CSC HOLDINGS INC - 10-Q Quarterly Report

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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 September 30, 2002

OR

/ / TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934

For the transition period from ___________ to ___________

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 / /

CSC Holdings, Inc. Yes /X/ No / /

Number of shares of common stock outstanding as of November 1, 2002:

Cablevision NY Group Class A Common Stock - 234,682,716
Cablevision NY Group Class B Common Stock - 67,242,427
CSC Holdings, Inc. Common Stock - 5,000,000

PART I. FINANCIAL INFORMATION

For information required by Item 1 and Item 2, refer to Index to Financial
Statements on page 9.

Item 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

The Company is exposed to market risks from changes in certain equity security
prices and interest rates. The Company's exposure to interest rate movements
results from its use of floating and fixed rate debt to fund its working
capital, capital expenditures, and other operational and investment
requirements. To manage interest rate risk, the Company has entered into
interest rate swap contracts to adjust the proportion of total debt that is
subject to variable and fixed interest rates. Such contracts fix the borrowing
rates on floating rate debt to provide an economic hedge against the risk of
rising rates and/or convert fixed rate borrowings to variable rates to provide
an economic hedge against the risk of higher borrowing costs in a declining
interest rate environment. In addition, from time to time the Company may
utilize short-term interest rate lock agreements to hedge the risk that the cost
of a future issuance of fixed rate debt may be adversely affected by changes in
interest rates. The Company does not enter into interest rate swap contracts for
speculative or trading purposes.

The Company's exposure to changes in equity security prices stems primarily from
the AT&T Corp., Charter Communications, Inc., AT&T Wireless Services, Inc., and
Adelphia Communications Corporation common stock held by the Company. The
Company has entered into prepaid forward contracts to hedge its equity price
risk and to monetize the value of these securities. These contracts, at
maturity, are expected to offset negative changes in the fair value of these
securities, while allowing for certain upside appreciation potential. In the
event of an early termination of such contracts, however, the Company would be
obligated to repay the monetization indebtedness less the sum of the fair value
of the underlying stock and the fair value of the equity collar, calculated at
the termination date. The underlying stock and equity collars are carried at
fair market value on the Company's consolidated balance sheet and the
monetization indebtedness is carried at its accreted value.

FAIR VALUE OF DEBT: Based on the level of interest rates prevailing at September
30, 2002, the carrying value of the Company's fixed rate debt and redeemable
preferred stock of $6,001.4 million exceeded its fair value of $4,635.0 million
by approximately $1,366.4 million. The fair value of these financial instruments
is estimated based on reference to quoted market prices for these or comparable
securities. The Company's floating rate borrowings bear interest at current
market rates and thus approximate fair value. The effect of a hypothetical 100
basis point decrease in interest rates prevailing at September 30, 2002 would
increase the estimated fair value of fixed rate debt and redeemable preferred
stock instruments by approximately $249.0 million. This estimate is based on the
assumption of an immediate and parallel shift in interest rates across all
maturities. Changes in the fair value of these securities are expected to be
offset economically by changes in the fair value of the interest rate swap
contracts to the extent these securities are hedged.

2

INTEREST RATE DERIVATIVE CONTRACTS: As of September 30, 2002, the Company had
outstanding interest rate swap contracts to convert fixed rate debt to floating
rate debt covering a total notional principal amount of $600.0 million. As of
September 30, 2002, the fair market value of these interest rate swap contracts
was approximately $14.4 million, a net receivable position, as reflected under
derivative contracts in the Company's consolidated balance sheet. Assuming an
immediate and parallel shift in interest rates across the yield curve, a 100
basis point increase in interest rates from September 30, 2002 prevailing levels
would decrease the fair market value of these contracts by approximately $5.6
million to a net receivable position of $8.8 million.

In addition, the Company had outstanding prepaid interest rate swap contracts
with a notional value of $1,115.0 million entered into in connection with its
monetization transactions. As of September 30, 2002, such contracts had a fair
market value of $119.7 million, a net liability position, reflected as
liabilities under derivative contracts in the Company's consolidated balance
sheet. Assuming an immediate and parallel shift in interest rates across the
yield curve, a 100 basis point increase in interest rates from September 30,
2002 prevailing levels would decrease the fair market value of these contracts
by approximately $34.0 million to a liability of $153.7 million.

EQUITY PRICE RISK: As of September 30, 2002, the fair market value and the
carrying value of the Company's holdings of AT&T, Charter Communications, AT&T
Wireless and Adelphia Communications common stock aggregated $611.0 million.
Assuming a 10% change in price, the potential change in the fair value of these
investments would be approximately $61.1 million. As of September 30, 2002, the
net fair value and the carrying value of the equity collar component of the
prepaid forward contracts entered into to hedge the equity price risk of AT&T,
Charter Communications, AT&T Wireless and Adelphia Communications aggregated
$729.9 million, a net receivable position. The maturities of these prepaid
forward contracts, all of which were entered into in 2001, are summarized in the
following table:

Item 4. CONTROLS AND PROCEDURES

Within the 90-day period prior to the filing of this report, an evaluation was
carried out under the supervision and with the participation of Cablevision's
management, including our Chief Executive Officer and Chief Financial Officer,
of the effectiveness of the design and operation of our disclosure controls and
procedures (as defined under Securities and Exchange Commission rules). Based
upon that evaluation, the Chief Executive Officer and Chief Financial Officer
concluded that the design and operation of these disclosure controls and
procedures were effective. No significant changes were made in our internal
controls or in other factors that could significantly affect these controls
subsequent to the date of their evaluation.

3

PART II. OTHER INFORMATION

Item 1. LEGAL PROCEEDINGS

We are party to various lawsuits, some involving substantial amounts. Management
does not believe that the resolution of such lawsuits will have a material
adverse impact on our financial position.

On April 25, 2001, At Home Corporation commenced a lawsuit in the Court of
Chancery of the State of Delaware alleging that Cablevision had breached its
obligations under certain agreements with At Home. The suit seeks a variety of
remedies including: recision of the agreements between At Home and Cablevision
and cancellation of all warrants currently held by Cablevision, damages, and/or
an order prohibiting Cablevision from continuing to offer its Optimum Online
service and requiring it to convert its Optimum Online customers to the
Optimum@Home service and to roll out the Optimum@Home service. Cablevision has
filed an answer to the complaint denying the material allegations and asserting
various affirmative defenses. On September 28, 2001, At Home filed a petition
for reorganization in federal bankruptcy court. In connection with the
liquidation of the At Home Corporation, the claims in this lawsuit, among
others, were assigned to the General Unsecured Creditors Committee, which has
until December 31, 2002 to decide whether to seek the removal of these claims to
the federal bankruptcy court.

On January 8, 2002, At Home terminated its At Home service to all of
Cablevision's Optimum@Home subscribers. In a letter dated January 9, 2002,
Cablevision advised At Home that such termination of service constituted an
election by At Home to terminate the existing master distribution agreement
entered into by and between Cablevision and At Home and all other related
agreements.

On April 29, 2002, Yankees Entertainment & Sports Network, LLC (the "YES
Network") filed a complaint and, on September 24, 2002, an amended complaint
against the Company in the United States District Court, Southern District of
New York. The lawsuit arises from the failure of the YES Network and the Company
to reach agreement on the carriage of programming of the YES Network (primarily
New York Yankees baseball games and New Jersey Nets basketball games) on the
Company's cable television systems. The amended complaint alleges a variety of
anticompetitive acts and seeks declaratory judgments as to violations of laws,
treble damages and injunctive relief, including an injunction requiring the
Company to carry the YES Network on its cable television systems. The Company
believes that the claims set forth in the complaint are without merit and
intends to contest vigorously the lawsuit.

In August 2002, purported class actions naming as defendants the Company and
each of its directors were filed in the Delaware Chancery Court. The actions,
which allege breach of fiduciary duties and breach of contract with respect to
the exchange of the Rainbow Media Group tracking stock for Cablevision NY Group
common stock, were purportedly brought on behalf of all holders of publicly
traded shares of Rainbow Media Group tracking stock. The actions seek to (i)
enjoin the exchange of Rainbow Media Group tracking stock for Cablevision NY
Group common stock, (ii) enjoin any sales of "Rainbow Media Group assets", or,
in the alternative, award rescissory damages, (iii) if the exchange is
completed, rescind it or award rescissory damages, (iv) award compensatory
damages, and (v) award costs and disbursements. The actions were consolidated
into one action on September 17, 2002, and on October 3, 2002,

4

the Company filed a motion to dismiss the consolidated action. The Company
believes the claims are without merit and intends to contest vigorously the
lawsuit.

Item 6. EXHIBITS AND REPORTS ON FORM 8-K

(a) Exhibits.

None.

(b) Reports on Form 8-K.

Cablevision Systems Corporation filed a Current Report on Form 8-K with
the Commission on August 14, 2002.

CSC Holdings, Inc. has not filed any Current Reports on Form 8-K with
the Commission during the quarter for which this report is filed.

5

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrants have duly caused this report to be signed on their behalf by the
undersigned thereunto duly authorized.

CABLEVISION SYSTEMS CORPORATION
CSC HOLDINGS, INC

Date: November 14, 2002 /s/ William J. Bell
------------------------------------
By: William J. Bell as Vice Chairman,
Director and Principal Financial
Officer of Cablevision Systems
Corporation and CSC Holdings, Inc.

Date: November 14, 2002 By: /s/ Andrew B. Rosengard
------------------------------------
Andrew B. Rosengard as
Executive Vice President, Finance
and Principal Accounting Officer
of Cablevision Systems Corporation
and CSC Holdings, Inc.

6

I, James L. Dolan, President and Chief Executive Officer of Cablevision Systems
Corporation ("Cablevision"), certify that:

1. I have reviewed this quarterly report on Form 10-Q of Cablevision;

2. Based on my knowledge, this quarterly report does not contain any untrue
statement of a material fact or omit to state a material fact necessary to make
the statements made, in light of the circumstances under which such statements
were made, not misleading with respect to the period covered by this quarterly
report;

3. Based on my knowledge, the financial statements, and other financial
information included in this quarterly report, fairly present in all material
respects the financial condition, results of operations and cash flows of
Cablevision as of, and for, the periods presented in this quarterly report;

4. Cablevision's other certifying officers and I are responsible for
establishing and maintaining disclosure controls and procedures (as defined in
Exchange Act Rules 13a-14 and 15d-14) for Cablevision and we have:

a) designed such disclosure controls and procedures to ensure that material
information relating to Cablevision, including its consolidated subsidiaries,
is made known to us by others within those entities, particularly during the
period in which this quarterly report is being prepared;

b) evaluated the effectiveness of Cablevision's disclosure controls and
procedures as of a date within 90 days prior to the filing date of this
quarterly report (the "Evaluation Date"); and

c) presented in this quarterly report our conclusions about the effectiveness
of the disclosure controls and procedures based on our evaluation as of the
Evaluation Date;

5. Cablevision's other certifying officers and I have disclosed, based on our
most recent evaluation, to Cablevision's auditors and the audit committee of
Cablevision's board of directors (or persons performing the equivalent
function):

a) all significant deficiencies in the design or operation of internal
controls which could adversely affect Cablevision's ability to record,
process, summarize and report financial data and have identified for
Cablevision's auditors any material weaknesses in internal controls; and

b) any fraud, whether or not material, that involves management or other
employees who have a significant role in Cablevision's internal controls; and

6. Cablevision's other certifying officers and I have indicated in this
quarterly report whether or not there were significant changes in internal
controls or in other factors that could significantly affect internal controls
subsequent to the date of our most recent evaluation, including any corrective
actions with regard to significant deficiencies and material weaknesses.

Date: November 14, 2002 By: /s/ James L. Dolan
----------------------------------
James L. Dolan
President and Chief Executive Officer

7

I, William J. Bell, Vice Chairman of Cablevision Systems Corporation
("Cablevision"), certify that:

1. I have reviewed this quarterly report on Form 10-Q of Cablevision;

2. Based on my knowledge, this quarterly report does not contain any untrue
statement of a material fact or omit to state a material fact necessary to make
the statements made, in light of the circumstances under which such statements
were made, not misleading with respect to the period covered by this quarterly
report;

3. Based on my knowledge, the financial statements, and other financial
information included in this quarterly report, fairly present in all material
respects the financial condition, results of operations and cash flows of
Cablevision as of, and for, the periods presented in this quarterly report;

4. Cablevision's other certifying officers and I are responsible for
establishing and maintaining disclosure controls and procedures (as defined in
Exchange Act Rules 13a-14 and 15d-14) for Cablevision and we have:

a) designed such disclosure controls and procedures to ensure that material
information relating to Cablevision, including its consolidated subsidiaries,
is made known to us by others within those entities, particularly during the
period in which this quarterly report is being prepared;

b) evaluated the effectiveness of Cablevision's disclosure controls and
procedures as of a date within 90 days prior to the filing date of this
quarterly report (the "Evaluation Date"); and

c) presented in this quarterly report our conclusions about the effectiveness
of the disclosure controls and procedures based on our evaluation as of the
Evaluation Date;

5. Cablevision's other certifying officers and I have disclosed, based on our
most recent evaluation, to Cablevision's auditors and the audit committee of
Cablevision's board of directors (or persons performing the equivalent
function):

a) all significant deficiencies in the design or operation of internal
controls which could adversely affect Cablevision's ability to record,
process, summarize and report financial data and have identified for
Cablevision's auditors any material weaknesses in internal controls; and

b) any fraud, whether or not material, that involves management or other
employees who have a significant role in Cablevision's internal controls; and

6. Cablevision's other certifying officers and I have indicated in this
quarterly report whether or not there were significant changes in internal
controls or in other factors that could significantly affect internal controls
subsequent to the date of our most recent evaluation, including any corrective
actions with regard to significant deficiencies and material weaknesses.

Date: November 14, 2002 By: /s/ William J. Bell
------------------------------
William J. Bell
Vice Chairman

8

INDEX TO FINANCIAL STATEMENTS

9

CABLEVISION SYSTEMS CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(Dollars in thousands)

See accompanying notes to
condensed consolidated financial statements.

I-1

CABLEVISION SYSTEMS CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(Dollars in thousands)
(continued)

See accompanying notes
to condensed consolidated financial statements.

I-2

CABLEVISION SYSTEMS CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Dollars in thousands, except per share data)
(Unaudited)

See accompanying notes to
condensed consolidated financial statements.

I-3

CABLEVISION SYSTEMS CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
Nine Months Ended September 30, 2002 and 2001
(Dollars in thousands)
(Unaudited)

See accompanying notes to
condensed consolidated financial statements.

I-4

CABLEVISION SYSTEMS CORPORATION AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Dollars in thousands)
(Unaudited)

NOTE 1. BASIS OF PRESENTATION

The accompanying unaudited condensed consolidated financial statements of
Cablevision Systems Corporation and its majority owned subsidiaries (the
"Company" or "Cablevision") have been prepared in accordance with the rules and
regulations of the Securities and Exchange Commission. Certain information and
footnote disclosures normally included in financial statements prepared in
accordance with generally accepted accounting principles have been condensed or
omitted.

NOTE 2. RESPONSIBILITY FOR INTERIM FINANCIAL STATEMENTS

The financial statements as of and for the three and nine months ended September
30, 2002 and 2001 presented in this Form 10-Q are unaudited; however, in the
opinion of management, such statements include all adjustments, consisting
solely of normal recurring adjustments, necessary for a fair presentation of the
results for the periods presented.

The interim financial statements should be read in conjunction with the audited
consolidated financial statements and notes thereto included in the Company's
and CSC Holdings, Inc.'s Annual Report on Form 10-K for the year ended December
31, 2001.

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, 2002.

NOTE 3. RECLASSIFICATIONS

Certain reclassifications have been made to the 2001 financial statements to
conform to the 2002 presentation.

NOTE 4. INCOME (LOSS) PER SHARE

Basic and diluted net loss per common share are computed by dividing net loss by
the weighted average number of common shares outstanding. Potential dilutive
common shares are not included in the computation as their effect would be
antidilutive.

Basic net income per share is computed by dividing net income by the weighted
average common stock outstanding during the period. Diluted net income per share
is computed by dividing net income by the total of the weighted average common
stock and common stock equivalents outstanding during the period.

All per share amounts have been adjusted, for all years presented, to reflect
the tracking stock distribution in March 2001 and the subsequent exchange of
each share of Rainbow Media Group ("RMG") tracking stock for 1.19093 shares of
Cablevision NY Group ("CNYG") common stock on August 20, 2002, as if each
occurred on January 1, 2001.

I-5

CABLEVISION SYSTEMS CORPORATION AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Dollars in thousands)
(Unaudited)
(continued)

NOTE 5. CASH FLOWS

For purposes of the consolidated statements of cash flows, the Company considers
short-term investments with a maturity at date of purchase of three months or
less to be cash equivalents.

During the nine months ended September 30, 2002 and 2001, the Company's non-cash
investing and financing activities and other supplemental data were as follows:

NOTE 6. EXCHANGE OF RAINBOW MEDIA GROUP COMMON STOCK

In August 2002, Cablevision's board of directors approved the exchange of
Rainbow Media Group common stock for shares of Cablevision NY Group common stock
pursuant to the terms of Cablevision's certificate of incorporation. Each share
of Rainbow Media Group common stock was exchanged for 1.19093 shares of
Cablevision NY Group common stock on August 20, 2002. Fractional shares were
paid in cash. From and after the date of the exchange, all rights of holders of
shares of Rainbow Media Group common stock ceased except for the right, upon
surrender of the certificates representing their shares of Rainbow Media Group
common stock, to receive the shares of Cablevision NY Group common stock for
which their shares of Rainbow Media Group common stock were exchanged, together
with any fractional payment as provided above, without interest.

NOTE 7. NET ASSETS HELD FOR SALE AND DISCONTINUED OPERATIONS

In connection with the 2002 restructuring discussed in Note 14, the Company
plans to sell its motion picture theater business. The assets and liabilities
attributable to the motion picture theater business have been classified in the
consolidated balance sheets as assets and liabilities held for sale and consist
of the following:

I-6

CABLEVISION SYSTEMS CORPORATION AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Dollars in thousands)
(Unaudited)
(continued)

The operations of the motion picture theater business, including a net reversal
of previously recorded restructuring charges of $1,877, have been classified as
discontinued operations, net of taxes, in the consolidated statements of
operations for all periods presented.

In addition, the results of operations of the retail electronics stores
closed or to be closed in the fourth quarter of 2002, including restructuring
charges of $9,479 and the write-off of certain fixed assets of $24,452, have
been reported in discontinued operations, net of taxes in the consolidated
statements of operations for all periods presented.

Operating results of discontinued operations are summarized as follows:

I-7

CABLEVISION SYSTEMS CORPORATION AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Dollars in thousands)
(Unaudited)
(continued)

NOTE 8. TRANSACTIONS

In March 2002, Rainbow Media Holdings, Inc., a subsidiary of the Company,
acquired Loral Space and Communications, Ltd.'s 50% interest in R/L DBS Company,
LLC for a purchase price of up to a present value of $33,000 payable only from a
percentage of future revenues of R/L DBS' business, if any, or from any future
sale of all or part of the interests in or assets of R/L DBS. This purchase
increased Rainbow Media Holdings' ownership of R/L DBS to 100%. R/L DBS's
results are consolidated with those of the Company as of the date of
acquisition.

Through June 30, 2002, NBC-Rainbow Holding, Inc. had exchanged a 5.0% interest
in Rainbow Media Holdings equity securities for 9,968,988 shares of Rainbow
Media Group Class A common stock of Cablevision (valued at $98,514). The Rainbow
Media Group common stock was exchanged for 11,872,367 shares of Cablevision NY
Group Class A common stock on August 20, 2002. In September 2002, NBC exchanged
a 0.7% interest in Rainbow Media Holdings equity securities for 1,647,266 shares
of Cablevision NY Group Class A common stock of Cablevision (valued at $16,374).
The acquisitions of the 5.7% and the 3.1% minority interest in 2002 and 2001,
respectively, were accounted for as purchases. The excess of the purchase price
over the net book value of assets acquired of approximately $149,060 was
allocated to the specific assets acquired, in 2002, based upon an independent
appraisal as follows:

NOTE 9. RECENTLY ADOPTED ACCOUNTING STANDARDS

Effective January 1, 2002, the Company adopted Statement of Financial Accounting
Standards No. 142, Goodwill and Other Intangible Assets. Statement 142 requires
that goodwill and intangible assets with indefinite useful lives no longer be
amortized, but instead tested for impairment at least annually in accordance
with the provisions of Statement 142. Statement 142 requires that intangible
assets with definite useful lives be amortized over their respective estimated
useful lives to their estimated residual values, and reviewed for impairment. In
connection with the adoption of Statement 142, the Company ceased the
amortization of goodwill and intangible assets that were determined to have an
indefinite useful life and that had been acquired in a purchase business
combination. The Company did not record any impairment charges in connection
with the implementation of Statement 142.

I-8

CABLEVISION SYSTEMS CORPORATION AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Dollars in thousands)
(Unaudited)
(continued)

Summarized below is pro forma net income and basic and diluted earnings per
share for the three and nine months ended September 30, 2001 as adjusted for
amortization expense that is no longer recorded in accordance with Statement
142.

Effective January 1, 2002, the Company adopted Statement No. 144, Accounting
for the Impairment or Disposal of Long-Lived Assets, which supersedes both
Statement 121 and the accounting and reporting provisions of APB Opinion No.
30, Reporting the Results of Operations - Reporting the Effects of Disposal
of a Segment of a Business, and Extraordinary, Unusual and Infrequently
Occurring Events and Transactions (Opinion 30), for the disposal of a segment
of a business (as previously defined in that Opinion). Statement 144 retains
the fundamental provisions of Statement 121 for recognizing and measuring
impairment losses on long-lived assets held for use and long-lived assets to
be disposed of by sale, while also resolving significant implementation
issues associated with Statement 121. Statement 144 retains the basic
provisions of Opinion 30 on how to present discontinued operations in the
income statement but broadens that presentation to include a component of an
entity (rather than a segment of a business). The provisions of Statement 144
have been applied to the planned sale of the Company's theater business and
the closing of certain retail electronics stores.

Effective January 1, 2002, the Company adopted the provisions of the FASB's
Emerging Issues Task Force, EITF No. 01-09, "Accounting for the Consideration
Given by a Vendor to a Customer or a Reseller of the Vendors' Products." EITF
No. 01-09 stipulates the criteria to be met in determining the financial
statement classification of customer incentives (which includes deferred
carriage fees) as either a reduction of revenue or an operating expense. Upon
adoption, the Company reclassified the amortization of its deferred carriage
fees as a reduction to

I-9

CABLEVISION SYSTEMS CORPORATION AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Dollars in thousands)
(Unaudited)
(continued)

revenues, net. This reclassification has been made for the comparable 2001
periods. The amortization of the deferred carriage fees shown on the balance
sheet was previously included in operating expenses, which were correspondingly
reduced.

In April 2002, the FASB issued Statement 145, Rescission of Statements No. 4, 44
and 64, Amendment of Statement No. 13, and Technical Corrections. Statement 145,
among other things, rescinds Statement 4, which required all gain and losses
from the extinguishment of debt to be classified as an extraordinary item and
amends Statement 13 to require that certain lease modifications that have
economic effects similar to sale-leaseback transactions to be accounted for in
the same manner as sale-leaseback transactions. The Company adopted Statement
145 effective July 1, 2002. The adoption of this statement had no impact on the
Company's consolidated financial statements.

In June 2002, Statement 146, Accounting for Costs Associated with Exit or
Disposal Activities, was issued. This Statement requires recording costs
associated with exit or disposal activities at their fair values when a
liability has been incurred. Under previous guidance, certain exit costs were
accrued upon management's commitment to an exit plan. The provisions of this
Statement are required to be adopted for all exit and disposal activities
initiated after December 31, 2002.

NOTE 10. INTANGIBLE ASSETS

The following table summarizes information relating to the Company's acquired
intangible assets at September 30, 2002.

GROSS CARRYING AMOUNT OF
AMORTIZED INTANGIBLE ASSETS
Franchises...................................................................................... $ 1,706
Affiliation agreements.......................................................................... 350,863
Broadcast rights................................................................................ 102,154
Player contracts................................................................................ 42,926
Other intangibles............................................................................... 195,868
-------------
693,517
-------------

ACCUMULATED AMORTIZATION
Franchises...................................................................................... 1,138
Affiliation agreements.......................................................................... 184,828
Broadcast rights................................................................................ 50,343
Player contracts................................................................................ 35,949
Other intangibles............................................................................... 37,196
-------------
309,454
-------------

UNAMORTIZED INTANGIBLE ASSETS
Franchises...................................................................................... 731,848
Excess costs over the fair value of net assets acquired......................................... 1,353,476
-------------
2,085,324
-------------

Total intangibles............................................................................. $ 2,469,387
=============

I-10

CABLEVISION SYSTEMS CORPORATION AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Dollars in thousands)
(Unaudited)
(continued)

AGGREGATE AMORTIZATION EXPENSE
Nine months ended September 30, 2002............................................................ $ 40,388

ESTIMATED AMORTIZATION EXPENSE
Year ending December 31, 2002................................................................... 54,244
Year ending December 31, 2003................................................................... 53,785
Year ending December 31, 2004................................................................... 42,464
Year ending December 31, 2005................................................................... 29,937
Year ending December 31, 2006................................................................... 26,374

The changes in the carrying amount of excess costs over the fair value of net
assets acquired for the nine months ended September 30, 2002 are as follows:

NOTE 11. DEBT

In March 2002, Rainbow Media Group, LLC, a wholly owned subsidiary of Rainbow
Media Holdings, entered into a $400,000 revolving credit facility with a group
of banks which matures on December 31, 2006 (in certain limited circumstances
the maturity date may be accelerated to November 1, 2005). The facility requires
commitment reductions beginning in the third quarter of 2004. This revolving
credit facility contains certain financial covenants that may limit Rainbow
Media Group's ability to utilize all of the undrawn funds available thereunder,
including covenants requiring the maintenance of certain financial ratios and
restricting the permitted uses of borrowed funds. See Note 18.

In March 2002, American Movie Classics Company and Bravo Company, subsidiaries
of Rainbow Media Holdings, entered into a $200,000 revolving credit facility
with a group of banks. The facility matures on December 31, 2006 (in certain
limited circumstances the maturity date may be accelerated to November 1, 2005)
and requires commitment reductions beginning in the third quarter of 2004. The
facility amended and restated the previously existing American Movie Classics
$200,000 revolving credit facility. The American Movie Classics/Bravo revolving
credit facility contains certain financial covenants that may limit the ability
of American Movie Classics/Bravo to utilize all of the undrawn funds available
thereunder, including covenants requiring the maintenance of certain financial
ratios and restricting the permitted uses of borrowed funds. See Note 18.

I-11

CABLEVISION SYSTEMS CORPORATION AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Dollars in thousands)
(Unaudited)
(continued)

NOTE 12. COLLATERALIZED INDEBTEDNESS AND DERIVATIVE CONTRACTS

In May 2002, due to certain events relating to Adelphia Communications
Corporation, the Company received early termination notices from its bank
counterparties pursuant to certain monetization contracts covering 9.79 million
shares of Adelphia Communications common stock. As a result, the Company was
required to repay the related collateralized indebtedness prior to maturity, net
of the benefit of the related prepaid equity forward contracts in a significant
gain position. The Company made cash payments aggregating $54,813, representing
the difference between the redemption value of the collateralized indebtedness
and the fair market value of the prepaid equity forward contracts as of the
early termination date, and 9.79 million shares of Adelphia Communications
common stock that were held as collateral were returned to the Company. In
connection with the early termination, the Company recognized a loss of $17,237,
representing the difference between the carrying value and the redemption value
of the collateralized indebtedness, which is reflected as a loss on the early
extinguishment of debt in the accompanying consolidated statement of operations.

NOTE 13. INCOME TAXES

Prior to June 29, 2002, the operations of the Company were included in two
consolidated federal income tax returns; one consolidated return included the
telecommunications and retail operations, and the second consolidated return
included all companies owned by Rainbow Media Holdings.

In connection with the exchange of equity securities by NBC described in Note 8,
the Company recorded a deferred tax liability of approximately $45,000 in
accordance with the purchase method of accounting. Pursuant to such exchange,
the Company will begin to file one consolidated federal income tax return
effective June 29, 2002. As a result of the consolidation of Rainbow Media
Holdings for federal tax purposes, the valuation allowance and excess costs over
fair value of net assets acquired were reduced by approximately $74,900.

Tax rules impose restrictions on the ability of the companies to utilize each
others' tax attributes. Management evaluates the realizability of the deferred
tax assets and the need for additional valuation allowances quarterly.

The income tax benefit attributable to continuing operations for the nine months
ended September 30, 2002 of $75,752 differs from the income tax benefit derived
from applying the statutory rate principally due to an increase in the valuation
allowance of approximately $59,200 and the impact of non-deductible preferred
stock dividends. The Company considers future taxable temporary differences as
positive evidence of the realizability of the deferred tax assets.

I-12

CABLEVISION SYSTEMS CORPORATION AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Dollars in thousands)
(Unaudited)
(continued)

NOTE 14. RESTRUCTURING

In December 2001, the Company recorded restructuring charges of $56,442
(including $3,500 for discontinued operations) which included expenses of
approximately $21,018 (including $2,313 for discontinued operations) associated
with the elimination of approximately 600 positions, primarily in corporate,
administrative and infrastructure functions across various business units of the
Company, and estimated expenses of approximately $35,424 (including $1,187 for
discontinued operations) associated with facility realignment and other related
costs. The following table summarizes the accrued restructuring liability at
September 30, 2002 for continuing operations.

In August 2002, the Company announced a new operating plan and restructuring
which includes the disposition of its motion picture theater business, the
closing of 26 retail electronics store locations, the elimination of certain
staff positions, and the reduction of capital expenditures. Additionally, the
Company reached an agreement with its supplier of set top boxes which reduced
the Company's purchase commitments for set top boxes from $378,500 in 2002,
$378,500 in 2003, and $567,750 in 2004 to a total remaining commitment of
$87,500 in 2002 and nothing thereafter and requires the Company to make certain
other cash payments aggregating $50,000 plus interest on a portion of such
amount with respect to, among other things, a license for certain software
(valued at $17,500 based on an independent appraisal). In connection with this
agreement, CSC Holdings received a waiver from the lenders under its $2.4
billion credit facility. In connection with this plan, the Company recorded
restructuring charges, included in accrued liabilities and other long-term
liabilities, of $70,206 which include $18,493 associated with the elimination of
approximately 1,280 positions, $19,213 associated with facility realignment and
other related costs and $32,500 associated with the reduction in required
digital set top box commitments.

The results of operations of the retail electronic stores closed or to be closed
including restructuring charges of $9,479, of which $2,353 is associated with
the elimination of 1,120 positions and $7,126 is associated with the early
termination of facility lease agreements, have been reported in discontinued
operations, net of taxes in the consolidated statements of operations for all
periods presented.

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CABLEVISION SYSTEMS CORPORATION AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Dollars in thousands)
(Unaudited)
(continued)

NOTE 15. SEGMENT INFORMATION

The Company's reportable segments are strategic business units that are managed
separately. The Company evaluates segment performance based on several factors,
of which the primary financial measure is business segment adjusted operating
cash flow (defined as operating income or loss before depreciation and
amortization, stock plan income or expense, long-term incentive plan income or
expense and restructuring charges).

I-14

CABLEVISION SYSTEMS CORPORATION AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Dollars in thousands)
(Unaudited)
(continued)

A reconciliation of reportable segment amounts to the Company's consolidated
balances is as follows:

Substantially all revenues and assets of the Company's reportable segments are
attributed to or located in the United States.

The Company does not have a single external customer which represents 10 percent
or more of its consolidated revenues.

I-15

CABLEVISION SYSTEMS CORPORATION AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Dollars in thousands)
(Unaudited)
(continued)

NOTE 16. LEGAL MATTERS

On April 29, 2002, Yankees Entertainment & Sports Network, LLC (the "YES
Network") filed a complaint and, on September 24, 2002, an amended complaint
against the Company in the United States District Court, Southern District of
New York. The lawsuit arises from the failure of the YES Network and the Company
to reach agreement on the carriage of programming of the YES Network (primarily
New York Yankees baseball games and New Jersey Nets basketball games) on the
Company's cable television systems. The amended complaint alleges a variety of
anticompetitive acts and seeks declaratory judgments as to violations of laws,
treble damages and injunctive relief, including an injunction requiring the
Company to carry the YES Network on its cable television systems. The Company
believes that the claims set forth in the complaint are without merit and
intends to contest vigorously the lawsuit.

In August 2002, purported class actions naming as defendants the Company and
each of its directors were filed in the Delaware Chancery Court. The actions,
which allege breach of fiduciary duties and breach of contract with respect to
the exchange of the Rainbow Media Group tracking stock for Cablevision NY Group
common stock, were purportedly brought on behalf of all holders of publicly
traded shares of Rainbow Media Group tracking stock. The actions seek to (i)
enjoin the exchange of Rainbow Media Group tracking stock for Cablevision NY
Group common stock, (ii) enjoin any sales of "Rainbow Media Group" assets, or,
in the alternative, award rescissory damages, (iii) if the exchange is
completed, rescind it or award rescissory damages, (iv) award compensatory
damages, and (v) award costs and disbursements. The actions were consolidated
into one action on September 17, 2002, and on October 3, 2002, the Company filed
a motion to dismiss the consolidated action. The Company believes the claims are
without merit and intends to contest vigorously the lawsuit.

NOTE 17. OTHER MATTERS

In January 2001, the Company completed the sale of its cable television systems
in Boston and eastern Massachusetts to AT&T Corporation in exchange for AT&T's
cable television systems in certain northern New York suburbs, shares of AT&T
common stock and a cash payment. The sales agreements with AT&T provided both
parties with certain post closing adjustments to the purchase price following
agreement on those adjustments between the parties, or, in the event no
agreement was reached, that the post closing adjustment issues would be resolved
by third party experts whose determination would be binding. The Company
believes the amount of any negotiated settlement or expert determination of the
parties' respective claims will not be material to the Company.

As of September 30, 2002, Northcoast Communications, LLC, a 49.9% owned
unconsolidated subsidiary of the Company, had $61,100 in notes payable to the
FCC for the acquisition of the PCS licenses acquired during 1997. In addition, a
wholly owned subsidiary of Northcoast Communications, Cleveland PCS, LLC, had
$68,400 in vendor financing outstanding under a stand-alone $75,000 facility
obtained in connection with the launch of commercial service in Cleveland.
Additional funding for Northcoast Communications has been provided by the
Company through the Restricted Group which as of September 30, 2002 totaled
$217,700

I-16

CABLEVISION SYSTEMS CORPORATION AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Dollars in thousands)
(Unaudited)
(continued)

(comprised of contributions directly to Northcoast Communications as well as
loans to Northcoast PCS, LLC, the other member in Northcoast Communications), in
addition to certain unpaid general and administrative charges from the Company
amounting to approximately $4,486 at September 30, 2002.

Vendor financing for Northcoast Communications' Cleveland operation consists of
the $75,000 credit facility at Cleveland PCS, LLC. This facility has no recourse
to Cablevision or to Northcoast Communications, other than pursuant to a pledge
by Northcoast Communications of the stock of Cleveland PCS and a guarantee of
the payment by Northcoast Communications and Cablevision of the FCC indebtedness
of the Cleveland PCS subsidiary which holds the Cleveland license which, as of
September 30, 2002, had an outstanding balance of $2,850. As of September 30,
2002, Cleveland PCS was in default of the terms of this credit facility and had
received notice of commitment termination and acceleration from the lender.
Northcoast Communications has invested $5,814 of the $217,700 invested by
Cablevision in Northcoast Communications in Cleveland PCS at September 30, 2002
and was owed $247 by Cleveland PCS for general and administrative charges at
September 30, 2002.

NOTE 18. SUBSEQUENT EVENTS

In November 2002, the Company reached an agreement with NBC for the sale of
Rainbow Media Holdings' 80% interest in the Bravo programming service for $1.0
billion payable in General Electric Company common stock and 53.2 million shares
of Cablevision NY Group Class A common stock (21.8 million shares of Cablevision
NY Group Class A common stock currently held by NBC and 31.4 million shares of
Cablevision NY Group Class A common stock issuable upon the conversion of shares
of Rainbow Media Holdings common stock held by NBC). The transaction is subject
to receipt of regulatory and other customary approvals. The Company expects to
record a gain in connection with this transaction.

Upon the closing of the sale of the Bravo programming service, the American
Movie Classics/Bravo and Rainbow Media Group, LLC credit facilities will
terminate by their terms and outstanding borrowings will be required to be
repaid. See Note 11.

In November 2002, Quadrangle Capital Partners LP, a private investment firm that
invests in media and communications companies, agreed to invest $75,000, subject
to execution of definitive documentation, in the Company. Quadrangle's
investment will be in the form of preferred stock convertible into Cablevision
NY Group Class A common stock. The transaction is subject to receipt of
regulatory approval.

I-17

CABLEVISION SYSTEMS CORPORATION AND SUBSIDIARIES

Item 2. Management's Discussion and Analysis of Financial Condition and Results
of Operations

This Quarterly Report contains or incorporates by reference statements that
constitute forward looking information within the meaning of the Private
Securities Litigation Reform Act of 1995, including forecasted cost savings,
restructuring charges, availability under credit facilities, cash flow growth,
levels of capital expenditures, sources of funds and funding requirements, among
others. 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 the Company's revenues;

- subscriber demand and growth, including demand for and growth of our
digital cable service, which are impacted by competition from other
services, such as DBS, and the other factors set forth below;

- the cost of programming and industry conditions;

- the regulatory environment in which the Company operates;

- general economic conditions in the areas in which we operate;

- demand for advertising time and space;

- the level of capital expenditures and whether our capital expenditures
increase as expected;

- the level of our expenses, including costs of our new services, such as
expenses related to the introduction of our digital services;

- pending and future acquisitions and dispositions of assets, including
the sale of Bravo;

- market demand for new services;

- whether any pending uncompleted transactions, including the sale of
Bravo, are completed on the terms and at the times set forth (if at
all);

- competition from existing competitors and new competitors entering the
Company's franchise areas;

- other risks and uncertainties inherent in the cable television business,
the programming and entertainment businesses and the Company's other
businesses;

- financial community and rating agency perceptions of the Company's
business, operations, financial condition and the industry in which it
operates; and

- the factors described in Cablevision's filings with the Securities and
Exchange Commission, including the sections entitled "Risk Factors" and
"Management's Discussion and Analysis of Financial Condition and Results
of Operations" contained therein.

The Company disclaims any obligation to update or revise the forward-looking
statements contained or incorporated by reference herein, except as otherwise
required by applicable federal securities laws.

I-18

CABLEVISION SYSTEMS CORPORATION AND SUBSIDIARIES

RECENT TRANSACTIONS

2002 TRANSACTION. In March 2002, Rainbow Media Holdings, Inc. acquired Loral
Space and Communications, Ltd.'s 50% interest in R/L DBS Company, LLC increasing
Rainbow Media Holdings' ownership of R/L DBS to 100%.

2001 TRANSACTIONS. In January 2001, CSC Holdings, Inc. completed the sale of its
cable systems in Boston and eastern Massachusetts to AT&T Corp. in exchange for
AT&T's cable television systems in certain northern New York suburbs and for
AT&T common stock and cash.

In April 2001, Metro-Goldwyn-Mayer Inc. ("MGM") acquired a 20% interest in
certain national programming businesses of Rainbow Media Holdings.

The above transactions completed in 2002 and 2001 are collectively referred to
as the "Transactions."

RESULTS OF OPERATIONS - CABLEVISION SYSTEMS CORPORATION

The following table sets forth on a historical basis certain items related to
operations as a percentage of net revenues for the periods indicated.

I-19

CABLEVISION SYSTEMS CORPORATION AND SUBSIDIARIES

STATEMENT OF OPERATIONS DATA

I-20

CABLEVISION SYSTEMS CORPORATION AND SUBSIDIARIES

STATEMENT OF OPERATIONS DATA (CONT'D)

I-21

CABLEVISION SYSTEMS CORPORATION AND SUBSIDIARIES

COMPARISON OF THREE AND NINE MONTHS ENDED SEPTEMBER 30, 2002 VERSUS THREE AND
NINE MONTHS ENDED SEPTEMBER 30, 2001

CONSOLIDATED RESULTS - CABLEVISION SYSTEMS CORPORATION

REVENUES, NET for the three and nine months ended September 30, 2002 increased
$39.5 million (4%) and $112.4 million (4%), respectively, as compared to
revenues for the same periods in the prior year. The net increases are
attributable to the following:

- ----------
* Amounts exclude the effects of the increase in bad debt expense related to
Adelphia Communications.

TECHNICAL AND OPERATING EXPENSES decreased $15.7 million (4%) and $16.4 million
(1%) for the three and nine months ended September 30, 2002 compared to the same
periods in 2001. The net changes resulted primarily from decreased costs at
Madison Square Garden (see Madison Square Garden discussion below) and a
reduction in accruals for management bonuses of $2.4 million, partially offset
by increased costs directly associated with the growth in revenues referred to
above. As a percentage of revenues, technical and operating expenses decreased
3% during both of the 2002 periods as compared to the 2001 periods.

RETAIL ELECTRONICS COST OF SALES for the three and nine months ended September
30, 2002 amounted to approximately $62.1 million (93% of retail electronics
sales) and $185.2 million (86% of retail electronics sales), respectively,
compared to approximately $70.1 million (82% of retail electronics sales) and
$205.0 million (81% of retail electronics sales) for the comparable 2001
periods. Cost of sales includes the cost of merchandise sold, including freight
costs incurred and certain occupancy and buying costs, for the Company's retail
electronics segment. The increases in cost of sales, as a percentage of
revenues, is primarily attributable to an increase in the provision for repaired
and returned merchandise.

SELLING, GENERAL AND ADMINISTRATIVE EXPENSES increased $2.8 million (1%) and
$11.1 million (1%) for the three and nine months ended September 30, 2002,
respectively, as compared to the same periods in 2001. The net increase for the
three months ended September 30, 2002 was comprised

I-22

CABLEVISION SYSTEMS CORPORATION AND SUBSIDIARIES

of increases of $47.4 million in expenses related to the Company's stock plan,
partially offset by decreases of approximately $15.2 million in sales and
marketing, customer service and administrative costs, a decrease of $26.9
million as a result of reductions in accruals for management bonuses and a
decrease of $2.5 million in costs related to a long-term incentive plan. The net
increase for the nine months ended September 30, 2002 was comprised of increases
of $10.9 million in expenses related to the Company's stock plan and
approximately $30.8 million in sales and marketing, customer service and
administrative costs, partially offset by a decrease of $26.9 million as a
result of reductions in accruals for management bonuses and a decrease of $3.7
million in costs related to a long-term incentive plan. As a percentage of
revenues, selling, general and administrative expenses remained relatively
constant for the three and nine months ended September 30, 2002 as compared to
the same periods in 2001. Excluding the effects of the stock plan and the
long-term incentive plan, as a percentage of revenues such costs decreased 5%
and 1%, respectively, during the 2002 periods as compared to the same periods in
2001.

RESTRUCTURING CHARGES of $77.5 million and $81.9 million for the three and nine
months ended September 30, 2002 are comprised of $7.3 million and $11.7 million,
respectively, relating to the 2001 restructuring and $70.2 million in both the
three and nine month periods relating to the 2002 restructuring. Such charges
include expenses associated with the elimination of positions, including
severance, outplacement costs and other related costs, and facility realignment
and for the 2002 restructuring includes $32.5 million associated with the
reduction in required digital set top commitments.

DEPRECIATION AND AMORTIZATION EXPENSE decreased $34.5 million (13%) and $87.5
million (12%) for the three and nine months ended September 30, 2002,
respectively, as compared to the same periods in 2001. Decreases of
approximately $75.1 million and $207.6 million, respectively, resulted from the
Company's adoption of Statement of Financial Accounting Standards No. 142
("Statement 142") as of January 1, 2002 where certain intangible assets are no
longer amortized. Partially offsetting these decreases were net increases of
approximately $40.6 million and $120.1 million, respectively, due primarily to
depreciation of new plant assets and amortization of acquired intangibles.

NET INTEREST EXPENSE decreased $12.9 million (9%) and $31.4 million (8%) during
the three and nine months ended September 30, 2002, respectively, compared to
the same periods in 2001. The net decreases were primarily attributable to lower
interest rates and increases in interest income, partly offset by higher overall
average debt balances.

EQUITY IN NET LOSS OF AFFILIATES decreased to $6.6 million and $28.8 million for
the three and nine months ended September 30, 2002, respectively, from $19.9
million and $31.3 million for the three and nine months ended September 30,
2001, respectively. Such amounts consist of the Company's share of the net
income or loss of certain businesses in which the Company has varying minority
ownership interests.

GAIN ON SALE OF CABLE ASSETS AND PROGRAMMING INTERESTS, NET for nine months
ended September 30, 2001 consists primarily of the gain recognized on the
disposition of the Company's cable

I-23

CABLEVISION SYSTEMS CORPORATION AND SUBSIDIARIES

television systems in Massachusetts and the gain from the sale of a 20% minority
interest in certain of the Company's programming businesses.

WRITE-OFF OF DEFERRED FINANCING COSTS of $0.6 million and $14.0 million for the
nine months ended September 30, 2002 and 2001, respectively, consist principally
of costs written off in connection with amendments to, or termination of,
certain of the Company's credit agreements.

IMPAIRMENT CHARGES ON INVESTMENTS of $4.8 million and $5.0 million for the three
and nine months ended September 30, 2002 and $0.3 million for the nine months
ended September 30 2001 consist of charges associated with the write-down of
certain of the Company's investments.

GAIN (LOSS) ON INVESTMENTS, NET for the three and nine months ended September
30, 2002 and 2001 consists of the following:

GAIN ON DERIVATIVE CONTRACTS, NET for the three and nine months ended September
30, 2002 and 2001 consists of the following:

I-24

CABLEVISION SYSTEMS CORPORATION AND SUBSIDIARIES

LOSS ON EARLY EXTINGUISHMENT OF DEBT of $17.2 million for the nine months ended
September 30, 2002 resulted from the settlement of the Company's collateralized
indebtedness relating to the monetization of its shares of Adelphia
Communications common stock.

MINORITY INTERESTS for the three and nine months ended September 30, 2002 and
2001 include CSC Holdings' preferred stock dividend requirements; Fox Sports
Networks, LLC's share of the net income or loss of Regional Programming
Partners; MGM's share of the net income or loss of American Movie Classics
Company, Bravo Company, The Independent Film Channel and WE: Women's
Entertainment; and National Broadcasting Company, Inc.'s ("NBC") share of the
net income or loss of Rainbow Media Holdings.

NET MISCELLANEOUS EXPENSE amounted to $1.8 million and $10.2 million for the
three and nine months ended September 30, 2002, respectively, compared to $1.5
million and $7.6 million for the comparable periods in 2001. The increase for
the nine months ended September 30, 2002 was due primarily to increased losses
on the disposal of fixed assets.

INCOME TAX BENEFIT attributable to continuing operations amounted to $25.8
million and $75.8 million for the three and nine months ended September 30,
2002, respectively, compared to an income tax benefit of $49.5 million and
income tax expense of $334.0 million for the three and nine months ended
September 30, 2001. The income tax benefit in the three month period in 2002
resulted from a pre-tax loss, including a decrease in the valuation allowance of
$15.6 million, partially offset by the impact of non-deductible preferred stock
dividends. The income tax benefit for the nine month period in 2002 resulted
from a pre-tax loss, partially offset by an increase in the valuation allowance
of $59.2 million and the impact of non-deductible preferred stock dividends. The
income tax expense in the 2001 periods resulted primarily from the Transactions,
partially offset by a decrease in the valuation allowance of $416.0 million in
the nine month period ended September 30, 2001. In the 2001 periods, the Company
did not reduce its entire valuation allowance due to uncertainties regarding the
realizability of its deferred tax assets.

LOSS FROM DISCONTINUED OPERATIONS, NET OF TAXES includes the results of the
Company's theater operations business which is classified as held for sale and
the losses relating to 26 retail electronics store locations which are being
disposed of in connection with the Company's 2002 restructuring.

BUSINESS SEGMENTS RESULTS - CABLEVISION SYSTEMS CORPORATION

The Company classifies its business interests into four segments:

- Telecommunications Services, consisting principally of its cable
television, telephone and high-speed data services operations;

- Rainbow, consisting principally of interests in national and regional
cable television programming networks;

- Madison Square Garden, which owns and operates professional sports
teams, regional cable television networks, live productions and
entertainment venues; and

I-25

CABLEVISION SYSTEMS CORPORATION AND SUBSIDIARIES

- Retail Electronics, which represents the operations of Cablevision
Electronics Investments, Inc.'s retail electronics stores.

The Company allocates certain costs to each segment based upon their
proportionate estimated usage of services. The financial information for the
segments does not include inter-segment eliminations.

TELECOMMUNICATIONS SERVICES

The table below sets forth, for the periods presented, certain historical
financial information and the percentage that those items bear to net revenues
for the Company's Telecommunications Services segment.

REVENUES for the three and nine months ended September 30, 2002 increased $32.8
million (6%) and $113.3 million (7%), respectively, as compared to revenues for
the same periods in the prior year. The net increases are attributable to the
following:

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CABLEVISION SYSTEMS CORPORATION AND SUBSIDIARIES

TECHNICAL AND OPERATING EXPENSES for the three and nine months ended September
30, 2002 increased $21.9 million (10%) and $57.2 million (8%), respectively,
compared to the same periods in 2001. The increases resulted from increased
costs directly associated with the growth in revenues referred to above,
partially offset by a reduction in accruals for management bonuses of $2.4
million in both periods. As a percentage of revenues, technical and operating
expenses increased 1% during the three and nine months ended September 30, 2002
as compared to the same 2001 periods.

SELLING, GENERAL AND ADMINISTRATIVE EXPENSES increased $13.3 million (14%) and
$11.1 million (3%) for the three and nine months ended September 30, 2002,
respectively, as compared to the same periods in 2001. The net increase for the
three months ended September 30, 2002 was comprised of increases of $25.6
million in expenses related to the Company's stock plan and increases
aggregating $0.3 million primarily due to increased administrative costs,
partially offset by a reduction in accruals for management bonuses of $10.0
million and a decrease of $2.6 million in costs related to a long-term incentive
plan. The net increase for the nine months ended September 30, 2002 was
comprised of net increases of $21.4 million primarily attributable to increased
facility costs and additional marketing expenses and approximately $3.8 million
related to the Company's stock plan, partially offset by a reduction in accruals
for management bonuses of $10.0 million and a decrease of $4.1 million in costs
related to a long-term incentive plan. As a percentage of revenues, selling,
general and administrative expenses increased 1% for the three months ended
September 30, 2002 and decreased 1% for the nine months ended September 30, 2002
as compared to the same periods in 2001. Excluding the effects of the stock plan
and the long-term incentive plan, as a percentage of revenues such costs
decreased 2% in the three month period in 2002 and remained relatively constant
during the nine month period in 2002 as compared to the same periods in 2001.

RESTRUCTURING CHARGES of $42.1 million and $45.0 million for the three and nine
months ended September 30, 2002 are comprised of a reduction in the accrual of
$0.7 million and additional expense of $2.2 million, respectively, relating to
the 2001 restructuring and $42.8 million in both the three and nine month
periods relating to the 2002 restructuring. Such charges include expenses
associated with the elimination of positions, including severance and
outplacement costs, and facility realignment and for the 2002 restructuring
includes $32.5 million associated with the reduction in required digital set top
commitments.

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CABLEVISION SYSTEMS CORPORATION AND SUBSIDIARIES

DEPRECIATION AND AMORTIZATION EXPENSE decreased $45.7 million (25%) and $96.2
million (19%) for the three and nine months ended September 30, 2002,
respectively, as compared to the same periods in 2001. Decreases of
approximately $63.9 million and $171.7 million, respectively, resulted from the
Company's adoption of Statement 142 as of January 1, 2002. Partially offsetting
these decreases were net increases of approximately $18.2 million and $75.5
million, respectively, due primarily to depreciation of new plant assets.

RAINBOW

REVENUES for the three and nine months ended September 30, 2002 increased $34.2
million (21%) and $78.6 million (16%), respectively, as compared to revenues for
the same periods in the prior year. Increases of $22.4 million and $68.6
million, respectively, were attributed to growth in programming network
subscribers and rate increases and increases of approximately $11.8 million and
$27.5 million were due to higher advertising revenue. Partially offsetting the
increases for the nine month period was a decrease of $17.5 million resulting
from bad debt expense recognition associated with the bankruptcy of Adelphia
Communications.

TECHNICAL AND OPERATING EXPENSES for the three and nine months ended September
30, 2002 increased $8.2 million (12%) and $16.0 million (7%), respectively,
compared to the same periods in 2001. The increased costs are directly
associated with the net increases in revenue discussed above. As a percentage of
revenues, such costs decreased 3% and 4%, respectively, during the three and
nine month periods in 2002 as compared to the same periods in 2001.

I-28

CABLEVISION SYSTEMS CORPORATION AND SUBSIDIARIES

SELLING, GENERAL AND ADMINISTRATIVE EXPENSES increased $17.9 million (28%) and
$31.8 million (16%) for the three and nine months ended September 30, 2002,
respectively, as compared to the same periods in 2001. The net increases were
comprised of increases of approximately $4.1 million and $23.5 million,
respectively, in additional sales, advertising and administrative costs,
increases of $13.5 million and $7.3 million in expenses related to the Company's
stock plan and increases of $0.3 million and $1.0 million in costs related to a
long-term incentive plan. As a percentage of revenues, selling, general and
administrative expenses increased 3% for the three months ended September 30,
2002 and remained relatively constant for the nine months ended September 30,
2002 as compared to the same periods in 2001. Excluding the effects of the stock
plan and the long-term incentive plan, as a percentage of revenues such costs
decreased 6% and 2%, respectively, during the 2002 periods as compared to the
same periods in 2001.

RESTRUCTURING CHARGES of $5.7 million for the three and nine months ended
September 30, 2002 are comprised of $4.0 million and $1.7 million relating to
the 2001 and 2002 restructurings, respectively. Such charges include expenses
associated with the elimination of positions, including severance and
outplacement costs, and facility realignment.

DEPRECIATION AND AMORTIZATION EXPENSE increased $2.7 million (19%) and $9.1
million (22%) for the three and nine months ended September 30, 2002,
respectively, as compared to the same periods in 2001. Increases of
approximately $4.7 million and $12.9 million, respectively, were primarily due
to depreciation of new plant assets and amortization of acquired intangibles.
Partially offsetting these increases were net decreases of $2.0 million and $3.8
million which resulted from the Company's adoption of Statement 142 as of
January 1, 2002 where certain intangible assets are no longer amortized.

MADISON SQUARE GARDEN

The table below sets forth, for the periods presented, certain historical
financial information and the percentage that those items bear to net revenues
for Madison Square Garden.

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CABLEVISION SYSTEMS CORPORATION AND SUBSIDIARIES

REVENUES for the three and nine months ended September 30, 2002 decreased $12.0
million (9%) and $49.4 million (9%), respectively, as compared to revenues for
the comparable periods in 2001. These declines were largely attributable to
lower revenues at MSG Networks resulting from lower affiliate fees, a decline in
advertising revenues, and the absence of broadcast rights fees for certain
sports programming resulting primarily from the loss of telecast rights to New
York Yankee games. Partially offsetting these declines were higher sales
resulting from additional family shows at Radio City Music Hall, as well as a
corporate facility rental in the third quarter of 2002 with no comparable rental
in 2001. In addition, the lower revenues for the nine month period reflect the
absence of Knicks playoff revenues, the absence of a touring show which ended in
2001, and fewer events at Madison Square Garden. These declines during the nine
month period were partially offset by higher Knicks regular season revenues
attributable to ticket price increases and the team's share of higher
league-wide television revenue.

TECHNICAL AND OPERATING EXPENSES for the three months ended September 30, 2002
decreased $61.8 million (48%) over the same 2001 period. This decline is
primarily attributable to a provision recorded in the third quarter of 2001 for
certain player transactions, as well as lower contractual rights expense as
Madison Square Garden's rights to telecast New York Yankee games ended at the
conclusion of the 2001 baseball season. Partially offsetting these declines were
increases in costs directly associated with the changes in revenues discussed
above. Technical and operating expenses for the nine months ended September 30,
2002 decreased $93.6 million (24%) over the same 2001 period. This decline is
primarily attributable to the impact of the items discussed above, as well as
the reversal of a provision for luxury tax for the 2001/2002 Knicks season.
Following the audit of all National Basketball Association (NBA) clubs, the NBA
announced that there would be no luxury tax assessment for the 2001/2002 season.
Accordingly, a credit was recorded in the second quarter of 2002 reflecting the
reversal of prior provisions that had been recorded in anticipation of the tax
assessment. These declines in technical and operating expenses also reflect
lower Knicks team compensation and a provision recorded in the second quarter of
2001 for certain player transactions. These declines were partially offset by
the absence of a $30 million credit recorded in the second quarter of 2001 as a
result of the settlement of certain litigation with the New York Yankees, LP and
by higher Rangers team salaries and higher theatrical development costs.

SELLING, GENERAL AND ADMINISTRATIVE EXPENSES for the three months ended
September 30, 2002 increased $8.0 million (29%) as compared to the same 2001
period due to a $7.1 million increase in Madison Square Garden's proportionate
share of the income/expense related to Cablevision's

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CABLEVISION SYSTEMS CORPORATION AND SUBSIDIARIES

stock plan and long-term incentive plan. Selling, general and administrative
expenses for the nine months ended September 30, 2002, decreased $11.4 million
(10%) as compared to the same 2001 period primarily due to the absence of a
provision for severance recorded in the second quarter of 2001, as well as to a
decline in legal and professional fees.

RESTRUCTURING CHARGES of $0.6 million for the nine months ended September 30,
2002 represent employee severance payments made in excess of amounts accrued.

DEPRECIATION AND AMORTIZATION EXPENSE for the three and nine months ended
September 30, 2002 decreased $8.1 million (34%) and $26.9 million (38%),
respectively, as compared to the same periods in 2001 due primarily to lower
amortization expense relating to the implementation of Statement 142.

RETAIL ELECTRONICS

The table below sets forth, for the periods presented, certain historical
financial information and the percentage that those items bear to net revenues
for the Company's retail electronics segment, Cablevision Electronics. These
results exclude the results of the 26 stores closed or being closed in
connection with the 2002 restructuring.

REVENUES for the three and nine months ended September 30, 2002 decreased $18.3
million (21%) and $38.6 million (15%) to approximately $66.9 million and $215.8
million, respectively, compared to revenues of approximately $85.2 million and
$254.4 million for the three and nine months ended September 30, 2001,
respectively. Comparable store sales accounted for $18.6 million and $41.0
million, respectively, of the decreases, partially offset by increases of

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CABLEVISION SYSTEMS CORPORATION AND SUBSIDIARIES

$0.3 million and $2.4 million, respectively, primarily attributable to the sale
of merchandise at the distribution center.

COST OF SALES for the three and nine months ended September 30, 2002 amounted to
approximately $62.1 million (93% of revenues) and $185.2 million (86% of
revenues), respectively, compared to cost of sales of $70.1 million (82% of
revenues) and $205.0 million (81% of revenues) for the three and nine months
ended September 30, 2001, respectively. Such costs include the cost of
merchandise sold, including freight costs incurred as well as certain occupancy
and buying costs. The increases in cost of sales, as a percentage of revenues,
are primarily attributable to an increase in the provision for repaired and
returned merchandise.

SELLING, GENERAL AND ADMINISTRATIVE EXPENSES amounted to approximately $29.8
million and $92.3 million (45% and 43% of revenues) for the three and nine
months ended September 30, 2002, respectively, and $28.8 million and $92.1
million (34% and 36% of revenues) for the three and nine months ended September
30, 2001, respectively. Selling, general and administrative expenses consist of
retail store expenses (excluding certain store occupancy costs), salaries and
commissions of store personnel, advertising expenses, operation of the
distribution center and corporate support functions other than buying.

RESTRUCTURING CHARGES of $3.2 million for the three and nine months ended
September 30, 2002 are comprised of $2.1 million relating to the 2001
restructuring and $1.1 million relating to the 2002 restructuring. Such charges
include expenses associated with the elimination of positions, including
severance and outplacement costs, and facility realignment.

DEPRECIATION AND AMORTIZATION EXPENSE amounted to approximately $19.6 million
and $25.2 million (29% and 12% of revenues) for the three and nine months ended
September 30, 2002, respectively, and $6.0 million and $17.3 million (each 7% of
revenues) for the three and nine months ended September 30, 2001. The increases
in 2002 are primarily the result of the write-off of certain capitalized
software costs.

OPERATING ACTIVITIES

Net cash provided by operating activities amounted to $122.6 million for the
nine months ended September 30, 2002 compared to $42.6 million for the nine
months ended September 30, 2001. The 2002 net cash provided by operating
activities consisted primarily of a net increase in cash of $396.6 million
resulting from net income before depreciation, amortization and other non-cash
items, partially offset by a net decrease in cash of $274.0 million resulting
from changes in assets and liabilities.

The 2001 net cash provided by operating activities consisted primarily of an
increase in cash resulting from changes in assets and liabilities of $96.2
million, partially offset by a net decrease in cash of $53.6 million resulting
from a net loss before depreciation, amortization and other non-cash items.

INVESTING ACTIVITIES

Net cash used in investing activities for the nine months ended September 30,
2002 was $857.3 million compared to net cash provided by investing activities of
$132.7 million for the

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CABLEVISION SYSTEMS CORPORATION AND SUBSIDIARIES

nine months ended September 30, 2001. The 2002 investing activities consisted of
$831.7 million of capital expenditures and other net cash payments aggregating
$25.6 million.

The 2001 investing activities consisted of net proceeds from the sale of cable
assets and programming interests of $1,118.2 million, partially offset by $967.8
million of capital expenditures and other net cash payments of $17.7 million.

FINANCING ACTIVITIES

Net cash provided by financing activities amounted to $935.5 million for the
nine months ended September 30, 2002 compared to $89.4 million for the nine
months ended September 30, 2001. In 2002, the Company's financing activities
consisted primarily of net proceeds from bank debt of $1,028.4 million,
partially offset by net repayments of collateralized indebtedness of $54.8
million and other net cash payments of $38.1 million.

In 2001, the Company's financing activities consisted primarily of $1,549.4
millions of proceeds from collateralized indebtedness, $996.8 million from the
issuance of senior notes, partially offset by net bank debt repayments of
$2,390.5 million and other net cash payments of $66.3 million.

DISCONTINUED OPERATIONS

Net cash used in discontinued operations amounted to $2.6 million for the nine
months ended September 30, 2002 compared to $1.7 million for the nine months
ended September 30, 2001.

LIQUIDITY AND CAPITAL RESOURCES

OVERVIEW

We have no operations independent of our subsidiaries, no borrowings and no
securities outstanding other than our Cablevision NY Group Class A and
Cablevision NY Group Class B common stock. The Rainbow Media Group Class A and
Rainbow Media Group Class B tracking stocks were exchanged for shares of
Cablevision NY Group common stock on August 20, 2002. We do not intend to pay
dividends on any of our common stock in the foreseeable future; accordingly, we
do not have cash needs independent of the needs of our subsidiaries.

Funding for our subsidiaries is generally obtained through separate financial
arrangements made available to the Restricted Group (as later defined) and to
our Rainbow, Madison Square Garden and Retail Electronics business segments.

The Restricted Group, which consists primarily of our cable television and
high-speed data operations, is our principal borrower. The Restricted Group has
historically raised funding via the issuance of public securities, including
senior, subordinated and preferred stock issuances, as well as borrowings under
its bank credit facility. The Restricted Group currently funds the requirements
of: the Telecommunications Services business segment, certain Rainbow businesses
which had been designated "Rainbow New York Group" entities under the previously
existing tracking stock structure (specifically, MetroChannels and News12), R/L
DBS, and our

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CABLEVISION SYSTEMS CORPORATION AND SUBSIDIARIES

investments in Northcoast Communications, LLC. The Restricted Group may also,
from time to time, make other investments as permitted under its credit
facility.

Rainbow, which comprises the Company's programming operations, is currently
funded through cash from operations as well as through borrowings under a $400
million credit facility made available to Rainbow Media Group, LLC ("RMG LLC")
and a $200 million credit facility made available to American Movie Classics and
Bravo Company. Madison Square Garden's funding requirements are provided through
cash from operations as well as borrowings under a $500 million credit facility
made available to it. Cablevision Electronics' financing requirements are met
with borrowings under an inventory-based credit facility with supplemental
financing provided by the Restricted Group.

The following table presents selected historical results of continuing
operations and other financial information related to the captioned financing
groups or entities as of and for the nine months ended September 30, 2002.

- ----------
* For the Restricted Group, AOCF is as per the Restricted Group bank credit
agreement definition. For all other groups, AOCF is defined as operating
income (loss) before depreciation and amortization and excluding
restructuring charges of $81,921, stock plan income of $50,584 and
long-term incentive plan expenses of $15,992.

The following table summarizes our outstanding debt, present value of capital
leases and redeemable preferred stock as of September 30, 2002:

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CABLEVISION SYSTEMS CORPORATION AND SUBSIDIARIES

RECENT EVENTS

On November 4, 2002, we announced an agreement for the sale of Rainbow Media
Holdings' 80% interest in the Bravo programming service to NBC, a division of
the General Electric Company, for $1 billion. The consideration is payable in
General Electric stock and in 53.2 million shares of Cablevision NY Group Class
A common stock held by NBC on a fully converted, fully diluted basis. The value
of the Cablevision shares received will be determined based on the 20 day volume
weighted average trading price of Cablevision shares for the 20 trading day
period ending two days prior to closing, but subject to a minimum and maximum
price of $8.43 and $12.64. The difference in value will be payable in General
Electric common stock, which, based on the possible ranges of Cablevision stock
prices, is expected to be a minimum value of $328 million and a maximum value of
$552 million. We expect the closing to occur by year end 2002 and we intend to
hedge and monetize the General Electric stock as soon as practicable following
the closing of the transaction. The proceeds from the monetization will be
initially utilized to reduce Restricted Group bank debt. The transaction is
subject to receipt of regulatory and other customary approvals.

Upon the closing of the transaction, the existing AMC/Bravo and Rainbow Media
Group credit facilities terminate by their terms and outstanding borrowings are
required to be repaid. We intend to pursue replacement credit facilities as soon
as practicable; however, no assurances as to our ability to obtain such
facilities, or to obtain them on terms and conditions reasonably acceptable to
us, can be provided.

On November 5, 2002, we announced that Quadrangle Capital Partners
("Quadrangle"), a private investment firm, would make a $75 million
investment in a convertible preferred stock security to be issued by the
Company. The security will have a 10% dividend requirement payable in
additional shares of convertible preferred stock and will be convertible into
Cablevision NY Group Class A common stock at $13.98 per share, a 30% premium
to the average of our common stock closing prices for the 20 day period
ending on November 11, 2002. Quadrangle may put the preferred stock to us at
any time after six months from the closing at the greater of appraised and
market value. We may elect to pay the put price, determined as of the date of
the put notice from Quadrangle, in cash or in stock at a value equal to 110%
of the put price. We will also have the right to call the security in certain
circumstances. Quadrangle will receive registration rights with respect to
any Cablevision NY Group Class A common stock received from the Company. In
connection with the investment, Quadrangle will have the right to nominate
one director to Cablevision's board of directors. Proceeds from the issuance
of the security are expected to be initially used to reduce Restricted Group
bank debt. The transaction is subject to negotiation of definitive
documentation and receipt of regulatory approval.

RESTRICTED GROUP

As of September 30, 2002, our Restricted Group consisted of: CSC Holdings and
all of its subsidiaries holding our cable operations, which encompassed
approximately 3 million subscribers; the commercial telephone operations of
Lightpath on Long Island, New York; and our consumer high-speed data operations,
which encompassed approximately 680,000 subscribers as of September 30, 2002.

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CABLEVISION SYSTEMS CORPORATION AND SUBSIDIARIES

The Restricted Group's primary sources of liquidity have been cash flow from
operations, its bank credit facility and its access to the capital markets as
evidenced by its outstanding senior, senior subordinated and redeemable
preferred stock issuances. In the future, we expect excess cash from Rainbow
operations (after funding of its own operational requirements) will be available
to the Restricted Group.

Currently, the Restricted Group has a $2.4 billion revolving credit facility in
place with a group of banks. The facility matures on June 30, 2006, requires no
interim commitment reductions, and permits maximum leverage of 6.75 times cash
flow (as defined in the credit agreement) through March 31, 2004. As of November
7, 2002, the Restricted Group had outstanding borrowings under its credit
facility of $1,853 million and outstanding letters of credit of $62.7 million,
resulting in undrawn revolver commitments of $484.3 million. The Restricted
Group's revolver contains certain covenants that may limit its ability to
utilize all of the undrawn funds available thereunder, including covenants
requiring the Restricted Group to maintain certain financial ratios and
restricting the permitted use of borrowed funds.

The Restricted Group's plant upgrade, combined with additional amounts required
for the start up and operation of new businesses such as digital video services,
internet protocol (IP) telephony, Lightpath's non-Long Island based commercial
telephone business, and business high-speed data services create a net funding
requirement. In addition, we expect that the Restricted Group will fund certain
cash requirements of Cablevision Electronics and Rainbow NY Group, certain
expenditures relating to the construction and launch by March 2003 of a direct
broadcast satellite, for which R/L DBS plans to make vendor payments in 2002
totaling approximately $140 million, and certain investments in 2002 totaling
approximately $100 million in Northcoast Communications, a wireless personal
communications services business in which the Company has a 49.9% voting
interest. We currently expect that the net funding and investment requirements
for 2002 will be met with borrowings under the Restricted Group's existing bank
credit facility and that the Restricted Group's available borrowing capacity
under that facility will be sufficient to meet such requirements.

In August 2002, we announced a new operating plan and major restructuring
designed to reduce expenses and improve overall liquidity. Under the plan, we
will dispose of our motion picture theater business, have closed 26 retail
electronics store locations, and are in the process of implementing a
restructuring plan to (i) eliminate operating losses at the remaining 17 stores;
(ii) substantially reduce corporate overhead and divisional expense (primarily
through the elimination of certain staff positions); and (iii) reduce capital
expenditures, including a significant reduction in required digital set top box
commitments. In connection with this plan, we recorded a restructuring charge in
the third quarter of 2002 of approximately $80.0 million, $66.8 million of which
is directly attributable to the Restricted Group and $9.8 million of which is
included in discontinued operations. The Company expects to record an additional
charge of between $10 million and $20 million in the fourth quarter, reflecting
elements of the plan that have not yet been finalized.

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CABLEVISION SYSTEMS CORPORATION AND SUBSIDIARIES

The following table summarizes the 2002 restructuring charges:

We currently project Telecommunications Services segment funding requirements
and availability under the Restricted Group credit facility resulting from
the restructuring plan and including pro forma estimates for the impact of
the Bravo sale and the Quadrangle investment, as discussed above under
"Recent Events," to be as follows:

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CABLEVISION SYSTEMS CORPORATION AND SUBSIDIARIES

Notes:
* See "Projected 2003 Investment in R/L DBS," in table and note 7 below.
(1) Does not include estimated 2002 restructuring charge; estimated cash
payments related to this charge are included in "Uses of funds: Other,"
below.
(2) Projected capital expenditures for 2003 is the midpoint of an estimated $670
million to $780 million range.
(3) In 2003, represents minimum payment requirements for license maintenance and
protection.
(4) For 2002, consists of the cash payment of the present value of interest
payable related to the early termination of Adelphia Communications
monetization contracts; the estimated cash impact of the 2001 and 2002
restructuring charges; initial payment under the August 2002 set top box
vendor agreement; and other working capital and miscellaneous requirements.
For 2003, consists of the estimated cash impact of the 2002 restructuring
charges and other working capital and miscellaneous requirements, partially
offset by the estimated proceeds from the sale of the Clearview theaters.
(5) Represents free cash flow generated by Rainbow operations available to the
Restricted Group after the termination and required repayment of the Rainbow
Media Group and AMC/Bravo credit facilities upon closing of the Bravo sale.
(6) The value of General Electric shares received is calculated assuming the
maximum price at which Cablevision NY Group Class A common stock shares will
be received, which is $12.64. The actual price at which Cablevision NY Group
Class A common stock shares will be received will depend on the 20-day
trailing volume-weighted average Cablevision NY Group Class A common stock
price for the period ending two days prior to closing, subject to a minimum
and maximum price of $8.43 and $12.64. If we receive Cablevision NY Group
shares at $8.43, the projected monetization proceeds would increase by
approximately $205 million to approximately $505 million.
(7) Represents the projected investment required to launch the satellite and
protect and maintain the FCC licenses. Such investment is expected to be
funded by proceeds from the pending transactions.

The following chart presents the Company's Telecommunications Services segment
and corporate projected capital expenditures for 2002 and 2003.

The projected 2002 and 2003 capital expenditures, sources of funds and uses of
funds may differ materially from the levels and amounts referred to above. Any
shortfall in sources of funds and any funding requirements above currently
projected levels would require additional funding. See "Management's Discussion
and Analysis of Financial Condition and Results of Operations" for information
on forward-looking statements in this Form 10-Q and the factors that may cause
actual results or developments to differ materially from the forward looking
statements contained or incorporated by reference herein.

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CABLEVISION SYSTEMS CORPORATION AND SUBSIDIARIES

In 2003, we project a significantly reduced funding requirement in light of
the improvements expected to be provided by our restructuring plan and
believe we have adequate funding available through cash from operations, from
both Telecommunications Services and Rainbow, and under our existing,
committed bank credit facilities, or alternatively, as shown previously, from
proceeds from pending transactions to fund our projected requirements through
2003. The plan contemplates no additional investment in Northcoast
Communications, other than required payments to maintain and protect
Northcoast Communications' FCC licenses in 2003. For R/L DBS, we may make a
further investment of up to $75 million to complete and launch the satellite
and to maintain and protect our FCC license, subject to approval by our board
of directors. As shown previously, this $75 million investment is expected to
be funded by proceeds from our pending transactions. Depending on the scope
of our pursuit of a direct broadcast satellite business, significant
additional funding to operate this satellite business may be required,
although it is our intention to maintain the liquidity necessary to meet our
projected funding requirements.

The Restricted Group's future access to the public debt markets and the cost of
any future debt issuances are influenced by its credit ratings, which are
provided by Moody's Investor Services and Standard & Poor's. Standard and Poor's
recently lowered the ratings on the Restricted Group's outstanding securities
and placed a negative outlook on the Restricted Group's ratings. Moody's
continues to have our ratings on credit watch for a potential further downgrade.
Further downgrades by either rating agency would further increase the Restricted
Group's interest rate on new debt issuances and could adversely impact its
ability to raise additional debt.

RAINBOW

Financing for Rainbow, which currently consists primarily of the Company's
interest in five nationally distributed entertainment programming networks
(American Movie Classics, Bravo, The Independent Film Channel, WE: Women's
Entertainment, and MuchMusic), interests in certain regional sports networks,
and Sterling Digital, has historically been provided by a combination of cash
flow from operations, bank credit facilities, intercompany borrowings, sales of
interests in programming entities, and, from time to time, by equity
contributions from partners. Rainbow is currently funded through cash from
operations, a $400 million credit facility made available to Rainbow Media
Group, LLC and a $200 million credit facility made available to American Movie
Classics and Bravo. In addition, the Rainbow NY Group operations (MetroChannels
and News12) are currently funded by the Restricted Group; however, during 2003
we expect Rainbow to provide funding for these entities.

The RMG LLC credit facility is a $400 million revolving credit facility that was
put in place on March 25, 2002 and matures on December 31, 2006 (in certain
limited circumstances the maturity date may be accelerated to November 1, 2005).
The facility requires commitment reductions beginning in the third quarter of
2004 and permits maximum leverage of 3.5 times cash flow (as defined, based on
the cash flows of American Movie Classics, Bravo and The Independent Film
Channel) through September 30, 2004. As of November 7, 2002, Rainbow Media Group
had outstanding borrowings under its credit facility of $146.5 million,
resulting in undrawn revolver commitments of $253.5 million. The RMG LLC
facility contains certain covenants that may limit Rainbow Media Group's ability
to utilize all of the undrawn funds

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CABLEVISION SYSTEMS CORPORATION AND SUBSIDIARIES

available thereunder, including covenants requiring the maintenance of certain
financial ratios and restricting the permitted use of borrowed funds, and
permits investments by Rainbow Media Group, subject to certain limitations, in
other entities which may include the Restricted Group. Proceeds from the RMG LLC
credit facility are not permitted to be invested in the American Movie Classics
and/or Bravo partnerships. As discussed earlier, upon the closing of the sale of
Rainbow Media Holdings' 80% interest in Bravo, this credit facility will
terminate. We intend to pursue a replacement credit facility as soon as
practicable; however, no assurances as to our ability to obtain such facility,
or to obtain it on terms and conditions reasonably acceptable to us, can be
provided.

The American Movie Classics/Bravo credit facility is a $200 million revolving
credit facility that was put in place on March 25, 2002 and matures on December
31, 2006 (in certain limited circumstances the maturity date may be accelerated
to November 1, 2005). The facility requires commitment reductions beginning in
the third quarter of 2004 and permits maximum leverage of 2.0 times cash flow
(as defined based on the cash flow of American Movie Classics, Bravo and The
Independent Film Channel) through maturity. The facility amended and restated
the previously existing American Movie Classics $200 million revolving credit
facility. As of November 7, 2002, there were no outstanding borrowings under
this credit facility. The revolver contains certain covenants that may limit
American Movie Classics and Bravo's ability to utilize all of the undrawn funds
available thereunder, including covenants requiring the maintenance of financial
ratios and restricting the permitted use of borrowed funds. As discussed
earlier, upon the closing of the sale of Rainbow Media Holdings' 80% interest in
Bravo, this credit facility will terminate. We intend to pursue a replacement
credit facility as soon as practicable; however, no assurances as to our ability
to obtain such facility, or to obtain it on terms and conditions reasonably
acceptable to us, can be provided.

Developmental activities of certain of Rainbow's businesses, including projected
investments in new programming content and services such as the digital video
programming services being developed by Sterling Digital, require funding. Such
funding may be obtained through cash generated from other Rainbow operations or
through borrowings under the RMG LLC credit facility (until its termination,
coinciding with the closing of the Bravo transaction), or a potential successor
facility. We believe we have sufficient availability from cash available at
other Rainbow operations to fund these activities through 2003, however, we
intend to pursue a replacement credit facility for RMG LLC.

Beginning on December 18, 2002, Fox Sports Networks has the ability under
certain circumstances to exercise a right to put, at fair market value, its 40%
interest in Regional Programming Partners, which includes the regional sports
programming businesses, Madison Square Garden, and Metro Channels, to Rainbow
Regional Holdings, a subsidiary of Rainbow Media Holdings. It also has the
separate right to put its 50% interest in Fox Sports Net Chicago and Fox Sports
Net Bay Area to the Regional Programming Partners' subsidiaries holding the
interest in those businesses. These rights must be exercised within thirty days
of December 18, 2002 and are not exercisable again until December 2005. Upon
exercise, Rainbow Media Holdings and Fox Sports Network must determine the fair
market value of Fox Sports Networks' interest in Regional Programming Partners,
either through negotiation or through an independent appraisal process. Once the
fair market value of the Fox Sports Networks' interest is

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CABLEVISION SYSTEMS CORPORATION AND SUBSIDIARIES

determined, Rainbow Media Holdings may elect to either (i) conduct an initial
public offering ("IPO") of securities of Regional Programming Partners (and/or
Fox Sports Net Chicago or Fox Sports Net Bay Area), or (ii) purchase Fox Sports
Networks' interest in Regional Programming Partners (and/or Fox Sports Net
Chicago or Fox Sport Net Bay Area) at the appraised fair market value of such
interests. In the event that Rainbow Media Holdings elects to effect the IPO,
such IPO must be consummated within 180 days of Fox Sports Networks' delivery of
the put notice. If Rainbow Media Holdings elects to purchase Fox Sports
Networks' interest(s), payment for such interest(s) may be made either, at
Rainbow Media Holdings' election, (i) with shares of Cablevision common stock,
valued at the then current market price (based on a 20 day trailing average), or
(ii) with a three-year bullet promissory note of the Rainbow Media Holdings'
subsidiary that is a partner in Regional Programming Partners bearing interest
at Prime plus 0.5% and secured by the Fox Sports Networks interest(s) purchased.
Exercise of the put is within Fox's discretion and no assurances can be given
that they will not do so.

MADISON SQUARE GARDEN

Madison Square Garden's primary source of liquidity has been cash flow from
operations and its $500 million revolving credit facility. This facility matures
on December 31, 2004, has no interim commitment reductions, and permits a
maximum leverage of 4.25 times cash flow (as defined in the credit facility)
through maturity. As of November 7, 2002, Madison Square Garden had outstanding
debt and letters of credit of $130 million and $12.5 million, respectively,
under this facility, resulting in undrawn funds of $357.5 million. Madison
Square Garden experiences seasonality in its borrowings due to significant
amounts received from advance ticket sales in the third quarter making that
period its historically lowest borrowing point. Madison Square Garden's revolver
contains certain covenants that may limit its ability to utilize all of the
undrawn funds available thereunder, including covenants requiring Madison Square
Garden to maintain certain financial ratios and restricting the permitted use of
borrowed funds.

The Company believes that through 2003, internally generated funds and funds
available under Madison Square Garden's existing credit facility will be
sufficient to meet its projected funding requirements; however, depending on the
scope of entertainment projects, potential sports player transactions, levels of
capital expenditures and cash flow from operations, Madison Square Garden may
need to obtain an amendment to existing financial covenants under its bank
credit facility, or, if such amendment could not be obtained, reduce
discretionary spending and capital expenditures, and/or seek funding from its
partners.

RETAIL ELECTRONICS

Cablevision Electronics' primary sources of liquidity have been funds from its
bank credit facility and advances from CSC Holdings' Restricted Group.
Cablevision Electronics currently has a $130 million credit facility, which
matures in April 2003. Under the terms of the credit facility, the total amount
of borrowing available to Cablevision Electronics is subject to an availability
calculation based on a percentage of eligible inventory and compliance with all
loan agreement covenants, including a minimum net worth covenant. On November 7,
2002, total outstanding debt under the credit facility was $36.5 million with no
additional available funds. CSC Holdings' cash investment, including
intercompany advances, in Cablevision Electronics

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CABLEVISION SYSTEMS CORPORATION AND SUBSIDIARIES

was approximately $536.7 million at November 7, 2002. Through November 7, 2002,
Cablevision Electronics received other financial support from CSC Holdings in
the form of guarantees and letters of credit of approximately $29.4 million.

For 2002, Cablevision Electronics will require additional financial support from
CSC Holdings in respect of operating losses, capital expenditures and
expenditures associated with its announced new business plan. For 2003, the
Company anticipates its store closure program in connection with the
restructuring to result in limited financial support from CSC Holdings and
expects this support, plus funds available under Cablevision Electronics' credit
facility, assuming the agreement can be renewed at maturity, will be sufficient
to meet Cablevision Electronics' funding requirements. No assurances as to the
Company's ability to renew or extend the facility or obtain support from other
sources can be provided.

COMMITMENTS AND CONTINGENCIES

RESTRICTED GROUP

The Restricted Group's guarantees outstanding as of September 30, 2002 totaled
$53.4 million, an increase of $16.8 million over the amount reported in our
Annual Report on Form 10-K as of December 31, 2001. The increase is primarily
attributable to an increase in the mark-to-market exposure under the guarantees
issued in connection with the monetization of the Company's Charter
Communications and Adelphia Communications common stocks in respect of potential
early termination events. Such increase is a result of the declines in the
prices of these common stocks during the period. The guarantee exposure is
estimated as of a particular point in time by the financial institution
counterparty and is based upon the current price of the underlying common stock
and various other assumptions, including stock market volatility and prevailing
interest rates; however, no amounts are payable under the guarantee unless an
early termination event (as defined in the agreements) occurs. The guarantee
exposure approximates the net sum of the fair value of the monetization
indebtedness less the fair value of the underlying stock less the fair value of
the equity collar.

In August 2002, the Company reached an agreement with its supplier of digital
set top boxes which reduced the Company's purchase commitments for set top boxes
from $378.5 million in 2002, $378.5 million in 2003, and $567.8 million in 2004
to a total remaining commitment of $87.5 million in 2002 and nothing thereafter
and requires the Company to make certain other cash payments aggregating $50
million plus interest on a portion of such amount, with respect to, among other
things, a license for certain software (valued at $17.5 million based on an
independent appraisal). In connection with this agreement, CSC Holdings received
a waiver from the lenders under its $2.4 billion credit facility. The Company
recorded a restructuring charge of $32.5 million related to this agreement in
the third quarter of 2002.

OBLIGATIONS UNDER DERIVATIVE CONTRACTS

To manage interest rate risk, the Company has entered into interest rate swap
contracts to adjust the proportion of total debt that is subject to variable and
fixed interest rates. Such contracts fix the borrowing rates on floating rate
debt to provide an economic hedge against the risk of rising

I-42

CABLEVISION SYSTEMS CORPORATION AND SUBSIDIARIES

rates and/or convert fixed rate borrowings to variable rates to provide an
economic hedge against the risk of higher borrowing costs in a declining
interest rate environment. The Company does not enter into interest rate swap
contracts for speculative or trading purposes and has only entered into
transactions with counterparties that are investment grade rated. All of the
Company's interest rate derivative contracts are entered into by CSC Holdings
and are thus attributable to the Restricted Group; all such contracts are
carried at their current fair market values (based on dealer quotes) on the
Company's consolidated balance sheet, with changes in value reflected in the
consolidated statement of operations.

As of September 30, 2002, the notional value of all such contracts was $600.0
million and the fair value of these derivative contracts was $14.4 million, a
net receivable position. For the nine months ended September 30, 2002, the
Company recorded a net gain on interest swap contracts of $25.6 million, as
detailed in the table below:

FAIR MARKET VALUE OF INTEREST RATE DERIVATIVE CONTRACTS
(DOLLARS IN THOUSANDS)

Fair market value as of September 30, 2002............................................... $ 14,358
Less: fair market value as of December 31, 2001....................................... 17,320
----------
Change in fair market value, net......................................................... (2,962)
Plus: realized gain from cash interest income and swap terminations................... 28,572
----------
Net gain on interest rate swap contracts................................................. $ 25,610
==========

The Company has also entered into derivative contracts to hedge its equity price
risk and monetize the value of its shares of AT&T, AT&T Wireless, Charter
Communications, and Adelphia Communications common stock. These contracts, at
maturity, are expected to offset negative changes in the fair value of these
securities, while allowing for certain upside appreciation potential. In the
event of an early termination of such contracts, however, the Company would be
obligated to repay the fair value of the monetization indebtedness less the sum
of the fair value of the underlying stock and the fair value of the equity
collar, calculated at the termination date. The following table details the
Company's estimated early termination exposure as of September 30, 2002:

I-43

CABLEVISION SYSTEMS CORPORATION AND SUBSIDIARIES

The underlying stock and the equity collars are carried at fair market value on
the Company's consolidated balance sheet and the monetization indebtedness is
carried at its accreted value. At maturity, the contracts provide for the option
to deliver cash or shares of Charter Communications, Adelphia Communications, or
AT&T Wireless stock (as the case may be), with a value determined by reference
to the applicable stock price at maturity. The terms of the AT&T transactions
require cash settlement in an amount determined by reference to the AT&T stock
price at maturity. The Company currently intends to generate the cash settlement
amount through proceeds from the equity collar and/or a sale of the underlying
common shares at maturity.

All of the Company's monetization transactions are obligations of wholly-owned
subsidiaries that are not part of the Restricted Group; however, in the Adelphia
Communications and Charter Communications transactions, CSC Holdings provided
guarantees of the subsidiaries' ongoing interest expense obligations and
potential payments that could be due as a result of an early termination event
(as defined in the agreements). The guarantee exposure approximates the net sum
of the fair value of the monetization indebtedness less the fair value of the
underlying stock less the fair value of the equity collar. All of the Company's
equity derivative contracts are carried at their current fair market value on
the Company's consolidated balance sheet (based on dealer quotes) with changes
in value reflected in the consolidated statement of operations, and all of the
counterparties to such transactions currently carry investment grade credit
ratings. As of September 30, 2002, the fair value of the Company's equity
derivative contracts was $729.9 million, a net receivable position. For the nine
months ended September 30, 2002, the Company recorded gains of $832.9 million on
these contracts, consisting of a realized gain of $256.6 million on the Adelphia
Communications contracts which were subject to early termination and a net
unrealized gain on all other outstanding prepaid forward contracts of $576.4
million attributable to changes in market conditions during the period. The
gains on derivative contracts offset a significant portion of the losses on the
Company's holdings of the underlying stocks of $916.9 million for the nine
months ended September 30, 2002, as shown in the following table:

FAIR MARKET VALUE OF EQUITY DERIVATIVE CONTRACTS
(DOLLARS IN THOUSANDS)

REALIZED GAINS
Fair market value of terminated contracts as of May 31, 2002............................. $ 353,450
Less: fair market value at December 31, 2001.......................................... 96,874
-----------
Realized gain due to early termination, net.............................................. 256,576
-----------

UNREALIZED GAINS
Fair market value as of September 30, 2002............................................... 729,866
Less: fair market value at December 31, 2001.......................................... 153,502
-----------
Unrealized gain due to changes in prevailing market conditions, net...................... 576,364

-----------
Total gain for the period (realized and unrealized) .................................... $ 832,940
===========
Unrealized loss on underlying stock positions due to changes in prevailing market
conditions, net....................................................................... $ (916,853)
===========

In 2001, in connection with the AT&T and AT&T Wireless monetization contracts,
CSC Holdings entered into prepaid interest rate swaps with a notional contract
value of $1,115.0 million. These contracts require CSC Holdings to pay floating
rates of interest in

I-44

CABLEVISION SYSTEMS CORPORATION AND SUBSIDIARIES

exchange for receipt of fixed rate payments, the net present value of which was
paid to CSC Holdings at the inception of the transaction in a total cash amount
of $239.3 million. Combined, the prepaid equity forward and prepaid interest
rate swap transactions generated cash proceeds of approximately $1,788.7 million
and such amount was applied towards the repayment of outstanding bank debt under
CSC Holdings' revolving credit facility. These swaps have maturities in 2005 and
2006 that coincide with the related prepaid equity forward maturities. Certain
contracts provide for early termination of the prepaid interest rate swap in the
event of an early termination of the related prepaid equity forward.

All of the Company's prepaid interest rate swaps are carried at their current
fair market values on the Company's consolidated balance sheet (based on dealer
quotes) with changes in value reflected in the consolidated statement of
operations, and all of the counterparties to such transactions currently carry
investment grade credit ratings. As of September 30, 2002, the fair value of the
Company's prepaid interest rate derivative contracts was $119.7 million, a net
liability position. For the nine months ended September 30, 2002, the Company
recorded a net gain on such derivative contracts of $85.7 million as detailed
below:

FAIR MARKET VALUE OF PREPAID INTEREST RATE DERIVATIVE CONTRACTS
(DOLLARS IN THOUSANDS)

Fair market value as of September 30, 2002............................................... $(119,716)
Less: fair market value at December 31, 2001.......................................... (226,295)
-----------
Unrealized gain due to changes in prevailing market conditions, net...................... 106,579
Plus: realized loss resulting from net cash payments.................................. (20,892)
-----------
Net gain on prepaid interest rate swap contracts......................................... $ 85,687
===========

RELATED PARTY TRANSACTIONS

We hold a 49.9% voting interest and certain preferential distribution rights in
Northcoast Communications. Northcoast Communications holds licenses to provide
wireless personal communications services ("PCS") in 56 markets, including New
York City, Boston, Minneapolis and Cleveland and commenced commercial service in
Cleveland (which accounts for approximately 5% of Northcoast Communications'
total "Points of Presence" or "POPs" covered by its licenses) in April 2001.
Northcoast Communications is controlled by John Dolan, a nephew of Charles F.
Dolan and a cousin of James L. Dolan, the Company's Chairman and Chief Executive
Officer, respectively. The operations of Northcoast Communications are not
consolidated with those of the Company.

As of September 30, 2002, Northcoast Communications had $61.1 million in notes
payable to the FCC for the acquisition of the PCS licenses acquired during 1997.
In addition, a wholly owned subsidiary of Northcoast Communications, Cleveland
PCS, LLC, had $68.4 million in vendor financing outstanding under a stand-alone
$75 million facility obtained in connection with the launch of commercial
service in Cleveland. Additional funding for Northcoast Communications has been
provided by the Restricted Group, which as of September 30, 2002 amounted to
$217.7 million (comprised of contributions directly to Northcoast Communications
as well as loans to Northcoast PCS, LLC, the other member in Northcoast
Communications), in addition to certain unpaid general and administrative
charges from the Company amounting to approximately $4.5 million at September
30, 2002.

I-45

CABLEVISION SYSTEMS CORPORATION AND SUBSIDIARIES

We currently anticipate that we will invest up to approximately $100 million in
Northcoast Communications in 2002 (of which $65.0 million had been invested as
of September 30, 2002) which will be used to fund the buildout of Northcoast
Communications' PCS licenses in accordance with FCC minimum buildout
requirements, FCC debt service and certain operating expenses. At this time, we
have no plans to fund any additional market launches. The FCC minimum buildout
requirements required Northcoast Communications to certify to the FCC by June
27, 2002 that it had met certain construction benchmarks in the markets in which
it is licensed in order to avoid forfeiture of the licenses. Northcoast
Communications has met these requirements in all of its 49 originally licensed
markets.

We also provide certain management services to Northcoast Communications,
subject to the direction and control of Northcoast Communications, for which we
receive an annual fee plus reimbursement of cost and expenses. For the nine
months ended September 30, 2002, we recorded management fees of $1.7 million,
which, together with previous management fees and interest thereon, aggregated
$16.5 million and were unpaid as of September 30, 2002.

CLEVELAND FINANCING

Vendor financing for Northcoast Communications' Cleveland operation consists of
the $75 million credit facility at Cleveland PCS, LLC. This facility has no
recourse to us or to Northcoast Communications, other than pursuant to a pledge
by Northcoast Communications of the stock of Cleveland PCS and a guarantee of
the payment by Northcoast Communications and Cablevision of the FCC indebtedness
of the Cleveland PCS subsidiary which holds the Cleveland license which, as of
September 30, 2002, had an outstanding balance of $2.9 million. As of September
30, 2002, Cleveland PCS was in default of the terms of this credit facility and
had received notice of commitment termination and acceleration from the lender.
Northcoast Communications has invested $5.8 million of the $217.7 million
invested by Cablevision in Northcoast Communications in Cleveland PCS at
September 30, 2002 and was owed $0.2 million by Cleveland PCS for general and
administrative charges at September 30, 2002.

I-46

CSC HOLDINGS, INC. AND SUBSIDIARIES
(a wholly-owned subsidiary of Cablevision Systems Corporation)
CONDENSED CONSOLIDATED BALANCE SHEETS
(Dollars in thousands)

See accompanying notes to
condensed consolidated financial statements.

II-1

CSC HOLDINGS, INC. AND SUBSIDIARIES
(a wholly-owned subsidiary of Cablevision Systems Corporation)
CONDENSED CONSOLIDATED BALANCE SHEETS
(Dollars in thousands)
(continued)

See accompanying notes to
condensed consolidated financial statements.

II-2

CSC HOLDINGS, INC. AND SUBSIDIARIES
(a wholly-owned subsidiary of Cablevision Systems Corporation)
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Dollars in thousands)
(Unaudited)

See accompanying notes to
condensed consolidated financial statements.

II-3

CSC HOLDINGS, INC. AND SUBSIDIARIES
(a wholly-owned subsidiary of Cablevision Systems Corporation)
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
Nine Months Ended September 30, 2002 and 2001
(Dollars in thousands)
(Unaudited)

See accompanying notes to
condensed consolidated financial statements.

II-4

CSC HOLDINGS, INC. AND SUBSIDIARIES
(a wholly-owned subsidiary of Cablevision Systems Corporation)
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Dollars in thousands)
(Unaudited)

NOTE 1. BASIS OF PRESENTATION

The accompanying unaudited condensed consolidated financial statements of CSC
Holdings, Inc. and its majority owned subsidiaries (the "Company") have been
prepared in accordance with the rules and regulations of the Securities and
Exchange Commission. Certain information and footnote disclosures normally
included in financial statements prepared in accordance with generally accepted
accounting principles have been condensed or omitted.

NOTE 2. RESPONSIBILITY FOR INTERIM FINANCIAL STATEMENTS

The financial statements as of and for the three and nine months ended September
30, 2002 and 2001 presented in this Form 10-Q are unaudited; however, in the
opinion of management, such statements include all adjustments, consisting
solely of normal recurring adjustments, necessary for a fair presentation of the
results for the periods presented.

The interim 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, 2001.

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, 2002.

NOTE 3. RECLASSIFICATIONS

Certain reclassifications have been made to the 2001 financial statements to
conform to the 2002 presentation.

NOTE 4. INCOME (LOSS) PER COMMON SHARE

Net income (loss) per common share is not presented since the Company is a
wholly owned subsidiary of Cablevision Systems Corporation ("Cablevision").

NOTE 5. CASH FLOWS

For purposes of the consolidated statements of cash flows, the Company considers
short-term investments with a maturity at date of purchase of three months or
less to be cash equivalents.

During the nine months ended September 30, 2002 and 2001, the Company's non-cash
investing and financing activities and other supplemental data were as follows:

II-5

CSC HOLDINGS, INC. AND SUBSIDIARIES
(a wholly-owned subsidiary of Cablevision Systems Corporation)
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Dollars in thousands)
(Unaudited)

II-6

CSC HOLDINGS, INC. AND SUBSIDIARIES
(a wholly-owned subsidiary of Cablevision Systems Corporation)
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Dollars in thousands)
(Unaudited)

The operations of the motion picture theater business, including a net reversal
of previously recorded restructuring charges of $1,877, have been classified as
discontinued operations, net of taxes, in the consolidated statements of
operations for all periods presented.

In addition, the results of operations of the retail electronics stores
closed or to be closed in the fourth quarter of 2002, including restructuring
charges of $9,479 and the write-off of certain fixed assets of $24,452, have
been reported in discontinued operations, net of taxes in the consolidated
statements of operations for all periods presented.

Operating results of discontinued operations are summarized as follows:

NOTE 8. TRANSACTIONS

In March 2002, Rainbow Media Holdings, Inc., a subsidiary of the Company
acquired Loral Space and Communications, Ltd.'s 50% interest in R/L DBS Company,
LLC for a purchase price of up to a present value of $33,000 payable only from a
percentage of future revenues of R/L DBS' business, if any, or from any future
sale of all or part of the interests in or assets of R/L DBS. This purchase
increased Rainbow Media Holdings' ownership of R/L DBS to 100%. R/L DBS' results
are consolidated with those of the Company as of the date of acquisition.

Through June 30, 2002, NBC-Rainbow Holding, Inc. had exchanged a 5.0% interest
in Rainbow Media Holdings equity securities for 9,968,988 shares of Rainbow
Media Group Class A common stock of Cablevision (valued at $98,514). The Rainbow
Media Group common stock was exchanged for 11,872,367 shares of Cablevision NY
Group Class A common stock on August 20, 2002. In September 2002, NBC exchanged
a 0.7% interest in Rainbow Media

II-7

CSC HOLDINGS, INC. AND SUBSIDIARIES
(a wholly-owned subsidiary of Cablevision Systems Corporation)
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Dollars in thousands)
(Unaudited)

Holdings equity securities for 1,647,266 shares of Cablevision NY Group Class A
common stock of Cablevision (valued at $16,374). The acquisitions of the 5.7%
and the 3.1% minority interest in 2002 and 2001, respectively, were accounted
for as purchases. The excess of the purchase price over the net book value of
assets acquired of approximately $149,060 was allocated to the specific assets
acquired, in 2002, based upon an independent appraisal as follows:

NOTE 9. RECENTLY ADOPTED ACCOUNTING STANDARDS

Effective January 1, 2002, the Company adopted Statement of Financial Accounting
Standards No. 142, Goodwill and Other Intangible Assets. Statement 142 requires
that goodwill and intangible assets with indefinite useful lives no longer be
amortized, but instead tested for impairment at least annually in accordance
with the provisions of Statement 142. Statement 142 requires that intangible
assets with definite useful lives be amortized over their respective estimated
useful lives to their estimated residual values, and reviewed for impairment. In
connection with the adoption of Statement 142, the Company ceased the
amortization of goodwill and intangible assets that were determined to have an
indefinite useful life and that had been acquired in a purchase business
combination. The Company did not record any impairment charges in connection
with the implementation of Statement 142.

Summarized below is pro forma net income (loss) for the three and nine months
ended September 30, 2001 as adjusted for amortization expense that is no longer
recorded in accordance with Statement 142.

Effective January 1, 2002, the Company adopted Statement No. 144, Accounting for
the Impairment or Disposal of Long-Lived Assets, which supersedes both Statement
121 and the accounting and reporting provisions of APB Opinion No. 30, Reporting
the Results of

II-8

CSC HOLDINGS, INC. AND SUBSIDIARIES
(a wholly-owned subsidiary of Cablevision Systems Corporation)
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Dollars in thousands)
(Unaudited)

Operations - Reporting the Effects of Disposal of a Segment of a Business, and
Extraordinary, Unusual and Infrequently Occurring Events and Transactions
(Opinion 30), for the disposal of a segment of a business (as previously defined
in that Opinion). Statement 144 retains the fundamental provisions of Statement
121 for recognizing and measuring impairment losses on long-lived assets held
for use and long-lived assets to be disposed of by sale, while also resolving
significant implementation issues associated with Statement 121. Statement 144
retains the basic provisions of Opinion 30 on how to present discontinued
operations in the income statement but broadens that presentation to include a
component of an entity (rather than a segment of a business). The provisions of
Statement 144 have been applied to the planned sale of the Company's theater
business and the closing of certain retail electronics stores.

Effective January 1, 2002, the Company adopted the provisions of the FASB's
Emerging Issues Task Force, EITF No. 01-09, "Accounting for the Consideration
Given by a Vendor to a Customer or a Reseller of the Vendors' Products." EITF
No. 01-09 stipulates the criteria to be met in determining the financial
statement classification of customer incentives (which includes deferred
carriage fees) as either a reduction of revenue or an operating expense. Upon
adoption, the Company reclassified the amortization of its deferred carriage
fees as a reduction to revenues, net. This reclassification has been made for
the comparable 2001 periods. The amortization of the deferred carriage fees
shown on the balance sheet was previously included in operating expenses, which
were correspondingly reduced.

In April 2002, the FASB issued Statement 145, Rescission of Statements No. 4, 44
and 64, Amendment of Statement No. 13, and Technical Corrections. Statement 145,
among other things, rescinds Statement 4, which required all gain and losses
from the extinguishment of debt to be classified as an extraordinary item and
amends Statement 13 to require that certain lease modifications that have
economic effects similar to sale-leaseback transactions to be accounted for in
the same manner as sale-leaseback transactions. The Company adopted Statement
145 effective July 1, 2002. The adoption of this statement had no impact on the
Company's consolidated financial statements.

In June 2002, Statement 146, Accounting for Costs Associated with Exit or
Disposal Activities, was issued. This Statement requires recording costs
associated with exit or disposal activities at their fair values when a
liability has been incurred. Under previous guidance, certain exit costs were
accrued upon management's commitment to an exit plan. The provisions of this
Statement are required to be adopted for all exit and disposal activities
initiated after December 31, 2002.

II-9

CSC HOLDINGS, INC. AND SUBSIDIARIES
(a wholly-owned subsidiary of Cablevision Systems Corporation)
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Dollars in thousands)
(Unaudited)

NOTE 10. INTANGIBLE ASSETS

The following table summarizes information relating to the Company's acquired
intangible assets at September 30, 2002.

GROSS CARRYING AMOUNT OF AMORTIZED INTANGIBLE ASSETS
Franchises.................................................................................... $ 1,706
Affiliation agreements........................................................................ 350,863
Broadcast rights.............................................................................. 102,154
Player contracts.............................................................................. 42,926
Other intangibles............................................................................. 195,868
-------------
693,517
-------------
ACCUMULATED AMORTIZATION
Franchises.................................................................................... 1,138
Affiliation agreements........................................................................ 184,828
Broadcast rights.............................................................................. 50,343
Player contracts.............................................................................. 35,949
Other intangibles............................................................................. 37,196
-------------
309,454
-------------
UNAMORTIZED INTANGIBLE ASSETS
Franchises.................................................................................... 731,848
Excess costs over the fair value of net assets acquired....................................... 1,353,476
-------------
2,085,324
-------------

Total intangibles................................................................................ $ 2,469,387
=============
AGGREGATE AMORTIZATION EXPENSE
Nine months ended September 30, 2002.......................................................... $ 40,388

ESTIMATED AMORTIZATION EXPENSE
Year ending December 31, 2002................................................................. 54,244
Year ending December 31, 2003................................................................. 53,785
Year ending December 31, 2004................................................................. 42,464
Year ending December 31, 2005................................................................. 29,937
Year ending December 31, 2006................................................................. 26,374

The changes in the carrying amount of excess costs over the fair value of net
assets acquired for the nine months ended September 30, 2002 are as follows:

II-10

CSC HOLDINGS, INC. AND SUBSIDIARIES
(a wholly-owned subsidiary of Cablevision Systems Corporation)
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Dollars in thousands)
(Unaudited)

NOTE 11. DEBT

In March 2002, Rainbow Media Group, LLC, a wholly owned subsidiary of Rainbow
Media Holdings, entered into a $400,000 revolving credit facility with a group
of banks which matures on December 31, 2006 (in certain limited circumstances
the maturity date may be accelerated to November 1, 2005). The facility requires
commitment reductions beginning in the third quarter of 2004. This revolving
credit facility contains certain financial covenants that may limit Rainbow
Media Group's ability to utilize all of the undrawn funds available thereunder,
including covenants requiring the maintenance of certain financial ratios and
restricting the permitted uses of borrowed funds. See Note 18.

In March 2002, American Movie Classics Company and Bravo Company, subsidiaries
of Rainbow Media Holdings, entered into a $200,000 revolving credit facility
with a group of banks. The facility matures on December 31, 2006 (in certain
limited circumstances the maturity date may be accelerated to November 1, 2005)
and requires commitment reductions beginning in the third quarter of 2004. The
facility amended and restated the previously existing American Movie Classics
$200,000 revolving credit facility. The American Movie Classics/Bravo revolving
credit facility contains certain financial covenants that may limit the ability
of American Movie Classics/Bravo to utilize all of the undrawn funds available
thereunder, including covenants requiring the maintenance of certain financial
ratios and restricting the permitted uses of borrowed funds. See Note 18.

NOTE 12. COLLATERALIZED INDEBTEDNESS AND DERIVATIVE CONTRACTS

In May 2002, due to certain events relating to Adelphia Communications
Corporation, the Company received early termination notices from its bank
counterparties pursuant to certain monetization contracts covering 9.79 million
shares of Adelphia Communications common stock. As a result, the Company was
required to repay the related collateralized indebtedness prior to maturity, net
of the benefit of the related prepaid equity forward contracts in a significant
gain position. The Company made cash payments aggregating $54,813, representing
the difference between the redemption value of the collateralized indebtedness
and the fair market value of the prepaid equity forward contracts as of the
early termination date, and 9.79 million shares of Adelphia Communications
common stock that were held as collateral were returned to the Company. In
connection with the early termination, the Company recognized a loss of $17,237,
representing the difference between the carrying value and the redemption value
of the collateralized indebtedness, which is reflected as a loss on the early
extinguishment of debt in the accompanying consolidated statement of operations.

NOTE 13. INCOME TAXES

Prior to June 29, 2002, the operations of the Company were included in two
consolidated federal income tax returns; one consolidated return included the
telecommunications and retail operations, and the second consolidated return
included all companies owned by Rainbow Media Holdings.

II-11

CSC HOLDINGS, INC. AND SUBSIDIARIES
(a wholly-owned subsidiary of Cablevision Systems Corporation)
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Dollars in thousands)
(Unaudited)

In connection with the exchange of equity securities by NBC described in Note 8,
the Company recorded a deferred tax liability of approximately $45,000 in
accordance with the purchase method of accounting. Pursuant to such exchange,
the Company will begin to file one consolidated federal income tax return
effective June 29, 2002. As a result of the consolidation of Rainbow Media
Holdings for federal tax purposes, the valuation allowance and excess costs over
the fair value of net assets acquired were reduced by approximately $74,900.

Tax rules impose restrictions on the ability of the companies to utilize each
others' tax attributes. Management evaluates the realizability of the deferred
tax assets and the need for additional valuation allowances quarterly.

The income tax benefit attributable to continuing operations for the nine months
ended September 30, 2002 of $75,752 differs from the income tax benefit derived
from applying the statutory rate principally due to an increase in the valuation
allowance of approximately $59,200.

NOTE 14. RESTRUCTURING

In December 2001, the Company recorded restructuring charges of $56,442
(including $3,500 for discontinued operations) which included expenses of
approximately $21,018 (including $2,313 for discontinued operations) associated
with the elimination of approximately 600 positions, primarily in corporate,
administrative and infrastructure functions across various business units of the
Company, and estimated expenses of approximately $35,424 (including $1,187 for
discontinued operations) associated with facility realignment and other related
costs. The following table summarizes the accrued restructuring liability at
September 30, 2002 for continuing operations.

In August 2002, the Company announced a new operating plan and restructuring
which includes the disposition of its motion picture theater business, the
closing of 26 retail electronics store locations, the elimination of certain
staff positions, and the reduction of capital expenditures. Additionally, the
Company reached an agreement with its supplier of set top boxes which reduced
the Company's purchase commitments for set top boxes from $378,500 in 2002,
$378,500 in 2003, and $567,750 in 2004 to a total remaining commitment of
$87,500 in 2002 and nothing thereafter and requires the Company to make certain
other cash payments aggregating $50,000 plus interest on a portion of such
amount with respect to, among other things, a license for certain software
(valued at $17,500 based on an independent appraisal). In connection with this
agreement, CSC Holdings received a waiver from the lenders under its

II-12

CSC HOLDINGS, INC. AND SUBSIDIARIES
(a wholly-owned subsidiary of Cablevision Systems Corporation)
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Dollars in thousands)
(Unaudited)

$2.4 billion credit facility. In connection with this plan, the Company recorded
restructuring charges, included in accrued liabilities and other long-term
liabilities, of $70,206 which include $18,493 associated with the elimination of
approximately 1,280 positions, $19,213 associated with facility realignment and
other related costs and $32,500 associated with the reduction in required
digital set top box commitments.

The results of operations of the retail electronic stores closed or to be closed
including restructuring charges of $9,479, of which $2,353 is associated with
the elimination of 1,120 positions and $7,126 is associated with the early
termination of facility lease agreements, have been reported in discontinued
operations, net of taxes in the consolidated statements of operations for all
periods presented.

NOTE 15. SEGMENT INFORMATION

The Company's reportable segments are strategic business units that are managed
separately. The Company evaluates segment performance based on several factors,
of which the primary financial measure is business segment adjusted operating
cash flow (defined as operating income or loss before depreciation and
amortization, stock plan income or expense, long-term incentive plan income or
expense and restructuring charges).

II-13

CSC HOLDINGS, INC. AND SUBSIDIARIES
(a wholly-owned subsidiary of Cablevision Systems Corporation)
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Dollars in thousands)
(Unaudited)

A reconciliation of reportable segment amounts to the Company's consolidated
balances is as follows:

Substantially all revenues and assets of the Company's reportable segments are
attributed to or located in the United States.

The Company does not have a single external customer which represents 10 percent
or more of its consolidated revenues.

II-14

CSC HOLDINGS, INC. AND SUBSIDIARIES
(a wholly-owned subsidiary of Cablevision Systems Corporation)
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Dollars in thousands)
(Unaudited)

NOTE 16. LEGAL MATTERS

On April 29, 2002, Yankees Entertainment & Sports Network, LLC (the "YES
Network") filed a complaint and, on September 24, 2002, an amended complaint
against the Company in the United States District Court, Southern District of
New York. The lawsuit arises from the failure of the YES Network and the Company
to reach agreement on the carriage of programming of the YES Network (primarily
New York Yankees baseball games and New Jersey Nets basketball games) on the
Company's cable television systems. The amended complaint alleges a variety of
anticompetitive acts and seeks declaratory judgments as to violations of laws,
treble damages and injunctive relief, including an injunction requiring the
Company to carry the YES Network on its cable television systems. The Company
believes that the claims set forth in the complaint are without merit and
intends to contest vigorously the lawsuit.

In August 2002, purported class actions naming as defendants Cablevision and
each of its directors were filed in the Delaware Chancery Court. The actions,
which allege breach of fiduciary duties and breach of contract with respect to
the exchange of the Rainbow Media Group tracking stock for Cablevision NY Group
common stock, were purportedly brought on behalf of all holders of publicly
traded shares of Rainbow Media Group tracking stock. The actions seek to (i)
enjoin the exchange of Rainbow Media Group tracking stock for Cablevision NY
Group common stock, (ii) enjoin any sales of "Rainbow Media Group" assets, or,
in the alternative, award rescissory damages, (iii) if the exchange is
completed, rescind it or award recissory damages, (iv) award compensatory
damages, and (v) award costs and disbursements. The actions were consolidated
into one action on September 17, 2002, and on October 3, 2002, the Company filed
a motion to dismiss the consolidated action. The Company believes the claims are
without merit and intends to contest vigorously the lawsuit.

NOTE 17. OTHER MATTERS

In January 2001, the Company completed the sale of its cable television systems
in Boston and eastern Massachusetts to AT&T Corporation in exchange for AT&T's
cable television systems in certain northern New York suburbs, shares of AT&T
common stock and a cash payment. The sales agreements with AT&T provided both
parties with certain post closing adjustments to the purchase price following
agreement on those adjustments between the parties, or, in the event no
agreement was reached, that the post closing adjustment issues would be resolved
by third party experts whose determination would be binding. The Company
believes the amount of any negotiated settlement or expert determination of the
parties' respective claims will not be material to the Company.

As of September 30, 2002, Northcoast Communications, LLC, a 49.9% owned
unconsolidated subsidiary of the Company, had $61,100 in notes payable to the
FCC for the acquisition of the PCS licenses acquired during 1997. In addition, a
wholly owned subsidiary of Northcoast Communications, Cleveland PCS, LLC, had
$68,400 in vendor financing outstanding under a stand-alone $75,000 facility
obtained in connection with the launch of commercial service in Cleveland.
Additional funding for Northcoast Communications has been provided by the
Company through the Restricted Group which as of September 30, 2002 totaled
$217,700

II-15

CSC HOLDINGS, INC. AND SUBSIDIARIES
(a wholly-owned subsidiary of Cablevision Systems Corporation)
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Dollars in thousands)
(Unaudited)

(comprised of contributions directly to Northcoast Communications as well as
loans to Northcoast PCS, LLC, the other member in Northcoast Communications), in
addition to certain unpaid general and administrative charges from the Company
amounting to approximately $4,486 at September 30, 2002.

Vendor financing for Northcoast Communications' Cleveland operation consists of
the $75,000 credit facility at Cleveland PCS, LLC. This facility has no recourse
to Cablevision or to Northcoast Communications, other than pursuant to a pledge
by Northcoast Communications of the stock of Cleveland PCS and a guarantee of
the payment by Northcoast Communications and Cablevision of the FCC indebtedness
of the Cleveland PCS subsidiary which holds the Cleveland license which, as of
September 30, 2002, had an outstanding balance of $2,850. As of September 30,
2002, Cleveland PCS was in default of the terms of this credit facility and had
received notice of commitment termination and acceleration from the lender.
Northcoast Communications has invested $5,814 of the $217,700 invested by
Cablevision in Northcoast Communications in Cleveland PCS at September 30, 2002
and was owed $247 by Cleveland PCS for general and administrative charges at
September 30, 2002.

NOTE 18. SUBSEQUENT EVENTS

In November 2002, the Company reached an agreement with NBC for the sale of
Rainbow Media Holdings' 80% interest in the Bravo programming service for $1.0
billion payable in General Electric Company common stock and 53.2 million shares
of Cablevision NY Group Class A common stock (21.8 million shares of Cablevision
NY Group Class A common stock currently held by NBC and 31.4 million shares of
Cablevision NY Group Class A common stock issuable upon the conversion of shares
of Rainbow Media Holdings common stock held by NBC). The transaction is subject
to receipt of regulatory and other customary approvals. The Company expects to
record a gain in connection with this transaction.

Upon the closing of the sale of the Bravo programming service, the American
Movie Classics/Bravo and Rainbow Media Group, LLC credit facilities will
terminate by their terms and outstanding borrowings will be required to be
repaid. See Note 11.

In November 2002, Quadrangle Capital Partners LP, a private investment firm that
invests in media and communications companies, agreed to invest $75,000, subject
to execution of definitive documentation, in the Company. Quadrangle's
investment will be in the form of preferred stock convertible into Cablevision
NY Group Class A common stock. The transaction is subject to receipt of
regulatory approval.

II-16

CSC HOLDINGS, INC. AND SUBSIDIARIES

Item 2. Management's Discussion and Analysis of Financial Condition and Results
of Operations.

The operations of CSC Holdings are identical to the operations of Cablevision,
except for dividends attributable to the preferred stock of CSC Holdings which
have been reported in minority interests in the consolidated financial
statements of Cablevision. Refer to Cablevision's Management's Discussion and
Analysis of Financial Condition and Results of Operations filed as part of this
document.

II-17