiary that is
established for the limited purpose of acquiring and financing Receivables and
Related Assets and engaging in activities ancillary thereto; provided that:
- no portion of the Indebtedness of a Securitization Subsidiary
is guaranteed by or is recourse to CSC Holdings or any other
Restricted Subsidiary, other than recourse for customary
representations, warranties, covenants and indemnities, none
of which relates to the collectibility of the Receivables and
Related Assets, and
- none of CSC Holdings or any other Restricted Subsidiary has
any obligation to maintain or preserve the Securitization
Subsidiary's financial condition.
"Senior Indebtedness" means, with respect to the notes and any person,
all principal of, premium, if any, and interest, including interest accruing on
or after the filing of any petition in bankruptcy or for reorganization relating
to the person whether or not a claim for post filing interest is allowed in the
proceedings, with respect to all Indebtedness of the person; provided that
Senior Indebtedness will not include:
- any Indebtedness of the person that, by its terms or the terms
of the instrument creating or evidencing the indebtedness, is
expressly subordinate in right of payment to the notes,
- any guarantee of Indebtedness of any subsidiary of the person
if recourse against the guarantee is limited to the capital
stock or other equity interests of the subsidiary,
- any obligation of the person to any subsidiary of the person
or, in the case of a Restricted Subsidiary, to CSC Holdings or
any other subsidiary of CSC Holdings, or
-50-
52
- any Indebtedness of the person, and any accrued and unpaid
interest in respect thereof, which is subordinate or junior in
any respect to any other Indebtedness or other obligation of
the person.
"Stock Payment" means, with respect to any person, the payment or
declaration of any dividend, either in cash or in property, except dividends
payable in common stock or common shares of capital stock of the person, or the
making by the person of any other distribution, on account of any shares of any
class of its capital stock, now or hereafter outstanding, or the redemption,
purchase, retirement or other acquisition or retirement for value by the person,
directly or indirectly, of any shares of any class of its capital stock, now or
hereafter outstanding, other than the redemptions, purchase, defeasance or other
acquisition or retirement for value of any Disqualified Stock at its mandatory
redemption date or other maturity date.
"Unrestricted Subsidiary" means any subsidiary of CSC Holdings which is
not a Restricted Subsidiary.
CERTAIN COVENANTS
The indenture contains, among others, the following covenants:
Limitation on Indebtedness. The indenture provides that CSC Holdings
will not, and will not permit any Restricted Subsidiary to, directly or
indirectly, incur, create, issue, assume, guarantee or otherwise become liable
for, contingently or otherwise, or become responsible for the payment of,
contingently or otherwise, any Indebtedness, other than Indebtedness between or
among any of CSC Holdings and its Restricted Subsidiaries, unless, after giving
effect thereto, the Cash Flow Ratio is less than or equal to 9 to 1.
At December 31, 2000, the Cash Flow Ratio was 6.5 to 1.
Limitation on Restricted Payments. The indenture provides that CSC
Holdings will not, and will not permit any Restricted Subsidiary to, make any
Restricted Payment if (1) at the time of the proposed Restricted Payment, a
Default or Event of Default has occurred and is continuing or will occur as a
consequence of the Restricted Payment or (2) immediately after giving effect to
the Restricted Payment, the aggregate of all Restricted Payments that have been
made on or after July 1, 1988 would exceed the sum of:
(a) $25,000,000, plus
(b) an amount equal to the difference between (i) the Cumulative
Cash Flow Credit and (ii) 1.2 multiplied by Cumulative
Interest Expense.
For purposes of this "Limitation on Restricted Payments" covenant, the
amount of any Restricted Payment, if other than cash, will be based on fair
market value as determined by our board of directors, whose good faith
determination will be conclusive.
-51-
53
The provisions above do not prevent: (1) the payment of any dividend
within 60 days after the date of declaration thereof, if at the date of
declaration the payment complied with the above provisions, and (2) the
retirement, redemption, purchase, defeasance or other acquisition of any shares
of CSC Holdings' capital stock or warrants, rights or options to acquire capital
stock of CSC Holdings, in exchange for, or out of the proceeds of a sale, within
one year before or 180 days after the retirement, redemption, purchase,
defeasance or other acquisition, of, other shares of CSC Holdings capital stock
or warrants, rights or options to acquire capital stock of CSC Holdings.
For purposes of determining the aggregate permissible amount of
Restricted Payments in accordance with clause (2) of the first paragraph of this
covenant, all amounts expended under clause (1) of this paragraph will be
included and all amounts expended or received under clause (2) of this paragraph
will be excluded; provided, however, that amounts paid under clause (1) of this
paragraph will be included only to the extent that the amounts were not
previously included in calculating Restricted Payments.
For the purposes of the provisions above, the net proceeds from the
issuance of shares of CSC Holdings capital stock on conversion of Indebtedness
will be deemed to be an amount equal to the accreted value of the Indebtedness
on the date of the conversion and the additional consideration, if any, CSC
Holdings receives on the conversion, minus any cash payment on account of
fractional shares, the consideration, if in property other than cash, to be
determined by our board of directors, whose good faith determination will be
conclusive. If CSC Holdings makes a Restricted Payment which, at the time of the
making of the Restricted Payment, would be in CSC Holdings good faith
determination permitted under the requirements of this covenant, the Restricted
Payment will be deemed to have been made in compliance with this covenant
notwithstanding any subsequent adjustments made in good faith to CSC Holdings
financial statements affecting Cumulative Cash Flow Credit or Cumulative
Interest Expense for any period.
As of December 31, 2000, we are permitted to make Restricted Payments
of approximately $5,255 billion.
Limitation on Investments in Unrestricted Subsidiaries and Affiliates.
The indenture provides that CSC Holdings will not, and will not permit any
Restricted Subsidiary to, directly or indirectly,
(1) make any Investment or
(2) allow any Restricted Subsidiary to become an Unrestricted
Subsidiary, in each case unless (a) no Default or Event of
Default has occurred and is continuing or will occur as a
consequence of the Investment or the redesignation of a
Restricted Subsidiary and (b) after giving effect thereto, the
Cash Flow Ratio is less than or equal to 9 to 1.
The preceding provisions of this covenant will not prohibit any renewal
or reclassification of any Investment existing on the date hereof or trade
credit extended on usual and customary terms in the ordinary course of business.
-52-
54
Transactions with Affiliates. The indenture provides that CSC Holdings
will not, and will not permit any of its subsidiaries to, sell, lease, transfer
or otherwise dispose of any of its properties or assets to or purchase any
property or assets from, or enter into any contract, agreement, understanding,
loan, advance or guarantee with, or for the benefit of, an affiliate of CSC
Holdings that is not a subsidiary of CSC Holdings, having a value, or for
consideration having a value, in excess of $10,000,000 individually or in the
aggregate unless our board of directors makes a good faith determination that
the terms of the transaction are, taken as a whole, no less favorable to CSC
Holdings or the subsidiary, as the case may be, than those which might be
available in a comparable transaction with an unrelated person. For purposes of
clarification, this provision will not apply to Restricted Payments permitted
under " Limitation on Restricted Payments".
Limitation on Liens. The indenture provides that CSC Holdings will not,
and will not permit any Restricted Subsidiary to, directly or indirectly,
create, incur, assume or suffer to exist any Lien of any kind, except for
Permitted Liens, on or with respect to any of its property or assets, whether
owned at the date of the indenture or thereafter acquired, or any income,
profits or proceeds therefrom, or assign or otherwise convey any right to
receive income thereon, unless:
- in the case of any Lien securing Indebtedness that is
subordinated in right of payment to the notes, the notes are
secured by a Lien on the property, assets or proceeds that is
senior in priority to the Lien; and
- in the case of any other Lien, the notes are equally and
ratably secured.
CONSOLIDATION, MERGER AND SALE OF ASSETS
CSC Holdings may not consolidate or merge with or into, or sell,
assign, transfer, lease, convey or otherwise dispose of all or substantially all
of its assets to, any person, unless:
- the person formed by or surviving any consolidation or merger,
if other than CSC Holdings, or to which the sale, assignment,
transfer, lease, conveyance or disposition is made is a
corporation organized and existing under the laws of the U.S.,
any state thereof or the District of Columbia, and assumes by
a supplemental indenture all of the obligations of CSC
Holdings under the notes and the indenture,
- immediately before and immediately after the transaction, and
after giving effect thereto, no Default or Event of Default
has occurred and is continuing, and
- immediately after the transaction, and after giving effect
thereto, the person formed by or surviving any consolidation
or merger, or to which the sale, assignment, transfer, lease
or conveyance or disposition is made, has a Cash Flow Ratio
not in excess of 9 to 1.
-53-
55
EVENTS OF DEFAULT
The following are Events of Default under the indenture:
(1) default for 30 days in payment of interest on the notes,
(2) default in payment of principal of the notes at maturity, on
acceleration or otherwise,
(3) failure to comply with any other covenant or agreement of CSC
Holdings, continued for 60 days, or, with respect to some
covenants or agreements, 30 days, after written notice as
provided in the indenture,
(4) default or defaults under any mortgage, indenture or
instrument that secures or evidences any Indebtedness for
money borrowed or guaranteed by CSC Holdings or a Restricted
Subsidiary in an aggregate amount of $10,000,000 or more, but
excluding any Indebtedness for the deferred purchase price of
property or services owed to the person providing the property
or services as to which CSC Holdings or the Restricted
Subsidiary is contesting its obligation to pay in good faith
and by proper proceedings and for which CSC Holdings or the
Restricted Subsidiary has established appropriate reserves,
which result from the failure to pay the Indebtedness at final
maturity or which has resulted in the acceleration of the
Indebtedness,
(5) the entry of a final judgment or final judgments for the
payment of money by a court or courts of competent
jurisdiction against CSC Holdings or any Restricted Subsidiary
in an aggregate amount exceeding $10,000,000, which remain
undischarged and unbonded for a period, during which execution
has not been effectively stayed, of 60 days or as to which an
enforcement proceeding has been commenced by any creditor, and
(6) some events of bankruptcy, insolvency or reorganization.
If an Event of Default, other than as specified in (6) above, occurs
and is continuing, either the trustee or the holders of not less than 25% in
aggregate principal amount of the outstanding notes issued under the indenture,
by written notice to CSC Holdings, and to the Trustee if the notice is given by
the holders, may declare all the unpaid principal of and interest on the notes
to be due and payable as provided in the indenture. On a declaration of
acceleration, the principal and accrued interest will be due and payable ten
days after receipt by CSC Holdings of the written notice. No action on the part
of the trustee or any holder of the notes is required for the acceleration if an
Event of Default specified in (6) above has occurred and is continuing. The
holders of at least a majority
-54-
56
in principal amount of the notes issued under the indenture may rescind an
acceleration and its consequences if
- all existing Events of Default, other than the nonpayment of
principal of or interest on the notes which have become due
solely because of the acceleration, have been cured or waived
and
- the rescission would not conflict with any judgment or decree
of a court of competent jurisdiction.
A declaration of acceleration because of an Event of Default specified
in clause (4) of the preceding paragraph would be automatically annulled if the
Indebtedness referred to therein were discharged, or the holders thereof
rescinded their declaration of acceleration referred to therein, within 30 days
after the acceleration of the notes and no other Event of Default had occurred
and not been cured or waived during the period. The holders of a majority in
principal amount of the notes issued under the indenture also have the right to
waive some past defaults under the indenture.
No holder of any note issued under the indenture has any right to
institute any proceeding with respect to the notes, the indenture or for any
remedy thereunder, unless
- the holder has previously given to the trustee written notice
of a continuing Event of Default under the indenture,
- the holders of at least 25% in principal amount of the
outstanding notes issued under the indenture have made written
request and offered reasonable indemnity to the trustee to
institute the proceeding as the trustee under the indenture;
and
- the trustee has not received from the holders of a majority in
principal amount of the outstanding notes issued under the
indenture a direction inconsistent with the request and the
trustee has failed to institute the proceeding within 60 days
after receipt of the notice.
These limitations do not apply, however, to a suit instituted by a holder of a
note for the enforcement of payment of the principal of or interest on the note
on or after the respective due dates expressed in the note.
During the existence of an Event of Default, the trustee is required to
exercise the rights and powers vested in it under the indenture and use the same
degree of care and skill in its exercise thereof as a prudent person would
exercise under the circumstances in the conduct of the person's own affairs.
Subject to the provisions of the indenture relating to the duties of the
trustee, in case an Event of Default has occurred and is continuing, the trustee
is not under any obligation to exercise any of its rights or powers under the
indenture at the request or direction of any of the holders unless the holders
have offered to the trustee reasonable security or indemnity.
-55-
57
Subject to the provisions for the indemnification of the trustee, the
holders of a majority in principal amount of the notes issued under the
indenture have the right to direct the time, method and place of conducting any
proceeding for any remedy available to the trustee, or exercising any trust or
power conferred on the trustee under the indenture.
CSC Holdings is required to furnish to the trustee an annual statement
as to the performance by CSC Holdings of its obligations under the indenture and
as to any default in the performance.
DEFEASANCE
CSC Holdings at any time may terminate all of its obligations with
respect to the notes ("defeasance"), except for some obligations, including
those regarding the Defeasance Trust, as defined below, and obligations to
register the transfer or exchange of the notes, to replace mutilated, destroyed,
lost or stolen notes and to maintain agencies in respect of the notes. CSC
Holdings may also at any time terminate its obligations under the covenants set
forth in the indenture, which are described under "Certain Covenants" above, and
any omission to comply with the obligations will not constitute a Default or an
Event of Default with respect to the notes ("covenant defeasance").
In order to exercise either defeasance or covenant defeasance,
- CSC Holdings must irrevocably deposit in trust, for the
benefit of the holders, with the trustee money or U.S.
government obligations, or a combination thereof, in amounts
as will be sufficient to pay the principal of and premium, if
any, and interest on the notes being defeased to redemption or
maturity (the "Defeasance Trust"),
- CSC Holdings must deliver opinions of counsel to the effect
that the holders will not recognize income, gain or loss for
federal income tax purposes as a result of the defeasance or
covenant defeasance and will be subject to federal income tax
on the same amounts, in the same manner and at the same times
as would have been the case if the defeasance or covenant
defeasance had not occurred, in the case of defeasance, the
opinion must refer to and be based on a ruling of the Internal
Revenue Service or a change in applicable federal income tax
laws, and
- CSC Holdings must comply with some other conditions.
SATISFACTION AND DISCHARGE OF THE INDENTURE AND THE NOTES
The indenture will cease to be of further effect, except as to
surviving rights of registration of transfer or exchange of securities, as
expressly provided for in the indenture, as to all outstanding notes when either
- all notes theretofore authenticated and delivered, except
lost, stolen or destroyed notes which have been replaced or
paid, have been delivered to the trustee for cancellation and
CSC Holdings has paid all sums payable by it under the
indenture or
-56-
58
- all notes not theretofore delivered to the trustee for
cancellation (a) have become due and payable, or (b) will
become due and payable within one year, and CSC Holdings has
irrevocably deposited or caused to be deposited with the
trustee funds in an amount sufficient to pay the entire
indebtedness on the notes not theretofore delivered to the
trustee for cancellation, for principal and interest to the
date of deposit, if the notes are then due and payable, or to
the maturity date, and CSC Holdings has paid all other sums
payable by it under the indenture.
MODIFICATION AND WAIVER
Modifications and amendments of the indenture or the notes issued
thereunder may be made by CSC Holdings and the trustee with the consent of the
holders of not less than a majority in aggregate principal amount of the notes
issued thereunder; provided, however, that no modification or amendment may,
without the consent of the holder of each outstanding note issued thereunder,
- change the stated maturity of the principal of, or any
installment of interest on, any notes issued thereunder,
- reduce the principal amount of or interest on the notes issued
thereunder,
- change the coin or currency in which any note or the interest
on any note is payable,
- impair the right to institute suit for the enforcement of any
payment on or with respect to the notes issued thereunder
after the stated maturity,
- reduce the percentage in principal amount of outstanding notes
and registered notes necessary to waive compliance with some
provisions of the indenture or to waive some defaults, or
- modify any of the provisions relating to supplemental
indentures requiring the consent of holders or relating to the
waiver of past defaults, except to increase the percentage of
outstanding securities required for the actions or to provide
that some other provisions of the indenture cannot be modified
or waived without the consent of the holder of each note
affected by the provisions.
The holders of a majority in aggregate principal amount of the notes
issued under the indenture may waive compliance with some restrictive covenants
and provisions of the indenture.
-57-
59
REGARDING THE TRUSTEE
The Bank of New York is the trustee under the indenture and the
indentures relating to our existing senior indebtedness and senior subordinated
indebtedness. The Bank of New York is a party to some credit agreements with us
and our subsidiaries, including our credit agreement. The Bank of New York may
also maintain other banking arrangements with us in the ordinary course of
business.
BOOK-ENTRY DELIVERY AND FORM
The certificates representing the new notes will be issued in fully
registered form, without coupons. The new notes will be deposited with, or on
behalf of, The Depository Trust Company, New York, New York ("DTC"), and
registered in the name of Cede & Co., as DTC's nominee, in the form of a global
certificate.
MATERIAL U.S. FEDERAL INCOME TAX CONSIDERATIONS
The exchange of old notes for new notes will not be treated as a taxable
transaction for U.S. Federal income tax purposes because the terms of the new
notes will not be considered to differ materially in kind or in extent from the
terms of the old notes. Rather, the new notes you receive will be treated as a
continuation of your investment in the old notes. As a result, you will not have
any material U.S. Federal income tax consequences if you exchange your old notes
for new notes.
IF YOU ARE THINKING ABOUT EXCHANGING YOUR OLD NOTES FOR NEW NOTES, YOU SHOULD
CONSULT YOUR OWN TAX ADVISORS CONCERNING THE TAX CONSEQUENCES ARISING UNDER
STATE, LOCAL OR FOREIGN LAWS OF THE EXCHANGE.
PLAN OF DISTRIBUTION
If you want to participate in the exchange offer you must represent,
among other things, that:
- you are acquiring the new notes issued in the exchange offer
in the ordinary course of your business,
- you are not an "affiliate", as defined in Rule 405 under the
Securities Act, of CSC Holdings; and
- you are not participating, do not intend to participate, and
have no arrangement or understanding with any person to
participate, in a distribution of the new notes issued in the
exchange offer.
If you are unable to make the above representations you are a
"restricted holder". A restricted holder will not be able to participate in the
exchange offer and may only sell its old notes under a registration statement
containing the selling securityholder information required by Item 507 of
-58-
60
Regulation S-K of the Securities Act, or under an exemption from the
registration requirement of the Securities Act.
If you are a broker-dealer who holds old notes that were acquired for
your own account as a result of market-marking activities or other trading
activities, you may exchange old notes by the exchange offer. As a
broker-dealer, you may be deemed to be an "underwriter" within the meaning of
the Securities Act, and, consequently, must deliver a prospectus meeting the
requirements of the Securities Act in connection with any resales of the new
notes you receive in the exchange offer.
Each participating broker-dealer is required to acknowledge in the
letter of transmittal that it acquired the old notes as a result of
market-making activities or other trading activities and that it will deliver a
prospectus in connection with the resale of the new notes. We have agreed that,
for a period of up to 90 days after the last exchange date, we will use our best
efforts to
- keep the exchange offer registration statement continuously
effective, supplemented and amended as required by the
registration rights agreement to the extent necessary to
ensure that it is available for resale of old notes acquired
by broker-dealers for their own accounts as a result of
market-making activities or other trading activities,
- ensure that the exchange offer registration statement conforms
with the requirements of the registration rights agreement,
the Securities Act and the policies, rules and regulations of
the SEC as announced from time to time; and
- make this prospectus available to participating broker-dealers
for use in connection with any resale.
During this period of time, delivery of this prospectus, as it may be amended or
supplemented, will satisfy the prospectus delivery requirements of a
participating broker-dealer engaged in market making or other trading
activities.
Based on interpretations by the staff of the SEC, we believe that new
notes issued by the exchange offer may be offered for resale, resold and
otherwise transferred by their holder, other than a participating broker-dealer,
without compliance with the registration and prospectus delivery requirements of
the Securities Act.
We will not receive any proceeds from any sale of new notes by
broker-dealers. New notes received by participating broker-dealers for their own
account under the exchange offer may be sold from time to time in one or more
transactions in the over-the-counter market,
- in negotiated transactions,
- through the writing of options on the new notes or
- a combination of methods of resale.
-59-
61
The new notes may be sold from time to time:
- at market prices prevailing at the time of resale,
- at prices related to prevailing market prices or
- at negotiated prices.
Any resale may be made directly to purchasers or to or through brokers or
dealers who may receive compensation in the form of commissions or concessions
from any participating broker-dealer and/or the purchasers of any new notes.
Any participating broker-dealer that resells new notes received by it
for its own account under the exchange offer and any broker or dealer that
participates in a distribution of the new notes may be deemed to be an
"underwriter" within the meaning of the Securities Act. Any profit on any resale
of new notes and any commissions or concessions received by these persons may be
deemed to be underwriting compensation under the Securities Act. The letter of
transmittal states that by acknowledging that it will deliver and by delivering
a prospectus, a participating broker-dealer will not be deemed to admit that it
is an "underwriter" within the meaning of the Securities Act.
We have agreed to pay all expenses incidental to the exchange offer
other than commissions and concessions of any brokers or dealers and will
indemnify holders of the notes, including any broker-dealers, against some
liabilities, including liabilities under the Securities Act, as set forth in the
registration rights agreement.
VALIDITY OF THE NEW NOTES
The validity of the new notes will be passed on for us by Sullivan &
Cromwell, New York, New York.
EXPERTS
The consolidated financial statements and schedule of CSC Holdings and
subsidiaries as of December 31, 2000 and 1999, and for each of the years in the
three-year period ended December 31, 2000 that are incorporated in this
registration statement by reference from the December 31, 2000 combined Annual
Report on Form 10-K of CSC Holdings, Inc. and Cablevision Systems Corporation
have been incorporated herein in reliance on the report of KPMG LLP, independent
certified public accountants, and upon the authority of said firm as experts in
accounting and auditing.
AVAILABLE INFORMATION
We are subject to the information requirements of the Securities
Exchange Act of 1934 and in accordance therewith file reports and other
information with the SEC. The reports and other information that we file with
the SEC at Room 1024, Judiciary Plaza, 450 Fifth Street, N.W.,
-60-
62
Washington, D.C 20549, and at the following regional offices: Seven World Trade
Center, Suite 1300, New York, New York 10048, and Citicorp Center, 500 West
Madison Street, Suite 1400, Chicago, Illinois 60661 and copies of this material
can be obtained from the Public Reference Section of the SEC at Judiciary Plaza,
450 Fifth Street, N.W., Washington, D.C. 20549, at prescribed rates.
Further information on the operation of the SEC's Public Reference Room
in Washington D.C. can be obtained by calling the SEC at 1-800-SEC-0330.
The SEC also maintains a Web site that contains reports, proxy
statements and other information about issuers, like CSC Holdings, who file
electronically with the SEC. The address of that site is http://www.sec.gov.
These reports and other information also may be inspected at the offices of the
New York Stock Exchange, 20 Broad Street, New York, New York 10005.
WHERE YOU CAN FIND MORE INFORMATION
We hereby incorporate by reference into this document the following
documents or information filed with the SEC:
CSC HOLDINGS COMMISSION FILINGS
-------------------------------
(FILE NO. [001-09046]) PERIOD COVERED OR DATE FILED
----------------------------
Annual Report on Form 10-K Fiscal year ended December 31, 2000
(our "Form 10-K")
We also incorporate by reference into this document all documents we
file pursuant to Section 13(a), 13(c), 14 or 15(d) of the Securities Exchange
Act of 1934 on or after the date of this offering made hereby.
We are delivering a copy of our Form 10-K, without exhibits thereto,
with this document.
Any statement contained herein or in any document incorporated or
deemed to be incorporated by reference in this document will be deemed to be
modified or superseded for the purpose of this document to the extent that a
subsequent statement contained herein or in any subsequently filed document that
also is or is deemed to be incorporated by reference herein modifies or
supersedes the statement. Any statement so modified or superseded will not be
deemed, except as so modified or superseded, to constitute a part of this
document.
YOU SHOULD RELY ONLY ON THE INFORMATION CONTAINED IN THIS DOCUMENT OR
THAT WE HAVE REFERRED YOU TO. WE HAVE NOT AUTHORIZED ANYONE TO PROVIDE YOU WITH
INFORMATION THAT IS DIFFERENT. NEITHER THE MAKING OF THE EXCHANGE OFFER PURSUANT
TO THIS DOCUMENT NOR THE ACCEPTANCE OF OLD NOTES FOR TENDER OR EXCHANGE PURSUANT
THERETO SHALL UNDER ANY CIRCUMSTANCES CREATE ANY IMPLICATION THAT THERE HAS BEEN
NO CHANGE IN THE AFFAIRS OF CSC HOLDINGS, INC. SINCE THE DATE HEREOF OR THAT THE
INFORMATION CONTAINED HEREIN IS CORRECT AS OF ANY TIME SUBSEQUENT TO THE DATE
HEREOF.
-61-
63
EACH BROKER-DEALER WHO HOLDS OLD NOTES ACQUIRED FOR ITS OWN ACCOUNT AS
A RESULT OF MARKET-MAKING OR OTHER TRADING ACTIVITIES AND WHO RECEIVES NEW NOTES
FOR ITS OWN ACCOUNT IN EXCHANGE FOR OLD NOTES PURSUANT TO THE EXCHANGE OFFER
MUST DELIVER A COPY OF THIS PROSPECTUS IN CONNECTION WITH ANY RESALE OF NEW
NOTES.
-62-
64
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the
registrant has duly caused this registration statement to be signed on its
behalf by the undersigned, thereunto duly authorized, in the City of Bethpage,
the State of New York, on this 26th day of April, 2001.
CSC Holdings, Inc.
By: /s/ William J. Bell
-----------------------------------
Name: William J. Bell
Title: Vice Chairman
POWER OF ATTORNEY
KNOW ALL PERSONS BY THESE PRESENTS, that each person whose signature
appears below constitutes and appoints William J. Bell and Robert S. Lemle, and
each of them, his true and lawful attorneys-in-fact and agents, with full power
of substitution and resubstitution, for him in his name, place and stead, in any
and all capacities, to sign any and all amendments (including post-effective
amendments) to this registration statement, and file the same, with all exhibits
thereto and other documents in connection therewith, with the Commission,
granting unto said attorneys-in-fact and agents, full power and authority to do
and perform each and every act and thing requisite and necessary to be done as
fully to all intents and purposes as he might or could do in person, hereby
ratifying and confirming all that said attorneys-in-fact and agents or any of
them may lawfully do or cause to be done by virtue hereof.
Pursuant to the requirements of the Securities Act of 1933, as amended,
this registration statement has been signed by the following persons in the
capacities indicated on April 26, 2001,
SIGNATURE TITLE
- --------- -----
/s/ James L. Dolan
- -----------------------------------------
James L. Dolan Chief Executive Officer and Director
(Principal Executive Officer)
/s/ William J. Bell
- -----------------------------------------
William J. Bell Vice Chairman and Director
(Principal Financial Officer)
/s/ Andrew B. Rosengard
- -----------------------------------------
Andrew B. Rosengard Executive Vice President, Finance and Controller
(Principal Accounting Officer)
I-1
65
SIGNATURE Title
- --------- -----
/s/ Charles F. Dolan
- -----------------------------------------
Charles F. Dolan Chairman of the Board of Directors
/s/ Robert S. Lemle
- -----------------------------------------
Robert S. Lemle Vice Chairman, General Counsel, Secretary and Director
/s/ Sheila A. Mahony
- -----------------------------------------
Sheila A. Mahony Executive Vice President and Director
/s/ Thomas C. Dolan
- ----------------------------- Senior Vice President,
Thomas C. Dolan Chief Information Officer and Director
/s/ John Tatta
- -----------------------------------------
John Tatta Director and Chairman of the Executive Committee
/s/ Patrick F. Dolan
- -----------------------------------------
Patrick F. Dolan Director
/s/ Charles D. Ferris
- -----------------------------------------
Charles D. Ferris Director
/s/ Richard H. Hochman
- -----------------------------------------
Richard H. Hochman Director
/s/ Victor Oristano
- -----------------------------------------
Victor Oristano Director
/s/ Vincent Tese
- -----------------------------------------
Vincent Tese Director
/s/ Michael P. Huseby
- -----------------------------------------
Michael P. Huseby Director
I-2
66
SIGNATURE Title
- --------- -----
/s/ Daniel E. Somers
- -----------------------------------------
Daniel E. Somers Director
I-3
67
PART II
INFORMATION NOT REQUIRED IN THE PROSPECTUS
ITEM 20. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
Section 145 of the Delaware General Corporation Law provides that a
corporation may indemnify directors and officers as well as other employees and
individuals against expenses (including attorneys' fees), judgments, fines and
amounts paid in settlement in connection with specified actions, suits or
proceedings, whether civil, criminal, administrative or investigative (other
than an action by or in the right of the corporation a "derivative action"), if
they acted in good faith and in a manner they reasonably believed to be in or
not opposed to the best interests of the corporation, and, with respect to any
criminal action or proceeding, had no reasonable cause to believe their conduct
was unlawful. A similar standard is applicable in the case of derivative
actions, except that indemnification only extends to expenses (including
attorneys' fees) incurred in connection with defense or settlement of such
action, and the statute requires court approval before there can be any
indemnification where the person seeking indemnification has been found liable
to the corporation. The statute provides that it is not exclusive of other
rights to which those seeking indemnification may be entitled under any by-law,
agreement, vote of stockholders or disinterested directors or otherwise.
The first paragraph of Article Ninth of CSC Holdings's Amended and
Restated Certificate of Incorporation provides:
The corporation shall, to the fullest extent permitted by
Section 145 of the General Corporation Law of the State of Delaware, as
the same may be amended and supplemented, or by any successor thereto,
indemnify any and all persons whom it shall have power to indemnify
under said section from and against any and all of the expenses,
liabilities or other matters referred to in or covered by said section.
Such right to indemnification shall continue as to a person who has
ceased to be a director, officer, employee or agent and shall inure to
the benefit of the heirs, executors and administrators of such a
person. The indemnification provided for herein shall not be deemed
exclusive of any other rights to which those seeking indemnification
may be entitled under any By-Law, agreement, vote of stockholders or
disinterested directors or otherwise.
Article VIII of the By-Laws of CSC Holdings provides:
A. The corporation shall indemnify each person who was or is
made a party or is threatened to be made a party to or is involved in
any threatened, pending or completed action, suit or proceeding,
whether civil, criminal, administrative or investigative (hereinafter a
"proceeding"), by reason of the fact that he or she, or a person of
whom he or she is the legal representative, is or was a director or
officer of the corporation or is or was serving at the request of the
corporation as a director, officer, employee or agent of another
corporation or of a partnership, joint venture, trust or other
enterprise, including service with respect to
II-1
68
employee benefit plans, whether the basis of such proceeding is alleged
action in an official capacity as a director, officer, employee or
agent or alleged action in any other capacity while serving as a
director, officer, employee or agent, to the maximum extent authorized
by the Delaware General Corporation Law, as the same exists or may
hereafter be amended (but, in the case of any such amendment, only to
the extent that such amendment permits the corporation to provide
broader indemnification rights than said law permitted the corporation
to provide before such amendment), against all expense, liability and
loss (including attorney's fees, judgments, fines, ERISA excise taxes
or penalties and amounts paid or to be paid in settlement) reasonably
incurred by such person in connection with such proceeding. Such
indemnification shall continue as to a person who has ceased to be a
director, officer, employee or agent and shall inure to the benefit of
his or her heirs, executors and administrators. The right to
indemnification conferred in this Article shall be a contract right and
shall include the right to be paid by the corporation the expenses
incurred in defending any such proceeding in advance of its final
disposition, provided that, if the Delaware General Corporation Law so
requires, the payment of such expenses incurred by a director or
officer in advance of the final disposition of a proceeding shall be
made only on receipt by the corporation of an undertaking by or on
behalf of such person to repay all amounts so advanced if it shall
ultimately be determined that such person is not entitled to be
indemnified by the corporation as authorized in this Article or
otherwise.
B. The right to indemnification and advancement of expenses
conferred on any person by this Article shall not limit the corporation
from providing any other indemnification permitted by law nor shall it
be deemed exclusive of any other right which any such person may have
or hereafter acquire under any statute, provision of the Certificate of
Incorporation, by-law, agreement, vote of stockholders or disinterested
directors or otherwise.
C. The corporation may purchase and maintain insurance, at its
expense, to protect itself and any director, officer, employee or agent
of the corporation or another corporation, partnership, joint venture,
or other enterprise against any expense, liability or loss, whether or
not the corporation would have the power to indemnify such person
against such expense, liability or loss under the Delaware General
Corporation Law.
CSC Holdings has entered into indemnification agreements with some of
its officers and directors indemnifying such officers and directors from and
against some expenses, liabilities or other matters referred to in or covered by
Section 145 of the Delaware General Corporation Law. CSC Holdings has also
entered into an agreement with Charles F. Dolan ("Mr. Dolan"), the Chairman of
CSC Holdings, pursuant to which Mr. Dolan has agreed to guarantee CSC Holdings's
obligation to indemnify its officers and directors to the fullest extent
permitted by Delaware law. In addition, subject to some limitations, Mr. Dolan
has agreed to indemnify such officers and directors against any loss or expense
such person may incur in connection with any transaction involving Mr. Dolan or
entities affiliated with Mr. Dolan to the extent indemnification is not provided
by CSC Holdings. Any payment required to be made by Mr. Dolan pursuant to such
agreement will be reduced by any proceeds of insurance or reimbursement under
any other form of indemnification
II-2
69
reimbursement available to such officer or director. CSC Holdings maintains
directors' and officers' liability insurance.
Section 102(b)(7) of the Delaware General Corporation Law permits a
corporation to provide in its certificate of incorporation that a director of
the corporation shall not be personally liable to the corporation or its
stockholders for monetary damages for breach of fiduciary duty as a director,
except for liability (1) for any breach of the director's duty of loyalty to the
corporation or its stockholders, (2) for acts or omissions not in good faith or
which involve intentional misconduct or a knowing violation of law, (3) for
payments of unlawful dividends or unlawful stock repurchases or redemptions, or
(4) for any transaction from which the director derived an improper personal
benefit. The second paragraph of Article Ninth of CSC Holdings' Certificate of
Incorporation provides for such limitation of liability.
ITEM 21. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES.
(a) EXHIBITS
EXHIBITS
DESCRIPTION
-----------
1.1 Purchase Agreement, dated March 15, 2001, between the Registrant and
Banc of America Securities LLC, Bear, Stearns & Co. Inc., Merrill
Lynch, Pierce, Fenner & Smith Incorporated, Chase Securities Inc., TD
Securities (USA) Inc., BMO Nesbitt Burns Corp., BNY Capital Markets,
Inc., Barclays Capital Inc., Credit Lyonnais Securities (USA) Inc.,
First Union Securities, Inc., Fleet Securities, Inc., RBC Dominion
Securities Corporation and Scotia Capital (USA) Inc.*
3.1 Certificate of Incorporation and two Certificates of Amendment of the
Certificate of Incorporation of Registrant (incorporated herein by
reference to Exhibits 3.3, 3.5 and 3.6 to the Registrant's Annual
Report on Form 10-K).
3.2 Amended and Restated Bylaws of the Registrant (incorporated herein by
reference to Exhibit 3.4 to the Registrant's Annual Report on Form
10-K).
4.1 Registration Rights Agreement, dated March 22, 2001, between the
Registrant and Banc of America Securities LLC, Bear, Stearns & Co.
Inc., Merrill Lynch, Pierce, Fenner & Smith Incorporated, Chase
Securities Inc., TD Securities (USA) Inc., BMO Nesbitt Burns Corp., BNY
Capital Markets, Inc., Barclays Capital Inc., Credit Lyonnais
Securities (USA) Inc., First Union Securities, Inc., Fleet Securities,
Inc., RBC Dominion Securities Corporation and Scotia Capital (USA)
Inc.*
4.2 Indenture dated as of March 22, 2001, between the Company and The Bank
of New York, as trustee.*
II-3
70
4.3 Form of New Note (included in Exhibit 4.2).*
5.1 Opinion of Sullivan & Cromwell regarding the validity of the 7 5/8%
Senior Notes being registered.*
8.1 Opinion of Sullivan & Cromwell regarding tax matters.*
12.1 Computation of Earnings to Fixed Charges.**
23.1 Consent of KPMG LLP.*
23.2 Consent of Sullivan & Cromwell (included in the opinions filed as
Exhibit 5.1 and Exhibit 8.1 hereto).*
24.1 Power of Attorney (included in the signature page attached hereto).*
25.1 Statement of Eligibility of the Trustee.*
99.1 Form of Letter of Transmittal.*
99.2 Form of Notice of Guaranteed Delivery.*
99.3 Form of Exchange Agent Agreement.*
- -------------------------------------
* Filed herewith.
** To be filed by amendment.
(b) FINANCIAL STATEMENT SCHEDULES
All other schedules for which provisions are made in the applicable
accounting regulation of the Securities and Exchange Commission are not required
or are inapplicable and therefore have been omitted, or the required information
has been incorporated by reference herein or disclosed in the financial
statements which form a part of this Proxy Statement/Prospectus.
ITEM 22. UNDERTAKINGS.
The undersigned registrant hereby undertakes:
(1) That, for purposes of determining any liability under the
Securities Act of 1933, each filing of the registrant's annual
report pursuant to Section 13(a) or 15(d) of the Securities
Exchange Act of 1934 (and, where applicable, each filing of an
employee benefit plan's annual report pursuant to Section
15(d) of the Securities Exchange Act of 1934) that is
incorporated by reference in the registration statement shall
be
II-4
71
deemed to be a new registration statement relating to the
securities offered therein, and the offering of such
securities at that time shall be deemed to be the initial bona
fide offering thereof.
(2) That prior to any public reoffering of the securities
registered hereunder through use of a prospectus which is a
part of this registration statement, by any person or party
who is deemed to be an underwriter within the meaning of Rule
145(c), the issuer undertakes that such reoffering prospectus
will contain the information called for by the applicable
registration form with respect to reofferings by persons who
may be deemed underwriters, in addition to the information
called for by the other items of the applicable form.
(3) That every prospectus: (i) that is filed pursuant to paragraph
(2) immediately preceding, or (ii) that purports to meet the
requirements of Section 10(a)(3) of the Act and is used in
connection with an offering of securities subject to Rule 415,
will be filed as a part of an amendment to the registration
statement and will not be used until such amendment is
effective, and that, for purposes of determining any liability
under the Securities Act of 1933, each such post-effective
amendment shall be deemed to be a new registration statement
relating to the securities offered therein, and the offering
of such securities at that time shall be deemed to be the
initial bona fide offering thereof.
(4) The undersigned registrant hereby undertakes to deliver or
cause to be delivered with the prospectus, to each person to
whom the prospectus is sent or given, the latest annual
report, to security holders that is incorporated by reference
in the prospectus and furnished pursuant to and meeting the
requirements of Rule 14a-3 or Rule 14c-3 under the Securities
Exchange Act of 1934; and, where interim financial information
required to be presented by Article 3 of Regulation S-X is not
set forth in the prospectus, to deliver, or cause to be
delivered to each person to whom the prospectus is sent or
given, the latest quarterly report that is specifically
incorporated by reference in the prospectus to provide such
interim financial information.
(5) Insofar as indemnification for liabilities arising under the
Securities Act of 1933 may be permitted to directors, officers
and controlling persons of the registrant, pursuant to the
provisions, or otherwise, the registrant has been advised that
in the opinion of the Securities and Exchange Commission such
indemnification is against public policy as expressed in the
Securities Act of 1933 and is, therefore, unenforceable. In
the event that a claim for indemnification against such
liabilities (other than the payment by the registrant of
expenses incurred or paid by a director, officer or
controlling person of the registrant in the successful defense
of any action, suit or proceeding) is asserted by any such
director, officer or controlling person in connection with the
securities being registered, the registrant will, unless in
the opinion of its counsel the matter has been settled by
controlling precedent, submit to a court of appropriate
jurisdiction the question of whether or not such
indemnification is against public policy as expressed
II-5
72
in the Securities Act of 1933 and will be governed by the
final adjudication of such issue.
(6) To respond to requests for information that is incorporated by
reference into the prospectus pursuant to Item 4, 10(b), 11,
or 13 of this form, within one business day of receipt of such
request, and to send the incorporated documents by first class
mail or other equally prompt means. This includes information
contained in documents filed subsequent to the effective date
of the registration statement through the date of responding
to the request.
II-6
73
INDEX TO EXHIBITS
Certain of the following documents are filed herewith. Certain other of
the following documents have been previously filed with the Securities and
Exchange Commission and, pursuant to Rule 12b-32, are incorporated herein by
reference.
EXHIBITS
DESCRIPTION
-----------
1.1 Purchase Agreement, dated March 15, 2001, between the Registrant and Banc of America
Securities LLC, Bear, Stearns & Co. Inc., Merrill Lynch, Pierce, Fenner & Smith
Incorporated, Chase Securities Inc., TD Securities (USA) Inc., BMO Nesbitt Burns Corp.,
BNY Capital Markets, Inc., Barclays Capital Inc., Credit Lyonnais Securities (USA) Inc.,
First Union Securities, Inc., Fleet Securities, Inc., RBC Dominion Securities Corporation and
Scotia Capital (USA) Inc.*
3.1 Certificate of Incorporation and two Certificates of Amendment of the Certificate of
Incorporation of Registrant (incorporated herein by reference to Exhibits 3.3, 3.5 and 3.6 to
the Registrant's Annual Report on Form 10-K).
3.2 Amended and Restated Bylaws of the Registrant (incorporated herein by
reference to Exhibit 3.4 to the Registrant's Annual Report on Form
10-K).
4.1 Registration Rights Agreement, dated March 22, 2001, between the Registrant and Banc of
America Securities LLC, Bear, Stearns & Co. Inc., Merrill Lynch, Pierce, Fenner & Smith
Incorporated, Chase Securities Inc., TD Securities (USA) Inc., BMO Nesbitt Burns Corp.,
BNY Capital Markets, Inc., Barclays Capital Inc., Credit Lyonnais Securities (USA) Inc.,
First Union Securities, Inc., Fleet Securities, Inc., RBC Dominion Securities Corporation and
Scotia Capital (USA) Inc.*
4.2 Indenture dated as of March 22, 2001, between the Company and The Bank of New York, as
trustee.*
4.3 Form of New Note (included in Exhibit 4.2).*
5.1 Opinion of Sullivan & Cromwell regarding the validity of the 7 5/8% Senior Notes being
registered.*
8.1 Opinion of Sullivan & Cromwell regarding tax matters.*
12.1 Computation of Earnings to Fixed Charges.**
II-7
74
23.1 Consent of KPMG LLP.*
23.2 Consent of Sullivan & Cromwell (included in the opinions filed as Exhibit 5.1 and Exhibit
8.1 hereto).*
24.1 Power of Attorney (included in the signature page attached hereto).*
25.1 Statement of Eligibility of the Trustee.*
99.1 Form of Letter of Transmittal.*
99.2 Form of Notice of Guaranteed Delivery.*
99.3 Form of Exchange Agent Agreement.*
- -------------------------------------
* Filed herewith.
** To be filed by amendment.
II-8