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Filed Pursuant to Rule 424(b)(3)
Registration No. 333-78419
PROSPECTUS LOGO
AT HOME CORPORATION
$437,000,000 PRINCIPAL AMOUNT AT MATURITY
CONVERTIBLE SUBORDINATED DEBENTURES DUE 2018
SHARES OF SERIES A COMMON STOCK
ISSUABLE UPON CONVERSION OF THE DEBENTURES
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Excite@Home's Series A common stock trades on the Nasdaq National Market.
Last reported sale price on July 1, 1999: $54.9375 per share.
Trading Symbol: ATHM
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THE OFFERING
Under this prospectus, the selling stockholders named in this prospectus or
in prospectus supplements may offer and sell the debentures or the shares of our
Series A common stock into which the debentures may be converted.
The debentures were initially issued at a price of $524.64 per $1,000
principal amount at maturity. Interest of .5246% per year on the principal
amount at maturity is payable semiannually beginning June 28, 1999.
The debentures mature December 28, 2018. Each $1,000 principal amount
debenture is convertible into 13.10 shares of our Series A common stock. We may
redeem our debentures on or after December 28, 2003 at the redemption prices
listed in this prospectus. Holders of the debentures also have an option to
require us to purchase the debentures for cash or shares of our Series A common
stock, at our election, on specified purchase dates or upon a change of control
of Excite@Home. The debentures are general unsecured obligations and are
subordinated in right of repayment below all of our existing and future senior
debt.
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INVESTING IN OUR CONVERTIBLE SUBORDINATED DEBENTURES OR OUR SERIES A COMMON
STOCK INVOLVES A HIGH DEGREE OF RISK. PLEASE CAREFULLY CONSIDER THE "RISK
FACTORS" BEGINNING ON PAGE 6 OF THIS PROSPECTUS.
NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE SECURITIES
COMMISSION HAS APPROVED OR DISAPPROVED THESE SECURITIES OR PASSED UPON THE
ADEQUACY OR ACCURACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
THE DATE OF THIS PROSPECTUS IS JULY 2, 1999
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TABLE OF CONTENTS
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PAGE
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Prospectus Summary.......................................... 3
Risk Factors................................................ 6
Ratio of Earnings to Fixed Charges.......................... 17
Use of Proceeds............................................. 17
Dividend Policy............................................. 17
Description of Debentures................................... 18
United States Federal Income Tax Considerations............. 31
Selling Securityholders..................................... 36
Plan of Distribution........................................ 40
Legal Matters............................................... 42
Experts..................................................... 42
Forward-Looking Statements.................................. 42
Where You Can Find More Information......................... 43
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PROSPECTUS SUMMARY
This summary highlights information contained elsewhere in this prospectus.
This summary is not complete and does not contain all the information you should
consider before buying securities in this offering. You should read the entire
prospectus carefully. Unless the context otherwise requires, the terms we, our,
us, the company and Excite@Home refer to At Home Corporation, a Delaware
corporation. Each of the share numbers in this prospectus, including those dated
prior to June 16, 1999, have been adjusted to reflect the two-for-one split of
our common stock on June 16, 1999.
EXCITE@HOME
We are the leading provider of broadband Internet services, content and
advertising over the cable television infrastructure. Our primary offering, the
@Home service, allows residential subscribers to connect their personal
computers through cable television wiring infrastructures to our high-speed
Internet backbone network. For businesses, our @Work services provide a platform
for Internet, intranet and extranet connectivity solutions and networked
business applications over both cable infrastructures and digital
telecommunications lines.
Our Excite subsidiary operates two Internet portal sites, www.excite.com
and www.webcrawler.com, which are currently accessible on the World Wide Web.
Our @Media group has established the @Home launch screen as the leading
broadband Internet portal, providing a gateway to compelling multimedia and
electronic commerce offerings on the Internet.
Excite's MatchLogic division and our Enliven business unit provide us with
the capabilities to offer advertisers a unified way to target, measure and
report advertising on all devices on which the @Home service is offered.
Our principal executive offices are located at 425 Broadway Street,
Redwood, California 94063. The primary telephone number for our principal
executive offices is (650) 569-5000.
THE OFFERING
AMOUNT OFFERED $437,000,000 principal amount at maturity
ORIGINAL ISSUE PRICE $524.64 per $1,000 principal amount at maturity
MATURITY DATE December 28, 2018
CASH INTEREST .5246% per year on the principal amount at
maturity, payable semiannually commencing June
28, 1999
YIELD TO MATURITY 4% per year
CONVERSION RIGHTS Each debenture holder may convert each debenture
into 13.10 shares of our Series A common stock
at any time on or prior to maturity. The
conversion rate may be adjusted in designated
circumstances, but will not be adjusted for
accrued original issue discount. Upon
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conversion, you will not receive any cash
payment representing accrued original issue
discount. Instead, accrued original issue
discount will be deemed paid by the Series A
common stock received by you on conversion.
SUBORDINATION Our debentures are subordinated to our existing
and future senior debt and are effectively
subordinated to all existing and future
liabilities of our subsidiaries. The indenture
does not limit our ability to take on senior
debt or other debt.
ORIGINAL ISSUE DISCOUNT We initially sold each debenture at an original
issue discount for United States federal income
tax purposes. This original issue discount
amount equals the excess of the stated
redemption price at maturity of the debenture,
$1,000, over the issue price of $524.64. You
must include accrued original issue discount in
your gross income for United States federal
income tax purposes prior to conversion,
redemption, sale or maturity of the debentures.
This will be true even if the debentures are
ultimately not converted, redeemed, sold or paid
at maturity.
OPTIONAL REDEMPTION On and after December 28, 2003, we can redeem
the debentures for cash at any time at our
option at the redemption prices listed in this
prospectus, plus cash interest.
PURCHASE AT THE OPTION OF THE
HOLDER Each debenture holder has the option to require
us to purchase its debentures for a purchase
price of $610.81 on December 28, 2003, for
$715.86 on December 28, 2008 and for $843.91 on
December 28, 2013. We may generally choose to
pay this purchase price in cash, shares of our
Series A common stock or any combination of cash
and Series A common stock.
If a change of control of Excite@Home occurs
prior to December 29, 2003, then each debenture
holder will have an option to require us to
repurchase the debentures for an amount equal to
the issue price plus accrued original issue
discount and cash interest.
OPTIONAL CONVERSION TO
SEMIANNUAL COUPON DEBENTURE
UPON TAX EVENT We have the option to convert original issue
discount to interest on the occurrence of
specified tax events. This interest would accrue
at 4% per year on a restated principal amount
equal to the issue price plus accrued original
issue discount.
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USE OF PROCEEDS We will not receive any cash from the sale of
our debentures or Series A common stock offered
under this prospectus.
TRADING The debentures issued in the initial private
placement are eligible for trading in The Portal
Market. However, debentures sold using this
prospectus will no longer be eligible for
trading in The Portal Market. Our Series A
common stock is traded on the Nasdaq National
Market under the symbol ATHM.
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RISK FACTORS
An investment in our debentures or our Series A common stock involves a
high degree of risk. You should carefully consider the following risk factors
and the other information in this prospectus before investing in our debentures
or our Series A common stock. Our business and results of operations could be
seriously harmed by any of the following risks. The trading price of our
debentures and our Series A common stock could decline due to any of these
risks, and you may lose all or part of your investment.
RISKS RELATED TO THE DEBENTURES
WE MAY NOT BE ABLE TO PAY OFF THE DEBENTURES ON THE PURCHASE DATES OR UPON A
CHANGE OF CONTROL OF EXCITE@HOME
On each purchase date of December 28, 2003, December 28, 2008 and December
28, 2013, each debenture holder will generally have an option to require us to
purchase their debentures. Also, if a change of control of Excite@Home occurs,
each debenture holder will generally have an option for us to repurchase their
debentures. We may not have sufficient cash to pay the debentures, or
restrictions in other agreements may not allow us to make these repurchases. In
either case, we may have to issue shares of our Series A common stock instead.
THE DEBENTURES ARE SUBORDINATED TO OUR SENIOR DEBT OBLIGATIONS
The debentures will be unsecured and subordinated in right of payment to
all of our existing and future senior debt obligations. Therefore, if we go
bankrupt, liquidate our assets, reorganize or enter into other specified
transactions, our assets will be available to pay our obligations with respect
to the debentures only after we have paid all of our senior debt obligations in
full, and there may not be sufficient assets remaining to pay amounts due on any
or all of the debentures then outstanding. The debentures also will be
effectively subordinated in right of payment of all the liabilities, including
trade payables, of our subsidiaries. The indenture governing the debentures does
not prohibit or limit the ability of us or our subsidiaries to incur senior debt
obligations, other debt obligations and other liabilities. If we take any of
these actions, this could harm our ability to pay off the debentures. As of
April 30, 1999, we had approximately $32.3 million (excluding accrued interest)
of senior debt obligations outstanding. Our subsidiaries had liabilities of $1.6
million, including trade payables, as of April 30, 1999, but they may incur
additional liabilities in the future.
A TRADING MARKET FOR THE DEBENTURES MAY NOT DEVELOP
Although the initial purchaser of the debentures has advised us that it
intends to make a market in the debentures, it is not obligated to do so and may
discontinue market making at any time without notice. Its market-making activity
will be subject to the limited imposed by the securities laws. We cannot
guarantee that the market for the debentures will be maintained. Also, we do not
intend to apply for listing of the debentures on any securities exchange. The
trading price of the debentures will decline if there ceases to be an active
trading market for them.
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RISKS RELATED TO OUR BUSINESS
WE HAVE INCURRED AND EXPECT TO INCUR SUBSTANTIAL LOSSES
We were incorporated in March 1995, commenced operations in August 1995,
and have incurred net losses from operations in each fiscal period since our
inception. As of March 31, 1999, we had an accumulated deficit of $245.3
million. In addition, we currently intend to increase capital expenditures and
operating expenses in order to expand our network and to market and provide our
services to a growing number of potential subscribers. As a result, we expect to
incur additional net losses before cost and amortization of distribution
agreements and amortization of goodwill and other intangible assets for at least
the next three quarters.
OUR BUSINESS IS UNPROVEN, AND WE MAY NOT ACHIEVE PROFITABILITY
The profit potential of our business model is unproven. The @Home service
was available only in portions of 68 geographic markets as of March 31, 1999 and
may not achieve broad consumer or commercial acceptance. Although approximately
2,200 primarily small- and medium-sized business organizations have agreed to
utilize @Work services as of March 31, 1999, @Work services may not achieve
broad commercial acceptance and the current rate of deployment for @Work
services may not be sustained. We have difficulty predicting whether the pricing
models for our Internet services will prove to be viable, whether demand for our
Internet services will materialize at the prices our cable partners charge for
the @Home service or the prices we or our cable partners charge for @Work
services, or whether current or future pricing levels will be sustainable. If
these pricing levels are not achieved or sustained or if our services do not
achieve or sustain broad market acceptance, our business, operating results and
financial condition will be significantly harmed. We may never achieve favorable
operating results or profitability.
GROWTH OF THE @HOME SERVICE MAY BE INHIBITED BY FACTORS BEYOND OUR CONTROL
As of March 31, 1999, we had in excess of 460,000 cable modem subscribers,
including recently acquired Internet subscribers that are being converted to the
@Home service. Our ability to increase the number of subscribers to the @Home
service to achieve our business plans and generate future revenues will depend
on many factors which are beyond our control. For instance, some of our cable
partners have not achieved the subscriber levels that we had originally
anticipated. Other factors include:
- the rate at which our current and future cable partners upgrade their
cable infrastructures for two-way data services
- our ability and the ability of our cable partners to coordinate timely
and effective marketing campaigns with the availability of cable
infrastructure upgrades
- the success of our cable partners in marketing and installing the @Home
service in their local cable areas
- the prices that our cable partners set for the @Home service and for its
installation
- the speed at which our cable partners can complete the installations
required to initiate service for new subscribers
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- the commercial availability of self-installable, two-way modems that
comply with the recently adopted interface standards known as DOCSIS, and
the success of our roll-out of these products with the @Home service
- the quality of customer and technical support provided by us and our
cable partners and
- the quality of content on the @Home service.
WE NEED TO ADD SUBSCRIBERS AT A RAPID RATE FOR OUR BUSINESS TO SUCCEED, BUT WE
MAY NOT ACHIEVE OUR SUBSCRIBER GROWTH GOALS
Our actual revenues or the rate at which we will add new subscribers may
differ from our forecasts. We may not be able to increase our subscriber base
enough to meet our internal forecasts or the forecasts of industry analysts or
to a level that meets the expectations of investors. The rate at which
subscribers have increased in the past does not necessarily indicate the rate at
which subscribers may be expected to grow in the future. In particular, while we
have forecast that our number of subscribers could grow to over 1.1 million by
December 31, 1999 from more than 460,000 subscribers at March 31, 1999, we may
not achieve this level of subscriber growth.
OUR SUBSCRIBER GROWTH DEPENDS ON THE ACTIONS OF OUR CABLE PARTNERS, AND IS
LIMITED BY PRICE AND INSTALLATION CONSTRAINTS
We believe subscriber growth has been constrained, and will continue to be
constrained, by the cost and time required to install the @Home service for each
residential consumer. In addition, our growth has been constrained by the rate
at which our cable partners have upgraded their systems, and most of our cable
partners are not obligated to upgrade their cable infrastructures or market the
@Home service. Moreover, the @Home service is currently priced at a premium to
many other online services, and large numbers of subscribers may not be willing
to pay a premium for the @Home service.
IF WE CANNOT MAINTAIN THE SCALABILITY, SPEED AND SECURITY OF OUR NETWORK,
CUSTOMERS WILL NOT ACCEPT OUR SERVICES
Due to the limited deployment of our services, the ability of our network
to connect and manage a substantial number of online subscribers at high
transmission speeds is unknown. Therefore, we face risks related to our
network's ability to be scaled up to its expected subscriber levels while
maintaining superior performance. Our network may be unable to achieve or
maintain a high speed of data transmission, especially as our subscribers
increase. In recent periods, the performance of our network has experienced some
deterioration in some markets as a result of subscriber abuse of the @Home
service. While we seek to eliminate this abuse by limiting users' upstream
bandwidth, our failure to achieve or maintain high-speed data transmission would
significantly reduce consumer demand for our services. In addition, while we
have taken steps to prevent users from sharing files via the @Home service and
to protect against bulk unsolicited e-mail, public concerns about security,
privacy and reliability of the cable network, or actual problems with the
security, privacy or reliability of our network, may inhibit the acceptance of
our Internet services.
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IF NEW TWO-WAY CABLE MODEMS ARE NOT DEPLOYED TIMELY AND SUCCESSFULLY, WE MAY NOT
BE ABLE TO GROW OUR SUBSCRIBER BASE AS QUICKLY
Each of our subscribers currently must obtain a cable modem from a cable
partner to access the @Home service. The North American cable industry has
recently adopted interface standards known as DOCSIS for hardware and software
to support the delivery of data services over the cable infrastructure utilizing
compatible cable modems. Some of our cable partners have chosen to delay some
deployments of the @Home service until the widespread commercial availability of
DOCSIS-compliant cable modems. Our subscriber growth could be constrained and
our business could be significantly harmed if our cable partners choose to slow
the deployment of the @Home service further. Cable modems that are
DOCSIS-compliant are not expected to be available in significant quantities
until at least the second quarter of 1999. If our cable partners are not able to
obtain a sufficient quantity of DOCSIS-compliant modems, our growth will be
limited.
WE COULD LOSE SUBSCRIBERS, DISTRIBUTION RELATIONSHIPS AND REVENUES TO OUR
COMPETITORS
The markets for consumer and business Internet services and online content
are extremely competitive, and we expect that competition will intensify in the
future. Our most direct competitors in these markets include the following:
- Providers of cable-based Internet services. For example, Time Warner
Inc. and Media One Group have deployed high-speed Internet access
services over their local cable networks through their own cable-based
Internet service, Road Runner. We currently compete with Road Runner to
establish distribution arrangements with cable system operators, but we
may compete for subscribers in the future if and when our cable partners
cease to be subject to their exclusivity obligations.
- Telecommunications providers. We compete with national long-distance and
local exchange carriers that offer high-speed, Internet access services
such as integrated services digital network and asymmetric digital
subscriber line. If the advanced services offered by these companies are
deregulated, this would further enhance the ability of these companies to
compete against our services.
- Internet and online service providers. We compete with Internet service
providers that provide basic Internet access services and with online
service providers such as America Online.
- Internet content aggregators. We compete with content aggregators and
Internet portals that seek to capture audience flow by providing
ease-of-use and offering content that appeals to a broad audience,
including America Online, Yahoo! Inc. and Lycos, Inc.
Many of our competitors and potential competitors have substantially greater
financial, technical and marketing resources, larger subscriber bases, longer
operating histories, greater name recognition and more established relationships
with advertisers and content and application providers than we do. These
competitors may be able to undertake more extensive marketing campaigns, adopt
more aggressive pricing policies and devote more resources to developing
Internet services or online content than we could. We may not be able to compete
successfully against current or future competitors, and competitive pressures
could significantly harm our subscriber base, our ability to renew and enter
into new distribution agreements and our revenues.
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OUR DEPENDENCE ON OUR NETWORK EXPOSES US TO A SIGNIFICANT RISK OF SYSTEM FAILURE
Our operations are dependent upon our ability to support our highly complex
network infrastructure and avoid damage from fires, earthquakes, floods, power
losses, telecommunications failures and similar events. The occurrence of a
natural disaster or other unanticipated problem at our network operations center
or at a number of our regional data centers could cause interruptions in our
services. Additionally, failure of our cable partners or companies from which we
obtain data transport services to provide the data communications capacity that
we require, for example as a result of natural disaster, or operational
disruption, could cause interruptions in the services we provide. Any damage or
failure that causes interruptions in our operations could harm our business.
YEAR 2000 ISSUES COULD AFFECT THE PERFORMANCE OF OUR SYSTEMS
If our internal and network information systems do not correctly recognize
and process date information beyond the year 1999, we may not be able to conduct
operations. We may also experience supplier-related Year 2000 problems. To
address these Year 2000 issues, we and TCI, our majority stockholder, have
initiated a comprehensive program to address Year 2000 readiness in our systems
and with our customers' and suppliers' systems. Although we currently expect
that the Year 2000 issue will not pose significant operational problems, delays
in the implementation of new information systems or failure to fully identify
all Year 2000 dependencies in our existing systems and in the systems of our
suppliers could harm our business. Therefore, we are developing, but do not yet
have, contingency plans for continuing operations in the event these problems
arise.
OUR LIMITED EXPERIENCE WITH INTERNATIONAL EXPANSION MAY PREVENT US FROM GROWING
OUR BUSINESS OUTSIDE THE UNITED STATES
A key component of our strategy is expansion into international markets. To
date, we have developed distribution relationships only with United States,
Canadian and Dutch cable system operators. We have extremely limited experience
in developing localized versions of our products and services and in developing
relationships with international cable system operators. We may not be
successful in expanding our product and service offerings into foreign markets.
In addition to the uncertainty regarding our ability to generate revenues from
foreign operations and expand our international presence, we face specific risks
related to providing Internet services in foreign jurisdictions, including:
- regulatory requirements, including the regulation of Internet access
- legal uncertainty regarding liability for information retrieved and
replicated in foreign jurisdictions and
- potential inability to use European customer information due to new
European governmental regulations.
OUR BUSINESS MAY BE IMPACTED BY CABLE UNBUNDLING PROPOSALS AND OTHER GOVERNMENT
REGULATION
Currently, our services are not directly subject to regulations of the
Federal Communication Commission or any other federal, state or local
communications regulatory agency. However, changes in the regulatory environment
relating to the Internet, cable or
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telecommunications markets which could require regulatory compliance by us or
which could impact our exclusivity arrangements, subscribers and revenues could
develop, including:
- Federal regulation. Regulatory changes that affect telecommunications
costs, limit usage of subscriber-related information or increase
competition from telecommunications companies could affect our pricing or
ability to market our services successfully. For example, regulation of
cable television rates may affect the speed at which our cable partners
upgrade their cable systems to carry our services.
- Regulation by local franchise authorities. Many of our United States
cable partners' local cable affiliates have elected to classify the
provision of the @Home service as additional cable services under their
local franchise agreements, and to pay franchise fees under those
agreements. Local franchise authorities may attempt to subject cable
systems to higher or different franchise fees, taxes or requirements in
connection with their distribution of the @Home service. There are
thousands of franchise authorities, and it would be difficult or
impossible for us or our cable partners to operate under a unified set of
franchise requirements.
- Third-party access. The FCC or local agencies could require our cable
partners to grant our competitors access to their cable systems. America
Online, MindSpring Enterprises, Inc., Consumers Union and other parties
have requested the FCC to require cable operators to provide Internet and
online service providers with unbundled access to their cable systems. If
we or our cable partners are classified as common carriers of Internet
services, or if the FCC otherwise requires third-party access to their
cable infrastructures, Internet and online service providers could
provide services over our cable partners' systems that compete with our
services. Our cable partners could also be subject to tariffs for the
amounts they could charge for our services.
In local government proceedings, Portland and Multnomah County, Oregon
have imposed third-party access requirements on TCI as a condition of its
merger with AT&T, and other municipalities such as Los Angeles are
considering imposing similar requirements. In June 1999, a U.S. District
Court upheld the third-party access requirement imposed on TCI by Portland
and Multnomah County. This decision has been appealed to the U.S. Court of
Appeals for the Ninth Circuit.
WE COULD FACE LIABILITY FOR DEFAMATORY OR INDECENT CONTENT
Claims could be made against Internet and online service providers under
both United States and foreign law for defamation, negligence, copyright or
trademark infringement, or other theories based on the nature and content of the
materials disseminated through their networks. Several private lawsuits seeking
to impose this liability are currently pending. In addition, legislation has
been proposed that imposes liability for or prohibits the transmission over the
Internet of indecent content. The imposition upon Internet and online service
providers of potential liability for information carried on or disseminated
through their systems could require us to implement measures to reduce our
exposure to this liability. This may require that we expend substantial
resources or discontinue service or product offerings. The increased attention
focused upon liability issues as a result of these lawsuits and legislative
proposals could impact the growth of Internet use. Furthermore, some foreign
governments, such as Germany, have enacted laws and regulations governing
content distributed over the Internet that are more strict than those
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currently in place in the United States. One or more of these factors could
significantly harm our business.
RISKS RELATED TO OUR RELATIONSHIPS WITH OUR CABLE PARTNERS
Our agreements with our cable partners are complex. For a summary of some
of the key aspects of these agreements, you should refer to our annual report on
Form 10-K.
WE DEPEND ON OUR CABLE PARTNERS TO UPGRADE TO THE TWO-WAY CABLE INFRASTRUCTURE
NECESSARY TO SUPPORT THE @HOME SERVICE; THE AVAILABILITY AND TIMING OF THESE
UPGRADES ARE UNCERTAIN
Transmission of the @Home service and cable-based @Work services depends on
the availability of high-speed two-way hybrid fiber coaxial cable
infrastructure. However, only a portion of existing cable plant in the United
States and in some international markets has been upgraded to two-way hybrid
fiber coaxial cable, and even less is capable of high-speed two-way
transmission. As of March 31, 1999, approximately 25% of our North American
cable partners' cable infrastructure is capable of delivering the @Home service.
Our cable partners have announced and begun to implement major infrastructure
investments in order to deploy two-way hybrid fiber coaxial cable. However,
these investments have placed a significant strain on the financial, managerial,
operating and other resources of our cable partners, most of which are already
highly leveraged. Therefore, these infrastructure investments have been, and we
expect will continue to be, subject to change, delay or cancellation. Although
our commercial success depends on the successful and timely completion of these
infrastructure upgrades, most of our cable partners are under no obligation to
upgrade systems or to introduce, market or promote our services. The failure of
our cable partners to complete these upgrades in a timely and satisfactory
manner, or at all, would prevent us from delivering high-performance Internet
services and would significantly harm our business.
OUR CABLE PARTNERS ARE NOT GENERALLY OBLIGATED TO CARRY OUR SERVICES, AND THE
EXCLUSIVITY OBLIGATIONS THAT PREVENT THEM FROM CARRYING COMPETING SERVICES MAY
BE TERMINATED
Our cable partners are subject to exclusivity obligations that prohibit
them from obtaining high-speed, greater than 128 kilobits per second,
residential consumer Internet services from any source other than us. However,
most of our cable partners are under no affirmative obligation to carry any of
our services. Also, the exclusivity obligations of our principal cable partners,
TCI, Comcast, Cox and Cablevision, expire on June 4, 2002, and may be terminated
sooner under some circumstances, including:
- Our principal cable partners may terminate all their exclusivity
obligations upon a change in law that materially impairs some of their
rights.
- Comcast or Cox may terminate all exclusivity obligations of our principal
cable partners at any time if there is a change of control of TCI that
results within twelve months in the incumbent TCI directors no longer
constituting a majority of TCI's board. AT&T, TCI, Comcast and Cox have
agreed, however, that AT&T's acquisition of TCI did not constitute a
change of control under the terms of the original agreement.
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- Cox or Comcast may terminate the exclusivity provisions of our principal
cable partners if AT&T and its affiliates do not meet @Home subscriber
penetration levels. On June 4, 1999, Cox had this right, but Cox waived
this right for 1999.
- Comcast may terminate its own exclusivity obligations if it allows us to
repurchase a portion of Comcast's equity interest in us. Comcast has
informed us that it has entered into an agreement with Microsoft
Corporation under which Microsoft can require Comcast to terminate its
exclusivity obligations.
In consideration for Cox's agreement to waive its right to terminate
exclusivity as of June 4, 1999, our board approved changes to our corporate
governance on April 16, 1999. Our stockholders approved these changes on May 28,
1999. These goverance changes generally require board action to be approved by a
majority of our board, including the board representatives of AT&T and either
Cox or Comcast. In addition, as further consideration for Cox's waiver, AT&T
agreed to increase its subscriber acquisition goals for the next twelve months
above its current goal for that period.
If the exclusivity obligations of our cable partners are terminated, this
could significantly harm our business and cause an immediate drop in our stock
price.
WE ARE CONTROLLED BY TCI AND AT&T
TCI controls approximately 58% of our voting power. AT&T owns TCI and
therefore controls us. Currently, four of our eleven directors are directors,
officers or employees of TCI, AT&T or its affiliates. TCI currently owns all
outstanding shares of our Series B common stock, 30,800,000 shares, each of
which carries ten votes per share. This Series B common stock ownership gives
TCI the right to elect five Series B directors, one of which is designated by
Comcast and one of which is designated by Cox. So as long as TCI owns at least
15,400,000 shares of our Series B common stock and holds a majority of our
voting power, our board may take action only if approved by the board and by at
least 75%, or four of the five, of our Series B directors. As a result,
corporate actions generally require the approval of TCI's three Series B
directors and one, or in some cases both, of the directors designated by Comcast
and Cox. Therefore, Comcast and Cox, acting together, may veto any board action.
Notwithstanding these provisions, all of our directors owe fiduciary duties to
our stockholders.
WE DEPEND ON TCG FOR LOCAL TELECOMMUNICATIONS SERVICES FOR OUR @WORK SERVICES
We depend on TCG, which is owned by AT&T, to provide local
telecommunications services and co-location within TCG's facilities on favorable
economic terms. This relationship enables us to provide @Work services to an
entire metropolitan area in which TCG has facilities. If we were required to
obtain comparable telecommunications services from local exchange carriers, we
would effectively be limited to providing @Work services to commercial customers
within a ten-mile radius of one of our points of presence. As a result, we would
be required to build multiple points of presence to service an entire
metropolitan area, which would substantially increase our capital costs to enter
new markets and which could make market entry uneconomical. If we were required
to pay standard local exchange carrier rates, the ongoing operating costs for
our @Work services would be substantially higher. The loss of our strategic
relationship with TCG would significantly harm our ability to deploy our @Work
services. In addition, TCG has acquired a provider of Internet-related services
to businesses and corporate customers and
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<PAGE> 14
will compete directly with the @Work Internet service. To the extent TCG
acquires or enters into strategic relationships with other Internet service
providers, TCG may reduce its support of the @Work services. Although there are
alternative suppliers for TCG's services, it could take a significant period of
time for us to establish similar relationships, and equivalent terms might not
be available.
WE MAY FACE ADDITIONAL COMPETITION FROM AT&T
AT&T operates businesses that could compete with our services,
notwithstanding any exclusivity obligations that may apply to it due to its
ownership of TCI:
- AT&T operates a consumer Internet service known as AT&T WorldNet.
Although AT&T WorldNet is currently a telephone dial-up service that does
not utilize broadband technologies, AT&T may be able to use
non-cable-based data transport mechanisms to offer high-speed residential
Internet services that compete with the @Home service.
- AT&T owns TCG, which operates an Internet service for business customers
that competes with the @Work service. The @Work business depends to a
significant extent on our agreement with TCG for local access
telecommunications services. If TCG ceases to cooperate with us, our
@Work business would be harmed. Because the @Work business is not subject
to the cable partners' exclusivity obligations, AT&T or TCG are not
limited in their ability to compete with the @Work business.
- AT&T and Time Warner have announced the formation of a significant
strategic relationship that will include a joint venture to offer
AT&T-branded cable telephony service to residential and small business
customers over Time Warner's existing cable television systems in 33
states. The relationship between AT&T and Time Warner could ultimately
extend to other broadband services, including cable Internet services,
that compete with the @Home service.
AT&T may take actions that benefit TCG, WorldNet or other services of AT&T
or other parties to our detriment.
WARRANTS ISSUED TO OUR CABLE PARTNERS MAY RESULT IN ADDITIONAL DILUTION TO OUR
STOCKHOLDERS
We have entered into agreements with Cablevision Systems Corporation,
Rogers, Shaw and other cable partners under warrants to purchase a total of
46,213,444 shares of our Series A common stock were outstanding as of March 31,
1999. Under these agreements, warrants to purchase 20,863,180 shares of our
Series A common stock at an average price of $0.38 per share were exercisable as
of March 31, 1999. To the extent that these cable partners become eligible to
and choose to exercise their warrants, our stockholders would experience
substantial dilution. We also may issue additional stock, or warrants to
purchase stock, at prices less than fair market value in connection with efforts
to expand distribution of the @Home service.
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<PAGE> 15
RISKS ASSOCIATED WITH OUR ACQUISITION OF EXCITE AND EXCITE'S BUSINESS
WE FACE SEVERAL TRANSITORY RISKS ASSOCIATED WITH OUR ACQUISITION OF EXCITE
On May 28, 199, we acquired Excite, Inc. Although this transaction is
complete, the following risks associated with this acquisition remain:
- Our pro forma accounting for the merger may change pending a final
analysis of the fair values of the assets acquired and liabilities
assumed. The impact of these changes could be material to our future
operating results.
- We may encounter substantial difficulties, costs and delays associated
with integrating the operations of our companies. This process may
disrupt our business if not completed in a timely and efficient manner.
- The present and potential relationships of us and Excite with sponsors,
content providers, advertisers, users and subscribers may be harmed by
the proposed merger.
- We and Excite may lose the right to use intellectual property or other
contractual rights if we or Excite cannot obtain third party consent,
waiver or approval of the proposed merger where required under existing
agreements.
- The merger may result in conflicts associated with exclusive rights that
both we and Excite have granted to third parties with regard to content,
sponsorship or other strategic relationships, and failure to resolve
these conflicts could harm our business.
EXCITE HAS NOT BEEN AND MAY NEVER BE PROFITABLE
Excite has incurred significant operating expenses since it was formed. As
of December 31, 1998, Excite had an accumulated deficit of $135.6 million.
Although Excite has had significant revenue growth in recent periods, it may not
be able to sustain this growth in future periods. Excite may never achieve
profitability.
EXCITE COULD LOSE USERS, ADVERTISERS AND REVENUES TO ITS COMPETITORS
Excite competes with a number of companies both for users and advertisers,
and therefore for revenues. We expect this competition will intensify,
particularly because there are few barriers to entry in Excite's market.
Excite's competitors include:
- Web portal companies such as Infoseek's Go Network, Lycos, Netscape's
Netcenter and Yahoo!
- online service providers such as America Online and Microsoft's MSN
service
- large media companies such as CBS, NBC, Time-Warner and USA Networks,
Inc., who have announced initiatives to develop Web services or partner
with Web companies and
- providers of Web-based advertising solutions, including AdForce,
advertising management software, including NetGravity, Inc., advertising
supported content and traditional advertising media.
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<PAGE> 16
EXCITE DEPENDS ON SPONSORSHIP AGREEMENTS FOR REVENUES
Excite derived approximately 25% of its 1998 advertising revenues from
third parties to provide sponsored services and placements on Excite's Web
sites. These sponsorships typically last for a longer period of time than
traditional banner advertisement purchases. If these sponsorship arrangements do
not meet the advertisers' expectations as to new customers or increased sales or
brand awareness, the sponsors may not renew their arrangements with Excite. It
may also be difficult for Excite to obtain additional sponsors if potential new
sponsors compete with existing sponsors. If Excite does not renew its existing
sponsorships or obtain new sponsors, its business would be harmed.
EXCITE DEPENDS ON SEVERAL THIRD PARTY RELATIONSHIPS FOR USERS, ADVERTISERS AND
REVENUES
Excite depends on a number of third party relationships to provide users
and content for its services, including agreements for links to Excite's
services to be placed on high-traffic Web sites and agreements for third parties
to provide content, games and e-mail for Excite's Web sites. If these
relationships terminate and Excite is not able to replace them, it could lose
users or advertisers, and this could harm our revenues.
PRIVACY CONCERNS REGARDING THE USAGE OF DEMOGRAPHIC INFORMATION COULD PREVENT US
AND EXCITE FROM BENEFITING FROM SELLING TARGETED ADVERTISING
Due to privacy concerns regarding the usage of demographic information in
online advertising, some commentators and governmental bodies have suggested
limitations on technology that we and Excite use to deliver targeted advertising
and compile demographic information about users. Any reduction or limitation in
the use of this technology could result in lower advertising rates.
POTENTIAL LITIGATION WITH RESPECT TO INTELLECTUAL PROPERTY RIGHTS COULD HARM
EXCITE'S BUSINESS
Many parties, including competitors of Excite, are actively developing
search, indexing and related Internet technologies. Some of these parties have
taken steps to protect these technologies, and we believe that others will
follow. Therefore, we believe that disputes regarding the ownership of these
technologies are likely to arise in the future. We may not be able to defend any
litigation successfully. Even if successful, defending litigation may be costly
and may divert management resources.
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<PAGE> 17
RATIO OF EARNINGS TO FIXED CHARGES
The ratio of earnings to fixed charges for each of the periods indicated is
as follows (in thousands):
<TABLE>
<CAPTION>
PERIOD FROM
MARCH 28, 1995 YEAR ENDED DECEMBER 31,
(INCEPTION) TO ------------------------------- THREE MONTHS ENDED
DECEMBER 31, 1995 1996 1997 1998 MARCH 31, 1999
----------------- -------- -------- --------- ------------------
<S> <C> <C> <C> <C> <C>
Deficiency of earnings
available to cover fixed
charges................... $(2,756) $(24,513) $(55,717) $(144,179) $(18,124)
</TABLE>
These computations include us and our consolidated subsidiaries. Earnings
consist of net loss plus fixed charges. Fixed charges consist of interest
expense, including amortization of debt issuance costs, and that portion of
rental expense we believe to be representative of interest.
USE OF PROCEEDS
We will not receive any proceeds from sales of debentures or Series A
common stock by the selling securityholders under this prospectus. On December
28, 1998, we received approximately $222.4 million from the sale of our
debentures to the initial purchasers of the debentures, after deducting expenses
and the initial purchaser's discount. We are using and intend to use the net
proceeds of the offering for general corporate purposes, including working
capital and capital expenditures, including those associated with domestic and
international expansion and additional backbone capacity. A portion of the net
proceeds also may be used to acquire or invest in complementary businesses or
products or to obtain the right to complementary technologies.
DIVIDEND POLICY
We have never paid any cash dividends on our stock. We anticipate that we
will continue to retain any earnings for use in the operation of our business
and we do not currently intend to pay dividends.
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<PAGE> 18
DESCRIPTION OF DEBENTURES
The debentures were issued under an indenture dated December 28, 1998,
between us and State Street Bank and Trust Company of California, N.A., as
trustee. This section is only a summary of the provisions of the debentures and
the indenture and the related registration rights agreement. You should refer to
these documents for more detailed information. Wherever we refer to particular
provisions or defined terms of the indenture, we also incorporate these
provisions or defined terms into this prospectus by reference. The terms we,
our, us, the company and At Home in this section refer solely to At Home and not
to our subsidiaries.
GENERAL
We issued $437,000,000 aggregate principal amount at maturity of the
debentures in a December 1998 private placement. The principal amount at
maturity of each debenture is $1,000. The debentures will be payable at the
office of the paying agent or an office or agency that we maintain for this
purpose in the Borough of Manhattan, City of New York. The debentures will
mature on December 28, 2018.
The debentures were initially issued at a price of $524.64 per $1,000
principal amount at maturity. Original issue discount will be periodically
includable in your gross income for United States federal income tax purposes.
See "United States Federal Income Tax Considerations -- Interest and original
issue discount." The debentures will bear interest at the rate of .5246% per
year on the principal amount due at maturity, and will be payable semiannually
commencing on June 28, 1999.
State Street Bank and Trust Company of California, N.A., is the trustee,
registrar, paying agent and conversion agent under the indenture.
FORM, DENOMINATION AND REGISTRATION
General. The debentures were issued in registered book-entry form, without
coupons, in denominations of $1,000 principal amount at maturity and integral
multiples of $1,000. There is no service charge for any registration of transfer
or exchange of debentures, but a holder of debentures may have to pay for any
tax, assessment or other governmental charge payable in connection with the
transfer.
The debentures that are sold under this prospectus will be represented by
global debentures without coupons. The global debentures were deposited with the
trustee as custodian for the Depository Trust Company, or DTC, and registered in
the name of a nominee of DTC.
Ownership interests in the global debentures. If a purchaser of debentures
under this prospectus is a participant in DTC, it may hold interests in the
global debentures directly through DTC or indirectly through DTC participants or
specified parties that clear through or maintain a custodial relationship with a
DTC participant. So long as DTC, or its nominee, is the registered owner or
holder of the global debentures, DTC or the nominee will be considered the sole
owner or holder of the debentures represented by the global debentures. DTC or
its participants will be responsible for recording beneficial ownership
interests in the global debentures. Accordingly, each person owning a beneficial
interest in the global debentures must rely on the procedures of DTC and, if
that person is not a
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<PAGE> 19
participant, those of the participant through which that person owns its
interests, in order to exercise any rights of a holder under the indenture or
the holder's debenture.
DTC has advised us that it will take any action permitted to be taken by a
holder of debentures only at the direction of one or more participants to whose
account with DTC interests in the global debentures are credited. DTC will only
take action in respect of the portion of the principal amount of the debentures
represented by the global debentures as to which the participant or participants
has or have given direction.
Transfer of ownership interests. Transfers between participants in DTC will
be made according to DTC rules and will be settled in same-day funds. The
ability of a person holding a beneficial interest in a global debenture to
transfer or pledge its interest to persons or entities who are not DTC
participants may be restricted in states that require persons to take physical
delivery of securities in definitive form, since debentures will only be
delivered in certificated form in limited circumstances.
Exchange for certificated debentures. Any beneficial interest in the global
debentures may be exchanged for certificated debentures by following the
procedures described in the indenture.
Payments on the global debentures. Payments on the global debentures will
be made to DTC or its nominee. Neither we, the trustee nor any paying agent will
have any responsibility or liability for payments made to beneficial ownership
interests in the global debentures or for maintaining, supervising or reviewing
any records relating to these beneficial ownership interests. We expect DTC to
credit participants' accounts on the payment date with payments in amounts
proportional to their beneficial interests in the global debentures, unless it
has reason to believe that it will not receive payment. Also, we expect that any
payment by a DTC participant to a non-participants who holds beneficial
interests in a global debenture through that participant will be governed by
standing instructions and customary practices. However, the participants will be
responsible for these payments.
SUBORDINATION OF THE DEBENTURES
Subordination. The debentures are subordinated to all existing and future
senior debt. Senior debt includes indebtedness for borrowed money, obligations
for outstanding bonds, debentures, notes or similar instruments and obligations
assumed in connection with acquisitions. As of April 30, 1999, we had
approximately $32.3 million in outstanding senior debt, and our subsidiaries had
liabilities of approximately $1.6 million. The indenture does not restrict us or
our subsidiaries from incurring additional senior debt or other debt.
The debentures are also effectively subordinated to all existing and future
liabilities of our subsidiaries. Any right we have to receive assets of a
subsidiary upon its liquidation or reorganization, and therefore your right to
participate in those assets, will be subject to the claims of that subsidiary's
creditors. Even if we are recognized as a creditor of the subsidiary, our claims
would still rank below any security interests in the assets of the subsidiary
and any debt of that subsidiary that is senior to our debt.
Effects upon liquidation or bankruptcy. Because of this subordination, in
the event of our liquidation, dissolution or other winding up, or insolvency or
bankruptcy, we will repay the senior debt before we make any payments on the
debentures. If you or the trustee receive any distribution before the senior
debt is paid in full, then you or the trustee must
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<PAGE> 20
hold the distribution in trust for the benefit of the senior debt holders to the
extent necessary to pay off all outstanding senior debt in full. As a result,
other unsecured creditors, who would recover less than holders of senior debt,
may still recover more than you.
Payment blockage periods. In addition, except for limited circumstances
defined in the indenture, the subordination provisions of the indenture prevent
us from making any payments on the debentures, or acquiring any debentures for
cash or property if:
- we fail to pay any amounts due on any designated senior debt beyond the
applicable grace period or
- any other default event occurs and continues under any designated senior
debt that permits its holders to accelerate the maturity of that debt,
and this default is either the subject of judicial proceedings or we
receive a written notice of this default.
However, we may resume making payments on the debentures:
- once the payment default is cured or waived or
- in the event of a default other than a payment default, as described
above, if 179 or more days pass after we receive notice of the default,
so long as the terms of the indenture otherwise permit the payment or
acquisition of the debentures at that time.
In addition, we may not make payments on any debentures that are declared
due and payable before their stated maturity due to a default event until the
earlier of:
- 120 days after the date of the acceleration or
- the payment in full of all senior debt,
but only if the payment is then otherwise permitted under the terms of the
indenture.
CONVERSION RIGHTS
You may convert each $1,000 principal amount of a debenture, or an integral
multiple of $1,000, into shares of Series A common stock at any time before the
close of business on December 28, 2018, unless previously redeemed or
repurchased. The right to convert a debenture called for redemption or delivered
for repurchase will terminate at the close of business on the business day
immediately preceding the redemption date or the repurchase date, as the case
may be.
Each $1,000 principal amount at maturity of a debenture is convertible into
13.10 shares of our Series A common stock, giving effect to the two-for-one
split of our common stock on June 16, 1999. This conversion rate is subject to
adjustment as described below. The shares of Series A common stock issuable upon
conversion of the debentures will be fully paid and nonassessable and will rank
equal to the other shares of our Series A common stock outstanding. We will not
issue fractional shares. Instead, you will receive cash equal to the market
value of any fractional share of our Series A common stock to which you would be
entitled.
Method of conversion. You may convert a debenture by delivering the
debenture and a duly signed and completed notice of conversion to the conversion
agent. You may also
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<PAGE> 21
need to furnish appropriate endorsements and transfer documents and pay any
transfer or similar taxes. The conversion date will be the date on which you
fulfill these requirements.
Cash payments. We will not make any payment or other adjustment on
conversion for accrued cash interest or accrued original issue discount, except
for:
- cash in lieu of fractional shares to which you would otherwise be
entitled upon the conversion or
- accrued but unpaid cash interest upon your conversion of the debentures
concurrently with or after acceleration of the debentures following a
default event on the debentures.
Upon our delivery to you of the shares of Series A common stock into which the
debenture is convertible, our obligation to pay the principal amount at maturity
of the debenture, including accrued original issue discount and accrued cash
interest, will be deemed to be paid in full, rather than canceled, extinguished
or forfeited.
If you convert any debentures during the period from (but excluding) an
interest payment record date to (but excluding) the interest payment date, you
must provide us with funds equal to the interest we must pay on the interest
payment date on the principal amount you convert unless the debenture has been
called for redemption on a redemption date during this period. Except where this
payment is required, we will not pay any interest on converted debentures on any
interest payment date subsequent to the date of conversion. You will not be
entitled to receive dividends payable to holders of Series A common stock as of
any record time or date before the close of business on your conversion date.
Adjustment of conversion ratio. We will adjust the conversion rate if we:
(1) pay a dividend or make a distribution on our Series A common stock
payable in Series A common stock or other types of our capital stock
(2) subdivide, combine or reclassify our Series A common stock into a
different number of shares
(3) distribute rights, warrants or options to purchase, for a period of up
to 60 days after the record date of the distribution, Series A common
stock or securities convertible into Series A common stock to all
holders of Series A common stock, at a price per share less than the
average sale price of our Series A common stock at the time or
(4) distribute assets, debt securities, or rights, warrants or options to
purchase our securities other than those specified above to all holders
of Series A common stock.
However, we will not adjust the conversion rate for a distribution in (4)
above:
- if the distribution is a cash dividend from current net earnings or
earned surplus, unless the dividend qualifies as an extraordinary
dividend as this term is defined in the indenture or
- if the fair market value of this distribution per share of Series A
common stock exceeds or is less than $1.00 below the average closing
price per share of our Series A common stock (instead of adjusting the
conversion rate, you would
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receive, upon conversion, both the shares of Series A common stock into
which the debenture is convertible and the distribution that you would
have received if you had converted the debenture immediately prior to the
record date for the distribution).
Also, the conversion rate is nor required to be adjusted:
- until the current cumulative adjustments in the conversion rate amount to
at least 1.0% of the conversion rate
- for accrued original issue discount or accrued cash interest at any time
during the terms of the debentures or
- if you may participate in the transactions otherwise giving rise to an
adjustment on a basis and with notice that our board of directors
determines to be fair and appropriate.
If specified tax events occur and we exercise our option to convert the
debentures to semiannual coupon debentures, you would receive the same number of
shares of Series A common stock upon conversion as if we had not exercised our
option to convert the debentures to semiannual coupon debentures.
If we are party to a consolidation, merger or binding share exchange or a
transfer of all or substantially all of our assets which is otherwise permitted
under the terms of the indenture, the right to convert a debenture into Series A
common stock may be changed into a right to convert it into the kind and amount
of securities, cash or other assets which the debenture holder would have
received if the holder had converted its debentures immediately prior to the
transaction.
If we make a taxable distribution to holders of Series A common stock which
results in an adjustment of the conversion rate or in which debenture holders
otherwise participate, or if we increase the conversion rate at our discretion,
the holders of the debentures may, in some circumstances, be deemed to have
received a distribution subject to United States federal income tax as a
dividend. See "United States Federal Income Tax Considerations -- Constructive
dividend."
WE MAY REDEEM THE DEBENTURES ON AND AFTER DECEMBER 28, 2003
On and after December 28, 2003, we may redeem the debentures for cash at
any time, in whole or in part in integral multiples of $1,000 principal amount
at maturity. We must provide notice to you by mail at least 30 days (unless the
trustee approves shorter notice), but not more than 60 days, prior to the
redemption date.
The table below shows redemption prices for a debenture per $1,000
principal amount at maturity on December 28, 2003 and on each subsequent
December 28 through maturity on December 28, 2018. These redemption prices
reflect the accrued original issue discount calculated as of each date. The
redemption price of a debenture redeemed on a date other
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<PAGE> 23
than December 28 would include the additional original issue discount that had
accrued since the preceding December 28.
<TABLE>
<CAPTION>
(1) (2) (3)
DEBENTURE ACCRUED ORIGINAL REDEMPTION
REDEMPTION DATE ISSUE PRICE ISSUE DISCOUNT PRICE (1)+(2)
--------------- ----------- ---------------- -------------
<S> <C> <C> <C>
December 28, 2003................... $524.64 $86.17 $ 610.81
December 28, 2004................... 524.64 105.55 630.19
December 28, 2005................... 524.64 125.71 650.35
December 28, 2006................... 524.64 146.69 671.33
December 28, 2007................... 524.64 168.51 693.15
December 28, 2008................... 524.64 191.22 715.86
December 28, 2009................... 524.64 214.84 739.48
December 28, 2010................... 524.64 239.42 764.06
December 28, 2011................... 524.64 264.99 789.63
December 28, 2012................... 524.64 291.59 816.23
December 28, 2013................... 524.64 319.27 843.91
December 28, 2014................... 524.64 348.06 872.70
December 28, 2015................... 524.64 378.02 902.66
December 28, 2016................... 524.64 409.19 933.83
December 28, 2017................... 524.64 441.62 966.26
At stated maturity.................. 524.64 475.36 1,000.00
</TABLE>
If specified tax events occur and we exercise our option to convert the
debentures to semiannual coupon debentures, the debentures will be redeemable at
the restated principal amount plus interest that has accrued since the date of
conversion. If we do not redeem all of the debentures at once, the trustee will
select which debentures shall be redeemed by a method which the trustee
considers fair and appropriate.
YOU MAY REQUIRE US TO REPURCHASE THE DEBENTURES AS OF SPECIFIED PURCHASE DATES
You may require us to purchase all or some of your debentures on December
28, 2003, December 28, 2008 and December 28, 2013 at the purchase price below
for each purchase date, plus cash interest that has accrued to the purchase
date. Each purchase price equals the issue price plus original issue discount
accrued as of the respective purchase date. If specified tax events occur and we
exercise our option to convert the debentures to semiannual coupon debentures
prior to a purchase date, the purchase price for that purchase date will equal
the restated principal amount plus cash interest accrued as of the conversion to
semiannual coupon debentures.
<TABLE>
<CAPTION>
PURCHASE DATE PURCHASE PRICE
------------- --------------
<S> <C>
December 28, 2003................ $610.81
December 28, 2008................ $715.86
December 28, 2013................ $843.91
</TABLE>
Payment in shares of Series A common stock. We may elect to pay the
purchase price in cash or in shares of Series A common stock, or a combination,
at our option. If we elect to pay any part of the purchase price in shares of
Series A common stock, the number of shares that you will receive will be
calculated by dividing the specified percentage of the purchase price by the
market price of a share of Series A common stock. You should refer to the
indenture for calculation of the market price. Because the
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<PAGE> 24
market price of the Series A common stock is determined prior to the purchase
date, you bear the market risk with respect to the value of the Series A common
stock that you would receive from the date the market price is determined to the
purchase date. We will not issue fractional shares. Instead, you will receive
cash equal to the market value of any fractional share of our Series A common
stock to which you would be entitled. Each holder who exercises this option will
receive the same percentage of cash or Series A common stock in payment of the
purchase price for the debentures.
Notice requirements. We will give you notice at least 20 business days
prior to each purchase date at your address shown in the register of the
registrar. This notice will state whether we will pay the purchase price of the
debentures in cash, Series A common stock, or a combination, and the procedures
that you must follow to exercise this option. Once we provide this notice, we
cannot change the form of payment (unless we fail to satisfy the conditions
required to allow us to pay in shares of Series A common stock, in which case we
must pay in cash).
If you wish to exercise this option, you must provide written notice to the
paying agent (or an office or agency maintained by us for this purpose in the
Borough of Manhattan, City of New York) within 20 business days prior to the
relevant purchase date. You may withdraw this purchase notice in writing prior
to the purchase date.
Delivery requirement. We will pay the purchase price for your debentures on
the later of the purchase date or promptly following the business day after the
day that you deliver your debenture to the paying agent (or an office or agency
maintained by us for this purpose in the Borough of Manhattan, City of New
York). Delivery of the debenture is a condition to our payment of the purchase
price. If you have given notice that you intend to exercise this option but have
not delivered your debenture to the paying agent as of the purchase date, then
as long as the paying agent has sufficient cash or securities to pay the
purchase price, cash interest and original issue discount will cease to accrue
and will be deemed paid, and all rights except the right to receive payment will
terminate, immediately after the purchase date.
Limitations on this option. We cannot repurchase your debentures, even if
you have exercised this option, if a default event has occurred and is
continuing. See "Default events" and "Risk Factors -- We may not be able to pay
off the debentures in the future."
YOU MAY REQUIRE US TO REPURCHASE THE DEBENTURES UPON A CHANGE OF CONTROL OF AT
HOME
If a change in control of At Home occurs on or prior to December 28, 2003,
you will generally have the option to require us to repurchase all or some of
your debentures on the date 30 business days after the change of control at a
change in control purchase price, in cash, equal to the issue price plus
original issue discount and cash interest that has accrued to the repurchase
date. If specified tax events occurred and we had converted the debentures to
semiannual coupon debentures prior to the change of control, we will be required
to repurchase the debentures at a cash price equal to the restated principal
amount plus accrued and unpaid interest from the date of the conversion to the
repurchase date.
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Definition of change of control. A change in control of At Home will
generally be deemed to have occurred if:
- any person other than us, our subsidiaries, our employee benefit plans or
a permitted holder files a Schedule 13D or 14D-1 under the Exchange Act
disclosing that the person has become the beneficial owner of 50% or more
of the total voting power of our outstanding capital stock
- we have consolidated or merged with another entity, and in this
transaction our Series A common stock would be converted into cash,
securities or other property, except for transactions of this type in
which our stockholders immediately prior to the transaction own a
majority of total voting power of the surviving corporation or
- we enter into a transaction in which all or substantially all of our
Series A common stock will be exchanged for consideration other than
common stock that is listed on a United States national securities
exchange or approved for listing on the Nasdaq National Market, or rights
to acquire common stock of this type.
For the purposes of the indenture, a permitted holder means:
- TCI or AT&T
- any person or entity which owns, directly or indirectly, a majority of
the total voting power of TCI or AT&T
- any business entity at least a majority of the total voting power of
which is owned, directly or indirectly, by TCI or AT&T
- any person who is a member of a "group" with TCI or AT&T, as defined in
Section 13(d)(3) of the Exchange Act or
- any person or entity, a majority of the equity interests of which are
distributed, directly or indirectly, to TCI or AT&T, if TCI or AT&T, as
the case may be, directly or indirectly owned a majority of the equity
interests and voting power of that person or entity immediately before
the distribution.
We may enter into some transactions, including recapitalizations, that
would not constitute a change in control under the indenture, but that would
increase the amount of our senior debt.
Notice requirements. We will provide you with notice of the change of
control within 15 business days of its occurrence. To exercise your option, you
must deliver written notice to the paying agent (or an office or agency
maintained by us for this purpose in the Borough of Manhattan, City of New York)
within 30 business days after the change of control. You may withdraw this
change in control purchase notice in writing prior to the repurchase date.
Delivery requirement. We will pay the change in control purchase price for
your debentures on the later of 30 business days after the change of control or
after you deliver your debenture to the paying agent (or an office or agency
maintained by us for this purpose in the Borough of Manhattan, City of New
York). Delivery of the debenture is a condition to our payment of the change in
control purchase price. If you have given notice that you intend to exercise
this option but have not delivered your debenture to the paying agent as of the
repurchase date, then as long as the paying agent has sufficient cash or
securities to pay the change in control purchase price, cash interest and
original issue
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discount will cease to accrue and will be deemed paid, and all rights except the
right to receive payment will terminate, immediately after the repurchase date.
Regulatory requirements. We will comply with the provisions of Rule 13e-4,
Rule 14e-1 and any other tender offer rules under the Exchange Act which apply,
and we will file Schedule 13E-4 or any other schedule required under the
Exchange Act in connection with any offer by us to repurchase your debentures if
you exercise this option.
Limitations on this option. We cannot repurchase your debentures, even if
you have exercised this option, if a default event has occurred and is
continuing. See "Default events" and "Risk Factors -- We may not be able to pay
off the debentures in the future."
WE MAY CONVERT THE DEBENTURES TO SEMIANNUAL COUPON DEBENTURES UPON SPECIFIED TAX
EVENTS
If a specified tax event occurs, we will have the option to elect to have
cash interest accrue and be payable at 4% per year on a restated principal
amount per debenture instead of future original issue discount and the cash
interest provided for under the indenture. This interest would accrue from the
date on which we exercise this option and would be payable semiannually. Our
exercise of this option could alter the timing of income recognition by holders
of the debentures with respect to these semiannual interest payments. For the
purposes of this option:
- the restated principal amount would equal the issue price of the
debenture plus original issue discount accrued to the later of the date
immediately prior to the tax event or the date on which we exercise this
option and
- a tax event means that we shall have received an opinion from independent
tax counsel that, on or after December 21, 1998, as a result of any
change in the laws of the United States or underlying regulations, the
laws or regulations of any political subdivision or taxing authority or
interpretation of these laws or regulations by any legislative body,
court, governmental agency or regulatory authority, there is more than an
insubstantial risk that we could not deduct interest or original issue
discount payable on the debentures on a current accrual basis or under
any other method for United States federal income tax purposes.
President Clinton's fiscal year 1998 budget proposed a series of tax law
changes that would have, if enacted and if they applied to the debentures,
prevented us from deducting interest and original issue discount payable on the
debentures on a current accrual basis and some or all of the interest and
original issue discount under any other method for United States federal income
tax purposes. This proposal was not adopted by Congress and was not part of the
Taxpayer Relief Act of 1997. A similar proposal was included in President
Clinton's fiscal year 1999 budget proposal introduced in February 1998 but was
not adopted by Congress and was not part of the Internal Revenue Services
Restructuring and Reform Bill of 1998 or the Tax and Trade Relief Extension Act
of 1998. If a similar proposal were ever enacted and made applicable to the
debentures, this would result in a tax event and we would obtain the option
described above.
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WE MAY CONSOLIDATE, MERGE OR SELL OUR ASSETS WITHOUT YOUR CONSENT
We may consolidate with, merge into, transfer or lease all or substantially
all of our assets to any person or entity without the consent of the holders of
the debentures if specified conditions are satisfied, including:
- the other person is an entity organized and existing under the laws of a
United States jurisdiction and expressly assumes our obligations on the
debentures and under the indenture and
- immediately after this transaction, no default event, and no event which,
after notice or lapse of time or both, would become a default event, is
continuing.
DEFAULT EVENTS
Default events. The indenture defines a default event as:
- our failure to pay the principal amount at maturity, accrued cash
interest (if the default continues for 31 days) or original issue
discount or other amounts due on the debentures, whether or not payment
is prohibited by the subordination provisions of the debentures and the
indenture
- our failure to deliver shares of Series A common stock when required upon
conversion of a debenture, and failure to remedy this within 10 days
after the required delivery date
- our failure to comply with any other agreement in the debentures or the
indenture, after we receive notice of default from the trustee or holders
of at least 25% of the aggregate principal amount at maturity of the
debentures then outstanding, and our failure to cure this failure within
90 days after we receive the notice
- default on any bond, debenture, note or indebtedness for money borrowed
in excess of $10,000,000 which results in that debt being accelerated,
without this debt being discharged or the acceleration being rescinded or
annulled within 20 days after we receive notice of default from the
trustee or at least of the aggregate principal amount at maturity of
debentures then outstanding or
- designated events of bankruptcy or insolvency.
Notice. Within 90 days after a default event, the trustee will mail notice
of all defaults of which it is aware to the debenture holders, unless these
defaults have been cured or waived prior to the mailing. However, the trustee
may elect to withhold notice of a default (other than a payment default) if the
trustee determines in good faith that this is in the interests of the debenture
holders.
Remedies upon default events. If a default event occurs and continues, the
trustee or the holders of at least 25% in principal amount at maturity of the
debentures outstanding may declare the debentures to be due and payable
immediately. If we experience bankruptcy or insolvency, the debentures
automatically become immediately due and payable. If our obligations under the
debentures have accelerated, we cannot make any payment until the earlier of our
payment in full of all outstanding senior debt or 120 days after the
acceleration, subject to limited exceptions.
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Trustee. Generally, the trustee will be under no obligation to exercise any
right or power under the indenture or otherwise incur financial liability unless
the debenture holders have offered reasonable indemnity against loss, liability
or expense that is satisfactory to the trustee. We are required to furnish the
trustee with an annual statement of our defaults under the indenture, and we
must give the trustee 5 business days notice of any default.
Requirements to pursue remedies. Before any debenture holder may pursue any
remedy with respect to the debentures or the indenture, the following conditions
must be satisfied:
- the debenture holder wishing to pursue a remedy must give the trustee
written notice of a continuing default event
- the holders of at least 25% in aggregate principal amount at maturity of
the outstanding debentures must make a written request to the trustee to
pursue the remedy
- the debenture holder(s) wishing to pursue the remedy must have offered
the trustee reasonable security or indemnity against any loss, liability
or expense satisfactory to the trustee
- the trustee has not instituted the proceeding requested by the debenture
holders within 60 days after it receives the notice and
- the holders of a majority in aggregate principal amount at maturity of
the outstanding debentures not have given the trustee instructions that
are different from the original request.
However, notwithstanding these requirements, the rights of each debenture holder
to receive their principal, premium and interest on the debentures, to convert
their debentures into Series A common stock or to bring suit to enforce either
of these rights will not be impaired without each debenture holder's consent.
Waiver. The holders of a majority in aggregate principal amount at maturity
of the debentures outstanding may waive past defaults and their consequences,
except for:
- payment defaults on the debentures
- defaults on the conversion rights of the debentures or
- defaults on indenture provisions that may not be modified without the
consent of the individual debenture holder affected.
AMENDMENT OF THE INDENTURE OR DEBENTURES
We and the trustee may amend the indenture or debentures without the
consent of the debenture holders in order to cure ambiguities, omissions or
defects, make other changes that do not harm the debenture holders or make other
similar changes specified in the indenture. We and the trustee may generally
make other amendments to the indenture or debentures with the consent of the
holders of at least a majority in aggregate principal
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amount at maturity of the debentures currently outstanding. However, we must
obtain the consent of all debenture holders to make the following amendments:
- reduce the principal amount at maturity, original issue discount or cash
interest due on the debentures, extend the stated maturity of the
debentures or change the form of consideration in which the debentures
are payable
- reduce the principal amount at maturity of debentures whose holders must
consent to an amendment or waiver under the indenture or modify the
indenture provisions relating to amendments or waivers
- make any change that harms the right to convert any debenture or any
option to require us to purchase a debenture
- modify the subordination provisions of the indenture in a manner adverse
to the debenture holders or
- impair the right to sue to enforce any payment on or conversion of the
debentures.
In addition, any amendment that would harm the rights of senior debt holders
requires the consent of the senior debt holders under the terms of the relevant
senior debt.
DISCHARGE OF THE INDENTURE
Our obligations under the indenture will be discharged if:
- all outstanding debentures are delivered to the trustee for cancellation
or
- if we deliver cash or Series A common stock sufficient to pay off all
outstanding debentures and sums due under the indenture with the trustee,
the paying agent or the conversion agent after the debentures have become
due and payable.
NO RECOURSE AGAINST OTHERS
The indenture provides that a director, officer, employee or stockholder of
At Home shall not have any liability for any of our obligations under the
debentures or the indenture or claims based on these obligations.
DESTRUCTION, LOSS OR THEFT OF DEBENTURES
In case one of your debentures becomes mutilated, defaced, destroyed, lost
or stolen, we will execute and upon our request the trustee will authenticate
and deliver a new debenture with the same maturity and date of issuance, an
equal principal amount at maturity, registered in the same manner and dated the
date of its authentication. You must provide us with evidence that you owned the
debenture and evidence of its destruction, loss or theft. You must also provide
us and the trustee with a security or indemnity for the substituted debenture.
You may have to pay for fees and expenses for issuing the substituted debenture.
REGISTRATION RIGHTS
We entered into a registration rights agreement with the initial purchasers
of the debentures. If you sell debentures or Series A common stock issued upon
conversion of the debentures under this registration statement, you generally
will be required to be named as
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a selling securityholder in this prospectus, deliver this prospectus to
purchasers and be bound by applicable provisions of the registration rights
agreement, including some indemnification provisions.
In this agreement, we agreed to file a registration statement that includes
this prospectus with the Securities and Exchange Commission by March 29, 1999.
We agreed to use all reasonable efforts to cause this registration statement to
become effective as promptly as practicable, but before June 28, 1999. We agreed
to keep this registration statement effective until the earlier of December 28,
2000, or the date on which all securities offered under this prospectus have
been sold by the selling securityholders.
Suspension of this offering. We may suspend the use of this prospectus if
we learn of any event including pending corporate development or public filings
with the Securities and Exchange Commission, that causes this prospectus to
include an untrue statement of a material fact or omits to state a material fact
required to be stated in the prospectus or necessary to make the statements in
the prospectus not misleading in the light of the circumstances then existing.
If this type of event occurs, a prospectus supplement or post-effective
amendment, if required, will be distributed to each selling securityholder. Each
selling securityholder has agreed not to trade securities from the time the
selling securityholder receives notice from us of this type of event until the
selling securityholder receives a prospectus supplement or amendment. This time
period may not exceed forty-five days in any three month period or ninety days
in any twelve month period.
Liquidated damages. We also agreed to pay liquidated damages to holders of
debentures and shares of Series A common stock issued upon conversion of the
debentures if the registration statement is not timely filed or made effective
or if the prospectus is unavailable for the periods in excess of those permitted
above. As of June 28, 1999, we owed liquidated damages to the debenture holders
because we did not file the registration statement before March 29, 1999. You
should refer to the indenture for a description of these liquidated damages.
GOVERNING LAW
The indenture and the debentures are governed by and will be construed in
accordance with the laws of the State of New York.
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UNITED STATES FEDERAL INCOME TAX CONSIDERATIONS
The following is a summary of some United States federal income tax
considerations relevant to holders of debentures. This summary is based upon the
Internal Revenue Code of 1986, as amended, Treasury Regulations, Internal
Revenue Service rulings and judicial decisions now in effect, all of which are
subject to change (possibly with retroactive effect) or different
interpretations. The Internal Revenue Service, or IRS, could challenge one or
more of the conclusions described in this prospectus, and we have not obtained,
nor do we intend to obtain, a ruling from the IRS with respect to the United
States federal income tax consequences of acquiring or holding debentures. This
discussion does not purport to deal with all aspects of United States federal
income taxation that may be relevant to a particular debenture holder in light
of the holder's circumstances (for example, persons subject to the alternative
minimum tax provisions of the Internal Revenue Code). Also, it is not intended
to be wholly applicable to all categories of investors, some of which (such as
dealers in securities, banks, insurance companies, tax-exempt organizations,
foreign persons and persons holding debentures as part of a hedging or
conversion transaction or straddle or other risk reduction transaction) may be
subject to special rules. The discussion also does not discuss the tax
consequences arising under the laws of any state, local or foreign jurisdiction.
In addition, this discussion is limited to persons who will hold the debentures
and common stock into which the debentures are converted as "capital assets"
within the meaning of Section 1221 of the Internal Revenue Code.
PERSONS CONSIDERING THE PURCHASE, OWNERSHIP, CONVERSION OR OTHER
DISPOSITION OF DEBENTURES SHOULD CONSULT THEIR OWN TAX ADVISORS REGARDING THE
FEDERAL INCOME TAX CONSEQUENCES AND THE CONSEQUENCES ARISING UNDER THE LAWS OF
ANY STATE, LOCAL OR FOREIGN TAXING JURISDICTION.
INTEREST AND ORIGINAL ISSUE DISCOUNT
Holders of the debentures will be required to include payments of
"qualified stated interest" (as defined below) received thereon in taxable
income in accordance with their respective methods of accounting for federal
income tax purposes. In addition, the debentures will be issued with a
substantial amount of "original issue discount" for federal income tax purposes.
A debenture holder generally is required to include original issue discount in
gross income as it accrues, regardless of the holder's method of accounting for
federal income tax purposes. Accordingly, each holder will be required to
include amounts in gross income without regard to when the cash or other
payments to which this income is attributable are received.
The amount of original issue discount with respect to each debenture is an
amount equal to the excess of the "stated redemption price at maturity" of each
debenture over its issue price (the initial price at which a substantial number
of debentures are sold for money). The stated redemption price at maturity of
each debenture will include all cash payments including principal and interest,
required to be made on the debenture until maturity, other than "qualified
stated interest" payments. "Qualified stated interest" is stated interest that
is required to be paid at least annually during the term of the debenture.
Stated interest on the debentures will be treated as qualified stated interest.
A holder of a debenture must include in gross income for federal income tax
purposes the sum of the daily portions of original issue discount with respect
to the debenture for each day during the taxable year or portion of a taxable
year on which each holder holds the debenture ("accrued original issue
discount"). The daily portion is determined by
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allocating to each day of an accrual period a pro rata portion of an amount
equal to the adjusted issue price of the debenture at the beginning of the
accrual period multiplied by the yield to maturity of the debenture. The accrual
period of a debenture may be of any length and may vary in length over the term
of the debenture, provided that each accrual period is no longer than one year
and each scheduled payment of principal or interest occurs at the end of an
accrual period or on the first day of an accrual period. The adjusted issue
price of the debenture at the start of any accrual period is the issue price of
the debenture increased by the accrued original issue discount for each prior
accrual period. Under these rules, debenture holders will have to include in
gross income increasingly greater amounts of original issue discount in each
successive accrual period. Any amount included in income as original issue
discount will increase a holder's tax basis in the debenture.
If your purchase price for a debenture exceeds the "adjusted issue price"
(the sum of the issue price of the debenture and the aggregate amount of
original issue discount includable in the gross income of all holders of the
debenture for periods before your acquisition of the debenture reduced by the
amount of any payment previously made on the debenture other than a payment of
qualified stated interest, the excess (referred to as "acquisition premium") may
offset the amount of original issue discount otherwise includible in your
taxable income unless the purchase price also exceeds the sum of all amounts
payable on the debenture after the purchase date other than payments of
qualified stated interest, i.e., the debenture is purchased at a "premium." The
above described rules for inclusion in gross income of original issue discount
do not apply to holders who have purchased the debentures at a premium.
We will be required to furnish annually to the IRS and to some noncorporate
debenture holders information regarding the amount of the original issue
discount attributable to that year. For this purpose, we will use a six-month
accrual period which ends on the day in each calendar year corresponding to the
maturity day of the debenture or the date six months before the maturity date.
MARKET DISCOUNT
The market discount rules discussed below will apply if, subject to a de
minimis exception, the "revised issue price" of the debenture exceeds your tax
basis in the debenture immediately after your acquisition of the debenture. The
revised issue price is the sum of the issue price of the debenture and the
aggregate amount of the original issue discount includible in the gross income
of all holders for periods before the acquisition of the bond by the taxpayer
(determined without regard to section 1272(a)(7) or (b)(4)) or, in the case of a
tax-exempt obligation, the aggregate amount of the original issue discount which
accrued in the manner provided by section 1272(a) (determined without regard to
paragraph (7) thereof) during periods before the acquisition of the bond by the
taxpayer.
If a debenture has market discount, then some or all of any gain realized
upon a subsequent disposition (including a sale or a taxable exchange) or
redemption at maturity of the debenture may be treated as ordinary income.
The amount of market discount treated as having accrued will be determined
either on a ratable basis, or if you so elect, on a constant interest method.
Upon any subsequent disposition (including a gift or redemption at maturity) of
the debenture (other than in connection with designated nonrecognition
transactions but not including conversion of the
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debenture), the lesser of the gain on the disposition (or appreciation in the
case of a gift) or the portion of the market discount that accrued while the
debenture was held by you will be treated as ordinary interest income at the
time of disposition.
In lieu of including accrued market discount in income at the time of
disposition, you may elect to include market discount in income currently.
Unless you so elect, you may be required to defer a portion of any interest
expense that may otherwise be deductible on any indebtedness incurred or
maintained to purchase or carry the debenture until you dispose of the
debenture. The election to include market discount in income currently, once
made, is irrevocable and applies to all market discount obligations acquired on
or after the first day of the first taxable year to which the election applies
and may not be revoked without the consent of the IRS.
A Department of Treasury legislative proposal would require accrual basis
taxpayers to include market discount in income as it accrues. The holder's yield
for purposes of determining and accruing market discount would be limited to the
greater of (1) the original yield-to-maturity of the debt instrument plus 5
percentage points, or (2) the applicable Federal rate at the time the holder
acquired the debt instrument plus 5 percentage points. The proposal would be
effective for debt instruments acquired on or after the date of enactment.
Gain on the disposition (including a redemption) of a debenture that has
accrued market discount is treated as ordinary income, and not as capital gain,
to the extent of the accrued market discount
BOND PREMIUM
Generally the holder of a debenture has bond premium if the holder's basis
in the debenture (reduced by, in the case of a convertible debenture, the value
attributable to the conversion feature of the debenture) exceeds the stated
redemption price on maturity of the debenture. If the holder elects, an
allocable portion of the bond premium may be used to offset interest income on
the debenture. Pursuant to Treasury Regulations, the value of the conversion
feature may be determined under any reasonable method.
DISPOSITION OR CONVERSION
Except as described below, gain or loss upon a sale or other disposition of
a debenture will generally be capital gain or loss (which will be long term if
the debenture is held for more than one year). Net capital gains of individuals
are, under some circumstances, taxed at lower rates than items of ordinary
income. In the case of individuals, long-term capital gains with respect to
property held for more than one year are taxed at a maximum 20% federal tax
rate. Net capital gain of corporations is taxed the same as ordinary income,
with a maximum federal tax rate of 35%.
A holder's conversion of a debenture into Series A common stock is
generally not a taxable event (except with respect to cash received in lieu of a
fractional share). The holder's obligation to include in gross income the daily
portions of original issue discount with respect to a debenture will terminate
prospectively on the date of conversion. The holder's basis in the common stock
received on conversion of a debenture will be the same as the holder's basis in
the debenture at the time of conversion (exclusive of any tax basis allocable to
a fractional share), and the holding period for the common stock received on
conversion will include the holding period of the debenture converted (assuming
each is
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held as a capital asset), except that the holder's holding period for common
stock treated as received for accrued original issue discount may commence on
the day following the date of conversion.
If a holder elects to exercise its option to tender a debenture to us on a
purchase date and we issue Series A common stock in satisfaction of all or part
of the purchase price, the exchange of the debenture for Series A common stock
should qualify as a reorganization or an otherwise nontaxable transaction for
federal income tax purposes. If the purchase price is paid solely in Series A
common stock, neither gain nor loss would generally be recognized by the holder,
except as described below with respect to a fractional share. If the purchase
price is paid in a combination of shares of Series A common stock and cash
(other than cash received in lieu of a fractional share), gain (but not loss)
realized by the holder would be recognized, but only to the extent the gain does
not exceed the cash. A holder's tax basis in the Series A common stock received
in the exchange will be the same as the holder's tax basis in the debenture
tendered to us in exchange therefor (exclusive of any tax basis allocable to a
fractional share interest as described below), decreased by the amount of cash
(other than cash received in lieu of a fractional share), if any, received in
exchange and increased by the amount of any gain recognized by the holder on the
exchange (other than gain with respect to a fractional share). The holding
period for Series A common stock received in the exchange will include the
holding period for the debenture tendered to us in exchange therefor (assuming
each is held as a capital asset), except that the holding period for Series A
common stock treated as received for accrued original issue discount may
commence on the day following the purchase date.
Cash received in lieu of a fractional share of Series A common stock upon
conversion of a debenture or upon a put of a debenture to us on a purchase date
should be treated as a payment in exchange for the fractional share.
Accordingly, if the Series A common stock is a capital asset in the hands of a
debenture holder, the receipt of cash in lieu of a fractional share of Series A
common stock should generally result in capital gain or loss, if any, measured
by the difference between the cash received for the fractional share and the
holder's basis in the fractional share.
If a debenture holder elects to exercise its option to tender a debenture
to us on a purchase date or a change in control purchase date and we deliver
cash in satisfaction of the purchase price, the holder would recognize gain or
loss, measured by the difference between the amount of cash transferred by us to
the holder and the holder's basis in the tendered debenture. Gain or loss
recognized by the holder would generally be capital gain or loss.
If a holder sells a debenture in the market, it will be a taxable sale with
the same results to the holder as a tender to us with a payment in cash.
Gain or loss upon a sale or other disposition of the Series A common stock
received upon conversion of a debenture or in satisfaction of the purchase price
of a debenture put to us generally will be capital gain or loss if the Series A
common stock is held as a capital asset (which gain or loss will be long-term if
the holding period for the common stock is more than one year). In the case of
individuals, long-term capital gains with respect to property held for more than
one year are taxed at a maximum 20% federal tax rate. Net capital gain of
corporations is taxed the same as ordinary income, with a maximum federal tax
rate of 35%.
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CONSTRUCTIVE DIVIDEND
If at any time we make a distribution of property to our stockholders that
would be taxable to the stockholders as a dividend for United States federal
income tax purposes and, in accordance with the anti-dilution provisions of the
debentures, the conversion rate of the debentures is increased, the increase may
be deemed to be the payment of a taxable dividend to holders of the debentures.
For example, an increase in the conversion rate in the event of distributions of
evidences of indebtedness or assets of us or an increase in the event of an
extraordinary cash dividend will generally result in deemed dividend treatment
to holders of the debentures, but generally an increase in the event of stock
dividends or the distribution of rights to subscribe for common stock will not.
BACKUP WITHHOLDING AND INFORMATION REPORTING
Information reporting will apply to payments of interest or dividends, if
any, made by us on, or the proceeds of the sale or other disposition of, the
debentures or shares of Series A common stock with respect to some noncorporate
debenture holders, and backup withholding at a rate of 31% may apply unless the
recipient of the payment supplies a taxpayer identification number, certified
under penalties of perjury, as well as designated other information or otherwise
establishes an exemption from backup withholding. Any amount withheld under the
backup withholding rules will be allowable as a credit against the holder's
federal income tax, provided that the required information is provided to the
Internal Revenue Service.
TAX EVENT
Our modification of the terms of the debentures upon designated tax events,
as described in "Description of Debentures -- We may convert the debentures to
semiannual coupon debentures upon specified tax events," could possibly alter
the timing of income recognition by the holders of the debentures with respect
to the semiannual payments of interest due on the debentures after the option
exercise date.
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SELLING SECURITYHOLDERS
The following table presents information with respect to the selling
securityholders and the principal amounts of debentures and shares of our Series
A common stock issuable upon the conversion of these debentures that they may
offer under this prospectus. The term selling securityholders includes donees
and pledgees selling securities received from a named selling securityholder
after the date of this prospectus. The debentures were originally issued by us
and sold by an initial purchaser, in a transaction exempt from the registration
requirements of the Securities Act, to qualified institutional buyers. To our
knowledge, none of the selling securityholders has, or within the past three
years has had, any position, office or other material relationship with us or
any of our predecessors or affiliates.
The principal amounts of debentures provided in the table below is based on
information provided to us by each of the selling securityholders as of April
30, 1999, and the percentages are based on $437,000,000 principal amount at
maturity of debentures outstanding. The number of shares of Series A common
stock that may be sold is calculated based on the conversion ratio of 13.10
shares of Series A common stock per $1,000 principal amount at maturity of a
debenture. If each selling securityholder named below converted all of its
debentures, each would own less than 1% of our outstanding Series A common
stock, based on 331,178,234 shares of Series A common stock outstanding as of
June 15, 1999.
Since the date on which each provided this information, each selling
securityholder identified below may have sold, transferred or otherwise disposed
of all or a portion of their debentures in a transaction exempt from the
registration requirements of the Securities Act. Information concerning the
selling securityholders may change from time to time and any changed information
will be set forth in supplements to this prospectus to the extent required. In
addition, the conversion ratio, and therefore the number of shares of our Series
A common stock issuable upon conversion of the debentures, is subject to
adjustment. Accordingly, the number of shares of Series A common stock issuable
upon conversion of the debentures may increase or decrease.
The selling securityholders may from time to time offer and sell any or all
of the securities under this prospectus. Because the selling securityholders are
not obligated to sell the debentures or the Series A common stock issuable upon
the conversion of the debentures, we cannot estimate the amount of the
debentures or how many shares of our Series A common that each selling
securityholder will beneficially own after this offering.
<TABLE>
<CAPTION>
PRINCIPAL AMOUNT OF PERCENTAGE NUMBER OF SHARES OF
DEBENTURES OF SERIES A COMMON
BENEFICIALLY OWNED DEBENTURES STOCK THAT MAY BE
NAME THAT MAY BE SOLD OUTSTANDING SOLD
---- ------------------- ----------- -------------------
<S> <C> <C> <C>
AIG/National Union Fire Insurance --
FRIC............................... $ 1,435,000 * 18,798
Alexandra Global Investment Fund I
LTD................................ $ 1,000,000 * 13,100
Aloha Airlines Non-Pilots Pension
Trust.............................. $ 350,000 * 4,585
Aloha Airlines Pilots Retirement
Trust.............................. $ 195,000 * 2,554
Alta Partners Holdings, LDC.......... $ 3,000,000 * 39,300
Angelo, Gordon & Co., L.P............ $ 1,500,000 * 19,650
</TABLE>
36
<PAGE> 37
<TABLE>
<CAPTION>
PRINCIPAL AMOUNT OF PERCENTAGE NUMBER OF SHARES OF
DEBENTURES OF SERIES A COMMON
BENEFICIALLY OWNED DEBENTURES STOCK THAT MAY BE
NAME THAT MAY BE SOLD OUTSTANDING SOLD
---- ------------------- ----------- -------------------
<S> <C> <C> <C>
Argent Classic Convertible Arbitrage
Fund L.P........................... $ 5,500,000 1.3% 72,050
Argent Classic Convertible Arbitrage
Fund (Bermuda) L.P................. $ 7,500,000 1.7% 98,250
Aristela International, Ltd.......... $ 1,500,000 * 19,650
Arpeggio Fund, LP.................... $ 500,000 * 6,550
Associated Electric & Gas Insurance
Services Ltd....................... $ 700,000 * 9,170
BancBoston Robertson Stephens........ $ 250,000 * 3,275
Bancroft Convertible Fund, Inc....... $ 500,000 * 6,550
Black Diamond Offshore, Ltd.......... $ 1,856,000 * 24,313
C&H Sugar Company.................... $ 375,000 * 4,912
David Lipscomb University General
Endowment.......................... $ 85,000 * 1,113
Delaware PERS........................ $ 2,740,000 * 35,894
Delphi Foundation, Inc............... $ 29,000 * 379
Deutsche Bank Securities............. $ 92,475,000 21.2% 1,211,422
Double Black Diamond Offshore LDC.... $ 3,144,000 * 41,186
Ellsworth Convertible Growth and
Income Fund Inc.................... $ 500,000 * 6,550
Equitable Life Assurance Separate
Account Balanced................... $ 135,000 * 1,768
Equitable Life Assurance Separate
Account Convertibles............... $ 2,000,000 * 26,200
Fidelity Financial Trust; Fidelity
Convertible Securities Fund........ $ 7,600,000 1.7% 99,560
The First Foundation................. $ 325,000 * 4,257
GLG Market Neutral Fund.............. $ 5,000,000 1.1% 65,500
GLG Trust Growth & Income Series..... $ 2,000,000 * 26,200
General Motors Employees Global Group
Pension Trust...................... $ 8,160,000 1.9% 106,896
General Motors Foundation............ $ 195,000 * 2,554
General Motors Insurance
Corporation........................ $ 1,616,000 * 21,169
Goldman Sachs & Co................... $ 1,440,000 * 18,864
Gryphon Domestic III, LLC............ $ 2,000,000 * 26,200
HBK Cayman L.P....................... $ 4,095,000 * 53,644
HBK Offshore Fund Ltd................ $ 7,605,000 1.7% 99,625
Hawaiian Airlines Employees Pension
Plan -- IAM........................ $ 300,000 * 3,930
Hawaiian Airlines Pension Plan for
Salaried Employees................. $ 75,000 * 982
Hawaiian Airlines Pilots Retirement
Plan............................... $ 460,000 * 6,026
Hudson River Trust Balanced
Account............................ $ 1,575,000 * 20,632
Hudson River Trust Growth & Income
Account............................ $ 2,820,000 * 36,942
</TABLE>
37
<PAGE> 38
<TABLE>
<CAPTION>
PRINCIPAL AMOUNT OF PERCENTAGE NUMBER OF SHARES OF
DEBENTURES OF SERIES A COMMON
BENEFICIALLY OWNED DEBENTURES STOCK THAT MAY BE
NAME THAT MAY BE SOLD OUTSTANDING SOLD
---- ------------------- ----------- -------------------
<S> <C> <C> <C>
Hudson River Trust Growth
Investors.......................... $ 1,325,000 * 17,357
ICI American Holdings Trust.......... $ 1,175,000 * 15,392
Investcorp SAM Fund Limited.......... $ 3,500,000 * 45,850
J.M. Hull Associates, L.P............ $ 200,000 * 2,620
JMG Convertible Investments, L.P..... $ 8,008,000 1.8% 104,904
Jackson Investment Fund Ltd.......... $ 6,422,000 1.5% 84,128
Julius Back Securities............... $ 600,000 * 7,860
Kapiolani Medical Center............. $ 650,000 * 8,515
MainStay VP Convertible Portfolio.... $ 1,500,000 * 19,650
McMahan Securities Company, L.P...... $ 196,000 * 2,567
Memphis Light, Gas & Water Retirement
Fund............................... $ 1,340,000 * 17,554
Merrill Lynch Pierce Fenner & Smith
Inc................................ $ 4,292,000 * 56,225
MichaelAngelo L.P.................... $ 6,750,000 1.5% 88,425
Morgan Stanley Dean Witter........... $ 5,000,000 1.1% 65,500
Morgan Stanley Dean Witter
Convertible Securities Trust....... $ 4,500,000 1.0% 58,950
Nalco Chemical Company............... $ 600,000 * 7,860
NationsBanc Montgomery Securities.... $ 4,000,000 * 52,400
Pell Rudman Trust Co................. $ 1,075,000 * 14,082
Putnam Advisory Company, Inc......... $ 422,000 * 5,528
Putnam Investment Management, Inc.... $ 4,132,000 * 54,129
Queens Health Plan................... $ 120,000 * 1,572
R2 Investments, LDC.................. $ 18,900,000 4.3% 247,590
Ramius Fund Ltd...................... $ 10,500,000 2.4% 137,550
Ramius, L.P.......................... $ 5,220,000 1.2% 68,382
Raphael, L.P......................... $ 3,250,000 * 42,575
RCG Baldwin, L.P..................... $ 3,250,000 * 42,575
Rhapsody Fund, LP.................... $ 500,000 * 6,550
SG Cowen Securities Corp............. $ 10,000,000 2.3% 131,000
Salomon Smith Barney Inc............. $ 2,175,000 * 28,492
Soundshore Holdings Ltd.............. $ 5,850,000 1.3% 76,635
Soundshore Opportunity Holding Fund
Ltd................................ $ 2,000,000 * 26,200
Southern Farm Bureau Life
Insurance -- FRIC.................. $ 1,550,000 * 20,305
Starvest Combined Portfolio.......... $ 1,925,000 * 25,217
State of Oregon Equity............... $ 13,500,000 3.1% 176,850
State of Oregon/SAIF Corporation..... $ 9,150,000 2.1% 119,865
Triarc Companies, Inc................ $ 780,000 * 10,218
Triton Capital Investments, Ltd...... $ 15,907,000 3.6% 208,381
Warburg Dillon Read.................. $ 8,649,000 2.0% 113,301
Zeneca Holdings Trust................ $ 1,175,000 * 15,392
</TABLE>
38
<PAGE> 39
<TABLE>
<CAPTION>
PRINCIPAL AMOUNT OF PERCENTAGE NUMBER OF SHARES OF
DEBENTURES OF SERIES A COMMON
BENEFICIALLY OWNED DEBENTURES STOCK THAT MAY BE
NAME THAT MAY BE SOLD OUTSTANDING SOLD
---- ------------------- ----------- -------------------
<S> <C> <C> <C>
Other holders of debentures or future
transferees of these holders
(**)............................... 94,377,000 21.6% 1,236,338
</TABLE>
- -------------------------
* Less than 1%
** Assumes that any other holders of debentures, or any future transferees of
these holders, do not beneficially own any Series A common stock other than
the Series A common stock issuable upon conversion of the debentures at the
initial conversion rate
39
<PAGE> 40
PLAN OF DISTRIBUTION
The selling securityholders will be offering and selling all securities
offered and sold under this prospectus. We will not receive any of the proceeds
of the sales of these securities. We entered into a registration rights
agreement dated December 28, 1998 with the initial purchasers of the debentures.
Securities may only be offered or sold under this prospectus pursuant to the
terms of the registration rights agreement. However, selling securityholders may
resell all or a portion of the securities in open market transactions in
reliance upon Rule 144 or Rule 144A under the Securities Act, provided they meet
the criteria and conform to the requirements of one of these rules.
Who may sell and applicable restrictions. The securities may be sold
directly by the selling securityholders from time to time. The selling
securityholders may decide not to sell any of the securities offered under this
prospectus, and selling stockholders could transfer, devise or gift these
securities by other means.
Alternatively, the selling securityholders may from time to time offer the
securities through brokers, dealers or agents that may receive compensation in
the form of discounts, concessions or commissions from the selling
securityholders and/or the purchasers of the securities for whom they may act as
agent. In effecting sales, broker-dealers that are engaged by the selling
securityholders may arrange for other broker-dealers to participate. The selling
securityholders and any brokers, dealers or agents who participate in the
distribution of the securities may be deemed to be underwriters, and any profits
on the sale of the securities by them and any discounts, commissions or
concessions received by any broker, dealer or agent might be deemed to be
underwriting discounts and commissions under the Securities Act. To the extent
the selling securityholders may be deemed to be underwriters, the selling
securityholders may be subject to statutory liabilities, including, but not
limited to, Sections 11, 12 and 17 of the Securities Act and Rule 10b-5 under
the Exchange Act.
Prospectus delivery. Because selling securityholders may be deemed to be
underwriters within the meaning of Section 2(11) of the Securities Act, they
will be subject to the prospectus delivery requirements of the Securities Act.
At any time a particular offer of the securities is made, a revised prospectus
or prospectus supplement, if required, will be distributed which will disclose:
- the name of the selling securityholder and of any participating
underwriters, broker-dealers or agents
- the aggregate amount and type of securities being offered
- the price at which the securities were sold and other material terms of
the offering
- any discounts, commissions, concessions and other items constituting
compensation from the selling securityholders and any discounts,
commissions or concessions allowed or reallowed or paid to dealers and
- that the participating broker-dealers did not conduct any investigation
to verify the information in this prospectus or incorporated in this
prospectus by reference.
The prospectus supplement or a post-effective amendment will be filed with the
Securities and Exchange Commission to reflect the disclosure of additional
information with respect to the distribution of the securities. In addition, if
we receive notice from a selling
40
<PAGE> 41
securityholder that a donee or pledgee intends to sell more than 500 shares of
Series A common stock, a supplement to this prospectus will be filed.
Manner of sales. The selling securityholders will act independently of the
company in making decisions with respect to the timing, manner and size of each
sale. Sales may be made over the Nasdaq National Market or the over-the-counter
market. The shares may be sold at then prevailing market prices, at prices
related to prevailing market prices, at fixed prices or at negotiated prices.
The securities may be sold according to one or more of the following
methods:
- a block trade in which the broker or dealer so engaged will attempt to
sell the securities as agent but may position and resell a portion of the
block as principal to facilitate the transaction
- purchases by a broker or dealer as principal and resale by the broker or
dealer for its account as allowed under this prospectus
- ordinary brokerage transactions and transactions in which the broker
solicits purchasers
- an exchange distribution under the rules of the exchange
- face-to-face transactions between sellers and purchasers without a
broker-dealer and
- by writing options.
SOME PERSONS PARTICIPATING IN THIS OFFERING MAY ENGAGE IN TRANSACTIONS THAT
STABILIZE, MAINTAIN OR OTHERWISE AFFECT THE PRICE OF THE SECURITIES, INCLUDING
THE ENTRY OF STABILIZING BIDS OR SYNDICATE COVERING TRANSACTIONS OR THE
IMPOSITION OF PENALTY BIDS. The selling securityholders and any other person
participating in a distribution will be subject to applicable provisions of the
Exchange Act and the rules and regulations thereunder including Regulation M.
This regulation may limit the timing of purchases and sales of any of the
securities by the selling securityholders and any other person. The anti-
manipulation rules under the Exchange Act may apply to sales of securities in
the market and to the activities of the selling securityholders and their
affiliates. Furthermore, Regulation M of the Exchange Act may restrict the
ability of any person engaged in the distribution of the securities to engage in
market-making activities with respect to the particular securities being
distributed for a period of up to five business days before the distribution.
All of the foregoing may affect the marketability of the securities and the
ability of any person or entity to engage in market-making activities with
respect to the securities.
Hedging and other transactions with broker-dealers. In connection with
distributions of the securities, the selling securityholders may enter into
hedging transactions with broker-dealers. In connection with these transactions,
broker-dealers may engage in short sales of the registered securities in the
course of hedging the positions they assume with selling securityholders. The
selling securityholders may also sell securities short and redeliver the
securities to close out short positions. The selling securityholders may also
enter into option or other transactions with broker-dealers which require the
delivery to the broker-dealer of the registered securities. The broker-dealer
may then resell or transfer these securities under this prospectus. A selling
stockholder may also loan or pledge the registered securities to a broker-dealer
and the broker-dealer may sell the securities so
41
<PAGE> 42
loaned or, upon a default, the broker-dealer may effect sales of the pledged
securities under this prospectus.
Expenses associated with registration. We have agreed to pay substantially
all of the expenses of registering the securities under the Securities Act and
of compliance with blue sky laws, including registration and filing fees,
printing and duplication expenses, administrative expenses, legal and accounting
fees, fees for one legal counsel retained by the selling securityholders and
fees of the trustee under the indenture pursuant to which we originally issued
the securities. If the debentures or the underlying Series A common stock are
sold through underwriters or broker-dealers, the selling securityholders will be
responsible for underwriting discounts, underwriting commissions and agent
commissions.
Indemnification and contribution. In the registration rights agreement, we
and the selling securityholders have agreed to indemnify or provide contribution
to each other and specified other persons against some liabilities in connection
with the offering of the securities, including liabilities arising under the
Securities Act. The selling securityholders may also agree to indemnify any
broker-dealer or agent that participates in transactions involving sales of the
securities against some liabilities, including liabilities arising under the
Securities Act.
LEGAL MATTERS
Fenwick & West LLP, Palo Alto, California will provide us with an opinion
as to legal matters in connection with the debentures and the Series A common
stock. Winthrop, Stimson, Putnam & Roberts, New York, New York, will provide an
opinion as to legal matters related to the laws of the State of New York in
connection with the debentures.
EXPERTS
Ernst & Young LLP, independent auditors, have audited our consolidated
financial statements included in our annual report on Form 10-K for the year
ended December 31, 1998, as amended, as set forth in their report, which is
incorporated by reference in this prospectus and elsewhere in the registration
statement. Our financial statements are incorporated by reference in reliance on
the report of Ernst & Young LLP given on their authority as experts in
accounting and auditing.
FORWARD-LOOKING STATEMENTS
This prospectus contains forward-looking statements within the meaning of
Section 27A of the Securities Act and Section 21E of the Exchange Act relating
to future events or financial results. These forward-looking statements include
statements indicating that we believe, we expect or we anticipate that events
may occur or trends may continue, and similar statements relating to future
events or financial results. These forward-looking statements are subject to
material risks and uncertainties as indicated under the caption "Risk Factors."
Actual results could vary materially as a result of a number of factors
including those disclosed in "Risk Factors" and elsewhere in this prospectus.
42
<PAGE> 43
WHERE YOU CAN FIND MORE INFORMATION
The following documents that we have filed with the Securities and Exchange
Commission are incorporated into this prospectus by reference:
- the registration statement on Form S-3 of which this prospectus is a
part, and the exhibits filed with this registration statement and
incorporated into this registration statement by reference
- our annual report on Form 10-K for the fiscal year ended December 31,
1998, as amended on March 31, 1999 and on April 27, 1999
- the registration of our Series A common stock on Form 8-A filed on June
13, 1997
- all other reports filed under Section 13(a) or 15(d) of the Exchange Act
since December 31, 1998, including: (1) our quarterly reports on Form
10-Q for the quarters ended March 31, June 30 and September 30, 1998,
each as amended on February 8, 1999; (2) our quarterly report on Form
10-Q for the quarter ended March 31, 1999; (3) our current report on Form
8-K filed on January 14, 1999, as amended on February 19, 1999; (4) our
two current reports on Form 8-K filed on January 21, 1999; (5) our
current report on Form 8-K filed on February 19, 1999; (6) our current
report on Form 8-K filed on April 8, 1999; and (7) our current report on
Form 8-K filed on June 14, 1999 and
- all other information that we file with the Commission pursuant to
Sections 13(a), 13(c), 14 or 15(d) of the Exchange Act after the date of
this prospectus and before the termination of this offering.
To the extent that any statement in this prospectus is inconsistent with
any statement that is incorporated by reference, the statement in this
prospectus shall control. The incorporated statement shall not be deemed, except
as modified or superceded, to constitute a part of this prospectus or the
registration statement.
Because we are subject to the informational requirements of the Exchange
Act, we file reports and other information with the Commission. Reports,
registration statements, proxy and information statements and other information
that we have filed can be inspected and copied at the public reference
facilities maintained by the Commission at Room 1024, 450 Fifth Street, N.W.,
Washington, D.C. 20549. You may obtain copies of this material from the Public
Reference Section of the Commission at 450 Fifth Street, N.W., Washington, D.C.
20549 at rates prescribed by the Commission. The public may obtain information
on the operation of the Public Reference Room by calling the Commission at
1-800-SEC-0330. The Commission also maintains a World Wide Web site that
contains reports, proxy and information statements and other information that is
filed electronically with the Commission. This web site can be accessed at
http://www.sec.gov.
We have filed with the Commission a registration statement on Form S-3
under the Securities Act with respect to the debentures and Series A common
stock offered under this prospectus. This prospectus does not contain all of the
information in the registration statement, parts of which we have omitted, as
allowed under the rules and regulations of the Commission. You should refer to
the registration statement for further information with respect to us, our
debentures and our Series A common stock. Statements contained in this
prospectus as to the contents of any contract or other document, including the
indenture and the registration rights agreement, are not necessarily complete
and, in each
43
<PAGE> 44
instance, we refer you to the copy of each contract or document filed as an
exhibit to the registration statement. Copies of the registration statement,
including exhibits, may be inspected without charge at the Commission's
principal office in Washington, D.C., and you may obtain copies from this office
upon payment of the fees prescribed by the Commission.
We will furnish without charge to each person to whom a copy of this
prospectus is delivered, upon written or oral request, a copy of the information
that has been incorporated by reference into this prospectus (except exhibits,
unless they are specifically incorporated by reference into this prospectus).
You should direct any requests for copies to At Home Corporation, 425 Broadway
Street, Redwood City, California 94063, Attention: David G. Pine, Vice President
and General Counsel, telephone: (650) 569-5000.
44
<PAGE> 45
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LOGO
AT HOME CORPORATION
$437,000,000 PRINCIPAL AMOUNT AT MATURITY
CONVERTIBLE SUBORDINATED DEBENTURES DUE 2018
SHARES OF SERIES A COMMON STOCK
ISSUABLE UPON CONVERSION OF THE DEBENTURES
-------------------------
PROSPECTUS
-------------------------
YOU SHOULD RELY ONLY ON THE INFORMATION CONTAINED IN OR INCORPORATED BY
REFERENCE IN THIS PROSPECTUS. WE HAVE NOT AUTHORIZED ANYONE TO PROVIDE YOU WITH
DIFFERENT INFORMATION. WE ARE NOT MAKING AN OFFER OF THESE SECURITIES IN ANY
STATE WHERE THE OFFER IS NOT PERMITTED. YOU SHOULD NOT ASSUME THAT THE
INFORMATION CONTAINED IN OR INCORPORATED INTO THIS PROSPECTUS BY REFERENCE IS
ACCURATE AS OF ANY DATE OTHER THAN THE DATE OF THIS PROSPECTUS.
- --------------------------------------------------------------------------------
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