DERIVATIVE CONTRACTS AND COLLATERALIZED INDEBTEDNESS

12 Months Ended

Dec. 31, 2015

Derivative Instruments and Hedging Activities Disclosure [Abstract]

DERIVATIVE CONTRACTS AND COLLATERALIZED INDEBTEDNESS

DERIVATIVE CONTRACTS AND COLLATERALIZED INDEBTEDNESS

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, 2015, 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, 2015.

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, 2015 and 2014:

		Asset Derivatives				Liability Derivatives
Derivatives Not Designated as  Hedging Instruments	Balance Sheet Location	Fair Value at December 31, 2015		Fair Value at December 31, 2014		Fair Value at December 31, 2015		Fair Value at December 31, 2014
Prepaid forward contracts	Current derivative contracts	$	10,333	$	—	$	2,706	$	93,010
Prepaid forward contracts	Long-term derivative contracts	72,075		7,317		—		9,207
		$	82,408	$	7,317	$	2,706	$	102,217

Unrealized and realized gains (losses) related to Company's equity derivative contracts related to the Comcast common stock for the years ended December 31, 2015, 2014 and 2013 of $104,927, $(45,055) and $(198,688), respectively, are reflected in gain (loss) on equity derivative contracts, net in the Company's consolidated statements of income.

For the years ended December 31, 2015, 2014 and 2013, the Company recorded a gain (loss) on investments of $(33,935), $129,832 and $313,251, respectively, representing the net increase (decrease) in the fair values of all investment securities pledged as collateral. 

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 and the value of the related equity derivative contracts for the years ended December 31, 2015 and 2014.  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,
	2015			2014
Number of shares	13,407,684			8,069,934
Collateralized indebtedness settled	$	(569,562	)	$	(248,388	)
Derivative contracts settled	(69,675		)	(93,717		)
	(639,237		)	(342,105		)
Proceeds from new monetization contracts	774,703			416,621
Net cash receipt	$	135,466		$	74,516

In the Merger Agreement, Cablevision agreed that it would not share settle any collateralized indebtedness prior to the Merger.