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As filed with the Securities and Exchange Commission on April 10, 2000
Registration No. 333-31530
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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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AMENDMENT NO. 1
to
FORM S-3
REGISTRATION STATEMENT
Under
THE SECURITIES ACT OF 1933
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AT HOME CORPORATION
(Exact name of the Registrant as specified in its charter)
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<S> <C>
Delaware 77-0408542
(State or other jurisdiction (I.R.S. Employer
of incorporation or organization) Identification No.)
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450 Broadway Street
Redwood City, California 94063
(650) 556-5000
(Address, including zip code, and telephone number, including area code, of
the Registrant's principal executive offices)
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Kenneth A. Goldman
Chief Financial Officer
At Home Corporation
450 Broadway Street
Redwood City, California 94063
(650) 556-5000
(Name, address, including zip code, and telephone number, including area code,
of the Registrant's agent for service)
Copies to:
Jeffrey R. Vetter, Esq.
Tram T. Phi, Esq.
Benjamin G. Hadary, Esq.
Nicholas S. Khadder, Esq.
Fenwick & West LLP
Two Palo Alto Square
Palo Alto, California 94306
(650) 494-0600
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Approximate date of commencement of proposed sale to the public: From time
to time after this registration statement becomes effective.
If the only securities being registered on this form are being offered
pursuant to dividend or interest reinvestment plans, please check the
following box. [_]
If any of the securities being registered on this form are to be offered on
a delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, other then securities offered only in connection with dividend or
interest reinvestment plans, check the following box. [X]
If this form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following
box and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering. [_]
If this form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [_]
If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box. [_]
CALCULATION OF REGISTRATION FEE
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<CAPTION>
Proposed Proposed
Minimum Maximum Amount of
Title of each class of Amounts to be Aggregate Aggregate Registration
securities to be registered Registered Price Per Unit Offering Price Fee
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<S> <C> <C> <C> <C>
Series A common stock, $0.01 par value per
share.................................... 5,285,600 $33.4688(/1/) $176,902,425(/4/) $46,702.24(/2/)
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Series A common stock, $0.01 par value per
share.................................... 1,036,403(/3/) $28.5625(/4/) $ 29,602,261(/4/) $7,815
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</TABLE>
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(1) Estimated solely for the purpose of calculating the amount of the
registration fee in accordance with Rule 457(c) under the Securities Act
of 1933, as amended (the "Securities Act"), based upon the average of the
high and low prices of the Registrant's Series A common stock as reported
by the Nasdaq National Market on February 22, 2000.
(2) This registration fee was previously paid by the Registrant when it first
filed this registration statement on March 2, 2000.
(3) These additional shares of Series A common stock are being registered on
this pre-effective amendment to the registration statement.
(4) Estimated solely for the purpose of calculating the amount of the
registration fee in accordance with Rule 457(c) under the Securities Act,
based upon the average of the high and low prices of the Registrant's
Series A common stock as reported by the Nasdaq National Market on April
4, 2000.
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The Registrant hereby amends this registration statement on such date or
dates as may be necessary to delay its effective date until the Registrant
files a further amendment which specifically states that this registration
statement shall thereafter become effective in accordance with Section 8(a) of
the Securities Act of 1933 or until the registration statement shall become
effective on such date as the Securities and Exchange Commission, acting
pursuant to Section 8(a), may determine.
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<PAGE>
PROSPECTUS
[LOGO APPEARS HERE]
At Home Corporation
6,322,003 Shares of Series A Common Stock
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Excite@Home's Series A common stock trades on the Nasdaq National Market.
Last reported sale price on April 7, 2000: $29/11///16/ per share.
Trading Symbol: ATHM
The Offering
Under this prospectus, the selling stockholders named under the section
entitled "Selling Stockholders" of this prospectus may offer and sell shares of
our Series A common stock that they acquired upon our acquisition of
Worldprints.com International, Inc., Kendara, Inc. and upon payment of the
earnout in connection with our acquisition of Hartford House, Ltd.
The selling stockholders may sell their shares of Series A common stock in
the open market at prevailing market prices, or in private transactions at
negotiated prices. They may sell the shares directly, or may sell them through
underwriters, brokers or dealers. Underwriters, brokers or dealers may receive
discounts, concessions or commissions from the selling stockholders or from the
purchaser, and this compensation might be in excess of the compensation
customary in the type of transaction involved. See "Plan of Distribution."
We will not receive any of the proceeds from the sale of these shares.
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Investing in our Series A common stock involves a high degree of risk.
Please carefully consider the "Risk Factors" beginning on page 4 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 April , 2000.
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TABLE OF CONTENTS
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Forward-Looking Statements.................................................. 2
Prospectus Summary.......................................................... 3
Risk Factors................................................................ 4
Use of Proceeds............................................................. 19
Dividend Policy............................................................. 19
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Selling Stockholders........................................................ 20
Plan of Distribution........................................................ 23
Legal Matters............................................................... 25
Experts..................................................................... 25
Where You Can Find More Information......................................... 25
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FORWARD-LOOKING STATEMENTS
We make many statements in this prospectus under the caption "Risk Factors"
and elsewhere that are forward-looking statements within the meaning of Section
27A of the Securities Act and Section 21E of the Exchange Act. These statements
relate to our future plans, objectives, expectations and intentions. We may
identify these statements by the use of words such as "believe," "expect,"
"anticipate," "intend" and "plan" and similar expressions. These forward-
looking statements involve risks and uncertainties. Our actual results could
differ materially from those anticipated in these forward-looking statements as
a result of various factors, including those we discuss in "Risk Factors" and
elsewhere in this prospectus. These forward-looking statements speak only as of
the date of this prospectus, and we caution you not to rely on these statements
without also considering the risks and uncertainties associated with these
statements and our business.
@Home, Excite, Excite@Home, Excite Network, MatchLogic and the @ball logo
are trademarks of At Home Corporation and are registered in certain
jurisdictions. Other trademarks and tradenames appearing in this prospectus are
the property of their respective holders.
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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 shares in this offering. You should read the
entire prospectus carefully. Unless the context otherwise requires, the terms
we, our, us and Excite@Home refer to At Home Corporation, a Delaware
corporation.
Excite@Home
Excite@Home is a global media company offering broadband Internet
connectivity, personalized web-based content and targeted advertising services.
Our @Home service provides broadband Internet access from consumers' homes over
the cable television infrastructure and offers end-to-end managed connectivity
services for businesses over both cable and digital telecommunications lines.
Our media services include the Excite Network, a leading consumer Internet
portal and MatchLogic, our targeted advertising service. The Excite Network
offers search, content, community, communications services and commerce
functionality to Internet users. Excite's media services focus on comprehensive
navigation, global reach and personalization technology to attract and retain
users and achieve market share. MatchLogic provides advertisers with targeted
ad campaign management and other advertising-related services designed to
improve the effectiveness of their advertising campaigns.
At Home Corporation was incorporated under the laws of the State of Delaware
in March 1995. Our principal executive offices are located at 450 Broadway
Street, Redwood City, California 94063. The primary telephone number for our
principal executive offices is (650) 556-5000.
The Offering
Of the 6,322,003 shares that may be offered under this prospectus, 1,800,130
are held by former stockholders of Kendara, Inc., 3,485,470 are held by former
stockholders of Hartford House, Ltd and 1,036,403 are held by former
shareholders of Worldprints.com International, Inc. These shares are being
offered on a continuous basis under Rule 415 of the Securities Act.
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Series A common stock that may be offered
by
the selling stockholders................. 6,322,003 shares
Use of proceeds........................... We will not receive any proceeds.
</TABLE>
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RISK FACTORS
The risks described below are not the only ones facing our company.
Additional risks not presently known to us, or that we currently deem
immaterial, may also impair our business operations. Our business, financial
condition or results of operations could be seriously harmed by any of these
risks. The trading price of our Series A common stock could decline due to any
of these risks.
Risks Related to Excite@Home's Business
We may fail to integrate our business and technologies with the business and
technologies of Excite, Bluemountain.com and the other companies we have
recently acquired or may acquire.
We have completed several acquisitions recently, including our acquisitions
of Excite, Inc. in May 1999, iMALL, Inc. in October 1999 and Bluemountain.com
in December 1999. We intend to pursue additional acquisitions in the future. If
we fail to integrate these businesses, our quarterly and annual results may be
adversely affected. Integrating acquired organizations and products and
services could be expensive, time-consuming and a strain on our resources.
Risks we could face with respect to acquisitions include:
. the difficulty of integrating acquired technology or content and rights
into our services;
. the difficulty of assimilating the personnel of the acquired companies;
. the difficulty of coordinating and integrating geographically-dispersed
operations;
. our ability to retain customers of an acquired company;
. the potential disruption of our ongoing business and distraction of
management;
. the maintenance of brand recognition of acquired businesses;
. the failure to successfully develop acquired in-process technology;
. unanticipated expenses related to technology integration;
. the maintenance of uniform standards, corporate cultures, controls,
procedures and policies;
. the impairment of relationships with employees and customers as a result
of the integration of new management personnel; and
. the potential unknown liabilities associated with acquired businesses.
Our inability to address any of these risks successfully could harm our
business.
Although we have launched @Home 2000, which integrates the technology
platform of the @Home network broadband services with Excite's Internet
services, we have not fully integrated such services including the advertising
services of Excite's subsidiary, MatchLogic. In addition, @Home 2000 has not
experienced significant traffic to date due to its recent release and we cannot
ensure that problems will not occur in widespread deployment. Further
integration of the Excite and MatchLogic services to the @Home network
broadband platform poses a number of technical challenges, including
difficulties associated with providing reliable updating and personalization of
content over @Home's broadband services and the difficulties associated with
applying the advertising services and targeting technologies of Excite's
MatchLogic subsidiary over the @Home broadband services. This is particularly
challenging because it is more difficult to provide regularly updated and
personalized information from distributed regional data centers, which we rely
upon to deliver our broadband services, than it is to deliver services from a
central data center, as Excite and MatchLogic currently do, in delivering their
narrowband services. We may not be able to achieve the same level of
reliability in providing updated and personalized Excite broadband content over
the @Home service as we have achieved with the Excite narrowband service.
We may be unable to identify future acquisition targets and we may be unable
to complete future acquisitions on reasonable terms. Even if we complete an
acquisition, we may have difficulty in integrating it
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with our current organization, technology and product and services offerings,
and any acquired features, functions, products or services may not achieve
market acceptance.
Recently-acquired businesses may not be successful.
We have recently acquired companies in an early stage of development and
with unproven business models.
iMALL. Prior to August 1998, substantially all of iMALL's revenues were
attributable to its seminar business. This business was discontinued in August
1998. iMALL has yet to achieve significant revenue from its current business of
providing turnkey electronic commerce services to online merchants or its other
shopping-oriented web sites. A market for iMALL's services may not develop, and
iMALL's services may not become widely accepted.
Bluemountain.com. The acquisition of Bluemountain.com also involves a number
of risks. For example, prior to the acquisition, the Bluemountain.com
electronic greeting card service only sold limited advertising on its web
sites. Bluemountain.com users may not accept a service that displays
advertising. Bluemountain.com users may not continue to use the
Bluemountain.com service for other reasons. For instance, competitive
electronic greeting card sites have increased in popularity. Also, the
popularity of electronic greeting card services could decline generally.
Additionally, advertisers may not choose to advertise on the Bluemountain.com
service if users do not accept advertising or purchase goods or services
advertised on Bluemountain.com in sufficient quantities.
During the first quarter of 2000, we acquired Kendara, Inc. and Rucker
Design Group and we expect to acquire several other companies during 2000.
These companies have specific technology and other capabilities that we may not
be able to successfully integrate with our services or transition to our online
platforms. As a result, we may incur unexpected integration and product
development expenses that could harm our results of operations. We may also be
required to record charges to operations related to the impairment of acquired
technology or other intangible assets.
We have incurred and expect to continue to incur substantial losses.
At Home Corporation was incorporated in March 1995, commenced operations in
August 1995, and has incurred net losses in each fiscal period since its
inception. As of December 31, 1999, we had an accumulated deficit of $1,685
million, which includes depreciation, cost and amortization of acquisition-
related intangibles and deferred compensation and cost and amortization of
distribution agreements of approximately $1,631 million since inception.
Excite, Inc., which we acquired in May 1999, has never been profitable. In
addition, we currently intend to increase capital expenditures and operating
expenses in order to expand our network and to market and provide our broadband
services to potential subscribers as well as to market our narrowband services.
As a result of the acquisitions of Excite, iMALL, Bluemountain.com and other
companies, we anticipate that we will incur substantial non-cash charges
including those relating to the amortization of goodwill and other intangible
assets in future periods. Therefore, we anticipate that we will incur
significant net losses for the foreseeable future.
Our quarterly operating results may fluctuate because of a number of factors.
Our quarterly operating results may fluctuate significantly in the future as
a result of a variety of factors, many of which are outside of our control.
These factors include:
. the level of usage of the Internet in general and portal web sites in
particular;
. subscriber growth rates and prices charged by our cable partners;
. demand for Internet advertising;
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. the addition or loss of advertisers;
. the level of user traffic on our web sites used for our narrowband
services;
. the mix of types of advertising we sell, such as the mix of targeted
advertising as compared to general rotation advertising;
. the amount and timing of capital expenditures and other costs relating to
the expansion of our operations;
. the introduction of new products or services by us or our competitors;
. pricing changes for Internet-based advertising;
. the timing of marketing expenditures to promote our brands;
. costs incurred with respect to acquisitions;
. seasonality during the first quarter of each year associated with the
advertising business and Bluemountain.com; and
. general economic conditions.
Our expense levels are based in part on expectations of future revenue and,
to a large extent, are fixed. We may be unable to adjust spending quickly
enough to compensate for any unexpected revenue shortfall.
Our Internet advertising revenue is subject to seasonal fluctuations.
Historically, advertisers spend less in the first and third calendar quarters,
and user traffic for our narrowband services has historically been lower
during the summer and during year-end vacation and holiday periods.
Due to all of the foregoing factors and the other risks described in this
section, you should not rely on quarter-to-quarter comparisons of our results
of operations as an indication of future performance, particularly in light of
the number of acquisitions we have completed. It is possible that in some
future periods our results of operations may be below the expectations of
public market analysts and investors. In this event, the price of our Series A
common stock may fall.
If we do not develop new and enhanced features, products and services for our
narrowband and broadband services, we may not be able to attract and retain a
sufficient number of users.
Because of the competitiveness of our market, we believe it is important to
introduce additional or enhanced features, products and services in the future
in order to differentiate our services and retain our current users and
attract new users. If we introduce a feature, product or service that is not
favorably received by our current users, they may not continue using our
services as frequently and they may choose a competing service.
We must also continually enhance our products and services to incorporate
rapidly changing Internet technologies. We could incur substantial development
costs if we need to modify our products, services or infrastructure to adapt
to changes in Internet technologies. Our business could be harmed if we incur
significant costs to adapt to these changes. If we cannot adapt to these
changes, users may discontinue using our services.
We may also experience difficulties that could delay or prevent us from
introducing new features, products or services. Furthermore, these features,
products or services may contain errors that are discovered after the feature,
product or services are introduced. We may need to modify their design
significantly to correct these errors. In addition, we must consult with and
involve our principal cable partners in the development and design of new
features, products or services for our broadband services. Therefore, the
process of introducing new broadband features, products and services is time
consuming and if our principal cable partners object to a new feature, product
or service, we could be prohibited from offering it in particular areas. Our
business could be adversely affected if we experience difficulties in
introducing new products and services or if users do not accept these new
products or services.
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We depend on the sale of advertisements on our services, and if online
advertising does not become accepted, or if users employ new technology to
block or filter online advertising, our business would be harmed.
We expect to derive a substantial amount of our revenues from the sale of
advertising on our services for the foreseeable future. No standards have been
widely accepted to measure the effectiveness of online advertising. If
standards do not develop, existing advertisers may not continue their current
levels of online advertising. Furthermore, advertisers that have traditionally
relied upon other advertising media may be reluctant to advertise online.
Advertisers that already have invested substantial resources in other
advertising methods may be reluctant to adopt a new strategy. Our business
would be harmed if the market for online advertising fails to develop or
develops more slowly than expected.
Different pricing models are used to sell online advertising. It is
difficult to predict which, if any, will emerge as the industry standard. This
makes it difficult to project future advertising rates and revenues. For
example, advertising rates based on the number of "click throughs," or user
requests for additional information made by clicking on the advertisement,
instead of rates based solely on the number of impressions, or number of times
an advertisement is displayed, could adversely affect our revenues because
impression-based advertising comprises a substantial majority of our current
advertising revenues. Our advertising revenues could be harmed if we are unable
to adapt to new forms of online advertising.
Moreover, "filter" software programs that limit or prevent advertising from
being delivered to a web user's computer are available. Other software programs
are able to hide a web user's identify and prevent "cookies" from being written
to, or read from, the user's hard drive. Such software prevents the proper
operation of our services, including personalization of the My Excite Start
Page and targeted banner advertising. Widespread adoption of such software
products could reduce the attractiveness of our personalization features and
harm the commercial viability of online advertising.
We must develop and maintain the awareness of our brands to attract consumers
and advertisers.
Maintaining and strengthening our brands is critical to achieving widespread
acceptance of our services by consumers and advertisers, particularly in light
of the competitive nature of our markets. Promoting and positioning our brands
will depend largely on the success of our marketing efforts and our ability to
provide high quality services. In order to promote our brands, we plan to
increase our marketing expenses from prior periods. We may find it necessary to
increase our marketing budget or otherwise increase our financial commitment to
creating and maintaining brand loyalty among users. If we fail to promote and
maintain our brands or incur excessive expenses in an attempt to promote and
maintain our brands, our business could be harmed.
Privacy concerns could lead to legislation or new technology that could make
it more difficult for us to deliver targeted advertising.
Due to privacy concerns, some Internet commentators, consumer advocates and
governmental officials have suggested that the use of cookies be limited or
eliminated. In addition, certain currently available web browsers allow a user
to delete cookies or prevent cookies from being stored on the user's hard
drive, and technology that shields e-mail addresses, cookies and other
electronic means of identification could become commercially accepted. Any
reduction or limitation in the use of cookies through legislation, new
technology or otherwise, could limit the effectiveness of our ad targeting,
which could harm our business.
We could face liability related to the privacy of personal information about
our users.
Our narrowband services use cookies to deliver targeted advertising, help
compile demographic information about users and limit the frequency with which
an advertisement is shown to the user. Cookies are bits of information keyed to
a specific memory location and passed to a web site server through the user's
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browser software. Cookies are placed on the user's hard drive, often without
the user's knowledge or consent. We could face liability relating to the
collection and use of this information, as well as other misuses such as
unauthorized marketing. The Federal Trade Commission and some states have been
investigating Internet companies regarding their use of personal information,
and some groups have initiated legal action against Internet companies
regarding their privacy practices. In addition, the United States federal and
various state governments have proposed new laws restricting the collection and
use of information regarding Internet users. We could incur additional expenses
if new regulations regarding the use of personal information are introduced or
if government agencies choose to investigate our privacy practices.
The sponsorship advertising we sell subjects us to financial and other risks.
We derive a substantial portion of our revenues from sponsorship
arrangements. These are advertising relationships under which third parties
receive sponsored services and placements on our services in addition to
traditional banner advertisements across our services. These arrangements
expose us to potential financial risks, including the risk that we fail to
deliver required minimum levels of user impressions, that third party sponsors
do not perform their obligations under these agreements, or that they do not
renew the agreements at the end of their term. These arrangements also require
us to integrate sponsors' content with our services, which can require the
dedication of resources and programming and design efforts to accomplish. We
may not be able to attract additional sponsors or renew existing sponsorship
arrangements when they expire.
In addition, we have granted exclusivity provisions to some of our sponsors,
and may in the future grant additional exclusivity provisions. These
exclusivity provisions may have the effect of preventing us from accepting
advertising or sponsorship arrangements from certain advertisers during the
term of the agreements. Our inability to enter into further sponsorship or
advertising arrangements as a result of any exclusivity arrangements could harm
our business.
We may face potential liability from our electronic commerce-related
advertising arrangements.
Some of our advertising relationships provide that we may receive payments
based on the amount of goods or services purchased by consumers clicking from
our services to a seller's web site. These arrangements may expose us to legal
risks and uncertainties, including potential liabilities to consumers of the
advertised products and services. Although we carry general liability
insurance, our insurance may not cover potential claims of this type or may not
be adequate to indemnify us for all liability that may be imposed.
Some of the liabilities that may result from these arrangements include:
. potential liabilities for illegal activities that may be conducted by the
sellers;
. product liability or other tort claims relating to goods or services sold
through third-party e-commerce sites;
. claims for consumer fraud and false or deceptive advertising or sales
practices;
. breach of contract claims relating to purchases; and
. claims that items sold through these sites infringe third-party
intellectual property rights.
Even to the extent that these claims do not result in material liability,
investigating and defending these claims could harm our business.
Our equity investments in other companies may not yield any returns.
We have made equity investments in many Internet companies, including joint
ventures in other countries. In most instances, these investments are in the
form of illiquid securities of private companies. These companies typically are
in an early stage of development and may be expected to incur substantial
losses. Our investments in these companies may not yield any return.
Furthermore, if these companies are not successful, we could incur charges
related to write-downs or write-offs of assets. We also record and continue to
record a
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share of the net losses in some of these companies, up to our cost basis, if
they are our affiliates. Our strategic investors and we intend to continue to
invest in illiquid securities of private companies and in joint ventures in
the future. Losses or charges resulting from these investments could harm our
operating results.
We must maintain the security of our networks.
We have in the past experienced security breaches in our networks. We have
taken steps to prevent these breaches, to prevent users from sharing files via
the @Home service and to protect against bulk unsolicited e-mail. However,
actual problems with, as well as public concerns about, the security, privacy
and reliability of our networks may inhibit the acceptance of our services.
The need to securely transmit confidential information over the Internet
has been a significant barrier to electronic commerce and communications over
the Internet. Any well-publicized compromise of security could deter more
people from using the Internet or our services to conduct transactions that
involve transmitting confidential information, such as purchases of goods or
services. Because many of our advertisers seek to encourage people to use the
Internet to purchase goods or services, our business could be harmed if this
were to occur. We may also incur significant costs to protect against the
threat of security breaches or to alleviate problems caused by these breaches.
Our limited experience with international operations may prevent us from
growing our business outside the United States.
A key component of our strategy is to expand into international markets and
offer broadband and narrowband services in those markets. We have 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. Some of our investments in international joint ventures include an
option to purchase the interests of other joint venture stockholders which, if
not exercised by a specified date, gives the other joint venture stockholders
the right to purchase our interest in the joint venture for a nominal price.
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 broadband and narrowband 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;
. potential inability to use European customer information due to new
European governmental regulations; and
. lack of a developed cable infrastructure in many international markets
We may be liable for our links to third-party web sites.
We could be exposed to liability with respect to the third-party web sites
that may be accessible through our services. These claims may allege, among
other things, that by linking to web sites operated by third parties, we may
be liable for copyright or trademark infringement or other unauthorized
actions by third parties through these web sites. Other claims may be based on
errors or false or misleading information provided by our services. Our
business could be harmed due to the cost of investigating and defending these
claims, even to the extent these types of claims do not result in liability.
Protection of our intellectual property rights is costly and difficult.
We regard our intellectual property, including our patents, copyrights,
trademarks, trade secrets, and similar intellectual property as critical to
our success. We rely upon patents, trademark and copyright law, trade secret
protection and confidentiality or license agreements to protect our
proprietary rights. Effective protection
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of intellectual property may not be available in every country in which our
products and services are available. We cannot guarantee that the steps we have
taken to protect our proprietary rights will be adequate.
We may be subject to intellectual property infringement claims, which are
costly to defend, and could limit our ability to use certain technologies in
the future.
Many parties are actively developing Internet-related technologies. We
believe that these parties will continue to take steps to protect these
technologies, including seeking patent protection. As a result, we believe that
disputes regarding the ownership of these technologies are likely to arise in
the future. From time to time, parties assert patent infringement claims
against us in the form of letters, lawsuits and other forms of communications.
In addition to patent claims, third parties may assert claims against us
alleging infringement of copyrights, trademark rights, trade secret rights or
other proprietary rights or alleging unfair competition.
We may incur substantial expenses in defending against third-party
infringement claims regardless of the merit of the claims. In the event that
there is a determination that we have infringed third-party proprietary rights,
we could incur substantial monetary liability and be prevented from using the
rights in the future.
Our business depends on the continued growth in Internet use.
We operate in a new and rapidly evolving market. Our business may be
adversely affected if usage of the Internet or other online services does not
continue to grow. This growth could be hindered by a number of factors
including the adequacy of the Internet's infrastructure to meet increased usage
demands, privacy and security concerns and the availability of cost-effective
services. Any of these issues could cause the Internet's performance or level
of usage to decline.
Future acquisitions could result in dilutive issuances of stock and the need
for additional financing.
We have typically paid for our acquisitions by issuing shares of our capital
stock. In the future, we may effect other large or small acquisitions by using
stock, and this will dilute our stockholders. We may also use cash to buy
companies or technologies in the future, as we did for a portion of the
purchase price for Bluemountain.com, and we may need to incur additional debt
to pay for these acquisitions. Acquisition financing may not be available on
favorable terms or at all. In addition, we will likely be required to amortize
significant amounts of goodwill and other intangible assets in connection with
future acquisitions, which will have a material effect on our results of
operations.
We must manage our growth.
Our growth and recent acquisitions have placed a significant strain on our
managerial, operational, and financial resources. For example, we have grown
from 570 employees at December 31, 1998 to more than 2,300 employees at
December 31, 1999. In addition, we plan to continue to hire additional
personnel. To manage our growth, we must continue to implement and improve our
operational and financial systems and to expand, train and manage our employee
base. Any failure to manage growth effectively could harm our business.
Government regulation and legal uncertainties relating to the Internet could
hinder the popularity of the Internet.
New Internet privacy and other laws. There are currently few laws or
regulations that specifically regulate communications or commerce on the
Internet. However, laws and regulations may be adopted in the future that
address issues such as user privacy, pricing, content and the characteristics
and quality of products and services. For example:
. The United States federal government and various state governments have
proposed limitations on the collection and use of information regarding
Internet users. In October 1998, the European Union
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adopted a directive that may result in limitations on our ability to
collect and use information regarding Internet users in Europe.
. Several telecommunications companies have petitioned the Federal
Communications Commission to regulate Internet service providers and
online service providers in a manner similar to long distance telephone
carriers and to impose access fees on these companies. This could
increase the cost of transmitting data over the Internet.
. A portion of the Telecommunications Act, which has since been ruled
unconstitutional, sought to prohibit transmitting certain types of
information and content over the Internet.
Moreover, it may take years to determine the extent to which existing laws
relating to issues such as property ownership, libel and personal privacy are
applicable to the Internet. Any new laws or regulations relating to the
Internet could harm our business.
Tax laws. The tax treatment of the Internet and electronic commerce is
currently unsettled. A number of proposals have been made at the federal,
state and local level and by certain foreign governments that could impose
taxes on the sale of goods and services and certain other Internet activities.
Our business may be harmed by the passage of laws in the future imposing taxes
or other burdensome regulations on online commerce.
Other jurisdictions. Because our service is available in multiple states
and foreign countries, these jurisdictions may claim that we are required to
qualify to do business as a foreign corporation in each of these states and
foreign countries. If we fail to qualify as a foreign corporation in a
jurisdiction where we are required to do so, we could be subject to taxes and
penalties.
We could face liability for defamatory or indecent content provided on our
services.
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 against Internet and
online services providers. Our insurance may not adequately protect us from
these types of claims.
In addition, legislation has been proposed that prohibits, or imposes
liability for, 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 focus on liability issues as a result of these
lawsuits and legislative proposals could impact the growth of Internet use.
Furthermore, governments of some foreign countries, such as Germany, have
enacted laws and regulations governing content distributed over the Internet
that are more strict than those currently in place in the United States. One
or more of these factors could significantly harm our business.
Year 2000 issues could affect the performance of our systems.
While we have experienced no material year 2000 date-related or other
significant problems to date, not all year 2000 disruption scenarios have
passed. There is a possibility of disruptions in the future including errors
that could still arise in our internal and network information systems because
of their failure to correctly recognize and process date information after the
calendar change from 1999 to 2000. We also may yet experience supplier-related
year 2000 problems. If any of these year 2000 problems occur, our operations
could be significantly hampered. Based on currently available information,
management continues to believe that year 2000 related disruptions or other
problems, if any, will not have a significant adverse impact on our operating
results or financial condition. However, we cannot be certain that year 2000
issues will not have a material adverse impact on us since it is still early
in 2000.
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Our future success depends on our ability to attract, retain and motivate
highly skilled employees.
Our future success depends on our ability to attract, retain and motivate
highly skilled employees. Competition for employees in the Internet industry is
intense, particularly in the Silicon Valley where we are headquartered.
Additionally, it is often more difficult to attract employees once a company's
stock is publicly traded because the exercise price of equity awards such as
stock options are based on the public market, which is highly volatile. We may
be unable to attract, assimilate or retain other highly qualified employees in
the future. We have from time to time in the past experienced, and we expect to
continue to experience in the future, difficulty in hiring and retaining highly
skilled employees with appropriate qualifications. This risk is compounded by
the fact that we are controlled by our principal cable partners, and therefore
we may not have the same flexibility as a typical Silicon Valley company to
pursue initiatives proposed by management. Moreover, hiring and retention is
made more difficult due to the uncertainty concerning the relationship we will
have with our principal cable partners following the expiration of their
exclusivity obligations in June 2002.
Risks Relating to Excite@Home's Broadband Services.
Our broadband business is unproven, and it may not achieve profitability.
The profit potential of our broadband business model is unproven and our
broadband services may not achieve widespread consumer or commercial
acceptance. We have had difficulty predicting whether the pricing models or
revenue sharing arrangements with our cable partners for our broadband services
will prove to be viable, whether demand for our broadband services will
materialize at the prices our cable partners charge for our broadband services,
or whether current or future pricing levels will be sustainable. If these
pricing levels are not achieved or sustained or if our broadband services do
not achieve or sustain broad market acceptance, our business will be
significantly harmed.
Growth of our broadband service may be inhibited by factors beyond our
control.
Our ability to increase the number of subscribers to our broadband service
to achieve our business plans and generate future revenues will depend on many
factors that 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;
. the commercial availability of self-installable, two-way modems that
comply with the recently adopted interface standards known as DOCSIS, and
the success of the roll-out of these products with the @Home service; and
. the quality of customer and technical support our cable partners provide.
We need to add subscribers at a rapid rate for our broadband business to
succeed, but we may not achieve our subscriber growth goals.
Our actual revenues or the rate at which we 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
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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.
Our broadband subscriber growth is limited by installation and price
constraints.
Installation of the @Home service requires a customer service
representative employed by a cable partner to install a cable modem at a
customer's location and therefore can be time consuming. If we are unable to
speed the installation of our service, our subscriber growth could be
constrained. 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 service. Recently, companies have begun to
offer free Internet access with the purchase of personal computers and some
Internet service providers have reduced or eliminated Internet access charges
in exchange for placing advertisements on a customer's computer screen. If
these promotions become more widely used, or if Internet access fees decline,
consumers may be less willing to pay a premium for broadband services, or our
broadband services in particular.
If we cannot maintain the scalability and speed of our @Home broadband
network, customers will not accept our broadband services.
Due to the limited deployment of our broadband services, the ability of our
broadband network to connect and manage a substantial number of subscribers at
high transmission speeds is unknown. Therefore, we face risks related to our
network's ability to be scaled up to accommodate increased subscriber levels
while maintaining performance. Our network may be unable to achieve or
maintain a high speed of data transmission, especially as the number of our
subscribers increases. Because of our reliance on regional data centers and
the cable infrastructure located in particular geographic areas to support our
broadband services, our and our cable partners' infrastructure must also be
able to accommodate increased subscribers in a particular area. If the
existing infrastructure for a geographic area does not accommodate additional
subscribers, network performance for an area could decline causing us to lose
subscribers in that area, especially if a cable partner was unwilling to
upgrade its infrastructure in that area.
In recent periods, the performance of the @Home network has experienced
some deterioration in some markets partially as a result of subscriber abuse
of the @Home service. While we are seeking to eliminate this abuse by
enforcing our acceptable-use policy and by limiting users' upstream bandwidth,
our failure to do so may result in slower network performance and reduced
customer demand for our services.
If new "DOCSIS" compliant and self-installable cable modems are not deployed
timely and successfully, our subscriber growth could be constrained.
Currently, each of our subscribers must typically 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 deployments of the @Home service until the commercial
availability of DOCSIS-compliant cable modems is widespread, among other
reasons. 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 because they are not able to obtain a sufficient quantity of
DOCSIS-compliant modems and if such modems do not become widely available
through other channels.
We believe that our ability to meet our subscriber goals depends on the
degree to which two-way cable modems become widely available in channels such
as personal computer manufacturers and retail outlets. Currently, this
widespread availability has not yet occurred. Also, cable modem manufacturers
have experienced, and may continue to experience, production and delivery
problems with cable modem components that may restrict the number of modems
available. In addition, these modems must be easy for consumers to install
themselves, rather than requiring a customer service representative to perform
the installation. If two-way cable modems do not become quickly available in
outlets other than through cable television companies,
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or if consumers cannot install them easily, it would be difficult for us to
attract large numbers of additional subscribers and our business would be
harmed.
Our broadband business may be impacted by cable unbundling proposals and
other government regulation.
Currently, our broadband services are not directly subject to regulations
of the Federal Communication Commission or any other federal, state or local
communications regulatory agency. However, there may be changes in the
regulatory environment relating to the Internet, cable television or
telecommunications markets. These changes could require regulatory compliance
by us, impact our exclusivity arrangements or limit our ability to provide
broadband services to our subscribers, and therefore could adversely affect
our revenues and results of operations. Such possible government regulations
include the following:
. The FCC or local agencies could require our cable partners to grant
competitors access to their cable systems. GTE, MindSpring Enterprises,
Inc., Consumers Union and other parties have requested Congress, the
Federal Communications Commission and state and local authorities to
require cable operators to provide Internet and online service providers
with unbundled access to their cable systems. Although America Online has
ceased petitioning government agencies for unbundled access, other
parties will likely continue to lobby heavily at all levels of
government. Some parties have also attempted to petition for unbundled
access under existing cable franchising rules, such as those for local
programming access. If we or our cable partners are classified as common
carriers, or if government authorities require third-party access to
cable networks or unaffiliated Internet service providers, our
competitors may be able to provide service over our cable partners'
systems. The rates that our cable partners charge for this third-party
access, or for the @Home services, could also be subject to rate
regulation or tariffing requirements.
. Local governmental proceedings. Some local jurisdictions, including
Portland and Multnomah County, Oregon and Broward County, Florida, have
imposed third-party access requirements on AT&T and other cable companies
operating in those communities. The imposition of these requirements has
been challenged in Federal Courts. In June 1999, a U.S. District Court
upheld the third-party access requirement imposed on AT&T by Portland and
Multnomah County. This decision was appealed to the U.S. Court of Appeals
for the Ninth Circuit and arguments were presented to the court in
November 1999. Although appeals decisions have no time limit, most
rulings occur within three to twelve months after the date arguments are
presented. Numerous other local jurisdictions have considered or are
considering imposing similar third-party access requirements and other
municipalities may consider imposing similar requirements in the future.
. Other litigation. In October 1999, GTE filed a lawsuit in a U.S. District
Court and in November 1999, a class action was filed, each alleging
violations of the federal antitrust laws. Although it is too early to
predict the outcome of this litigation, we could be forced to pay
damages, allow other service providers to utilize our network, otherwise
alter the way we do business or incur significant costs in defending
these litigations. Any of these outcomes could harm our business. In
addition, others could initiate litigation on similar legal theories in
the future.
. 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 broadband services successfully. For example,
changes in the regulation of cable television rates may affect the speed
at which our cable partners upgrade their cable systems to carry our
broadband 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 an additional cable service 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 thus it would be difficult or
impossible for us or our cable partners to operate without a uniform set
of franchise requirements.
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We could lose subscribers, distribution relationships and revenues related to
broadband services to our competitors.
The markets for consumer and business broadband services are extremely
competitive, and we expect that competition will intensify in the future. Our
most direct competitors for broadband services include the following:
. Providers of cable-based Internet services. Media One Group, which AT&T
has agreed to acquire, and Time Warner Inc. 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 and we may compete for subscribers in the future if and when
our cable partners cease to be subject to their exclusivity obligations.
In addition, we compete with other providers of cable-based Internet
services, such as ISP Channel, Inc. and High Speed Access Corporation.
. Telecommunications providers. We compete with national long-distance and
local exchange carriers that offer high-speed, Internet access services
such as asymmetric digital subscriber line, known as DSL. Recently, these
services have been offered in a number of areas and at lower prices than
in the past. If the advanced services offered by these companies were
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 and other Internet portals and
online services that have announced broadband strategies, such as Yahoo!.
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 can. We may not be able
to compete successfully against current or future competitors. Competitive
pressures could significantly impact the growth of our broadband subscriber
base and our ability to renew and enter into new distribution agreements and
as a result may hurt our revenues.
The proposed merger between America Online and Time Warner Inc. creates
uncertainties about which cable markets will be served by Road Runner on an
exclusive or non-exclusive basis, and the merger may improve Road Runner's
ability to negotiate exclusive distribution agreements with cable system
operators. Additionally, our principal shareholder, AT&T, will have a
substantial ownership interest in Time Warner and Road Runner if its proposed
merger with MediaOne is completed. This relationship between America Online,
AT&T, Time Warner and Road Runner creates further uncertainties about which
cable markets we will be able to serve and under what terms. The proposed
merger would also give America Online, the dominant dial-up Internet service
provider, the ability to utilize Road Runner's technology as a basis for
leveraging its marketing prowess and extensive subscriber base to compete for
customers in cable markets once our exclusivity agreements have expired. As a
result, we may face intense long-term competition for customers in previously
exclusive cable markets.
Our dependence on our network to provide our broadband services exposes us to
a significant risk of system failure.
Our broadband service 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 broadband services. Additionally, failure of
our cable partners or companies from which we obtain data transport services
to provide
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the data communications capacity that we require, for example as a result of
natural disaster or operational disruption, could cause interruptions in our
broadband services. Any damage or failure that causes interruptions in our
network operations could harm our business.
Risks Related to Our Relationships With Our Cable Partners.
The success of our business depends on our relationships with our cable
partners, most of which have agreed to provide our broadband services on an
exclusive basis. We have also agreed not to provide a variety of Internet
services in the areas covered by our cable partners. Our agreements with our
cable partners are complex. Some of the risks associated with these
relationships are set forth below. Please also refer to "Item 1. Business" for
a further description of our relationships with our cable partners.
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 our broadband 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 December 31, 1999,
approximately 40% of our North American cable partners' cable infrastructure
was capable of delivering the @Home service. Our cable partners have announced
and are implementing 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. Furthermore, because of consolidation
in the cable television industry, as well as the sale or transfer of cable
assets among cable television operators, many cable companies have delayed
upgrading particular systems that they plan to sell or transfer. If these
upgrades are not completed in a timely manner, our broadband services may not
be available on a widespread basis and we may not be able to increase our
subscriber base at the rate we anticipate. 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 broadband services. As has happened in
the past, even if a cable partner upgrades its cable infrastructure, the
upgraded infrastructure may not function properly, and therefore may cause a
delay in the availability of our broadband services for particular areas. The
failure of our cable partners to complete these upgrades in a timely and
satisfactory manner, or at all, would prevent us from delivering broadband
services and would significantly harm our business.
Our cable partners are not generally obligated to carry our broadband
services, and the exclusivity obligations that prevent them from carrying
competing services may be terminated.
Most of 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 broadband services. Also, the exclusivity obligations of our principal
cable partners, AT&T, Comcast, Cox and Cablevision, expire on June 4, 2002, and
may be terminated sooner under some circumstances, as follows:
. 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 12 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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. Comcast or Cox may terminate the exclusivity provisions of our principal
cable partners if AT&T and its affiliates do not meet specified
subscriber penetration levels for the @Home service. On June 4, 1999, Cox
had this right, but Cox agreed to waive it for 1999; and
. Comcast may terminate its own exclusivity obligations at any time if it
allows us to repurchase a portion of Comcast's equity interest in our
company. 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, changes were made to the corporate governance
provisions of our certificate of incorporation and bylaws. These 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 twelve months following June 4, 1999
above its current goal for that period.
In December 1999, AT&T announced that customers of its broadband cable
systems would be able to choose their Internet service provider for high-speed
Internet access upon expiration of our exclusivity agreement with AT&T.
If the exclusivity obligations of our cable partners are terminated, our
business could be harmed significantly and our stock price would likely suffer
an immediate drop. Our cable partners and we are continuing to explore the
relationships we will have after our exclusivity obligations expire as well as
possible strategic alternatives to our current relationships.
Our cable partners may offer services that compete with the @Home service, but
we are prohibited from offering competing services.
Many of our cable partners' exclusivity obligations are limited to high-
speed residential Internet services and do not extend to various services that
they may offer without us. These services include, but are not limited to,
telephony services, commercial and business services similar to our @Work
service, Internet services that do not use the cable television infrastructure
or do not require use of an Internet backbone and limited Internet services
including streaming video and other downstream-only services. By providing
these services, most cable partners can compete, directly or indirectly, with
our broadband delivery activities.
Until the expiration of our cable partners' exclusivity obligations, which
begin in June 2002, we may not offer the services described above using a cable
partner's cable plant, or to residences in the geographic areas served by its
cable systems, without its consent. These restrictions apply even if we have
integrated such a service with the @Home service in another geographic area.
For example, in order to provide streaming video longer than 10 minutes in
duration, we must seek a cable partner's consent or negotiate a separate
agreement, including a new revenue split, if applicable, prior to offering the
service. We must similarly obtain our cable partners' consent or execute a
separate agreement to provide broadband services over alternate platforms
including fixed wireless, cellular or DSL infrastructures to any residential
customers in the cable partners' geographic area. If our cable partners do not
allow us to offer broadband services over alternate platforms, our market for
such services will be severely limited and our business could be harmed.
We depend on our cable partners to promote our services and obtain new
subscribers.
The rate at which we are able to obtain new subscribers depends not only on
the degree to which our cable partners upgrade their cable systems but also on
the level and effectiveness of the efforts of our cable partners to promote our
services. Our cable partners have achieved different levels of subscriber
penetration. In Canada, for example, where our cable partners have high levels
of upgraded cable systems and faced early competition from other providers of
high speed data services, we have relatively high levels of subscriber
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penetration (exceeding those in the United States). Among our principal U.S.
cable partners, AT&T, Cox and Comcast are actively promoting our services and
are beginning to increase their penetration rates. Cablevision, however, has
deployed our service to only a small number of subscribers and continues to
offer its own online service called Optimum Online to the majority of
subscribers in cable systems deployed to date. We cannot predict the rate at
which our cable partners will add new subscribers to our services. If our cable
partners do not actively and effectively promote our services, we will not be
able to reach the level of subscribers necessary to achieve a profitable
business model.
We are controlled by AT&T, Cox and Comcast.
AT&T, through its ownership of TCI, controls approximately 56% of our voting
power. Currently, four of our eleven directors are directors, officers or
employees of TCI, AT&T or their affiliates. AT&T currently owns all 30.8
million outstanding shares of our Series B common stock, each of which carries
ten votes per share. This Series B common stock ownership gives AT&T the right
to elect five Series B directors, one of which is designated by Comcast and one
of which is designated by Cox. So long as AT&T owns at least 15.4 million
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 AT&T'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.
We depend on a continuing cooperative relationship with AT&T, Cox, Comcast
and other large stockholders to take action that requires stockholder consent.
It is possible that the objectives of AT&T's stockholders will diverge from
what management considers to be our optimum strategy.
Warrants issued to our cable partners may result in additional dilution to our
stockholders.
We have entered into agreements with Cablevision, Rogers, Shaw and other
cable partners under which we issued warrants to purchase shares of our Series
A common stock. Under these agreements, warrants to purchase approximately 28.5
million shares of our Series A common stock at an average price of $1.66 per
share were exercisable as of December 31, 1999. To the extent that Cablevision,
Rogers, Shaw or other cable partners become eligible to and exercise their
warrants, our stockholders would experience substantial dilution.
We also may issue additional stock, or warrants to purchase stock, at prices
equal to or less than fair market value in connection with efforts to expand
distribution of the @Home service.
Risks Related to Our Narrowband Services
Our narrowband services could lose users, advertisers and revenues to
competitors.
Our narrowband services compete 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 this market.
These competitors include:
. Internet portal companies such as Disney's Go Network, Lycos, Netscape's
Netcenter, NBCi 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 a wide variety of online information, entertainment and
community services such as services that are targeted to vertical markets
or electronic commerce services.
Many providers of Internet services have been entering into distribution
arrangements, co-branding arrangements, content arrangements and other
strategic partnering arrangements with ISPs, online service
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providers, providers of web browsers, operators of high-traffic web sites and
other businesses in an attempt to increase traffic and page views, thereby
making their web sites more attractive to advertisers while also making it
more difficult for consumers to link to services. To the extent that our
direct competitors or other web site operators are able to enter into
successful strategic relationships, these competitors and web sites could
experience increases in traffic and page views, or the traffic and page views
on our narrowband services could remain constant or decline, either of which
could harm our business by making these web sites appear more attractive to
advertisers.
Many of our existing competitors, as well as a number of potential new
competitors, have longer operating histories in the Internet market, greater
name recognition, larger customer bases and significantly greater financial,
technical and marketing resources than we have. These competitors may be able
to undertake more extensive marketing campaigns, adopt more aggressive pricing
policies and make more attractive offers to potential employees, distribution
partners, advertisers and content providers. Further, it is possible that our
competitors could develop search and retrieval services or other online
services that are equal or superior to ours or that achieve greater market
acceptance than our offerings.
The Internet in general, and our narrowband services specifically, also
must compete with traditional advertising media, such as print, radio and
television, for a share of advertisers' total advertising budgets. To the
extent that the Internet is not perceived as an effective advertising medium,
advertisers may be reluctant to devote a significant portion of their
advertising budgets to Internet advertising.
The proposed merger between Time Warner Inc. and America Online announced
in January 2000 would create a very large, diverse media conglomerate. The
combined companies may be able to use their diverse media holdings and
Internet service delivery capabilities to develop or expand Internet services
and content that could attract a significant number of new users and increased
traffic. Additionally, America Online will likely use Time Warner's
subscription-based services as an advertising mechanism to attract users to
the Internet access services provided by America Online and Road Runner.
Increased competition for users of Internet services and content may result in
lower subscriber growth rates for our online and Internet services and lower
advertising rates and decreased demand for advertising space on our web sites.
If Internet users do not continue to use Internet portal sites, our business
could be harmed.
The success of our Internet portal web sites is also dependent on Internet
users continuing to use "portal" web sites for their information needs.
Internet measurement services have reported that the number of unique users of
Internet portal sites has been decreasing in recent periods. If Internet users
begin to become less dependent on portal sites, and instead go directly to
particular web sites, our traffic levels could decrease as measured by unique
users, reach and pages views. As a result, the number of advertising
impressions and the attractiveness of our sites to advertisers could be
impacted, which would harm our media and advertising revenues.
Our systems may not be able to accommodate increases in the number of users
of our narrowband services.
Our web sites for the Excite Network are currently hosted and operated on a
computer network infrastructure separate from our broadband services. The
Excite Network must accommodate a high volume of traffic and deliver
frequently updated information. The web sites for the Excite Network have in
the past, and may in the future, experience slower response times or other
problems for a variety of reasons. We also depend on third party information
providers to provide updated information and content for these services on a
timely basis. The Excite Network could experience disruptions or interruption
in service due to the failure or delay in the transmission or receipt of this
information. In addition, the users of these Excite Network services depend on
Internet service providers, online service providers and other web site
operators for access to the Excite Network. Each of these parties has
experienced significant outages in the past, and could experience outages,
delays and other difficulties due to system failures unrelated to our systems.
These types of occurrences could cause users to perceive the Excite Network as
not functioning properly and therefore cause them to use other services.
19
<PAGE>
We depend on several third-party relationships for users, advertisers and
revenues.
We depend on a number of third party relationships to provide users and
content for the Excite Network, including agreements for links to narrowband
services to be placed on high-traffic web sites and agreements for third
parties to provide content, games and e-mail for narrowband web sites. We are
not guaranteed of recouping our investments in these agreements through
additional users or advertising revenues, and we may have to pay penalties for
terminating agreements early. Some of these third parties could become our
competitors, or provide their services to our competitors, upon termination of
such relationships. If these relationships are terminated and we are not able
to replace them, we could lose users or advertisers.
USE OF PROCEEDS
We will not receive any proceeds from the sale of the Series A common stock
by the selling stockholders under this prospectus.
DIVIDEND POLICY
We have never paid any cash dividends on our capital 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.
20
<PAGE>
SELLING STOCKHOLDERS
Former Stockholders of Hartford House, Ltd. and Kendara, Inc.
The following table sets forth information with respect to the selling
stockholders that received the shares of our Series A common stock that they
may offer under this prospectus in connection with our acquisition of Hartford
House, Ltd. (Bluemountain.com) in December 1999 and Kendara, Inc. in February
2000. Except for the relationships described below, the selling stockholders
have not had any other position, office or other material relationship with us
or any of our predecessors or affiliates.
Except as noted below, the share information provided in the table below is
based on information provided to us by the selling stockholders as of February
15, 2000. Each selling stockholder beneficially owns less than 1% of our
outstanding Series A common stock, based on 361,800,891 shares of Series A
common stock outstanding as of March 8, 2000. We may update, amend or
supplement this prospectus from time to time to update the disclosure in this
section.
The selling stockholders may from time to time offer and sell any or all of
their shares that are registered under this prospectus. Because the selling
stockholders are not obligated to sell their shares, and because the selling
stockholders may also acquire publicly traded shares of our Series A common
stock, we cannot estimate how many shares of the selling stockholders will
beneficially own after this offering.
<TABLE>
<CAPTION>
Shares Total
Owned Shares
Before that May
the be
Name Offering Offered
---- --------- ---------
<S> <C> <C>
Fortuna Ventures, L.P(1)................................... 1,553,240 1,553,240
Stephen Schutz and Susan Schutz, Trustees under Trust dated
December 19, 1985(1)...................................... 1,062,665 1,062,665
Jared Schutz(1)............................................ 823,093 823,093
Mohr, Davidow Ventures V, L.P.(2).......................... 475,446 475,446
Institutional Venture Partners VIII, L.P.(3)............... 451,598 451,598
Pavani Diwanji(4).......................................... 286,580 286,580
Freeman Murray(5).......................................... 233,996 233,996
Bret Comolli(6)............................................ 80,791 80,791
IVP Broadband Fund L.P.(7)................................. 51,123 51,123
Robert Polis, as Trustee of the Robert Nathan Polis
Revocable Trust dated August 25, 1993(1).................. 46,472 46,472
Mohr, Davidow Ventures V, L.P. as nominee for MDV
Entrepreneurs' Network Fund II(A), L.P. and MDV
Entrepreneurs' Network Fund II(B), L.P.(8)................ 35,786 35,786
Brian Wilson............................................... 29,578 29,578
Jean Michel Leon and Christilla Leon....................... 19,719 19,719
Gleb Budman................................................ 14,000 14,000
Stuart Cheshire............................................ 11,831 11,831
Jason Knight............................................... 9,859 9,859
Heinrich Gantenbein........................................ 9,859 9,859
IVM Investment Fund VIII, LLC(9)........................... 8,512 8,512
Paul B. Callahan........................................... 7,887 7,887
Vlad Bolshakov............................................. 7,887 7,887
Arthur Van Hoff............................................ 7,697 7,697
David Cheriton............................................. 7,697 7,697
Christopher Kelly.......................................... 5,915 5,915
G & H Partners............................................. 5,842 5,842
Scott Eikenberry and Ashley Eikenberry..................... 4,929 4,929
Cory Cooke and Janelle Hargrove............................ 4,929 4,929
</TABLE>
21
<PAGE>
<TABLE>
<CAPTION>
Shares Total
Owned Shares
Before that May
the be
Name Offering Offered
---- --------- ---------
<S> <C> <C>
Noel Wilson................................................. 4,929 4,929
Michael Sheridan............................................ 4,046 4,046
Donna Novitsky 3,943 3,943
Wendy Riggs................................................. 1,971 1,971
Steve Jessey................................................ 1,854 1,854
Martin Foster............................................... 1,676 1,676
Carol Dressler.............................................. 1,603 1,603
Richard P. Yoon............................................. 1,577 1,577
Laura Bidinger and Joseph Bidinger.......................... 1,577 1,577
Miko Matsumora.............................................. 1,577 1,577
Bob Adler................................................... 1,090 1,090
Melissa Criqui.............................................. 788 788
James Gosling............................................... 394 394
Geoff Baehr................................................. 394 394
Steve Arnold................................................ 394 394
Ashmeet Sidana.............................................. 394 394
Jeff Whipps................................................. 394 394
Marko Balabanovic........................................... 49 49
Jane Prusakova.............................................. 19 19
--------- ---------
Total..................................................... 5,285,600 5,285,600
</TABLE>
- --------
(1) Based on information provided to us as of February 25, 2000.
(2) Prior to our acquisition of Kendara, Mohr, Davidow Ventures V, L.P. and
Mohr, Davidow Ventures V, L.P. as nominee for MDV Entrepreneurs' Network
Fund II(A), L.P. and MDV Entrepreneurs' Network Fund II(B), L.P. together
held approximately 18.4% of the fully-diluted common shares of Kendara, and
Jonathan Feiber, a representative of these partnerships, served as a
director of Kendara.
(3) Prior to our acquisition of Kendara, Institutional Venture Partners VIII,
L.P., IVP Broadband Fund L.P. and IVM Investment Fund VIII, LLC together
held approximately 18.4% of the fully-diluted common shares of Kendara, and
Timothy M. Haley, a representative of these partnerships, served as a
director of Kendara.
(4) Pavani Diwanji was Chief Technical Officer and a director of Kendara. Prior
to our acquisition of Kendara, Ms. Diwanji held approximately 23.2% of the
fully-diluted common shares of Kendara.
(5) Freeman Murray was Secretary of Kendara. Prior to our acquisition of
Kendara, Mr. Freeman held approximately 19.0% of the fully-diluted common
shares of Kendara.
(6) Bret Comolli was Chief Executive Officer and a director of Kendara. Prior
to our acquisition of Kendara, Mr. Comolli held approximately 10.5% of the
fully-diluted common shares of Kendara.
(7) Prior to our acquisition of Kendara, Institutional Venture Partners VIII,
L.P., IVP Broadband Fund L.P. and IVM Investment Fund VIII, LLC together
held approximately 18.4% of the fully-diluted common shares of Kendara, and
Timothy M. Haley, a representative of these partnerships, served as a
director of Kendara.
(8) Prior to our acquisition of Kendara, Mohr, Davidow Ventures V, L.P. and
Mohr, Davidow Ventures V, L.P. as nominee for MDV Entrepreneurs' Network
Fund II(A), L.P. and MDV Entrepreneurs' Network Fund II(B), L.P. together
held approximately 18.4% of the fully-diluted common shares of Kendara, and
Jonathan Feiber, a representative of these partnerships, served as a
director of Kendara.
(9) Prior to our acquisition of Kendara, Institutional Venture Partners VIII,
L.P., IVP Broadband Fund L.P. and IVM Investment Fund VIII, LLC together
held approximately 18.4% of the fully-diluted common shares of Kendara, and
Jonathan Feiber, a representative of these partnerships, served as a
director of Kendara.
22
<PAGE>
In the acquisition of Kendara, in addition to issuing 1,475,211shares of our
Series A common stock, we issued 202.130 shares of our newly-created Series B
preferred stock which automatically converts into approximately 202,130 shares
of our Series A common stock on February 10, 2001. In addition, we issued
1,279.065 shares of our newly-created Series C preferred stock to Pavani
Diwanji, Freeman Murray and Bret Comolli which automatically converts into
approximately 1,279,065 shares of our Series A common stock as such shares vest
pursuant to stock purchase agreements or option agreements between Kendara and
each of Ms. Diwanji, Mr. Murray and Mr. Comolli.
Former Stockholders of Worldprints.com International, Inc.
The following table sets forth information with respect to the selling
stockholders that received the shares of our Series A common stock that they
may offer under this prospectus in connection with our acquisition of
Worldprints.com, International, Inc. on April 5, 2000. Except for the
relationships described below, the selling stockholders have not had any other
position, office or other material relationship with us or any of our
predecessors or affiliates.
The share information provided in the table below is based on information
provided to us by the selling stockholders as of April 4, 2000. Each selling
stockholder owns less than 1% of our outstanding Series A common stock, based
on 361,800,891 shares of Series A common stock outstanding as of March 8, 2000.
We may update, amend or supplement this prospectus from time to time to update
the disclosure in this section.
The selling stockholders may from time to time offer and sell any or all of
their shares that are registered under this prospectus. Because the selling
stockholders are not obligated to sell their shares, and because the selling
stockholders may also acquire publicly traded shares of our Series A common
stock, we cannot estimate how many shares of the selling stockholders will
beneficially own after this offering.
<TABLE>
<CAPTION>
Amount of Total Warrant
Shares Owned Shares Shares
Before the that May be that May be
Name Offering* Offered* Offered**
- ---- ------------ ----------- -----------
<S> <C> <C> <C>
Barrett Capital Limited (1).............. 284,099 284,099 --
The Productivity Fund III, L.P (2)....... 131,594 131,594 46,789
Apex Investment Fund III, L.P. and Apex
Strategic Partners, LLC (3)............. 131,593 131,593 46,789
Timothy F. Stainton (4).................. 97,990 97,990 --
Richard A. Schmelzer (5)................. 72,546 72,546 --
Jon E. Gordon (6)........................ 72,546 72,546 --
Robert Schmelzer (7)..................... 70,826 70,826 --
John Garay (8)........................... 55,971 55,971 55,971
Jim McElhiney............................ 39,010 39,010 39,010
The Wrightville Technical Trust.......... 26,904 26,904 26,904
Virginia Stainton........................ 19,130 19,130 --
Andrew Balfour........................... 8,480 8,480 8,480
Barbara Steele........................... 8,480 8,480 8,480
Sara Zook................................ 4,638 4,638 --
Kevin A. and Dorinda D. Cudney........... 4,638 4,638 --
Kevin O'Connell (9)...................... 4,240 4,240 --
Lewis Visscher (10)...................... 1,999 1,999 --
Mark Bossert............................. 1,719 1,719 --
Total.................................. 1,036,403 1,036,403 232,423
</TABLE>
- --------
* Including shares issuable upon exercise of warrants we assumed in the
acquisition.
** Warrant component of the total shares that the selling stockholders may
offer.
23
<PAGE>
(1) Prior to our acquisition of Worldprints.com, Barrett Capital Limited held
approximately 35.3% of Worldprints.com's outstanding capital stock and
John Garay, a representative of this stockholder, served as a director of
Worldprints.com.
(2) Prior to our acquisition of Worldprints.com, The Productivity Fund III,
L.P. held approximately 10.5% of Worldprints.com's outstanding capital
stock.
(3) Prior to our acquisition of Worldprints.com, Apex Investment Fund III,
L.P. and Apex Strategic Partners, LLC, each an affiliate of the other,
held approximately 10.5% of Worldprints.com's outstanding capital stock
and James Johnson, a representative of these stockholders served as a
director of Worldprints.com.
(4) Prior to our acquisition of Worldprints.com, Timothy F. Stainton held
approximately 12.2% of Worldprints.com's outstanding capital stock.
(5) Mr. Richard Schmelzer served as President, Chief Executive Officer and a
director Worldprints.com.
(6) Mr. Gordon served as Chief Operating Officer, Treasurer, an Assistant
Secretary and a director of Worldprints.com.
(7) Mr. Robert Schmelzer served as Vice President--Content and an Assistant
Secretary of Worldprints.com.
(8) Mr. Garay served as a director of Worldprints.
(9) Mr O'Connell served as Vice President--Corporate Development, General
Counsel and Secretary of Worldprints.com.
(10) Mr. Visscher served as Vice President--Finance and Administration of
Worldprints.com.
On April 5, 2000, we completed our acquisition of Worldprints.com, a
Colorado corporation, the operator of the Worldprints.com web site, which
promotes and sells images in a variety of media. We plan to incorporate the
Worldprints.com content across our complement of content offerings.
The acquisition was accomplished by merging Worldprints.com with and into
Walter Acquisition Corporation, a wholly-owned subsidiary of Excite@Home, with
Walter Acquisition Corporation surviving as the continuing corporation. The
transaction was accounted for as a purchase and the merger is intended to
qualify as a tax-free reorganization.
In the acquisition, in addition to issuing 803,980 shares of our Series A
common stock, we issued shares of our Series B preferred stock which
automatically convert into approximately 803,980 shares of our Series A common
stock on the first anniversary of the merger's completion. We also converted
outstanding Worldprints.com options into options to purchase up to 278,198
shares of our Series A common stock and outstanding Worldprints.com warrants
into warrants to purchase up to 232,423 shares of our Series A common stock. In
addition to the securities we issued in the acquisition, we also paid, prior to
the completion of the transaction, $4 million plus interest of
Worldprints.com's outstanding debt and assumed $6.5 million plus interest in
loans that we previously made to Worldprints.com. We were obligated under the
merger agreement to file a registration statement on Form S-3 with the
Securities and Exchange Commission to register for resale the shares of Series
A common stock issued in the acquisition and the shares of Series A common
stock issuable upon exercise of the warrants issued in the merger. We are also
obligated under the merger agreement to file a registration statement on Form
S-8 with respect to the converted options.
Forty percent of the Series B preferred stock issued in the acquisition was
held back from the selling stockholders by Excite@Home as security for the
Worldprints.com shareholders' indemnification obligations under the merger
agreement. These shares will be released to the former Worldprints.com
shareholders on March 31, 2001, less any shares returned to Excite@Home in
respect of damages incurred by Excite@Home or subject to Excite@Home claims for
damages still outstanding at that date.
24
<PAGE>
PLAN OF DISTRIBUTION
Who may sell and applicable restrictions. The selling stockholders will be
offering and selling all shares offered and sold under this prospectus.
Alternatively, the selling stockholders may from time to time offer the shares
through brokers, dealers or agents that may receive compensation in the form of
discounts, concessions or commissions from the selling stockholders and/or the
purchasers of the shares for whom they may act as agent. In effecting sales,
broker-dealers that are engaged by the selling stockholders may arrange for
other broker-dealers to participate. The selling stockholders 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 stockholders may be deemed
to be underwriters, they 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.
In addition, some of the selling stockholders are venture capital funds,
corporations or trusts which may, in the future, distribute their shares to
their partners, stockholders or trust beneficiaries, respectively, which
distributees may likewise distribute such shares to their partners,
stockholders or trust beneficiaries. Those shares may later be sold by those
partners, stockholders or trust beneficiaries, or by any of their respective
distributees.
Manner of sales. The selling stockholders will act independently of us 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 or at negotiated prices. The selling
stockholders may also resell all or a portion of the shares in open market
transactions in reliance upon Rule 144 under the Securities Act, provided that
the shares meet the criteria and conform to the requirements of this rule. The
selling stockholders may decide not to sell any of the shares offered under
this prospectus, and they may transfer, devise or gift these shares by other
means.
The shares 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 stockholders 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 stockholders 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 stockholders 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.
25
<PAGE>
Hedging and other transactions with broker-dealers. In connection with
distributions of the securities, the selling stockholders 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
stockholders. The selling stockholders may also sell securities short and
redeliver the securities to close out short positions. The selling stockholders
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
loaned or, upon a default, the broker-dealer may effect sales of the pledged
securities under this prospectus.
Prospectus delivery. Because selling stockholders 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 set
forth:
. the name of the selling stockholder 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; stockholders 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 stockholder 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.
Expenses associated with registration. We have agreed to pay the expenses of
registering the shares under the Securities Act, including registration and
filing fees, printing and duplication expenses, administrative expenses and
legal and accounting fees. Each selling stockholder will pay its own brokerage
and legal fees, if any.
Suspension of this offering. We may suspend the use of this prospectus if we
learn of any event that causes this prospectus to include an untrue statement
of a material fact or omit 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 stockholder.
The Series A common stock offered under this prospectus was originally
issued to former stockholders of Bluemountain.com, Kendara, Inc. and
Worldprints.com in connection with the acquisitions of these companies pursuant
to exemptions from the registration requirements of the Securities Act provided
by Section 4(2) thereof and/or Regulation D promulgated thereunder. In
connection with the acquisitions of Bluemountain.com, Kendara, and
Worldprints.com, we agreed to register the shares of Series A common stock
offered under this prospectus under the Securities Act. Excite@Home and the
selling stockholders have agreed to indemnify each other, and their respective
controlling persons, against specific liabilities, including liabilities
arising under the Securities Act and Exchange Act, in connection with the offer
and sale of the shares. In addition, the selling stockholders may indemnify
brokers, dealers, agents or underwriters that participate in transactions
involving sales of the shares against specific liabilities, including
liabilities arising under the Securities Act and/or Exchange Act.
26
<PAGE>
LEGAL MATTERS
Fenwick & West LLP, Palo Alto, California, will provide us with an opinion as
to legal matters in connection with the shares of Series A common stock that
may be offered with this prospectus.
EXPERTS
Ernst & Young LLP, independent auditors, have audited our consolidated
financial statements and schedule included in our Annual Report on Form 10-K
for the year ended December 31, 1999 as set forth in their report, which is
incorporated by reference in this prospectus and elsewhere in the Registration
Statement. Our consolidated financial statements and schedule are incorporated
by reference in reliance on Ernst & Young LLP's report-given on their authority
as experts in accounting and auditing.
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, as amended, of which this
prospectus is a part, and the exhibits filed with this registration
statement and incorporated into the registration statement by
reference;
. our annual report on Form 10-K for the fiscal year ended December 31,
1999;
. the registration of our Series A common stock on Form 8-A filed on June
13, 1997 under Section 12(g) of the Exchange Act, including any
amendment or report filed for the purpose of updating such description;
. our current report on Form 8-K filed with the SEC on April 4, 2000;
. all other information that we file with the Commission under 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 Room 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.
27
<PAGE>
We have filed with the Commission a registration statement on Form S-3 under
the Securities Act with respect to the 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 and our Series A common
stock. Statements contained in this prospectus as to the contents of any
contract or other document are not necessarily complete and, in each 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.
28
<PAGE>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
[LOGO OF EXCITE@HOME APPEARS HERE]
At Home Corporation
6,322,003 Shares of
Series A common stock
----------------
PROSPECTUS
, 2000
----------------
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. The selling stockholders are offering to sell, and
seeking offers to buy, shares of common stock only in jurisdictions where
offers and sales are permitted. The information contained in this prospectus is
accurate only as of the date of this prospectus, regardless of the time of
delivery of this prospectus or of any sale of common stock.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<PAGE>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 14. Other Expenses of Issuance and Distribution.
The following table sets forth the various expenses payable by the
Registrant in connection with the sale and distribution of the securities being
registered hereby. Normal commission expenses and brokerage fees are payable
individually by the selling stockholders. All amounts are estimated except the
Securities and Exchange Commission registration fee and the Nasdaq National
Market filing fee.
<TABLE>
<S> <C>
Securities and Exchange Commission registration fee................ $ 46,702.24
Nasdaq National Market filing fee.................................. 17,500.00
Accounting fees and expenses....................................... 10,000.00
Legal fees and expenses............................................ 40,000.00
Miscellaneous...................................................... 5,797.76
-----------
Total............................................................ $120,000.00
===========
</TABLE>
ITEM 15. Indemnification of Directors and Officers.
As permitted by the Delaware General Corporation Law, the registrant's
certificate of incorporation, as amended and restated, includes a provision
that eliminates the personal liability of its directors to the registrant or
its stockholders for monetary damages for breach of fiduciary duty as a
director, except for liability:
. for any breach of the director's duty of loyalty to the corporation or
its stockholders;
. for acts or omissions not in good faith or that involve intentional
misconduct or a knowing violation of law;
. under Section 174 of the Delaware General Corporation Law; and
. for any transaction from which the director derived an improper personal
benefit.
As permitted by Section 145 of the Delaware General Corporation Law, the
registrant's certificate of incorporation, as amended and restated, further
provides:
. for mandatory indemnification, to the fullest extent permitted by
applicable law, for any person who is or was a director or officer, or
is or was serving at the request of the registrant as a director,
officer, employee or agent of another corporation or of a partnership,
joint venture, trust, enterprise or nonprofit entity, including service
with respect to employee benefit plans, against all liability and loss
suffered and expenses (including attorneys' fees) reasonably incurred by
this person;
. that the registrant's obligation to indemnify any person who was or is
serving at the registrant's request as a director, officer, employee or
agent of another corporation, partnership, joint venture, trust,
enterprise or nonprofit entity must be reduced by any amount the person
may collect as indemnification from the other corporation, partnership,
joint venture, trust, enterprise or nonprofit entity;
. that the registrant must advance to all indemnified parties the expenses
(including attorneys' fees) incurred in defending any proceeding
provided that indemnified parties (if they are directors or officers)
must provide the registrant an undertaking to repay the advances if
indemnification is determined to be unavailable;
. that the rights conferred in the certificate of incorporation are not
exclusive; and
. that the registrant may not retroactively amend the certification of
incorporation provisions relating to indemnity.
II-1
<PAGE>
The indemnification provision in the registrant's certificate of
incorporation and the indemnification agreements entered into between the
registrant and each of its directors and executive officers may be sufficiently
broad to permit indemnification of the registrant's directors and officers for
liabilities arising under the Securities Act. The registrant has also obtained
directors' and officers' liability insurance.
The following documents are incorporated by reference:
Document
1. Fifth Amended and Restated Certificate of Incorporation (see Exhibit
3.01).
2. Form of Indemnification Agreement entered into between the registrant
and each of its directors and executive officers (incorporated by
reference to Exhibit 10.09 to the registrant's registration statement
on Form S-1 (File No. 333-27323) declared effective by the Commission
on July 11, 1997).
In addition, the registrant has entered into various merger agreements and
related registration rights agreements in connection with its acquisitions of
and mergers with various companies under which the parties to those agreements
have agreed to indemnify the registrant and its directors, officers, employees
and controlling persons against specified liabilities, including liabilities
arising under the Securities Act, the Exchange Act or other federal or state
laws.
Item 16. Exhibits.
The following exhibits are filed with this registration statement or
incorporated into this registration statement by reference:
<TABLE>
<CAPTION>
Exhibit
Number Exhibit Title
------- -------------
<C> <S>
4.01 The Registrant's Fifth Amended and Restated Certificate of
Incorporation filed with the Delaware Secretary of State on May 28,
1999 (incorporated by reference to Exhibit 4.01 to the Registrant's
registration statement on Form S-8, File No. 333-79883, filed with the
Commission on June 3, 1999).
4.02 The Registrant's Second Amended and Restated Bylaws as adopted on July
16, 1997 (incorporated by reference to Exhibit 3.05 to the
Registrant's registration statement on Form S-1, File No. 333-27323,
declared effective by the Commission on July 11, 1997).
4.03 Form of certificate of the Registrant's Series A Common Stock
(incorporated by reference to Exhibit 4.05 to the Registrant's
registration statement on Form S-1, File No. 333-27323, declared
effective by the Commission on July 11, 1997).
4.04 Form of Certificate of Designation of Series B Non-Voting Convertible
Preferred Stock of At Home Corporation.*
4.05 Form of Certificate of Designation of Series C Non-Voting Convertible
Preferred Stock of At Home Corporation.*
4.06 Agreement and Plan of Reorganization, dated October 23, 1999, by and
among At Home Corporation and Hartford House, Ltd. (incorporated by
reference to Exhibit 2.01 of our Quarterly Report on Form 10-Q for the
quarter ending on September 30, 1999).*
4.07 Agreement and Plan of Reorganization, dated April 5, 2000, by and
among At Home Corporation, Grisham Acquisition Corporation, Kendara,
Inc. and a representative of the former stockholders of Kendara,
Inc.**
4.08 Agreement and Plan of Reorganization, dated April 5, 2000, by and
among At Home Corporation, Walter Acquisition Corporation,
Worldprints.com International, Inc. and the founding shareholders of
Worldprints.com International, Inc.**
</TABLE>
II-2
<PAGE>
<TABLE>
<CAPTION>
Exhibit
Number Exhibit Title
------- -------------
<C> <S>
5.01 Opinion of Fenwick & West LLP regarding the legality of offer and sale
of 5,285,600 shares of Series A common stock being registered.*
5.02 Opinion of Fenwick & West LLP regarding legality of offer and sale of
1,036,403 shares of Series A common stock being registered.**
23.01 Consent of Ernst & Young LLP, Independent Auditors.
23.02 Consent of Fenwick & West LLP for Exhibit 5.01 legal opinion (included
in Exhibit 5.01).
23.03 Consent of Fenwick & West LLP for Exhibit 5.02 legal opinion**
24.01 Power of attorney (see pg. II-5 of this registration statement).
</TABLE>
- --------
* Previously filed.
** To be filed by amendment.
ITEM 17. Undertakings.
The registrant hereby undertakes:
(1) To file, during any period in which offers or sales are being made, a
post-effective amendment to this registration statement:
(a) to include any prospectus required by Section 10(a)(3) of the
Securities Act;
(b) to reflect in the prospectus any facts or events arising after the
effective date of the registration statement (or the most recent post-
effective amendment thereof) which, individually or in the aggregate,
represent a fundamental change in the information set forth in the
registration statement; and
(c) to include any material information with respect to the plan of
distribution not previously disclosed in the registration statement or
any material change to the information in the registration statement;
provided, however, that paragraphs (1)(a) and (1)(b) above do not apply if
the information required to be included in a post-effective amendment by
those paragraphs is contained in periodic reports filed with or furnished
to the Commission by Registrant pursuant to Section 13 or Section 15(d) of
the Exchange Act that are incorporated by reference in the registration
statement.
(2) That, for the purpose of determining any liability under the Securities
Act, each post-effective amendment shall be deemed to be a new registration
statement relating to the securities offered in the registration statement, and
the offering of the securities at that time shall be deemed to be the initial
bona fide offering of those securities.
(3) To remove from registration by means of a post-effective amendment any
of the securities being registered which remain unsold at the termination of
the offering.
(4) That, for purposes of determining any liability under the Securities
Act, each filing of the registrant's annual report pursuant to Section 13(a) or
Section 15(d) of the Exchange Act that is incorporated by reference in the
registration statement shall be deemed to be a new registration statement
relating to the securities offered in the registration statement, and the
offering of the securities at that time shall be deemed to be the initial bona
fide offering of those securities.
(5) Insofar as indemnification for liabilities arising under the Securities
Act may be permitted to directors, officers and controlling persons of the
registrant pursuant to the provisions discussed in Item 6 hereof, or otherwise,
the registrant has been advised that in the opinion of the Commission this
indemnification is against public policy as expressed in the Securities Act and
is, therefore, unenforceable. If a claim for indemnification against these
liabilities (other than the payment by the registrant of expenses incurred or
paid
II-3
<PAGE>
by a director, officer or controlling person of the registrant in the
successful defense of any action, suit or proceeding) is asserted by the
director, officer or controlling person in connection with the securities being
registered under this registration statement, the registrant will, unless in
the opinion of its counsel the matter has been settled by controlling
precedent, submit to a court of appropriate jurisdiction the question whether
indemnification by it is against public policy as expressed in the Securities
Act and will be governed by the final adjudication of this issue.
(6) That, for purposes of determining any liability under the Securities
Act, the information omitted from the form of prospectus filed as part of a
registration statement in reliance upon Rule 430A and contained in the form of
prospectus filed by the registrant pursuant to Rule 424(b)(1) or (4) or 497(h)
under the Securities Act shall be deemed to be part of the registration
statement as of the time it was declared effective.
(7) For purpose of determining any liability under the Securities Act, each
post-effective amendment that contains a form of prospectus shall be deemed to
be a new registration statement relating to the securities offered therein, and
the offering of such securities at that time shall be deemed to be the initial
bona fide offering thereof.
II-4
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the Registrant,
At Home Corporation, certifies that it has reasonable grounds to believe that
it meets all of the requirements for filing on Form S-3 and has duly caused
this registration statement to be signed on its behalf by the undersigned,
thereunto duly authorized, in Redwood City, State of California, on this 10th
day of April, 2000.
AT HOME CORPORATION
*
By: _________________________________
George Bell
President and Chief Executive
Officer
POWER OF ATTORNEY
Each individual whose signature appears below constitutes and appoints George
Bell, Kenneth A. Goldman and David G. Pine, and each of them, his true and
lawful attorneys-in-fact and agents, each with the power of substitution, for
him and in his name, place and stead, in any and all capacities, to sign any
and all amendments (including post-effective amendments) to this registration
statement, and to sign any registration statement for the same offering covered
by this registration statement that is to be effective upon filing pursuant to
Rule 462(b) promulgated under the Securities Act of 1933, and all post-
effective amendments thereto, and to file the same, with all exhibits thereto
and all documents in connection therewith, with the Securities and Exchange
Commission, granting unto said attorneys-in-fact and agents, and each of them,
full power and authority to do and perform each and every act and thing
requisite and necessary to be done in and about the premises, as fully to all
intents and purposes as he might or could do in person, hereby ratifying and
confirming all that said attorneys-in-fact and agents or any of them, or his or
their substitute or substitutes, may lawfully do or cause to be done by virtue
hereof.
Pursuant to the requirements of the Securities Act of 1933, this registration
statement has been signed by the following persons in the capacities and on the
dates indicated.
<TABLE>
<CAPTION>
Signature Title Date
--------- ----- ----
Principal Executive Officer:
<S> <C> <C>
* President, Chief Executive April 10, 2000
____________________________________ Officer and Director
George Bell
Principal Financial Officer:
* Executive Vice President and April 10, 2000
____________________________________ Chief Financial Officer
Kenneth A. Goldman
Principal Accounting Officer:
* Vice President, Corporate April 10, 2000
____________________________________ Controller and Treasurer
Robert A. Lerner
</TABLE>
II-5
<PAGE>
<TABLE>
<CAPTION>
Signature Title Date
--------- ----- ----
<S> <C> <C>
Additional Directors:
* Chairman April 10, 2000
____________________________________
Thomas A. Jermoluk
* Director April 10, 2000
____________________________________
William R. Hearst III
* Director April 10, 2000
____________________________________
John C. Malone
* Director April 10, 2000
____________________________________
John C. Petrillo
* Director April 10, 2000
____________________________________
Brian L. Roberts
* Director April 10, 2000
____________________________________
David M. Woodrow
/s/ David G. Pine April 10, 2000
*By: _______________________________
David G. Pine
Attorney-in-fact
</TABLE>
II-6
<PAGE>
Exhibits Index
<TABLE>
<CAPTION>
Exhibit
Number Exhibit Title
------- -------------
<C> <S>
23.01 Consent of Ernst & Young LLP, Independent Auditors.
24.01 Power of attorney (see pg. II-5 of this registration statement).
</TABLE>
<PAGE>
EXHIBIT 23.01
CONSENT OF ERNST & YOUNG LLP, INDEPENDENT AUDITORS
We consent to the reference to our firm under the caption "Experts" in
Amendment No. 1 to the Registration Statement on Form S-3 and related
Prospectus of At Home Corporation for the registration of 6,322,003 shares of
its Series A common stock and to the incorporation by reference therein of our
report dated January 20, 2000, with respect to the consolidated financial
statements and Schedule of At Home Corporation included in its Annual Report on
Form 10-K for the year ended December 31, 1999, filed with the Securities and
Exchange Commission.
/s/ Ernst & Young LLP
San Jose, California
April 6, 2000
