DERIVATIVE CONTRACTS AND COLLATERALIZED INDEBTEDNESS

12 Months Ended

Dec. 31, 2014

Derivative Instruments and Hedging Activities Disclosure [Abstract]

DERIVATIVE CONTRACTS AND COLLATERALIZED INDEBTEDNESS

DERIVATIVE CONTRACTS AND COLLATERALIZED INDEBTEDNESS

To manage interest rate risk, the Company has historically entered into interest rate swap contracts to adjust the proportion of total debt that is 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.

The Company has 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 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.  

The Company received cash proceeds upon execution of the prepaid forward contracts discussed above which has been reflected as collateralized indebtedness in the accompanying consolidated balance sheets.  In addition, the Company separately accounts for the equity derivative component of the prepaid forward contracts.  These equity derivatives have not been designated as hedges for accounting purposes.  Therefore, the net fair values of the equity derivatives have been reflected in the accompanying consolidated balance sheets as an asset or liability and the net increases or decreases in the fair value of the equity derivative component of the prepaid forward contracts are included in gain (loss) on derivative contracts in the accompanying consolidated statements of income.

All of the Company's monetization transactions are obligations of its wholly-owned subsidiaries that are not part of the Restricted Group; however, CSC Holdings has provided guarantees of the subsidiaries' ongoing contract payment expense obligations and potential payments that could be due as a result of an early termination event (as defined in the agreements).  If any one of these contracts were terminated prior to its scheduled maturity date, the Company would be obligated to repay the fair value of the collateralized indebtedness less the sum of the fair values of the underlying stock and equity collar, calculated at the termination date.  As of December 31, 2014, the Company did not have an early termination shortfall relating to any of these contracts.

The Company monitors the financial institutions that are counterparties to its equity derivative contracts and it diversifies its equity derivative contracts among various counterparties to mitigate exposure to any single financial institution.  All of the counterparties to such transactions carry investment grade credit ratings as of December 31, 2014.

The following represents the location of the assets and liabilities associated with the Company's derivative instruments within the consolidated balance sheets at December 31, 2014 and December 31, 2013:

		Asset Derivatives				Liability Derivatives
Derivatives Not Designated as  Hedging Instruments	Balance Sheet Location	Fair Value at December 31, 2014		Fair Value at December 31, 2013		Fair Value at December 31, 2014		Fair Value at December 31, 2013
Prepaid forward contracts	Current derivative contracts	$	—	$	—	$	93,010	$	99,577
Prepaid forward contracts	Long-term derivative contracts	7,317		3,385		9,207		47,370
		$	7,317	$	3,385	$	102,217	$	146,947

The following represents the impact of the Company's derivative instruments and location within the consolidated statements of income for the years ended December 31, 2014, 2013 and 2012:

Derivatives Not		Amount of Loss Recognized
Designated as Hedging	Location of Loss	Years Ended December 31,
Instruments	Recognized	2014			2013			2012
Interest rate swap contracts	Loss on interest rate swap contracts, net	$	—		$	—		$	(1,828	)
Prepaid forward contracts	Loss on equity derivative contracts, net	(45,055		)	(198,688		)	(211,335		)
		$	(45,055	)	$	(198,688	)	$	(213,163	)

For the years ended December 31, 2014, 2013 and 2012, the Company recorded a gain on investments of $129,832, $313,251 and $293,599, respectively, representing the net increase in the fair values of all investment securities pledged as collateral for the period. 

Settlements of Collateralized Indebtedness

The following table summarizes the settlement of the Company's collateralized indebtedness relating to Comcast 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 years ended December 31, 2014 and 2013.  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. 

	Years Ended December 31,
	2014			2013
Number of shares	8,069,934			13,407,684
Collateralized indebtedness settled	$	(248,388	)	$	(307,763	)
Derivative contracts settled	(93,717		)	(200,246		)
	(342,105		)	(508,009		)
Proceeds from new monetization contracts	416,621			569,561
Net cash receipt	$	74,516		$	61,552

In January 2015, the Company settled collateralized indebtedness relating to 2,668,875 Comcast shares by delivering cash equal to the collateralized loan value obtained from the proceeds of a new monetization contract covering an equivalent number of Comcast shares. Accordingly, the consolidated balance sheets of Cablevision and CSC Holdings as of December 31, 2014 reflect the reclassification of $154,821 of investment securities pledged as collateral from a current asset to a long-term asset and $103,227 of collateralized indebtedness from a current liability to a long-term liability.