<PAGE>
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934 (Amendment No. )
Filed by the Registrant [X]
Filed by a Party other than the Registrant [_]
Check the appropriate box:
[_] Preliminary Proxy Statement [_] CONFIDENTIAL, FOR USE OF THE
COMMISSION ONLY (AS PERMITTED BY
RULE 14A-6(E)(2))
[X] Definitive Proxy Statement
[_] Definitive Additional Materials
[_] Soliciting Material Pursuant to Section 240.14a-11(c) or Section 240.14a-12
CABLE MICHIGAN
- - --------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
- - --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required
[_] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
(1) Title of each class of securities to which transaction applies:
-------------------------------------------------------------------------
(2) Aggregate number of securities to which transaction applies:
-------------------------------------------------------------------------
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which
the filing fee is calculated and state how it was determined):
-------------------------------------------------------------------------
(4) Proposed maximum aggregate value of transaction:
-------------------------------------------------------------------------
(5) Total fee paid:
-------------------------------------------------------------------------
[_] Fee paid previously with preliminary materials.
[_] Check box if any part of the fee is offset as provided by Exchange
Act Rule 0-11(a)(2) and identify the filing for which the offsetting fee
was paid previously. Identify the previous filing by registration statement
number, or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
-------------------------------------------------------------------------
(2) Form, Schedule or Registration Statement No.:
-------------------------------------------------------------------------
(3) Filing Party:
-------------------------------------------------------------------------
(4) Date Filed:
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Notes:
<PAGE>
LOGO
CABLE MICHIGAN
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
JUNE 18, 1998
The Annual Meeting of Shareholders of Cable Michigan, Inc. will be held at
the executive offices of Cable Michigan, Inc., 105 Carnegie Center, Princeton,
New Jersey 08540, on Thursday, June 18, 1998, at 11:00 A.M. local time. The
meeting will be held for the following purposes:
1. To elect three (3) Directors to Class I to serve for a term of three (3)
years;
2. To ratify the appointment of Coopers & Lybrand L.L.P. as independent
auditors of the Company for the fiscal year ending December 31, 1998; and
3. To act upon such other matters as may properly come before the meeting
or any adjournment or postponement thereof.
Only shareholders of record at the close of business on May 20, 1998, will
be entitled to vote at the meeting either in person or by proxy. Each of these
shareholders is cordially invited to be present and vote at the meeting in
person.
In order to insure that your shares are represented and are voted in
accordance with your wishes, IT WILL BE APPRECIATED IF YOU WILL DATE AND SIGN
THE ENCLOSED PROXY AND RETURN IT PROMPTLY IN THE ACCOMPANYING ENVELOPE. If you
attend the meeting, you may personally vote your shares regardless of whether
you have signed a proxy.
LOGO
/s/ BRUCE C. GODFREY
Bruce C. Godfrey,
Corporate Secretary
Dated: May 26, 1998
<PAGE>
CABLE MICHIGAN, INC.
----------------
PROXY STATEMENT
----------------
ANNUAL MEETING OF SHAREHOLDERS TO BE HELD ON THURSDAY, JUNE 18, 1998
This Proxy Statement is being mailed to shareholders on or about May 26,
1998, in connection with the solicitation of proxies by the Board of Directors
of Cable Michigan, Inc. ("Cable Michigan" or the "Company") for use at the
Annual Meeting of Shareholders (the "Annual Meeting") to be held on Thursday,
June 18, 1998, at 11:00 A.M., local time, at the executive offices of the
Company, 105 Carnegie Center, Princeton, New Jersey 08540, and at any
adjournment or postponement thereof.
At the Annual Meeting, shareholders of Cable Michigan eligible to vote will
consider and vote upon proposals (i) to elect three (3) Class I Directors to
serve for a term of three (3) years; (ii) to ratify the appointment of Coopers
& Lybrand L.L.P. as independent auditors of Cable Michigan for the fiscal year
ending December 31, 1998; and (iii) to transact such other business as may
properly come before the meeting.
Any proxy may be revoked at any time prior to its exercise by notifying the
Corporate Secretary in writing, by delivering a duly executed proxy bearing a
later date or by attending the meeting and voting in person.
No person is authorized to give any information or to make any
representation not contained in this Proxy Statement in connection with the
solicitation made hereby, and if given or made, such information or
representation should not be relied upon as having been authorized by Cable
Michigan.
----------------
The date of this Proxy Statement is May 26, 1998.
1
<PAGE>
THE ANNUAL MEETING
PLACE, DATE AND TIME
The Annual Meeting will be held at the executive offices of the Cable
Michigan, Inc., 105 Carnegie Center, Princeton, New Jersey 08540, on Thursday,
June 18, 1998, at 11:00 A.M., local time.
PURPOSE OF THE ANNUAL MEETING
Shareholders of Cable Michigan will consider and vote upon proposals (i) to
elect three (3) Class I Directors to serve for a term of three (3) years; (ii)
to ratify the appointment of Coopers & Lybrand L.L.P. as independent auditors
of Cable Michigan for the fiscal year ending December 31, 1998; and (iii) to
transact such other business as may properly come before the meeting.
RECORD DATE, QUORUM, REQUIRED VOTE
The close of business on May 20, 1998, has been fixed as the record date for
the determination of shareholders entitled to notice of and to vote at the
Annual Meeting and at any adjournment or postponement thereof. On May 20,
1998, there were outstanding 6,896,342 shares of Cable Michigan Common Stock,
par value $1.00 per share ("Cable Michigan Common Stock"). Shareholders are
entitled to one vote per share of Cable Michigan Common Stock held. The
presence at the Annual Meeting, in person or by proxy, of shareholders
entitled to cast a majority of the votes entitled to be cast at the Annual
Meeting shall constitute a quorum at the Annual Meeting. Shareholders will be
entitled to one vote per share of Cable Michigan Common Stock on all matters
to be submitted to a vote at the Annual Meeting. Shareholders do not have
cumulative voting rights with respect to the election of Directors. Holders of
Cable Michigan Common Stock will vote as a single class on all matters.
In accordance with Pennsylvania law, a shareholder entitled to vote for the
election of directors can withhold authority to vote for all nominees for
directors or can withhold authority to vote for certain nominees for
directors.
Directors will be elected by a plurality of the votes cast at the Annual
Meeting. Abstentions and broker non-votes are not treated as votes cast, and
thus will not be the equivalent of votes against the election of a nominee.
The approval of Proposal 2 (regarding ratification of the appointment of
independent auditors) requires the affirmative vote of a majority of the votes
cast by the holders of Cable Michigan Common Stock voting as a single class.
Abstentions and broker non-votes, because they are not treated as votes cast,
will not be the equivalent of votes against Proposal 2.
2
<PAGE>
PROPOSAL 1
ELECTION OF DIRECTORS
The Company's Board of Directors is divided into three (3) classes and is
currently comprised of nine (9) members. One class is elected each year for a
three-year term. Each of the nominees for Class I Director is currently a
Class I Director whose term will expire at the Annual Meeting. They are as
follows: Bruce C. Godfrey, Daniel E. Knowles, and Raymond B. Ostroski. These
three (3) nominees, if elected at the 1998 Annual Meeting, will serve for a
term of three (3) years expiring at the Annual Meeting of Shareholders to be
held in 2001.
It is not anticipated that any of these nominees will become unavailable for
any reason, but, if that should occur before the Annual Meeting, the persons
named on the enclosed Proxy reserve the right to substitute another person of
their choice as nominee in his place or to vote for such lesser number of
Directors as may be prescribed by the Board of Directors.
The Board of Directors recommends that the shareholders vote FOR the
election of these three (3) nominees as Class I Directors to serve for a term
of three (3) years.
DIRECTOR INFORMATION
Information as of April 1, 1998, concerning the nominees for election as
Class I Directors and for the other current Directors is set forth below.
<TABLE>
<CAPTION>
DIRECTOR
NAME OF DIRECTOR AGE SINCE
---------------- --- --------
<C> <C> <S> <C>
R. Douglas Bradbury 47 Executive Vice President and Chief 1998
Financial Officer of Level 3
Communications, Inc. ("Level 3") since
August 1997; Chief Financial Officer of MFS
Communications Company ("MFS/WorldCom")
from January 1992 to December 1996,
Executive Vice President from August 1995
to December 1996 and Senior Vice President
from September 1992 to August 1996; Senior
Vice President - Corporate Affairs for MFS
Telecom, Inc. from January 1988 to August
1992.
Bruce C. Godfrey 42 Corporate Secretary of the Company since 1997
September 1997; Executive Vice President
and Chief Financial Officer of C-TEC
Corporation, by name change, Commonwealth
Telephone Enterprises, Inc. ("CTE"), since
April 1994 and Corporate Secretary since
September 1997; Director, Executive Vice
President and Chief Financial Officer of
RCN Corporation ("RCN") since September
1997; Director, Executive Vice President
and Chief Financial Officer of Mercom, Inc.
("Mercom") from April 1994 to October 1997;
Director of Mercom since May 1994 and
Corporate Secretary since October 1997;
Senior Vice President and Principal of
Daniels and Associates from January 1984 to
April 1994.
</TABLE>
3
<PAGE>
<TABLE>
<CAPTION>
DIRECTOR
NAME OF DIRECTOR AGE SINCE
---------------- --- --------
<C> <C> <S> <C>
Mark Haverkate 43 President and Chief Operating Officer of 1997
the Company since September 1997; Executive
Vice President of Business Development of
RCN since September 1997; President and
Chief Operating Officer of Mercom since
October 1997; President of RCN Business
Development from June 1997 to September
1997; Executive Vice President of Business
Development of CTE from May 1997 to
September 1997; President for Business
Operations at RCN Telecom Services, Inc.
from August 1996 to November 1996;
Executive Vice President of CTE's Cable
Television Group from July 1995 to August
1996, Executive Vice President of
Development for CTE from February 1995 to
July 1995; Executive Vice President of C-
TEC International, Inc., now by name
change, RCN International Holdings, Inc.
from May 1995 to November 1996; Executive
Vice President for Development of Mercom
from November 1995 to February 1996; Vice
President of Development for CTE from
December 1993 to February 1995, Vice
President of CTE's Cable Television Group
from October 1989 to December 1993.
Frank M. Henry 64 Chairman, Frank Martz Coach Company since 1997
1995 and President of Frank Martz Coach
Company from 1964 to 1995; President, Gold
Line, Inc., since 1975; Director of First
Union Corporation; and Director of CTE
since 1980.
Daniel E. Knowles 68 President of Cambridge Human Resources 1997
since 1989; Vice President of Personnel and
Administration, Grumman Corporation, from
1963 to 1989; and Director of CTE since
1995.
David C. McCourt 41 Chairman and Chief Executive Officer of the 1997
Company since September 1997; Chairman,
Director and Chief Executive Officer of CTE
since October 1993; Chairman, Director and
Chief Executive Officer of RCN since
September 1997; President and Director of
Level 3 Telecom Holdings, Inc. ("LTH");
Chairman, Director and Chief Executive
Officer of Mercom since October 1993;
Director of MFS/WorldCom from July 1990 to
December 1996; President and Director of
Metropolitan Fiber Systems/McCourt, Inc., a
subsidiary of MFS Telecom, Inc., since
1988; Director of Cable Satellite Public
Affairs Network ("C-SPAN") since June 1995;
Director of WorldCom from December 1996 to
March 1997; and Director of Level 3 since
January 1998.
David C. Mitchell 56 Former President of Rochester Telephone 1997
Corporation's Telephone Group, Corporate
Executive Vice President and Director of
Rochester Telephone Corporation ("RTC"),
now Frontier Corporation; Director of Lynch
Corporation and USN Communications; and
Director of CTE since 1993. Since 1963, Mr.
Mitchell held various positions throughout
RTC encompassing virtually all disciplines
of the company.
Raymond B. Ostroski 43 Former Executive Vice President and General 1997
Counsel of CTE from February 1995 to
September 1997 and Corporate Secretary of
CTE from October 1989 to September 1997;
Director of Mercom since May 1994 and
Executive Vice President and General
Counsel of Mercom from February 1995 to
September 1997; Vice President and General
Counsel of CTE from December 1990 to
February 1995, Vice President and General
Counsel of Mercom from December 1991 to
February 1995, and Corporate Secretary of
Mercom from December 1991 to December 1994.
</TABLE>
4
<PAGE>
<TABLE>
<CAPTION>
DIRECTOR
NAME OF DIRECTOR AGE SINCE
---------------- --- --------
<C> <C> <S> <C>
Timothy J. Stoklosa 37 Executive Vice President and Chief 1997
Financial Officer of the Company since
September 1997; Senior Vice President and
Treasurer of RCN since September 1997;
Senior Vice President of Finance of CTE
since February 1997, Treasurer of CTE since
August 1994; Executive Vice President and
Chief Financial Officer of Mercom since
October 1997; Manager of Mergers and
Acquisitions at Peter Kiewit Sons', Inc.
("PKS") from October 1991 to August 1994;
and Senior Financial Analyst of Corporate
Development at Citizens Utilities Co. from
February 1990 to October 1991.
</TABLE>
- - --------
The Board of Directors is divided into three classes. Bruce C. Godfrey,
Daniel E. Knowles and Raymond B. Ostroski are members of Class I whose term
will expire at the Annual Meeting. R. Douglas Bradbury, Mark Haverkate and
David C. Mitchell are members of Class II with terms expiring in 1999. Frank
M. Henry, David C. McCourt and Timothy J. Stoklosa are members of Class III
with terms expiring in 2000.
5
<PAGE>
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
THE COMPANY
The following table sets forth the beneficial ownership of Cable Michigan
Common Stock as of April 1, 1998, by each director, the Named Executive
Officers and by all persons, as a group, who are currently directors and
executive officers of the Company and by each person who is known to the
Company to be the beneficial owner of more than five percent (5%) of the Cable
Michigan Common Stock. Each director or executive officer has sole investment
and voting power over the shares listed opposite his name except as set forth
in the footnotes hereto:
<TABLE>
<CAPTION>
COMMON STOCK
------------------------
NUMBER OF
SHARES PERCENT OF
NAME OF BENEFICIALLY OUTSTANDING
BENEFICIAL OWNER OWNED (1) SHARES
- - ---------------- ------------ -----------
<S> <C> <C>
R. Douglas Bradbury.................................... -- --
John J. Gdovin (2)..................................... 1,743 *
Bruce C. Godfrey (2)................................... 4,741 *
Mark Haverkate (2)..................................... 4,596 *
Frank M. Henry......................................... 16,140 *
David E. Knowles....................................... 234 *
David C. McCourt (2)(3)................................ 12,382 *
David C. Mitchell...................................... 681 *
Raymond B. Ostroski.................................... 18,419 *
Timothy J. Stoklosa.................................... 1,014 *
All Directors and Executive Officers as a Group
(15 Persons).......................................... 59,950 *
Level 3 Telecom Holdings, Inc. (4)..................... 3,330,121 48%
</TABLE>
- - --------
(*)Less than 1% of the outstanding shares
(1) Includes forfeitable Matching Shares (as defined below), and Share Units
(as defined below).
(2) Under the Cable Michigan Executive Stock Purchase Plan ("ESPP"),
participating executive officers who forgo current compensation are
credited with Cable Michigan "Share Units," the value of which is based on
the value of a share of Cable Michigan Common Stock. ESPP participants who
elect to receive Share Units in lieu of current compensation are also
credited with restricted "Matching Shares," which vest over a period of
three (3) years from the grant date, subject to continued employment.
Matching Shares, unless forfeited, have voting and dividend rights. The
holdings indicated include Share Units and Matching Shares. The table
below shows, in respect of each Named Executive Officer, the number of
shares of Cable Michigan Common Stock purchased outright, Share Units
relating to Cable Michigan Common Stock acquired by each Named Executive
Officer in lieu of current compensation, and the forfeitable Matching
Shares of Cable Michigan Common Stock held by each Named Executive
Officer:
<TABLE>
<CAPTION>
SHARE UNITS TOTAL SHARES
ACQUIRED UNDER PURCHASED AND
SHARES THE ESPP IN TOTAL SHARES RESTRICTED ACQUIRED AND
PURCHASED LIEU OF CURRENT PURCHASED AND MATCHING RESTRICTED
OUTRIGHT COMPENSATION ACQUIRED SHARES MATCHING SHARES
--------- --------------- ------------- ---------- ---------------
<S> <C> <C> <C> <C> <C>
John J. Gdovin.......... 677 533 1,210 533 1,743
Bruce C. Godfrey........ 1,251 1,745 2,996 1,745 4,741
Mark Haverkate.......... 2,392 1,102 3,494 1,102 4,596
David C. McCourt........ 2,894 4,744 7,638 4,744 12,382
</TABLE>
- - --------
(3) Includes 56 shares of Cable Michigan Common Stock which are owned by Mr.
McCourt's wife. Mr. McCourt disclaims beneficial ownership of such shares.
Does not include 3,330,121 shares of Cable Michigan Common Stock held by
LTH.
6
<PAGE>
(4) As a result of PKS separating its construction and mining management
businesses ("Construction Group") from its other businesses on March 31,
1998 (the "Split-Off"), PKS no longer owns an interest in the Construction
Group. In conjunction with the Split-Off, PKS changed its name to "Level 3
Communications, Inc." and the new PKS, the company formed in the Split-Off
to hold the Construction Group's business, changed its name to "Peter
Kiewit Sons', Inc." Level 3 holds 90% of the common stock of LTH and all
of the preferred stock of LTH. David C. McCourt, Chairman and Chief
Executive Officer of the Company, owns the remaining 10% of the common
stock of LTH. Level 3 has recently been merged into PKS and PKS has
changed its name to Level 3 Communications, Inc. The address of Level 3 is
3555 Farnam Street, Omaha, Nebraska 68131. The address of LTH is 1000
Kiewit Plaza, Omaha, Nebraska 68131.
The information set forth above and in "Director Information" does not give
effect to the ownership of Company securities by LTH. Certain executive
officers or directors of the Company are directly or indirectly affiliated
with LTH.
MERCOM, INC.
Set forth below is certain information regarding the beneficial ownership of
the Common Stock of Mercom, a 61.92% owned subsidiary of the Company, as of
April 1, 1998, by each director, the Named Executive Officers and by all
persons, as a group, who are currently directors and executive officers of the
Company. Each director or executive officer has sole investment and voting
power over the shares listed opposite his name except as set forth in the
footnotes hereto:
<TABLE>
<CAPTION>
NUMBER OF SHARES PERCENT OF
NAME OF BENEFICIAL OWNER BENEFICIALLY OWNED OUTSTANDING SHARES
- - ------------------------ ------------------ ------------------
<S> <C> <C>
R. Douglas Bradbury...................... -- --
John J. Gdovin........................... -- --
Bruce C. Godfrey......................... -- --
Mark Haverkate........................... -- --
Frank M. Henry........................... -- --
Daniel E. Knowles........................ -- --
David C. McCourt......................... 50,000(1) --
David C. Mitchell........................ -- --
Raymond B. Ostroski...................... 4,000 *
Timothy J. Stoklosa...................... -- --
All Directors and Executive Officers as a
Group
(15 persons)............................ 54,000 *
</TABLE>
- - --------
(*)Less than 1% of the outstanding shares.
(1) Includes 50,000 shares which are owned by Mr. McCourt's wife. Mr. McCourt
disclaims beneficial ownership of such shares.
7
<PAGE>
LEVEL 3 COMMUNICATIONS, INC.
Set forth below is certain information regarding the beneficial ownership of
equity securities of Level 3 Common Stock as of April 1, 1998, by each
director, the Named Executive Officers and by all persons, as a group, who are
currently directors and executive officers of the Company.
<TABLE>
<CAPTION>
NUMBER OF SHARES PERCENT OF
NAME OF BENEFICIAL OWNER BENEFICIALLY OWNED OUTSTANDING SHARES
- - ------------------------ ------------------ ------------------
<S> <C> <C>
R. Douglas Bradbury...................... 1,277,595 *
John J. Gdovin........................... -- --
Bruce C. Godfrey......................... -- --
Mark Haverkate........................... -- --
Frank M. Henry........................... -- --
Daniel E. Knowles........................ -- --
David C. McCourt......................... 57,500 *
David C. Mitchell........................ -- --
Raymond B. Ostroski...................... -- --
Timothy J. Stoklosa...................... 2,155 --
All Directors and Executive Officers as a
Group
(15 Persons)............................ 1,337,650 *
</TABLE>
- - --------
(*) Less than 1% of the outstanding shares of the class.
EXECUTIVE COMPENSATION
No executive officer of the Company received any compensation for services
rendered on behalf of the Company during the fiscal year ended December 31,
1997. See "Certain Transactions."
In connection with the Distribution, each CTE option held by the Named
Executive Officers and all other holders of such options was adjusted so that
following the Distribution each such executive officer and other holder holds
options to purchase shares of CTE Common Stock, RCN Common Stock and Cable
Michigan Common Stock, respectively. The number of shares subject to, and the
exercise price of, such options was adjusted to take into account the
Distribution and to ensure that the aggregate intrinsic value of the resulting
RCN, Cable Michigan and CTE options immediately after the Distribution was
equal to the aggregate intrinsic value of the CTE options immediately prior to
the Distribution. Information relating to Cable Michigan stock options held by
the Named Executive Officers is as follows:
CABLE MICHIGAN FISCAL YEAR-END OPTION VALUES (1)
<TABLE>
<CAPTION>
NUMBER OF SECURITIES
UNDERLYING VALUE OF UNEXERCISED
UNEXERCISED OPTION AT IN-THE-MONEY OPTIONS AT
DECEMBER 31, 1997 (2) DECEMBER 31, 1997 (2) (3)
--------------------------------- ---------------------------------
EXERCISABLE (#) UNEXERCISABLE (#) EXERCISABLE ($) UNEXERCISABLE ($)
--------------- ----------------- --------------- -----------------
<S> <C> <C> <C> <C>
Bruce C. Godfrey........ 10,500 7,000 151,358 100,905
John J. Gdovin.......... 1,500 6,000 21,623 78,730
Mark Haverkate.......... 7,250 10,250 103,109 141,774
David C. McCourt........ 62,500 62,500 913,838 920,288
Timothy J. Stoklosa..... 2,000 6,750 28,630 89,241
</TABLE>
- - --------
(1) No Cable Michigan stock options were exercised by the Named Executive
Officers during the fiscal year ended December 31, 1997.
(2) Denominated in shares of Cable Michigan Common Stock.
(3) The fair market value of Cable Michigan Common Stock at December 31, 1997,
was $22.875 per share.
8
<PAGE>
CABLE MICHIGAN OPTIONS/SAR GRANTS IN FISCAL YEAR 1997
<TABLE>
<CAPTION>
POTENTIAL REALIZABLE
VALUE AT
% OF TOTAL ASSUMED ANNUAL
NUMBER OF OPTIONS RATES OF STOCK PRICE
SECURITIES GRANTED TO APPRECIATION FOR
UNDERLYING EMPLOYEES EXERCISE OR OPTION TERM (2)
OPTIONS IN FISCAL BASE PRICE EXPIRATION ---------------------
NAME GRANTED (#) YEAR 1997 ($/SH) DATE (1) 5% ($) 10% ($)
- - ---- ----------- ---------- ----------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C>
John J. Gdovin.......... 5,000 5.68% 10.01 2/12/2007 $ 31,480 $ 79,785
Mark Haverkate.......... 2,500 2.84% 10.01 2/12/2007 $ 15,740 $ 39,893
Timothy J. Stoklosa..... 5,000 5.68% 10.01 2/12/2007 $ 31,480 $ 79,785
</TABLE>
- - --------
(1) Options vest ratably five (5) years from the date of grant and expire ten
(10) years from the date of grant.
(2) The assumed rates of growth were selected by the Securities and Exchange
Commission for illustrative purposes only and are not intended to predict
or forecast future stock prices.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
The members of the Compensation Committee are Daniel E. Knowles, Chairman,
Frank M. Henry and David C. Mitchell.
OTHER RELATED INFORMATION
Level 3, the Company's controlling shareholder, and/or its affiliates has a
substantial stock ownership in LTH and the Company. These companies share
mutual director representation on their respective boards.
9
<PAGE>
PERFORMANCE GRAPH
The following performance graph compares the performance of Cable Michigan's
Common Stock to the Nasdaq Stock Market Index and the Nasdaq
Telecommunications Index. The graph assumes that the value of the investment
in the Company's Common Stock and each index was $100 at September 22, 1997.
COMPARISON OF 3 MONTH CUMULATIVE TOTAL RETURN*
AMONG CABLE MICHIGAN, INC., THE NASDAQ STOCK MARKET (U.S.) INDEX
AND THE NASDAQ TELECOMMUNICATIONS INDEX
Measurement Period CABLE NASDAQ
(Fiscal Year Covered) MICHIGAN NASDAQ TELECOMM.
- - ------------------- ---------- --------- ----------
Measurement Pt-
09/19/97 $100 $100 $100
FYE 09/97 $110 $106 $113
FYE 10/97 $125 $100 $116
FYE 11/97 $121 $101 $117
FYE 12/97 $137 $ 99 $123
* $100 INVESTED ON 9/19/97 IN STOCK OR ON 8/31/97 IN INDEX - INCLUDING
REINVESTMENT OF DIVIDENDS. FISCAL YEAR ENDING DECEMBER 31.
10
<PAGE>
TRANSACTIONS WITH MANAGEMENT AND CERTAIN CONCERNS
There were no related party transactions involving amounts greater than
$60,000.
Each of CTE, RCN and Cable Michigan are effectively controlled by Level 3.
In addition, the majority of the Company's directors and executive officers
also are directors and/or executive officers of CTE and/or RCN. Set forth
below is a brief description of certain aspects of the relationship among CTE,
RCN and Cable Michigan.
RELATIONSHIP AMONG CTE, RCN AND CABLE MICHIGAN
The Distribution Agreement dated September 5, 1997, among CTE, RCN and Cable
Michigan entered into in connection with the Distribution defines certain
aspects of the relationship among CTE, RCN and Cable Michigan, including the
provision of services described below and provides for the allocation of
certain assets and liabilities among CTE, RCN and Cable Michigan. CTE, RCN and
Cable Michigan have also entered into a Tax Sharing Agreement dated as of
September 5, 1997, to define certain aspects of their relationship with
respect to taxes and to provide for the allocation of tax assets and
liabilities.
RCN has agreed to provide or cause to be provided to Cable Michigan certain
specified services for a transitional period after the Distribution. The
transitional services to be provided include the following: (i) cusomer
service; (ii) marketing; (iii) accounting; (iv) payroll; (v) management
supervision; (vi) cash management; (vii) human resources and benefit plan
administration; (viii) insurance administration; (ix) legal; (x) tax; (xi)
internal audit; (xii) programming administration; (xiii) billing; (xiv)
monthly cable guides; (xv) investor and public relations; (xvi) provision of
third party programming; and (xvii) other miscellaneous administrative
services. Subject to certain limitations, the fee for services listed in items
(ii)-(xiii), (xv) and (xvii) will be 4.0% of the revenues of Cable Michigan
plus a direct allocation of certain consolidated cable administrative
functions. The fee for customer service listed in item (i) along with the
billing service listed in item (xiii) will be a pro rata share (based on the
relative number of subscribers) of the fees and expenses incurred by RCN to
provide such customer billing services and fees to RCN and Cable Michigan. The
third party expense incurred by RCN to obtain third party programming and
monthly cable guides for Cable Michigan referred to in items (xiv) and (xvi)
above, are reimbursed to RCN by Cable Michigan and no additional fee is
charged with respect thereto.
CTE has agreed to provide or cause to be provided to Cable Michigan
financial data processing applications, lockbox services, storage facilities,
local area network and wide area network support services, building
maintenance and other miscellaneous administrative services for a transitional
period after the Distribution. The fees for such services and arrangements are
an allocated portion (based on relative usage) of the cost incurred by CTE to
provide such services and arrangements to all three (3) companies.
OTHER MATTERS
Prior to September 30, 1997, the Company was operated as part of C-TEC. On
September 30, 1997, C-TEC distributed 100 percent of the outstanding shares of
common stock of its wholly owned subsidiaries, RCN and Cable Michigan, to
holders of record of C-TEC's Common Stock and C-TEC's Class B Common Stock as
of the close of business on September 19, 1997 (the "Distribution"), in
accordance with the terms of a Distribution Agreement dated September 5, 1997
among C-TEC, RCN and Cable Michigan. In connection with the Distribution, C-
TEC changed its name to Commonwealth Telephone Enterprises, Inc. (already
defined herein as "CTE"). RCN consists primarily of C-TEC's former bundled
residential voice and Internet access operations in the Boston to Washington,
D.C. corridor, its existing New York, New Jersey and Pennsylvania cable
television operations, a portion of its long distance operations and its
international investment in Megacable, S.A. de C.V. Cable Michigan consists of
C-TEC's former Michigan cable operations, including its 61.92% ownership in
Mercom.
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INFORMATION ABOUT THE BOARD AND ITS COMMITTEES
The Board of Directors of the Company held one (1) meeting in 1997, the
Audit Committee met one (1) time and the Compensation Committee did not meet.
EXECUTIVE COMMITTEE
The Executive Committee exercises, to the maximum extent permitted by law,
all powers of the Board of Directors between board meetings, except those
functions assigned to specific committees. The current Executive Committee
consists of David C. McCourt, Chairman, Bruce C. Godfrey, Mark Haverkate and
David C. Mitchell.
AUDIT COMMITTEE
The Audit Committee reviews the services provided by the Company's
independent auditors, consults with the independent auditors and reviews the
need for internal auditing procedures and the adequacy of internal controls.
The current Audit Committee consists of David C. Mitchell, Chairman, Frank M.
Henry and Daniel E. Knowles.
COMPENSATION COMMITTEE
The Compensation Committee makes recommendations to the Board of Directors
on matters related to incentive compensation awards for the top levels of
management of the Company. The current Compensation Committee consists of
Daniel E. Knowles, Chairman, Frank M. Henry and David C. Mitchell.
DIRECTORS' COMPENSATION
Directors of Cable Michigan who are employees of the Company and its
subsidiaries receive no directors' fees. Non-employee Directors of the Company
receive on January 1, an annual directors' fee of $6,000 in Cable Michigan
Common Stock based upon the average fair market value of the Cable Michigan
Common Stock during the ten (10) trading days prior to such date, plus $500
per Board of Directors meeting. The Committee Chairman and other committee
members are paid $1,000 and $500, respectively, for each committee meeting
attended. Pursuant to the 1997 Non-Management Directors Compensation Plan,
each non-employee director will receive an annual grant of a non-qualified
option covering 2,000 shares of Cable Michigan Common Stock on the date of the
annual meeting of shareholders based upon the fair market value of the Cable
Michigan Common Stock on the date the option is granted.
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PROPOSAL 2
RATIFICATION OF INDEPENDENT AUDITORS
The Company is asking the shareholders to ratify the appointment of Coopers
& Lybrand L.L.P. as the Company's independent auditors for the fiscal year
ending December 31, 1998.
If the shareholders do not ratify this appointment, other independent
auditors will be considered by the Board of Directors. Notwithstanding the
shareholders' ratification of the selection of the independent auditors, the
Board reserves the right to select other independent auditors at its
discretion.
Representatives of Coopers & Lybrand L.L.P. are expected to be present at
the Annual Meeting, will have the opportunity to make a statement if they
desire to do so and will be able to respond to appropriate questions.
Ratification of Coopers & Lybrand L.L.P. as the Company's independent auditors
for the year ending December 31, 1998, requires the affirmative vote of a
majority of the votes cast by holders of Cable Michigan Common Stock.
The Board of Directors recommends that the shareholders vote FOR the
proposal to ratify the appointment of Coopers & Lybrand L.L.P. to serve as
independent auditors of the Company for the fiscal year ending December 31,
1998.
OTHER MATTERS
The Board of Directors does not know of any other matters that may come
before the meeting. However, if any other matters properly come before the
meeting, it is the intention of the persons named in the accompanying form of
proxy to vote the proxy in accordance with their judgment on such matters.
GENERAL INFORMATION
FINANCIAL INFORMATION
A copy of the Company's 1998 Annual Report to Shareholders containing the
Consolidated Financial Statements of the Company, including the report thereon
dated March 13, 1998, of Coopers & Lybrand L.L.P., independent accountants,
accompanies this Proxy Statement.
Upon the written request of any person who on May 20, 1998, was a record
owner of Cable Michigan Common Stock, or who represents in good faith that he
was on such date a beneficial owner of such stock entitled to vote at the
Annual Meeting, the Company will furnish, without charge, a copy of the
Company's 1997 annual report on Form 10-K ("Report"), including the financial
statements, schedules and exhibits, filed with the Securities and Exchange
Commission. Written requests for the Report should be directed to: Investor
Relations Department, Cable Michigan, Inc., 105 Carnegie Center, Princeton,
New Jersey 08540, Attn: Valerie Haertel, Director of Investor Relations.
SOLICITATION OF PROXIES
The Company will bear the cost of solicitation of proxies. In addition to
the use of the mail, proxies may be solicited by officers, directors and
regular employees of the Company, personally or by telephone, telecopy or
telegraph, and the Company may reimburse persons holding stock in their names
or those of their nominees for their expenses in forwarding soliciting
materials to their principals.
It is important that proxies be returned promptly. Therefore, shareholders
are urged to promptly fill in, date, sign and return the enclosed proxy in the
enclosed envelope, to which no postage need be affixed if mailed in the United
States.
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SHAREHOLDERS' PROPOSALS
Any shareholder who desires to submit a proposal to be considered for
inclusion in the proxy statement and proxy of the Company relating to the 1999
Annual Meeting of Shareholders must submit such proposal in writing to the
Company by January 27, 1999, and must comply with the applicable provisions of
the Company's Bylaws. Such proposals should be hand delivered or mailed,
return receipt requested, to the Secretary of the Company.
By order of the Board of Directors.
LOGO
/s/ BRUCE C. GODREY
Bruce C. Godfrey,
Corporate Secretary
Dated: May 26, 1998
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CABLE MICHIGAN, INC.
105 CARNEGIE CENTER
PRINCETON, NEW JERSEY 08540
PROXY--ANNUAL MEETING OF SHAREHOLDERS--JUNE 18, 1998
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned, hereby revoking any contrary proxy previously given, hereby
appoints David C. McCourt, Mark Haverkate and David C. Mitchell, and each of
them, his true and lawful agents and proxies, with full power of substitution
and revocation, to vote as indicated below, all the Common Stock of the
undersigned in CABLE MICHIGAN, INC. (the "Company") entitled to vote at the
Annual Meeting of Shareholders of the Company to be held at the Corporate
Headquarters of the Company, 105 Carnegie Center, Princeton, New Jersey on June
18, 1998, at 11:00 A.M., local time, and at any adjournment or postponement
thereof, all as set forth in the related notice of proxy statement for the 1998
Annual Meeting.
1. To elect three FOR all nominees listed
(3) Directors to below (except as marked to WITHHOLD AUTHORITY to
Class I to serve the contrary) [_] vote for all nominees
for a term of listed below [_]
three (3) years;
(INSTRUCTIONS: TO WITHHOLD AUTHORITY TO VOTE FOR ANY INDIVIDUAL NOMINEE, STRIKE
A LINE THROUGH THE NOMINEE'S NAME IN THE LIST BELOW.)
Bruce C. Godfrey, Daniel E. Knowles and Raymond B. Ostroski
2. To ratify the selection of Coopers & Lybrand L.L.P., as independent auditors
of the Company for the fiscal year ending December 31, 1998; and
FOR [_] AGAINST [_] ABSTAIN [_]
3. To act upon such other matters as may properly come before the meeting or
any adjournment or postponement thereof.
FOR [_] AGAINST [_] ABSTAIN [_]
(Continued, and to be Signed and Dated, on Reverse Side)
<PAGE>
THIS PROXY, WHEN PROPERLY EXECUTED, WILL BE VOTED IN THE MANNER DIRECTED
HEREIN. IF NO DIRECTION IS MADE, THIS PROXY WILL BE VOTED FOR THE PROPOSALS
LISTED ON THE REVERSE SIDE. THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR ALL OF
THE PROPOSALS ON THE REVERSE SIDE.
The undersigned acknowledges receipt of the notice and proxy statement
relating to the 1998 Annual Meeting and the Company's annual report for 1997.
Dated: _____________________________
____________________________________
Signature
____________________________________
Signature, if held jointly
PLEASE MARK, SIGN AND DATE THIS PROXY AND RETURN IT PROMPTLY IN THE ENCLOSED
ENVELOPE.
