Cablevision 2014 Annual Report Download - page 24

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Our ability to meet our obligations under our indebtedness may be restricted by limitations on our subsidiaries' ability to send
us funds.
Cablevision's sole subsidiary is CSC Holdings. CSC Holdings' principal subsidiaries include various entities that own cable
systems and other businesses. Cablevision's ability to pay interest and principal on its outstanding indebtedness is dependent upon
the operations of CSC Holdings and its subsidiaries and the distributions or other payments of the cash they generate to Cablevision
in the form of distributions, loans or advances. Similarly, CSC Holdings' ability to pay interest and principal on its indebtedness
is dependent in part on distributions from its subsidiaries. The Company's subsidiaries are separate and distinct legal entities and
have no obligation, contingent or otherwise, to pay any amounts due on the Company's indebtedness or to make any funds available
to the Company to do so. In addition, Newsday is a party to a credit agreement that contains various financial and operating
covenants that restrict the payment of dividends or other distributions. Also, our subsidiaries' creditors, including trade creditors,
in the event of a liquidation or reorganization of any subsidiary, would be entitled to a claim on the assets of such subsidiaries,
including any assets transferred to those subsidiaries, prior to any of our claims as a stockholder and those creditors are likely to
be paid in full before any distribution is made to us. To the extent that we are a creditor of a subsidiary, our claims could be
subordinated to any security interest in the assets of that subsidiary and/or any indebtedness of that subsidiary senior to that held
by us.
Our ability to incur debt and the use of our funds are limited by significant restrictive covenants in financing agreements.
Our credit facilities and debt instruments contain various financial and operating covenants that, among other things, require the
maintenance of financial ratios and restrict the relevant borrower's 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 that would
permit the parties who have lent money under such credit facilities and such other debt instruments to:
• restrict the ability to borrow undrawn funds under such credit facilities, and
• require the immediate repayment of the borrowings thereunder.
These events would be likely to have a material adverse effect on the value of our debt and equity securities.
We will need to raise significant amounts of funding over the next several years to fund capital expenditures, repay existing
obligations and meet other obligations and the failure to do so successfully could adversely affect our business. We may also
engage in extraordinary transactions that involve the incurrence of large amounts of debt.
Our business is very capital intensive. Operating and maintaining our cable systems requires significant amounts of cash payments
to third parties. Capital expenditures were $891.7 million, $951.7 million and $991.6 million, in 2014, 2013 and 2012, respectively,
and primarily include payments for customer premise equipment, such as new digital video cable boxes and modems, as well as
infrastructure and capital expenditures related to our cable and Lightpath networks, in addition to the capital requirements of our
other businesses. Historically, we have made substantial investments in the development of new and innovative programming
options and other service offerings for our customers as a way of differentiating ourselves from our competitors. For example, we
have deployed WiFi access points throughout our footprint. We expect these capital expenditures to continue to be significant as
we further enhance our service offerings. We have substantial future capital commitments in the form of long-term contracts that
require substantial payments over a period of time. We will not be able to generate sufficient cash internally to fund anticipated
capital expenditures, meet these obligations and repay our indebtedness at maturity. Accordingly, we will have to do one or more
of the following:
• eliminate or reduce the quarterly dividend and/or share repurchase program;
• refinance existing obligations to extend maturities;
• raise additional capital, through debt or equity issuances or both;
• cancel or scale back current and future spending programs; or
• sell assets or interests in one or more of our businesses.
However, you should not assume that we will be able to refinance existing obligations or raise any required additional capital or
to do so on favorable terms. Borrowing costs related to future capital raising activities may be significantly higher than our current
borrowing costs and we may not be able to raise additional capital on favorable terms, or at all, if unsettled conditions in financial
markets recur. If we are unable to pursue our current and future spending programs, we may be forced to cancel or scale back
those programs. Our choice of which spending programs to cancel or reduce may be limited. Failure to successfully pursue our
capital expenditure and other spending plans could materially and adversely affect our ability to compete effectively. It is possible