XNYS:CVC Cablevision Systems Corp Class A Quarterly Report 10-Q Filing - 6/30/2012

Effective Date 6/30/2012

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UNITED STATES SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C.  20549

FORM 10-Q

(Mark One)
 
x
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 
For the quarterly period ended      June 30, 2012    
 
OR

o
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 
For the transition period from _____________ to _____________
 
Commission File Number
 
Registrant; State of Incorporation;
Address and Telephone Number
 
IRS Employer Identification No.
         
1-14764
 
Cablevision Systems Corporation
 
11-3415180
   
Delaware
   
   
1111 Stewart Avenue
   
   
Bethpage, New York  11714
   
   
(516) 803-2300
   
         
1-9046
 
CSC Holdings, LLC
 
27-0726696
   
Delaware
   
   
1111 Stewart Avenue
   
   
Bethpage, New York  11714
   
   
(516) 803-2300
   

Indicate by check mark whether the Registrants (1) have filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the Registrants were required to file such reports), and (2) have been subject to such filing requirements for the past 90 days.

Cablevision Systems Corporation
Yes
x
 
No
o
CSC Holdings, LLC
Yes
x
 
No
o

Indicate by check mark whether the Registrants have submitted electronically and posted on their corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the Registrants were required to submit and post such files).
 
Yes
x
 
No
o
 


 
 

 
 
Indicate by check mark whether each Registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer or a smaller reporting company (as defined in Exchange Act Rule 12b-2).

 
Large accelerated
filer
 
Accelerated
filer
 
Non-accelerated
filer
 
Smaller
Reporting
Company
Cablevision Systems Corporation
Yes
x
 
No
o  
Yes
o  
No
x
 
Yes
o  
No
x
 
Yes
o
No
x
CSC Holdings, LLC
Yes
o  
No
x
 
Yes
o  
No
x
 
Yes
x
 
No
o  
Yes
o
No
x

Indicate by check mark whether the Registrants are shell companies (as defined in Rule 12b-2 of the Exchange Act).

Cablevision Systems Corporation
Yes
o  
No
x
CSC Holdings, LLC
Yes
o  
No
x

Number of shares of common stock outstanding as of July 31, 2012:

Cablevision NY Group Class A Common Stock   -
212,261,783
Cablevision NY Group Class B Common Stock   -
54,137,673
CSC Holdings, LLC Interests of Member  -
14,432,750

CSC Holdings, LLC meets the conditions set forth in General Instruction H(1)(a) and (b) of Form 10-Q and is therefore filing this Form with the reduced disclosure format applicable to CSC Holdings, LLC.
 
 
 

 
 
CABLEVISION SYSTEMS CORPORATION AND SUBSIDIARIES

FORM 10-Q

TABLE OF CONTENTS

     
Page
   
PART I.
 
FINANCIAL INFORMATION
 
       
Item 1.
   
Financial Statements of Cablevision Systems Corporation and Subsidiaries
 
       
   
2
       
   
4
       
   
5
       
   
6
       
   
Financial Statements of CSC Holdings, LLC and Subsidiaries
 
       
   
7
       
   
9
       
   
10
       
   
11
       
   
12
       
Item 2.
 
34
       
Item 3.
 
64
       
Item 4.
 
66
       
PART II.
 
OTHER INFORMATION
 
       
Item 1.
 
66
       
Item 2.
 
67
       
Item 6.
 
68
       
69
 
 
PART I.
FINANCIAL INFORMATION

This Quarterly Report on Form 10-Q for the period ended June 30, 2012 is separately filed by Cablevision Systems Corporation ("Cablevision") and CSC Holdings, LLC ("CSC Holdings" and collectively with Cablevision and their subsidiaries, the "Company", "we", "us" or "our").

This Quarterly Report contains statements that constitute forward-looking information within the meaning of the Private Securities Litigation Reform Act of 1995.  In this Quarterly Report there are statements concerning our future operating results and future financial performance.  Words such as "expects", "anticipates", "believes", "estimates", "may", "will", "should", "could", "potential", "continue", "intends", "plans" and similar words and terms used in the discussion of future operating results and future financial performance identify forward-looking statements.  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;
 
·
competition for subscribers from existing competitors (such as telephone companies and direct broadcast satellite ("DBS") distributors) and new competitors (such as high-speed wireless providers) entering our franchise areas;
 
·
demand for our video, high-speed data and voice services, which is impacted by competition from other services and the other factors discussed herein;
 
·
industry conditions;
 
·
changes in the laws or regulations under which we operate;
 
·
the outcome of litigation and other proceedings, including the matters described in Note 12 of the combined notes to our condensed consolidated financial statements;
 
·
general economic conditions in the areas in which we operate;
 
·
the state of the market for debt securities and bank loans;
 
·
demand for advertising in our newspapers along with subscriber and single copy outlet sales demand for our newspapers;
 
·
the level of our capital expenditures;
 
·
the level of our operating expenses, including the cost of programming;
 
·
future acquisitions and dispositions of assets;
 
·
market demand for new services;
 
·
demand for advertising;
 
·
the tax-free treatment of the MSG Distribution and the AMC Networks Distribution (each as defined herein);
 
·
whether pending uncompleted transactions, if any, are completed on the terms and at the times set forth (if at all);
 
·
other risks and uncertainties inherent in the cable television, newspaper publishing businesses, and our other businesses;
 
·
financial community and rating agency perceptions of our business, operations, financial condition and the industries in which we operate; and
 
·
the factors described in our filings with the Securities and Exchange Commission, including under the sections entitled "Risk Factors" and "Management's Discussion and Analysis of Financial Condition and Results of Operations" contained therein.
 
We disclaim any obligation to update or revise the forward-looking statements contained herein, except as otherwise required by applicable federal securities laws.
 
 
Item 1.  Financial Statements

CABLEVISION SYSTEMS CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands)
(Unaudited)
 
   
June 30,
2012
   
December 31,
2011
 
ASSETS
           
             
Current Assets:
           
             
Cash and cash equivalents
  $ 337,945     $ 611,947  
Restricted cash
    576       29,068  
Accounts receivable, trade (less allowance for doubtful accounts of $15,803 and $14,907)
    283,296       295,277  
Prepaid expenses and other current assets
    153,094       135,579  
Amounts due from affiliates
    1,857       6,818  
Deferred tax asset
    84,941       84,925  
Investment securities pledged as collateral
    343,320       191,338  
Total current assets
    1,205,029       1,354,952  
                 
Property, plant and equipment, net of accumulated depreciation of $9,334,179 and $9,221,694
    3,298,574       3,269,232  
Other receivables
    4,660       3,279  
Investment securities pledged as collateral
    343,320       317,896  
Derivative contracts
    5,385       18,617  
Other assets
    47,338       53,971  
Amortizable intangible assets, net of accumulated amortization of $142,041 and $115,043
    227,630       252,871  
Indefinite-lived cable television franchises
    1,240,228       1,240,228  
Other indefinite-lived intangible assets
    55,895       55,895  
Goodwill
    442,773       442,773  
Deferred financing costs, net of accumulated amortization of $88,193 and $81,182
    120,857       133,611  
    $ 6,991,689     $ 7,143,325  

See accompanying combined notes to condensed consolidated financial statements.
 
 
CABLEVISION SYSTEMS CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS (Cont'd)
(In thousands, except per share amounts)
(Unaudited)
 
   
June 30,
2012
   
December 31,
2011
 
LIABILITIES AND STOCKHOLDERS' DEFICIENCY
           
             
Current Liabilities:
           
             
Accounts payable
  $ 438,870     $ 455,654  
Accrued liabilities
    507,029       604,240  
Amounts due to affiliates
    32,781       32,682  
Deferred revenue
    56,521       61,599  
Liabilities under derivative contracts
    60,193       75,223  
Credit facility debt
    130,387       103,245  
Collateralized indebtedness
    241,999       148,175  
Capital lease obligations
    12,083       9,174  
Notes payable
    11,225       17,614  
Senior notes
    -       87,822  
Total current liabilities
    1,491,088       1,595,428  
                 
Deferred revenue
    10,648       10,896  
Liabilities under derivative contracts
    36,762       3,141  
Other liabilities
    250,369       220,865  
Deferred tax liability
    158,984       80,546  
Credit facility debt
    5,005,723       5,080,949  
Collateralized indebtedness
    273,636       307,763  
Capital lease obligations
    37,518       33,589  
Notes payable
    1,506       11,613  
Senior notes and debentures
    5,367,089       5,358,838  
Total liabilities
    12,633,323       12,703,628  
                 
Commitments and contingencies
               
                 
Redeemable noncontrolling interests
    13,891       13,761  
                 
Stockholders' Deficiency:
               
Preferred Stock, $.01 par value, 50,000,000 shares authorized, none issued
    -       -  
CNYG Class A common stock, $.01 par value, 800,000,000 shares authorized, 285,340,347 and 281,833,547 shares issued and 212,276,443 and 220,170,261 shares outstanding
    2,853       2,818  
CNYG Class B common stock, $.01 par value, 320,000,000 shares authorized, 54,137,673 shares issued and outstanding
    541       541  
RMG Class A common stock, $.01 par value, 600,000,000 shares authorized, none issued
    -       -  
RMG Class B common stock, $.01 par value, 160,000,000 shares authorized, none issued
    -       -  
Paid-in capital
    997,417       1,051,435  
Accumulated deficit
    (5,124,707 )     (5,245,483 )
      (4,123,896 )     (4,190,689 )
Treasury stock, at cost (73,063,904 and 61,663,286 CNYG Class A common shares)
    (1,511,036 )     (1,363,698 )
Accumulated other comprehensive loss
    (21,266 )     (21,468 )
Total stockholders' deficiency
    (5,656,198 )     (5,575,855 )
Noncontrolling interest
    673       1,791  
Total deficiency
    (5,655,525 )     (5,574,064 )
    $ 6,991,689     $ 7,143,325  

See accompanying combined notes to condensed consolidated financial statements.
 
 
CABLEVISION SYSTEMS CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
Three and Six Months Ended June 30, 2012 and 2011
(In thousands, except per share amounts)
(Unaudited)
 
   
Three Months Ended
June 30,
   
Six Months Ended
June 30,
 
   
2012
   
2011
   
2012
   
2011
 
Revenues, net (including revenues, net from affiliates of $1,564, $1,354, $3,521, and $2,173, respectively)
  $ 1,697,288     $ 1,688,681     $ 3,356,045     $ 3,343,805  
                                 
Operating expenses:
                               
Technical and operating (excluding depreciation, amortization and impairments shown below and including charges from affiliates of $46,517, $44,742, $92,305, and $89,255, respectively)
    810,064       745,728       1,594,679       1,483,716  
Selling, general and administrative (net of charges to affiliates of $542, $5,473, $468, and $10,170, respectively)
    368,575       382,813       739,604       756,997  
Restructuring expense (credits)
    (93 )     94       (391 )     265  
Depreciation and amortization (including impairments)
    258,403       247,605       511,750       492,788  
      1,436,949       1,376,240       2,845,642       2,733,766  
Operating income
    260,339       312,441       510,403       610,039  
                                 
Other income (expense):
                               
Interest expense, net
    (181,317 )     (188,295 )     (363,148 )     (379,379 )
Gain on investments, net
    42,113       13,312       177,438       72,384  
Loss on equity derivative contracts, net
    (16,137 )     (2,823 )     (127,331 )     (42,881 )
Loss on interest rate swap contracts, net
    (183 )     (5,497 )     (1,828 )     (9,686 )
Miscellaneous, net
    260       238       805       455  
      (155,264 )     (183,065 )     (314,064 )     (359,107 )
Income from continuing operations before income taxes
    105,075       129,376       196,339       250,932  
Income tax expense
    (41,286 )     (59,836 )     (75,446 )     (112,379 )
Income from continuing operations
    63,789       69,540       120,893       138,553  
Income from discontinued operations, net of income taxes
    -       18,592       -       53,623  
Net income
    63,789       88,132       120,893       192,176  
Net income attributable to noncontrolling interests
    (260 )     (288 )     (117 )     (267 )
Net income attributable to Cablevision Systems Corporation stockholders
  $ 63,529     $ 87,844     $ 120,776     $ 191,909  
                                 
Basic net income per share attributable to Cablevision Systems Corporation stockholders:
                               
                                 
Income from continuing operations
  $ 0.24     $ 0.25     $ 0.46     $ 0.49  
                                 
Income from discontinued operations
  $ -     $ 0.07     $ -     $ 0.19  
                                 
Net income
  $ 0.24     $ 0.32     $ 0.46     $ 0.68  
                                 
Basic weighted average common shares (in thousands)
    263,428       278,303       265,423       280,203  
                                 
Diluted net income per share attributable to Cablevision Systems Corporation stockholders:
                               
                                 
Income from continuing operations
  $ 0.24     $ 0.24     $ 0.45     $ 0.48  
                                 
Income from discontinued operations
  $ -     $ 0.06     $ -     $ 0.19  
                                 
Net income
  $ 0.24     $ 0.31     $ 0.45     $ 0.66  
                                 
Diluted weighted average common shares (in thousands)
    267,482       286,154       270,760       288,674  
                                 
Amounts attributable to Cablevision Systems Corporation stockholders:
                               
Income from continuing operations, net of income taxes
  $ 63,529     $ 69,252     $ 120,776     $ 138,286  
Income from discontinued operations, net of income taxes
    -       18,592       -       53,623  
Net income
  $ 63,529     $ 87,844     $ 120,776     $ 191,909  
Cash dividends declared per share of common stock
  $ 0.15     $ 0.15     $ 0.30     $ 0.275  

See accompanying combined notes to condensed consolidated financial statements.
 
 
CABLEVISION SYSTEMS CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
Three and Six Months Ended June 30, 2012 and 2011
(In thousands)
(Unaudited)
 
   
Three Months Ended
June 30,
   
Six Months Ended
June 30,
 
   
2012
   
2011
   
2012
   
2011
 
                         
Net income
  $ 63,789     $ 88,132     $ 120,893     $ 192,176  
                                 
Other comprehensive income, net of tax:
                               
Defined benefit pension plans and postretirement plans:
                               
Amortization of actuarial losses, net
    153       381       202       699  
Unrecognized loss arising during period
    -       (744 )     -       (744 )
Comprehensive income
    63,942       87,769       121,095       192,131  
Comprehensive income attributable to noncontrolling interests
    (260 )     (288 )     (117 )     (267 )
Comprehensive income  attributable to Cablevision Systems Corporation stockholders
  $ 63,682     $ 87,481     $ 120,978     $ 191,864  

See accompanying combined notes to condensed consolidated financial statements.
 
 
CABLEVISION SYSTEMS CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
Six Months Ended June 30, 2012 and 2011
(In thousands)
(Unaudited)
 
   
2012
   
2011
 
Cash flows from operating activities:
           
Income from continuing operations
  $ 120,893     $ 138,553  
Adjustments to reconcile income from continuing operations to net cash provided by operating activities:
               
Depreciation and amortization (including impairments)
    511,750       492,788  
Gain on investments, net
    (177,438 )     (72,384 )
Loss on equity derivative contracts, net
    127,331       42,881  
Amortization of deferred financing costs and discounts on indebtedness
    21,510       23,200  
Share-based compensation expense related to equity classified awards
    24,056       25,604  
Deferred income taxes
    79,435       90,992  
Provision for doubtful accounts
    23,393       25,080  
Changes in other assets and liabilities
    (140,808 )     (67,122 )
Net cash provided by operating activities
    590,122       699,592  
                 
Cash flows from investing activities:
               
Capital expenditures
    (512,469 )     (345,298 )
Proceeds from sale of equipment, net of costs of disposal
    2,639       476  
Payments for acquisitions, net
    -       (7,776 )
Decrease in investment securities and other investments
    -       30  
Decrease (increase) in restricted cash
    573       (1,730 )
Additions to other intangible assets
    (1,322 )     (1,294 )
Net cash used in investing activities
    (510,579 )     (355,592 )
                 
Cash flows from financing activities:
               
Proceeds from credit facility debt
    -       605,000  
Repayment of credit facility debt
    (48,587 )     (128,726 )
Repayment of senior notes
    (87,822 )     (325,796 )
Proceeds from collateralized indebtedness
    157,561       191,688  
Repayment of collateralized indebtedness and related derivative contracts
    (137,989 )     (163,686 )
Proceeds from stock option exercises
    3,300       5,893  
Dividend distributions to common stockholders
    (86,020 )     (79,507 )
Principal payments on capital lease obligations
    (4,638 )     (714 )
Deemed repurchases of restricted stock
    (19,831 )     (32,761 )
Purchase of shares of CNYG Class A common stock, pursuant to a share repurchase program, held as treasury shares
    (127,503 )     (394,540 )
Additions to deferred financing costs
    (738 )     (149 )
Distributions to noncontrolling interests, net
    (1,206 )     (133 )
Net cash used in financing activities
    (353,473 )     (323,431 )
                 
Net increase (decrease) in cash and cash equivalents from continuing operations
    (273,930 )     20,569  
                 
Cash flows of discontinued operations:
               
Net cash provided by (used in) operating activities
    (72 )     141,397  
Net cash used in investing activities
    -       (4,086 )
Net cash provided by financing activities
    -       2,857  
Effect of change in cash related to discontinued operations
    -       (117,877 )
Net increase (decrease) in cash and cash equivalents from discontinued operations
    (72 )     22,291  
                 
Cash and cash equivalents at beginning of year
    611,947       313,991  
                 
Cash and cash equivalents at end of period
  $ 337,945     $ 356,851  

See accompanying combined notes to condensed consolidated financial statements.
 
 
CSC HOLDINGS, LLC AND SUBSIDIARIES
(a wholly-owned subsidiary of Cablevision Systems Corporation)
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands)
(Unaudited)
 
   
June 30,
2012
   
December 31,
2011
 
ASSETS
           
             
Current Assets:
           
             
Cash and cash equivalents
  $ 285,511     $ 611,054  
Restricted cash
    576       29,068  
Accounts receivable, trade (less allowance for doubtful accounts of $15,803 and $14,907)
    283,296       295,277  
Prepaid expenses and other current assets
    148,766       129,282  
Amounts due from affiliates (primarily due from Cablevision)
    477,155       503,576  
Deferred tax asset
    -       91,372  
Investment securities pledged as collateral
    343,320       191,338  
Total current assets
    1,538,624       1,850,967  
                 
Property, plant and equipment, net of accumulated depreciation of $9,334,179 and $9,221,694
    3,298,574       3,269,232  
Other receivables
    2,882       3,279  
Investment securities pledged as collateral
    343,320       317,896  
Derivative contracts
    5,385       18,617  
Other assets
    47,338       53,971  
Amortizable intangible assets, net of accumulated amortization of $142,041 and $115,043
    227,630       252,871  
Indefinite-lived cable television franchises
    1,240,228       1,240,228  
Other indefinite-lived intangible assets
    55,895       55,895  
Goodwill
    442,773       442,773  
Deferred financing costs, net of accumulated amortization of $77,882 and $72,577
    85,576       96,056  
    $ 7,288,225     $ 7,601,785  

See accompanying combined notes to condensed consolidated financial statements.
 
 
CSC HOLDINGS, LLC AND SUBSIDIARIES
(a wholly-owned subsidiary of Cablevision Systems Corporation)
CONDENSED CONSOLIDATED BALANCE SHEETS (Cont'd)
(In thousands)
(Unaudited)
 
   
June 30,
2012
   
December 31,
2011
 
LIABILITIES AND MEMBER'S DEFICIENCY
           
             
Current Liabilities:
           
             
Accounts payable
  $ 438,870     $ 455,654  
Accrued liabilities
    462,212       554,050  
Amounts due to affiliates
    32,781       30,065  
Deferred revenue
    56,521       61,599  
Liabilities under derivative contracts
    60,193       75,223  
Credit facility debt
    130,387       103,245  
Collateralized indebtedness
    241,999       148,175  
Capital lease obligations
    12,083       9,174  
Notes payable
    11,225       17,614  
Senior notes
    -       60,997  
Total current liabilities
    1,446,271       1,515,796  
                 
Deferred revenue
    10,648       10,896  
Liabilities under derivative contracts
    36,762       3,141  
Other liabilities
    248,846       218,312  
Deferred tax liability
    604,351       600,420  
Credit facility debt
    5,005,723       5,080,949  
Collateralized indebtedness
    273,636       307,763  
Capital lease obligations
    37,518       33,589  
Notes payable
    1,506       11,613  
Senior notes and debentures
    3,226,266       3,218,697  
Total liabilities
    10,891,527       11,001,176  
                 
Commitments and contingencies
               
                 
Redeemable noncontrolling interests
    13,891       13,761  
                 
Member's Deficiency:
               
Accumulated deficit
    (3,301,589 )     (3,492,409 )
Senior notes due from Cablevision
    (753,717 )     (753,717 )
Other member's equity (14,432,750 membership units issued and outstanding)
    458,706       852,651  
      (3,596,600 )     (3,393,475 )
Accumulated other comprehensive loss
    (21,266 )     (21,468 )
Total member’s deficiency
    (3,617,866 )     (3,414,943 )
Noncontrolling interest
    673       1,791  
Total deficiency
    (3,617,193 )     (3,413,152 )
    $ 7,288,225     $ 7,601,785  

See accompanying combined notes to condensed consolidated financial statements.
 
 
CSC HOLDINGS, LLC AND SUBSIDIARIES
(a wholly-owned subsidiary of Cablevision Systems Corporation)
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
Three and Six Months Ended June 30, 2012 and 2011
(In thousands)
(Unaudited)
 
   
Three Months Ended
June 30,
   
Six Months Ended
June 30,
 
   
2012
   
2011
   
2012
   
2011
 
Revenues, net (including revenues, net from affiliates of $1,564, $1,354, $3,521, and $2,173, respectively)
  $ 1,697,288     $ 1,688,681     $ 3,356,045     $ 3,343,805  
                                 
Operating expenses:
                               
Technical and operating (excluding depreciation, amortization and impairments shown below and including charges from affiliates of $46,517, $44,742, $92,305, and $89,255, respectively)
    810,064       745,728       1,594,679       1,483,716  
Selling, general and administrative (net of charges to affiliates of $542, $5,473, $468, and $10,170, respectively)
    368,575       382,813       739,604       756,997  
Restructuring expense (credits)
    (93 )     94       (391 )     265  
Depreciation and amortization (including impairments)
    258,403       247,605       511,750       492,788  
      1,436,949       1,376,240       2,845,642       2,733,766  
Operating income
    260,339       312,441       510,403       610,039  
                                 
Other income (expense):
                               
Interest expense
    (136,011 )     (142,612 )     (272,236 )     (287,952 )
Interest income
    14,975       14,964       30,061       29,799  
Gain on investments, net
    42,113       13,312       177,438       72,384  
Loss on equity derivative contracts, net
    (16,137 )     (2,823 )     (127,331 )     (42,881 )
Loss on interest rate swap contracts, net
    (183 )     (5,497 )     (1,828 )     (9,686 )
Miscellaneous, net
    260       238       805       455  
      (94,983 )     (122,418 )     (193,091 )     (237,881 )
Income from continuing operations before income taxes
    165,356       190,023       317,312       372,158  
Income tax expense
    (65,971 )     (91,984 )     (126,375 )     (169,114 )
Income from continuing operations
    99,385       98,039       190,937       203,044  
Income from discontinued operations, net of income taxes
    -       18,592       -       53,623  
Net income
    99,385       116,631       190,937       256,667  
Net income attributable to noncontrolling interests
    (260 )     (288 )     (117 )     (267 )
Net income attributable to CSC Holdings, LLC's sole member
  $ 99,125     $ 116,343     $ 190,820     $ 256,400  
                                 
Amounts attributable to CSC Holdings, LLC's sole member:
                               
Income from continuing operations, net of income taxes
  $ 99,125     $ 97,751     $ 190,820     $ 202,777  
Income from discontinued operations, net of income taxes
    -       18,592       -       53,623  
Net income
  $ 99,125     $ 116,343     $ 190,820     $ 256,400  

See accompanying combined notes to condensed consolidated financial statements.
 

CSC HOLDINGS, LLC AND SUBSIDIARIES
(a wholly-owned subsidiary of Cablevision Systems Corporation)
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
Three and Six Months Ended June 30, 2012 and 2011
(In thousands)
(Unaudited)
 
   
Three Months Ended
June 30,
   
Six Months Ended
June 30,
 
   
2012
   
2011
   
2012
   
2011
 
                         
Net income
  $ 99,385     $ 116,631     $ 190,937     $ 256,667  
                                 
Other comprehensive income, net of tax:
                               
Defined benefit pension plans and postretirement plans:
                               
Amortization of actuarial losses, net
    153       381       202       699  
Unrecognized loss arising during period
    -       (744 )     -       (744 )
Comprehensive income
    99,538       116,268       191,139       256,622  
Comprehensive income attributable to noncontrolling interests
    (260 )     (288 )     (117 )     (267 )
Comprehensive income  attributable to CSC Holdings, LLC's sole member
  $ 99,278     $ 115,980     $ 191,022     $ 256,355  

See accompanying combined notes to condensed consolidated financial statements.
 
 
CSC HOLDINGS, LLC AND SUBSIDIARIES
(a wholly-owned subsidiary of Cablevision Systems Corporation)
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
Six Months Ended June 30, 2012 and 2011
(In thousands)
(Unaudited)
 
   
2012
   
2011
 
Cash flows from operating activities:
           
Income from continuing operations
  $ 190,937     $ 203,044  
Adjustments to reconcile income from continuing operations to net cash provided by operating activities:
               
Depreciation and amortization (including impairments)
    511,750       492,788  
Gain on investments, net
    (177,438 )     (72,384 )
Loss on equity derivative contracts, net
    127,331       42,881  
Amortization of deferred financing costs and discounts on indebtedness
    18,554       20,468  
Share-based compensation expense related to equity classified awards
    24,056       25,604  
Deferred income taxes
    112,353       138,729  
Provision for doubtful accounts
    23,393       25,080  
Excess tax benefit on share-based awards
    (4,373 )     (7,123 )
Changes in other assets and liabilities
    (122,691 )     (56,531 )
Net cash provided by operating activities
    703,872       812,556  
                 
Cash flows from investing activities:
               
Capital expenditures
    (512,469 )     (345,298 )
Proceeds from sale of equipment, net of costs of disposal
    2,639       476  
Payments for acquisitions, net
    -       (7,776 )
Decrease in investment securities and other investments
    -       30  
Decrease (increase) in restricted cash
    573       (1,730 )
Additions to other intangible assets
    (1,322 )     (1,294 )
Net cash used in investing activities
    (510,579 )     (355,592 )
                 
Cash flows from financing activities:
               
Proceeds from credit facility debt
    -       605,000  
Repayment of credit facility debt
    (48,587 )     (128,726 )
Repayment of senior notes
    (60,997 )     (325,796 )
Proceeds from collateralized indebtedness
    157,561       191,688  
Repayment of collateralized indebtedness and related derivative contracts
    (137,989 )     (163,686 )
Distributions to Cablevision
    (426,543 )     (574,325 )
Excess tax benefit on share-based awards
    4,373       7,123  
Principal payments on capital lease obligations
    (4,638 )     (714 )
Additions to deferred financing costs
    (738 )     (149 )
Distributions to noncontrolling interests, net
    (1,206 )     (133 )
Net cash used in financing activities
    (518,764 )     (389,718 )
                 
Net increase (decrease) in cash and cash equivalents from continuing operations
    (325,471 )     67,246  
                 
Cash flows of discontinued operations:
               
Net cash provided by (used in) operating activities
    (72 )     141,397  
Net cash used in investing activities
    -       (4,086 )
Net cash provided by financing activities
    -       2,857  
Effect of change in cash related to discontinued operations
    -       (117,877 )
Net increase (decrease) in cash and cash equivalents from discontinued operations
    (72 )     22,291  
                 
Cash and cash equivalents at beginning of year
    611,054       266,914  
                 
Cash and cash equivalents at end of period
  $ 285,511     $ 356,451  

See accompanying combined notes to condensed consolidated financial statements.
 
 
COMBINED NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(In thousands, except share and per share amounts)
(Unaudited)
 
NOTE 1.
BUSINESS
 
Cablevision Systems Corporation ("Cablevision"), its wholly-owned subsidiary CSC Holdings, LLC ("CSC Holdings," and collectively with Cablevision, the "Company") and their subsidiaries own and operate cable television systems and own companies that provide regional news, local programming and advertising sales services for the cable television industry, provide commercial data and voice services, operate motion picture theatres and operate a newspaper publishing business.  The Company classifies its operations into two reportable segments:  (1) Telecommunications Services, consisting principally of its video, high-speed data, Voice over Internet Protocol ("VoIP") and its commercial data and voice services operations; and (2) Other, consisting principally of (i) Newsday, which includes the Newsday daily newspaper, amNew York, Star Community Publishing Group, and online websites including newsday.com and exploreLI.com, (ii) a motion picture theatre business ("Clearview Cinemas"), (iii) the News 12 Networks, which provide regional news programming services, (iv) the MSG Varsity network, a network dedicated entirely to showcasing high school sports and activities, (v) a cable television advertising company, Cablevision Media Sales Corporation ("Cablevision Media Sales"), and (vi) certain other businesses and unallocated corporate costs.

On June 30, 2011, Cablevision distributed to its stockholders all of the outstanding common stock of AMC Networks Inc. ("AMC Networks"), a company which consists principally of national programming networks, including AMC, WE tv, IFC and Sundance Channel, previously owned and operated by the Company's Rainbow segment (the "AMC Networks Distribution").  As a result of the AMC Networks Distribution, the Company no longer consolidates the financial results of AMC Networks for the purpose of its own financial reporting and the historical financial results of AMC Networks have been reflected in the Company's condensed consolidated financial statements as discontinued operations for the three and six months ended June 30, 2011.  Accounts payable to and advances to AMC Networks that were previously eliminated in consolidation are now presented as amounts due to affiliates or amounts due from affiliates on the Company's condensed consolidated balance sheets.

NOTE 2.                 BASIS OF PRESENTATION

The accompanying unaudited condensed consolidated financial statements of Cablevision and CSC Holdings have been prepared in accordance with U.S. generally accepted accounting principles ("GAAP") and with the instructions to Form 10-Q and Article 10 of Regulation S-X for interim financial information.  Accordingly, these financial statements do not include all the information and notes required for complete annual financial statements.
 
The interim condensed consolidated financial statements should be read in conjunction with the audited consolidated financial statements and notes thereto included in the Company's Annual Report on Form 10-K for the year ended December 31, 2011.
 
 
COMBINED NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Cont'd)
(In thousands, except share and per share amounts)
(Unaudited)
 
The financial statements as of June 30, 2012 and for the three and six months ended June 30, 2012 and 2011 presented in this Form 10-Q are unaudited; however, in the opinion of management, such financial statements include all adjustments, consisting solely of normal recurring adjustments, necessary for a fair presentation of the results for the periods presented.
 
The accompanying condensed consolidated financial statements of Cablevision include the accounts of Cablevision and its majority-owned subsidiaries and the accompanying condensed consolidated financial statements of CSC Holdings include the accounts of CSC Holdings and its majority-owned subsidiaries. Cablevision has no business operations independent of its CSC Holdings subsidiary, whose operating results and financial position are consolidated into Cablevision.  The condensed consolidated balance sheets and statements of income of Cablevision are essentially identical to the condensed consolidated balance sheets and statements of income for CSC Holdings, with the following significant exceptions:  Cablevision has $2,140,823 of senior notes outstanding at June 30, 2012 (excluding the $753,717 aggregate principal amount of Cablevision notes held by its subsidiary Newsday Holdings LLC) that were issued to third party investors, cash, deferred financing costs and accrued interest related to its senior notes, deferred taxes and accrued dividends on its balance sheet and CSC Holdings and its subsidiaries have certain intercompany receivables from Cablevision.  Differences between Cablevision's results of operations from those of CSC Holdings primarily include incremental interest expense, interest income, and income tax expense.  CSC Holdings' results of operations include incremental interest income from the Cablevision senior notes held by Newsday Holdings LLC, which is eliminated in Cablevision's results of operations.

The combined notes to the condensed consolidated financial statements relate to the Company, which, except as noted, are essentially identical for Cablevision and CSC Holdings.  All significant intercompany transactions and balances between Cablevision and CSC Holdings and their respective consolidated subsidiaries are eliminated in both sets of condensed consolidated financial statements.  Intercompany transactions between Cablevision and CSC Holdings do not eliminate in the CSC Holdings condensed consolidated financial statements, but do eliminate in the Cablevision condensed consolidated financial statements.

The results of operations for the interim periods are not necessarily indicative of the results that might be expected for future interim periods or for the full year ending December 31, 2012.

The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period.  Actual results could differ from those estimates.

Recently Adopted Accounting Pronouncements

In September 2011, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update ("ASU") No. 2011-08, Intangibles - Goodwill and Other (Topic 350):  Testing Goodwill for Impairment.  ASU No. 2011-08 is intended to reduce the cost and complexity of the annual goodwill impairment test by providing entities an option to perform a "qualitative" assessment to determine whether further impairment testing is necessary.  Under the amended rule, a company will not be required to calculate the fair value of a business that contains recorded goodwill unless it concludes, based on the qualitative assessment, that it is more likely than not that the fair value of that business is less than its book value. If such a decline in fair value is deemed more likely than not to have occurred, then the quantitative goodwill impairment test that exists under current GAAP must be completed; otherwise, goodwill is deemed to be not impaired and no further testing is required until the next annual test date (or sooner if conditions or events before that date raise concerns of potential impairment in the business).  The amended goodwill impairment guidance does not affect the manner in which a company estimates fair value.  ASU No. 2011-08 was effective for the Company on January 1, 2012 and the Company adopted this guidance in connection with its annual goodwill impairment test performed in the first quarter of 2012.  The adoption of ASU No. 2011-08 had no impact on the financial statements of the Company as of June 30, 2012.
 
 
COMBINED NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Cont'd)
(In thousands, except share and per share amounts)
(Unaudited)
 
In May 2011, the FASB issued ASU No. 2011-04, Fair Value Measurement (Topic 820):  Amendments to Achieve Common Fair Value Measurement and Disclosure Requirements in U.S. GAAP and IFRSs.  ASU No. 2011-04 provides amendments to Topic 820 that change the wording used to describe many of the requirements in GAAP for measuring fair value and for disclosing information about fair value measurements.  Provisions of the amendment include a requirement that for recurring Level III fair value measurements, entities disclose quantitative information about unobservable inputs, a description of the valuation process used and qualitative details about the sensitivity of the measurements.  In addition, for items not carried at fair value but for which fair value is disclosed, entities are required to disclose the level within the fair value hierarchy that applies to the fair value measurement disclosed.  The adoption of ASU No. 2011-04 by the Company on January 1, 2012 had no impact on the Company's fair value measurements, financial position, results of operations or cash flows, however additional disclosures are included in Note 9.

Reclassifications

Certain reclassifications have been made to the 2011 financial statements to conform to the 2012 presentation.

NOTE 3.                 DIVIDENDS

During the six months ended June 30, 2012, the Board of Directors of Cablevision declared the following cash dividends to stockholders of record on both its Cablevision NY Group ("CNYG") Class A common stock and CNYG Class B common stock:

Declaration Date
 
Dividend per Share
 
Record Date
 
Payment Date
             
February 22, 2012
  $0.15  
March 9, 2012
 
March 30, 2012
May 1, 2012
  $0.15  
May 17, 2012
 
June 1, 2012

Cablevision paid dividends aggregating $86,020 during the six months ended June 30, 2012, primarily from the proceeds of equity distribution payments from CSC Holdings.  In addition, as of June 30, 2012, up to approximately $4,057 will be paid when, and if, restrictions lapse on restricted shares outstanding.

During the six months ended June 30, 2012, CSC Holdings made equity distribution payments to Cablevision aggregating $426,543.  These distribution payments were funded from cash on hand and cash from operations.  The proceeds were used to fund:
 
 
·
Cablevision's dividends paid;
 
·
Cablevision's interest and principal payments on its senior notes;
 
·
Cablevision's payments for the acquisition of treasury shares related to statutory minimum tax withholding obligations upon the vesting of certain restricted shares; and
 
·
the repurchase of CNYG Class A common stock under Cablevision's share repurchase program.
 
 
COMBINED NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Cont'd)
(In thousands, except share and per share amounts)
(Unaudited)

NOTE 4.                 NET INCOME PER SHARE ATTRIBUTABLE TO STOCKHOLDERS

Cablevision

Basic net income per common share attributable to Cablevision stockholders is computed by dividing net income attributable to Cablevision stockholders by the weighted average number of common shares outstanding during the period.  Diluted net income per common share attributable to Cablevision stockholders reflects the dilutive effects of stock options and restricted stock (including shares held by AMC Networks and The Madison Square Garden Company ("Madison Square Garden") employees).

A reconciliation of the denominator of the basic and diluted net income per share attributable to Cablevision stockholders calculation for the three and six months ended June 30, 2012 and 2011 is as follows:

   
Three Months
   
Six Months
   
Three Months
   
Six Months
 
   
Ended June 30, 2012
   
Ended June 30, 2011
 
   
(in thousands)
 
Basic weighted average shares outstanding
    263,428       265,423       278,303       280,203  
Effect of dilution:
                               
Stock options
    2,568       2,735       3,273       3,334  
Restricted stock awards
    1,486       2,602       4,578       5,137  
Diluted weighted average shares outstanding
    267,482       270,760       286,154       288,674  

Anti-dilutive shares (options whose exercise price exceeds the average market price of Cablevision's common stock during the period and certain restricted shares) totaling approximately 3,482,000 and 1,256,000 shares (which include Company options held by AMC Networks and Madison Square Garden employees), have been excluded from diluted weighted average shares outstanding for the three and six months ended June 30, 2012, respectively.  For the three and six months ended June 30, 2011, anti-dilutive shares totaling approximately 7,500 and 11,229 shares (which include Company options held by AMC Networks and Madison Square Garden employees), have been excluded from diluted weighted average shares outstanding, respectively.  In addition, approximately 756,400 restricted shares for the three and six months ended June 30, 2012 and 331,200 for the three and six months ended June 30, 2011, and approximately 12,354,000 options for the three and six months ended June 30, 2012, issued pursuant to the Company’s employee stock plan have also been excluded from the diluted weighted average shares outstanding for the respective periods, as the performance criteria on these awards have not yet been satisfied.

CSC Holdings

Net income per membership unit for CSC Holdings is not presented since CSC Holdings is a limited liability company and a wholly-owned subsidiary of Cablevision.

NOTE 5.                 GROSS VERSUS NET REVENUE RECOGNITION

In the normal course of business, the Company is assessed non-income related taxes by governmental authorities, including franchising authorities, and collects such taxes from its customers.  The Company's policy is that, in instances where the tax is being assessed directly on the Company, amounts paid to the governmental authorities and amounts received from the customers are recorded on a gross basis.  That is, amounts paid to the governmental authorities are recorded as technical and operating expenses and amounts received from the customer are recorded as revenues.  For the three and six months ended June 30, 2012 and 2011, the amount of franchise fees included as a component of net revenue aggregated $36,876 and $73,328 and $37,149 and $73,960, respectively.
 

COMBINED NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Cont'd)
(In thousands, except share and per share amounts)
(Unaudited)
 
NOTE 6.                 SUPPLEMENTAL CASH FLOW INFORMATION

The Company considers the balance of its investment in funds that substantially hold securities that mature within three months or less from the date the fund purchases these securities to be cash equivalents.  The carrying amount of cash and cash equivalents either approximates fair value due to the short-term maturity of these instruments or are at fair value.

During the six months ended June 30, 2012 and 2011, the Company's non-cash investing and financing activities and other supplemental data were as follows:

   
Six Months Ended
June 30,
 
   
2012
   
2011
 
Non-Cash Investing and Financing Activities of Cablevision and CSC Holdings:
           
             
Continuing Operations:
           
Redemption of collateralized indebtedness with related equity derivative contracts
  $ 40,125     $ 45,215  
Capital lease obligations
    11,476       5,081  
Satisfaction and discharge of debt with AMC Networks debt
    -       1,250,000  
Distribution of AMC Networks (Cablevision)
    -       1,101,616  
Distribution of AMC Networks (CSC Holdings)
    -       1,169,564  
Property and equipment accrued but unpaid
    70,039       33,085  
                 
Non-Cash Investing and Financing Activities of Cablevision:
               
Dividends payable on unvested restricted share awards
    1,493       2,318  
                 
Supplemental Data:
               
Continuing Operations:
               
Cash interest paid (Cablevision)
    350,380       364,171  
Cash interest paid (CSC Holdings)
    261,421       275,207  
Income taxes paid, net (Cablevision and CSC Holdings)
    4,954       19,416  
Discontinued Operations:
               
Cash interest paid (Cablevision and CSC Holdings)
    -       51,629  
Income taxes paid, net (Cablevision and CSC Holdings)
    -       5,573  
 
 
COMBINED NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Cont'd)
(In thousands, except share and per share amounts)
(Unaudited)
 
NOTE 7.                 DISCONTINUED OPERATIONS

On June 30, 2011, the Company completed the AMC Networks Distribution (see Note 1).  As a result, the operating results of the Company's Rainbow segment through the date of the AMC Networks Distribution, as well as transaction costs, have been classified in the condensed consolidated statements of income as discontinued operations through the distribution date.  Operating results of discontinued operations for the three and six months ended June 30, 2011 are summarized below:

   
Three Months Ended
June 30, 2011
   
Six Months Ended
June 30, 2011
 
   
AMC Networks
 
             
Revenues, net
  $ 291,965     $ 564,868  
                 
Income before income taxes
  $ 54,545     $ 115,015  
Income tax expense(a)
    (35,953 )     (61,392 )
Income from discontinued operations, net of income taxes
  $ 18,592     $ 53,623  
 

(a)
Income tax expense for the three and six months ended June 30, 2011 includes $6,406 and $3,969, respectively, resulting from the non-deductibility of certain transaction costs and the recognition of a deferred tax gain associated with the AMC Networks Distribution.

AMC Networks' results of operations reported on a stand-alone basis will differ from results presented above due to certain reclassifications and adjustments made for purposes of discontinued operations reporting.

NOTE 8.                 DERIVATIVE CONTRACTS AND COLLATERALIZED INDEBTEDNESS

To manage interest rate risk, the Company enters into interest rate swap contracts to adjust the proportion of total debt subject to variable interest rates.  Such contracts effectively fix the borrowing rates on floating rate debt to limit the exposure against the risk of rising rates.  The Company does not enter into interest rate swap contracts for speculative or trading purposes.

During the six months ended June 30, 2012, CSC Holdings was party to several interest rate swap contracts with an aggregate notional amount of $2,600,000 that effectively fixed borrowing rates on a portion of the Company's floating rate debt.  These contracts were not designated as hedges for accounting purposes and matured in June 2012.

The Company has also entered into various transactions to limit the exposure against equity price risk on its shares of Comcast Corporation ("Comcast") common stock.  The Company has monetized all of its stock holdings in Comcast Corporation through the execution of prepaid forward contracts, collateralized by an equivalent amount of the respective underlying stock.  At maturity, the contracts provide for the option to deliver cash or shares of Comcast stock with a value determined by reference to the applicable stock price at maturity.  These contracts, at maturity, are expected to offset declines in the fair value of these securities below the hedge price per share while allowing the Company to retain upside appreciation from the hedge price per share to the relevant cap price.
 
 
COMBINED NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Cont'd)
(In thousands, except share and per share amounts)
(Unaudited)
 
The following represents the location of the assets and liabilities associated with the Company's derivative instruments within the condensed consolidated balance sheets at June 30, 2012 and December 31, 2011:

Derivatives Not
     
Asset Derivatives
   
Liability Derivatives
 
Designated as
Hedging
Instruments
 
Balance Sheet
Location
 
Fair Value at
June 30,
2012
   
Fair Value at
December 31,
2011
   
Fair Value at
June 30,
2012
   
Fair Value at
December 31,
2011
 
                             
Interest rate swap contracts
 
Current derivative contracts
  $ -     $ -     $ -     $ 55,383  
                                     
Prepaid forward contracts
 
Current derivative contracts
    -       -       60,193       19,840  
                                     
Prepaid forward contracts
 
Long-term derivative contracts
    5,385       18,617       36,762       3,141  
                                     
Total derivative contracts
  $ 5,385     $ 18,617     $ 96,955     $ 78,364  

The following represents the impact and location of the Company's derivative instruments within the condensed consolidated statements of income for the three and six months ended June 30, 2012 and 2011:

Derivatives Not
     
Amount of Loss
Recognized
   
Amount of Loss
Recognized
 
Designated as
Hedging
 
Location of
Loss
 
Three Months Ended
June 30,
   
Six Months Ended
June 30,
 
Instruments
 
Recognized
 
2012
   
2011
   
2012
   
2011
 
                             
Interest rate swap contracts
 
Loss on interest rate swap contracts, net
  $ (183 )   $ (5,497 )   $ (1,828 )   $ (9,686 )
                                     
Prepaid forward contracts
 
Loss on equity derivative contracts, net
    (16,137 )     (2,823 )     (127,331 )     (42,881 )
Total derivative contracts
  $ (16,320 )   $ (8,320 )   $ (129,159 )   $ (52,567 )

Settlements of Collateralized Indebtedness
 
The following table summarizes the settlement of the Company's collateralized indebtedness relating to Comcast Corporation shares that were settled by delivering cash equal to the collateralized loan value, net of the value of the related equity derivative contracts for the six months ended June 30, 2012.  The cash was obtained from the proceeds of new monetization contracts covering an equivalent number of Comcast shares.  The terms of the new contracts allow the Company to retain upside participation in Comcast shares up to each respective contract's upside appreciation limit with downside exposure limited to the respective hedge price.

Number of shares
    5,401,059  
         
Collateralized indebtedness settled
  $ (97,864 )
Derivative contracts settled
    (40,125 )
      (137,989 )
Proceeds from new monetization contracts
    157,561  
Net cash receipt
  $ 19,572  
 
 
COMBINED NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Cont'd)
(In thousands, except share and per share amounts)
(Unaudited)
 
NOTE 9.                 FAIR VALUE MEASUREMENT

The fair value hierarchy is based on inputs to valuation techniques that are used to measure fair value that are either observable or unobservable.  Observable inputs reflect assumptions market participants would use in pricing an asset or liability based on market data obtained from independent sources while unobservable inputs reflect a reporting entity's pricing based upon their own market assumptions.  The fair value hierarchy consists of the following three levels:

 
·
Level I - Quoted prices for identical instruments in active markets.
 
·
Level II - Quoted prices for similar instruments in active markets; quoted prices for identical or similar instruments in markets that are not active; and model-derived valuations whose inputs are observable or whose significant value drivers are observable.
 
·
Level III - Instruments whose significant value drivers are unobservable.

The following table presents for each of these hierarchy levels, the Company's financial assets and financial liabilities that are measured at fair value on a recurring basis at June 30, 2012 and December 31, 2011:

At June 30, 2012:
                       
   
Level I
   
Level II
   
Level III
   
Total
 
Assets:
                       
                         
Money market funds
  $ 282,861     $ -     $ -     $ 282,861  
Investment securities
    125       -       -       125  
Investment securities pledged as collateral
    686,640       -       -       686,640  
Prepaid forward contracts
    -       5,385       -       5,385  
                                 
Liabilities:
                               
                                 
Liabilities under derivative contracts:
                               
Prepaid forward contracts
    -       96,955       -       96,955  

At December 31, 2011:
                       
   
Level I
   
Level II
   
Level III
   
Total
 
Assets:
                       
                         
Money market funds
  $ 556,853     $ -     $ -     $ 556,853  
Restricted money market funds
    27,920        -        -       27,920  
Investment securities
    113       -