As filed with the Securities and Exchange Commission on April 29, 1999
Registration No. 333-_________
==============================================================================
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
-----------------------
Form S-4
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
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RCN CORPORATION
(Exact name of registrant as specified in its charter)
Delaware 4813 22-3498533
(State or other jurisdiction (Primary Standard (I.R.S. Employer
of incorporation Industrial Classification Identification No.)
or organization) Code Number)
105 Carnegie Center
Princeton, NJ 08540-6215
(609) 734-3700
(Address, including zip code, and telephone number,
including area code, of registrant's principal executive offices)
John J. Jones, Esq.
Executive Vice President,
General Counsel and Corporate Secretary
RCN Corporation
105 Carnegie Center
Princeton, NJ 08540-6215
(609) 734-3700
(Name, address, including zip code, and telephone number,
including area code, of agent for service)
-----------------------
Copies to:
Julia K. Cowles
Davis Polk & Wardwell
450 Lexington Avenue
New York, New York 10017
(212) 450-4000
-----------------------
Approximate date of commencement of proposed sale to the public: From
time to time after the effective date of this Registration Statement.
If the securities being registered on this Form are being offered in
connection with the formation of a holding company and there is compliance
with General Instruction G, check the following box: [ ]
<TABLE>
CALCULATION OF REGISTRATION FEE
=================================================================================================================================
Proposed Maximum
Title of Each Class Amount to be Proposed Maximum Aggregate Offering Amount of
of Securities to be Registered Registered Offering Price(1) Price(1) Registration Fee(1)
- ---------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Common Stock, par value $1.00 per
share................................ 1,650,000 shares $47.375 $78,168,750 $21,731
=================================================================================================================================
</TABLE>
(1) Estimated solely for the purpose of calculating the amount of the
registration fee, in accordance with Rule 457(c) on the basis of the
market value of the outstanding common stock on April 28, 1999.
-----------------------
The registrant hereby amends this Registration Statement on such date or
dates as may be necessary to delay its effective date until the registrant
shall file 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, as amended or until the
Registration Statement shall become effective on such date as the
Commission, acting pursuant to said Section 8(a), may determined.
==============================================================================
<PAGE>
The information in this prospectus is not complete and may be changed. We may
not sell these securities until the registration statement filed with the
Securities and Exchange Commission is effective. This prospectus is not an offer
to sell these securities and it is not soliciting an offer to buy these
securities in any state where the offer or sale is not permitted.
Subject to Completion, dated April 29, 1999
PROSPECTUS
[Logo]
1,650,000 Shares
RCN CORPORATION
Common Stock
-----------------------
We may offer and issue, from time to time, up to 1,650,000 shares of our
common stock, par value $1.00 per share, in connection with acquisitions of
other businesses or assets.
We anticipate that any acquisitions will consist principally of acquisitions of
telecommunications-related businesses (including providers of voice, video and
data transmission products, services and systems). The consideration for such
acquisitions may consist of shares of common stock, cash, assumption of
liabilities or any combination thereof.
-----------------------
This prospectus may be used by persons who receive shares of common stock in
connection with acquisitions and who wish to resell the shares. We have not
authorized any person to use this prospectus in connection with resales of
shares without our prior written consent.
The common stock is included for quotation in The Nasdaq National Market under
the symbol "RCNC." On April 28, 1999, the last sale price of the common stock
was $47.00 per share.
-----------------------
Investing in the common stock involves certain risks. See "Risk Factors"
beginning on Page 3.
-----------------------
Neither the Securities and Exchange Commission nor any state securities
commission has approved or disapproved of these securities, or determined if
this prospectus is truthful or complete. Any representation to the contrary is a
criminal offense.
The date of this prospectus is April 29, 1999
<PAGE>
SUMMARY
This summary may not contain all the information that may be important to
you. You should read the entire prospectus, including the financial data and
related notes, before making an investment decision.
We are building high-speed, high-capacity advanced fiber optic networks in
selected markets with high levels of population density. Our strategy is to
become the leading single source provider of voice, video and data services to
residential customers in each of our markets by offering individual or bundled
service options, superior customer service and competitive prices. We are also
constructing our networks with significant excess capacity in order to
accommodate expanded services in the future.
Our initial advanced fiber optic networks have been established in
selected markets in the Boston to Washington, D.C. corridors, which includes
New York City, and also in the San Francisco Bay area. In Boston and
Washington, we operate through joint ventures with Boston Edison Company and
PEPCO Communications, L.L.C., respectively. We are typically building the first
true local network to compete with the aging infrastructure of the incumbent
service providers in our markets.
We have extensive operating experience in the telephone, video and
Internet industries and in the design, development and construction of
telecommunications facilities. As of December 31, 1998, we had approximately
855,000 total service connections, including approximately 123,000 connections
provided to customers on our advanced fiber optic network.
Our principal executive offices are located at 105 Carnegie Center,
Princeton, New Jersey, 08540, and our telephone number is (609) 734-3700. We
maintain a website at www.rcn.com where general information about us is
available. We are not incorporating the contents of the website into this
prospectus.
About this Prospectus
This prospectus is part of a registration statement that we filed with
the SEC which will allow us to issue, from time to time, up to 1,650,000
shares of our common stock in connection with acquisitions of other
businesses or assets. Each time we issue common stock under the
registration statement we will provide a prospectus supplement that will
contain specific information about the terms of that offering. The
prospectus supplement may also add, update or change information contained
in this prospectus. You should read both this prospectus and any
prospectus supplement together with additional information described under
the heading WHERE YOU CAN FIND MORE INFORMATION.
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<PAGE>
RISK FACTORS
You should carefully consider each of the following risks and all of the
other information set forth in this prospectus before deciding to invest in our
securities. Some of the following risks relate principally to our business in
general and the industry in which we operate. Other risks relate principally to
the securities markets and ownership of our securities. The risks and
uncertainties described below are not the only ones facing our company.
Additional risks and uncertainties not presently known to us or that we
currently believe to be immaterial may also adversely affect our business.
If any of the following risks and uncertainties develop into actual
events, our business, financial condition or results of operations could be
materially adversely affected. In such case, the trading price of our
securities could decline, and you may lose all or part of your investment.
This prospectus contains forward-looking statements that involve risks and
uncertainties. Our actual results could differ materially from those
anticipated in these forward-looking statements as a result of certain factors,
including the risks faced by us described below and elsewhere in this
prospectus.
We have a limited operating history and have incurred negative cash flow
and operating losses
We have only recently begun operating a voice, video and data services
business. Accordingly, you will need to evaluate our performance based on a
limited operating history. In connection with entering this business, we have
incurred operating and net losses and negative cash flows and expect to
continue to do so for the next five to seven years as we expand our network and
customer base. Whether we continue to have negative cash flow in the future
will be affected by a variety of factors including:
o our pace of entry into new markets;
o the time and expense required for constructing our fiber optic
network as we planned;
o our success in marketing services;
o the intensity of competition; and
o the availability of additional capital to pursue our business
plans.
We had operating losses after depreciation and amortization and
nonrecurring charges of $158,793,000, $70,875,000 and $13,078,000 for the years
ended December 31, 1998, 1997 and 1996. We can not assure you that we will
achieve or sustain profitability or positive cash flows from operating
activities in the future.
Additional growth will require additional capital, and our total capital needs
may be substantial
We expect that we will require substantial additional capital to expand
the development of our network and operations into new areas. We will need
capital to fund the construction of our advanced fiber optic networks, upgrade
our hybrid fiber/coaxial plant and fund operating losses and pay our debts.
Based on our current growth plan, we currently estimate that our capital
requirements for the period from January 1, 1999 through 2000 will be
approximately $1.8 billion, which include capital expenditures of approximately
$700 million in 1999 and approximately $1 billion in 2000. These capital
expenditures do not include amounts our joint venture partners contribute to
the Boston and Washington, D.C. joint ventures. We are obligated to pay our
portion of any capital contributions required by the joint ventures' annual
budget or capital contribution schedule. If our joint venture partner(s) fail
to make anticipated capital contributions, it could have a material adverse
effect on our business. Additional information regarding our financing plan is
included under "Management's Discussion and Analysis of Financial Condition and
Results of Operations" in our Annual Report on Form 10-K, which is incorporated
by reference into this prospectus.
We may seek additional sources of funding from vendor financing, public
offerings or private placements of equity and/or debt securities, and bank
loans. We cannot assure you that additional financing will be available to us
or, if available, that it can be obtained on a timely basis and on acceptable
terms. If we fail to obtain such financing, it could
3
<PAGE>
result in the delay or curtailment of our development and expansion plans
and expenditures and could have a material adverse effect on our business.
Our estimates of capital requirements are forward-looking statements that
are subject to change. The actual timing and amount of capital required to
develop our network and to fund operating losses may vary materially from our
estimates if there are significant departures from the current business plan,
unforeseen delays, cost overruns, engineering design changes or other
unanticipated expenses or occurrences.
Our substantial indebtedness limits our business flexibility
We have indebtedness that is substantial in relation to our shareholders'
equity and cash flow. As of December 31, 1998, we had an aggregate of
approximately $1,267 million of indebtedness outstanding. As a result of our
substantial indebtedness, fixed charges are expected to exceed earnings for the
foreseeable future, and our operating cash flow may not be sufficient to pay
principal and interest on our various debt securities. The extent of our
leverage may also have the following consequences:
o limit our ability to obtain necessary financing in the future
for working capital, capital expenditures, debt service
requirements or other purposes;
o require that a substantial portion of our cash flows from
operations be dedicated to paying principal and interest on our
indebtedness and therefore not be available for other purposes;
o limit our flexibility in planning for, or reacting to, changes
in our business;
o place us at a competitive disadvantage as compared with our
competitors who do not have as much debt; and
o render us more vulnerable in the event of a downturn in our
business.
Our outstanding debt securities contain customary covenants limiting our
flexibility, including covenants limiting our ability to incur additional debt,
make liens, make investments, consolidate, merge or acquire other businesses
and sell assets, pay dividends and other distributions, make capital
expenditures and enter into transactions with affiliates.
We may not be able to manage our growth or integrate our acquisitions
The expansion and development of our operations, including the
construction and development of additional networks, will depend on several
factors, including our ability to:
o access markets,
o design fiber optic network backbone routes,
o install or lease fiber optic cable and other facilities,
including switches, and
o obtain rights-of-way, building access rights and any government
authorizations, franchises and permits,
all in a timely manner, at reasonable costs and on satisfactory terms and
conditions.
In addition to the markets we are presently developing, we continually
evaluate other potential markets. These markets may be within the Boston to
Washington, D.C. corridor or in non-contiguous areas. As is the case in our
present markets, we intend to evaluate potential markets in terms of population
density and favorable demographics, and to apply a strategy of building network
facilities to meet the needs of targeted subscribers in new markets. We cannot
assure you that we will be able to expand our existing network or to identify
and develop new markets. Furthermore, our ability to manage our expansion
effectively will also require us to continue to implement and improve our
operating and administrative systems and attract and retain qualified
management and professional and technical personnel. If we are not able to
manage our planned expansion effectively, it could have a material adverse
effect on our business.
4
<PAGE>
We recently announced our intention to begin developing advanced fiber
optic networks in selected high density markets outside of the Boston to
Washington, D.C. corridor, initially in the San Francisco Bay Area. Our
proposed expansion into non-contiguous markets could place additional strain on
management resources. Furthermore, although we believe that our experience in
the Northeast will provide us with strategic advantages in developing new
markets, we cannot assure you that our experience in our current markets will
be replicated in the western United States.
We have experienced significant growth through acquisitions and will
continue to consider acquisition opportunities that arise from time to time.
Acquisitions may place a significant strain on our resources, and we may incur
additional expenses during the integration of the acquired company with our
business. For instance, the process of integrating the Internet service
provider businesses we acquired in 1998 may take a significant period of time
and require significant expenditure, including costs to upgrade the systems and
internal controls of these businesses. As a result, we cannot assure you that
we will be able to integrate these businesses successfully or in a timely
manner.
Our business is dependent upon acceptance of fiber optic technology as the
platform of choice
The telecommunications industry has been and will continue to be subject
to rapid and significant changes in technology. The effect of technological
changes on our business cannot be predicted, and we cannot assure you that the
fiber optic technology that we use will not be supplanted by new or different
technologies. See "Business-- Competition" in our Annual Report on Form 10-K,
which is incorporated by reference into this prospectus.
We are dependent on our strategic relationships and joint ventures
We have entered into a number of strategic alliances and relationships
which allowed us to enter into the market for telecommunications services
earlier than if we had made the attempt independently. As our network is
further developed, we will be dependent on some of these arrangements to
provide a full range of telecommunications service offerings. Our key strategic
relationships include:
o our arrangements with MFS Communications Company, Inc. (a
subsidiary of WorldCom, Inc.) to lease portions of
MFS/WorldCom's fiber optic network in New York City and Boston;
o our joint venture with Boston Edison Company ("RCN-BECOCOM")
under which we have access to its extensive fiber optic network
in Greater Boston;
o our joint venture with Pepco Communications ("Starpower") to
develop and operate an advanced fiber optic network in the
Washington, D.C. market; and
o our agreement with Level 3 to provide us with access to its
cross-country fiber network.
Our joint venture agreements with Boston Edison Company and Pepco
Communications contain provisions for the management, governance and ownership
of the RCN-BECOCOM and Starpower joint ventures, respectively. Certain matters
require the approval of our joint venture partner, including some matters
beyond our control, such as a change of control. In addition, although certain
covenants contained in our indentures apply to the joint venture companies,
neither the joint venture companies nor our joint venture partners are parties
to these indentures and are not bound to comply with the indentures. A
disagreement with our joint venture partners over certain business actions,
including actions related to compliance with these indentures, could impede our
ability to conduct our business. It may also trigger deadlock provisions in the
joint venture agreements which could force us to sell our interest in the
relevant joint venture or buy out the interest of the other joint venturer. See
"Business -- Strategic Relationships and Facilities Agreements" in our Annual
Report on Form 10-K, which is incorporated by reference into this prospectus.
In addition, any disruption of our relationships or arrangements with
incumbent local exchange carriers, such as Bell Atlantic, could have a material
adverse effect on our company. We cannot assure you that we will successfully
negotiate agreements with the incumbent local exchange carrier in new markets
or renew existing agreements. Our
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failure to negotiate or renew required interconnection and resale
agreements could have a material adverse effect on our business.
We may encounter difficulties in competing in the highly competitive
telecommunications industry
In each of the markets where we offer our services, we face significant
competition from larger, better-financed telephone carriers and cable
companies. Virtually all markets for voice, video and data services are
extremely competitive, and we expect that competition will intensify in the
future. Our principal competitors include:
o traditional and competitive telephone companies, including Bell
Atlantic, AT&T, Sprint, and MCI WorldCom, some of which are
constructing extensive fiber optic networks and expanding into data
services;
o cable television service operators such as Time Warner, some of which
are beginning to offer telephone and data services through cable
networks using fiber optic networks and high-speed modems;
o established online services, such as America Online and Internet
services of other telecommunications companies;
o alliances and combinations of telephone companies, cable service
providers and Internet companies, including the recently announced
alliance that will combine services of AT&T, TCI and At Home; and
o developing technologies such as Internet-based telephony and
satellite communications services.
It may be difficult to gain customers from the incumbent providers which have
historically dominated their markets.
Other new technologies may become competitive with services that we offer.
Advances in communications technology as well as changes in the marketplace and
the regulatory and legislative environment are constantly occurring. In
addition, a continuing trend toward business combinations and alliances in the
telecommunications industry may also create significant new competitors. We
cannot predict the extent to which competition from such developing and future
technologies or from such future competitors will impact our operations. For
further discussion of the competitive environment in which we operate, see
"Business -- Competition" in our Annual Report on Form 10-K, which is
incorporated by reference into this prospectus.
Our business plan depends upon continued application of regulations that
have been challenged in the past
Our ability to provide telephone and video programming transmission
services was made possible by important changes in government regulations which
have been subsequently challenged and may be subject to change in the future.
These regulations often have a direct or indirect impact on the costs of
operating our networks, and therefore the profitability of our services. In
addition, we will continue to be subject to other regulations at the federal,
state and local levels, all of which may change in the future. We cannot assure
you that we will be able to obtain all of the authorizations we need to
construct advanced fiber optic network facilities or to retain the
authorizations we have already acquired. It is possible that changes in
existing regulations could have an adverse impact on our ability to obtain or
retain authorizations and on our business. For further discussion of
regulations applicable to us, see "Business--Regulation" in our Annual Report
on Form 10-K, which is incorporated by reference into this prospectus.
We may not be able to procure programming services from the third parties
we depend on
Our video programming services are dependent upon our management's ability
to procure programming that is attractive to our customers at reasonable
commercial rates. We are dependent upon third parties for the development and
delivery of programming services. These programming suppliers charge us for the
right to distribute the channels to our customers. The costs to us for
programming services is determined through negotiations with these programming
suppliers. Management believes that the availability of sufficient programming
on a timely basis will be important to
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our future success. We cannot assure you that we will have access to
programming services or that management can secure rights to such programming
on commercially acceptable terms.
The expansion of our Internet services business has subjected us to
additional risks
The expansion of our Internet services business has subjected us to
additional risks. These risks will affect our ability to develop a profitable
Internet services business. These special factors include:
o evolving industry standards which have the potential to make our
services obsolete by replacing or providing lower-cost alternatives
to our services;
o constraints on server capacity or supply of equipment (such as modems
and servers) which could result in a strain on incoming access lines,
causing busy signals and/or delays for our subscribers;
o network infrastructure and risk of system failure, such as viruses,
which could lead to interruptions, delays, or cessation of our
services, as well as corruption of our or our subscribers' computer
systems;
o possible claims of liability against us as a result of computer
viruses or security breaches; and
o the evolving competitive and regulatory environment concerning
Internet services.
Our management may have conflicts of interest with other companies
Level 3 Telecom beneficially owns approximately 46% of our common stock.
Level 3 Telecom effectively has the power to elect a majority of our directors
and to decide the outcome of substantially all matters voted on by
shareholders. This may tend to deter non-negotiated tender offers or other
efforts to obtain control of our company and thereby deprive shareholders of
opportunities to sell shares at prices higher than the prevailing market price.
Moreover, a disposition by Level 3 Telecom of a significant portion of our
common stock, or the perception that such a disposition may occur, could affect
the trading price of our common stock and the control of our company. The
common stock of Level 3 Telecom is owned 90% by Level 3 and 10% by David C.
McCourt, our Chairman and Chief Executive Officer. Mr. McCourt has been a
member of the Board of Directors and President of Level 3 Telecom since
September 1992. Based upon a review of documents filed with the SEC, we believe
that as of December 31, 1998, 16.1% of the common stock of Level 3 was owned by
directors and executive officers of Level 3, five of whom (Walter Scott, Jr.,
Richard R. Jaros, David C. McCourt, James Q. Crowe and Michael B. Yanney) are
executive officers or directors of RCN. The remaining shares of Level 3 common
stock are owned by other persons, none of whom own more than 5% of outstanding
shares.
As a result of the September 30, 1997 spin-off of our shares to holders of
common equity of Commonwealth Telephone Enterprises, Inc., relationships exist
that may lead to conflicts of interest. Level 3 Telecom effectively controls
both us and Commonwealth Telephone. In addition, the majority of our named
executive officers are also directors and/or executive officers of Commonwealth
Telephone. Our success may be affected by the degree which our officers and
directors are involved in our business and the abilities of officers, directors
and employees in managing both our company and Commonwealth Telephone. We will
deal with potential conflicts of interest on a case-by-case basis taking into
consideration relevant factors including the requirements of The Nasdaq
National Market and prevailing corporate practices.
In February 1999, we announced that we have entered into joint
construction agreements with Level 3. We also recently announced that we have
entered into a letter of intent with Level 3 for Level 3 to provide us with
cross-country capacity to allow our customers to connect to major internet
connection points in the United States. Although these arrangements are
designed to reflect similar arrangements entered into by parties negotiating at
arm's length, we cannot assure you that we would not be able to obtain better
terms from an unrelated third party.
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WHERE YOU CAN FIND MORE INFORMATION
We file annual, quarterly and special reports, proxy statements and other
information with the SEC. You may read and copy any document that we file at
the Public Reference Room of the SEC at 450 Fifth Street, NW, Washington, D.C.
20549. You may obtain information on the operation of the Public Reference Room
by calling the SEC at 1-800- SEC-0330. You may also inspect our filings at the
regional offices of the SEC located at Citicorp, 500 West Madison Street, Suite
1400, Chicago, Illinois 60661 and 7 World Trade Center, New York, New York
10048 or over the Internet at the SEC's WEB site at http://www.sec.gov.
The SEC allows us to "incorporate by reference" the information we file
with them, which means that we can disclose important information to you by
referring you to those documents. The information incorporated by reference is
an important part of this prospectus, and information that we file later with
the SEC will automatically update and supersede this information. We
incorporate by reference the documents listed below and any future filings made
with the SEC under Sections 13(a), 13(c), 14, or 15(d) of the Securities
Exchange Act of 1934 until we sell all of the securities:
(a) Current Report on Form 8-K dated March 19, 1999; and
(b) Annual Report on Form 10-K for the year ended December 31, 1998.
You may request a copy of these filings at no cost, by writing or
telephoning the office of Valerie Haertel, RCN Corporation, 105 Carnegie
Center, Princeton, N.J. 08540-6215, telephone number (609) 734 -3700.
SPECIAL NOTE ON FORWARD-LOOKING STATEMENTS
This prospectus includes forward-looking statements. We have based these
forward-looking statements on our current expectations and projections about
future events. These forward-looking statements are subject to risks,
uncertainties, and assumptions about our business, including, among other
things:
o plans to develop networks and upgrade facilities;
o opportunities presented by target markets;
o plans to connect certain wireless video, resale telephone and
Internet service customers to advanced fiber optic networks;
o development of existing businesses;
o current and future markets for services and products;
o anticipated capital expenditures;
o impact of the Year 2000 issue;
o anticipated sources of capital; and
o effects of regulatory reform and competitive and technological
developments.
We have no obligation to publicly update or revise any forward-looking
statements, whether as a result of new information, future events or risks. New
information, future events or risks may cause the forward-looking events we
discuss in this prospectus not to occur.
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USE OF PROCEEDS
This prospectus relates to shares of common stock which may be offered and
issued by RCN from time to time in connection with acquisitions of other
business or assets. Other than the businesses or assets acquired, there will be
no proceeds to RCN from these offerings.
DIVIDENDS
The Company anticipates that future revenues will be used principally to
support operations and finance growth of the business and, thus, RCN does not
intend to declare or pay cash dividends on the common stock in the foreseeable
future. The declaration or payment of any cash dividends in the future will be
at the discretion of RCN's Board of Directors. The declaration of any dividends
and the amount thereof will depend on a number of factors, including RCN's
financial condition, capital requirements, funds from operations, future
business prospects and such other factors as RCN's Board of Directors may deem
relevant. RCN is a holding company and its ability to pay cash dividends is
dependent on its ability to receive cash dividends, advances and other payments
from its subsidiaries. The Credit Agreement into which certain subsidiaries of
RCN have entered contains restrictions on the payment of dividends by those
subsidiaries. RCN has entered into indentures in connection with its debt
securities which restrict RCN's and certain of its subsidiaries' ability to pay
dividends. See "Management's Discussion and Analysis of Financial Condition and
Results of Operations" in RCN's Annual Report on Form 10-K, which is
incorporated by reference into this prospectus.
MARKET PRICE AND DIVIDEND INFORMATION
The common stock (symbol: "RCNC") currently trades on NASDAQ.
The following table sets forth the high and low bid prices per share of the
common stock on NASDAQ and cash dividends declared on the common stock since
September 19, 1997:
Cash
Dividends
High Low Declared($)
------ ----- -----------
1997
- ----
Quarter ending September 30.............. 15 11/16 10 9/16 0
Quarter ending December 31............... 21 1/2 12 1/2 0
1998
- ----
Quarter ending March 31.................. 30 5/8 15 7/8 0
Quarter ending June 30................... 29 3/8 19 1/4 0
Quarter ending September 30.............. 24 5/16 12 3/8 0
Quarter ending December 31............... 25 8 3/4 0
1999
- ----
Quarter ending March 31.................. 39 3/4 17 3/4 0
Our common stock was distributed on September 30, 1997 to holders of
record of the common stock of Commonwealth Telephone Enterprises, Inc. on
September 19, 1997. Accordingly, market price and dividend information have
only been set forth in the table above for the quarter ending September 30,
1997 and subsequent periods. Information for the quarter ending September 30,
1997 reflects the partial period between September 19, 1997 through September
30, 1997.
The last reported sale price per share of our common stock on April 28,
1999, the last practicable date prior to the filing of this prospectus, was
$47.00.
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On March 31, 1998, there were approximately 2,800 holders of common stock.
On March 31, 1998, 66,522,888 shares of common stock were outstanding.
10
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SELECTED HISTORICAL CONSOLIDATED FINANCIAL DATA
The table below sets forth our selected historical consolidated financial
data. Prior to September 30, 1997, we operated as part of C-TEC Corporation.
The historical consolidated financial data presented below reflect periods
during which we did not operate as an independent company. Accordingly, we had
to make certain assumptions to reflect the results of operations or the
financial condition which would have resulted if we had operated as a separate,
independent company during the periods listed below. You should not rely on the
historical consolidated financial data as an indication of our results of
operation and financial condition that would have been achieved if we had
operated as a separate, independent company during the periods listed below.
The historical consolidated financial data also do not necessarily indicate our
future results of operation or financial condition.
The selected historical consolidated financial data for the year ended
December 31, 1994 and as of December 31, 1994 are derived from our unaudited
historical consolidated financial statements not included in this prospectus.
The selected historical consolidated financial data as of December 31, 1995 are
derived from our audited historical consolidated financial statements not
included in this prospectus. The selected historical consolidated financial
data for the year ended December 31, 1995 and as of December 31, 1996 are
derived from and should be read in conjunction with our audited historical
consolidated financial statements incorporated by reference to our Annual
Report on Form 10-K for the year ended December 31, 1997. The selected
historical consolidated financial data for the years ended December 31, 1998,
1997 and 1996 and as of December 31, 1998 and 1997 are derived from and should
be read in conjunction with our audited historical consolidated financial
statements incorporated by reference to our Annual Report on Form 10-K for the
year ended December 31, 1998. See "Management's Discussion and Analysis of
Financial Condition and Results of Operations" in our Annual Report on Form
10-K for the year ended December 31, 1998.
<TABLE>
Year Ended December 31,
----------------------------------------------------------
1994 1995 1996 1997 1998
--------- --------- --------- ---------- ----------
(in thousands of dollars)
<S> <C> <C> <C> <C> <C>
Statement of Operations Data:
Sales $ 59,500 $ 91,997 $ 104,910 $ 127,297 $ 210,940
Costs and expenses, excluding depreciation
and amortization......................... 49,747 75,003 79,107 134,967 262,352
Nonrecurring charges........................ -- -- -- 10,000 --
Acquired research and development........... -- -- -- -- 18,293
Depreciation and amortization............... 9,803 22,336 38,881 53,205 89,088
--------- --------- --------- ---------- ----------
Operating (loss)............................ (50) (5,342) (13,078) (70,875) (158,793)
Interest income............................. 21,547 29,001 25,602 22,824 58,679
Interest expense............................ (16,669) (16,517) (16,046) (25,602) (112,239)
Other (expense) income, net................. 1,343 (304) (546) 131 (1,889)
(Benefit) provision for income taxes........ 2,340 1,119 979 (20,849) (4,998)
Equity in loss of unconsolidated entities... -- (3,461) (2,282) (3,804) (12,719)
Minority interest in loss (income) of
consolidated entities.................... (95) (144) 1,340 7,296 17,162
Extraordinary charge- debt prepayment
penalty, net of tax of $1,728............ -- -- -- (3,210) --
Cumulative effect of changes in accounting
principles............................... (83) -- -- -- (641)
--------- --------- --------- ---------- ----------
Net (loss) income........................... $ 3,653 $ 2,114 $ (5,989) $ (52,391) $ (205,442)
========= ========= ========= ========== ==========
Ratio of earnings to fixed charges.......... 1.36 1.41 0.75 (1.87) (0.91)
Deficiency of earnings to fixed charges..... N/A N/A N/A $ (73,522) $ (214,242)
Balance Sheet Data (at end of period):
Total assets................................ $ 568,586 $ 649,610 $ 628,085 $1,150,992 $1,907,615
Long-term debt (excluding current portion).. 154,000 135,250 131,250 686,103 1,263,036
Shareholders' equity........................ 372,847 394,069 390,765 356,584 371,446
Other Data:
11
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Year Ended December 31,
----------------------------------------------------------
1994 1995 1996 1997 1998
--------- --------- --------- --------- ----------
<S> <C> <C> <C> <C> <C>
EBITDA before nonrecurring charges.......... 9,753 16,994 25,803 (7,670) (51,412)
Cash Provided by (Used in):
Operating Activities........................ 6,193 48,559 23,831 2,069 35,110
Investing Activities........................ (140,152) (146,203) (9,377) (475,860) (828,176)
Financing Activities........................ 280,014 (31,203) 9,391 634,858 690,282
</TABLE>
In the table above:
(1) Nonrecurring charges represent costs of $10,000 incurred in 1997 the
termination of a marketing services agreement related to our wireless video
services, and costs of $18,293 incurred in 1998 relating to acquisition of
in-process technology in connection with the acquisitions.
(2) The deficiency of earnings to fixed charges is based on income from
continuing operations and has been computed on a total enterprise basis.
Earnings represent income before income taxes, and fixed charges. Fixed charges
consist of interest expense and debt amortization costs.
(3) EBITDA before nonrecurring charges represents earnings before
interest, depreciation and amortization, and income taxes. Because of the
capital intensive nature of the business and resulting large non-cash charges
for depreciation, EBITDA is commonly used in the communications industry by
management, investors, and analysts to analyze companies on the basis of
operating performance, leverage and liquidity. RCN intends to judge the success
of its initial rollout of fiber optic networks before deciding whether to
undertake additional capital expenditures to expand its network in new areas.
RCN believes that EBITDA is a critical measure of success. Because RCN is in a
growth- oriented and capital intensive phase of development, it incurs
depreciation and amortization charges in new markets which may obscure its
earnings growth in more mature markets. In addition, EBITDA provides a measure
of the availability of funds for various uses including repayment of debt,
expansion into new markets and acquisitions. EBITDA is not intended to
represent cash flows for the period and should not be considered as an
alternative to cash flows from operating, investing or financing activities as
determined in accordance with U.S. GAAP. EBITDA is not a measurement under U.S.
GAAP and may not be comparable with other similarly titled measures of other
companies. Certain of our debt agreements contain certain covenants that, among
other things, limit our and our subsidiaries' ability to incur indebtedness,
pay dividends, prepay subordinated indebtedness, repurchase capital stock,
engage in transactions with stockholders and affiliates, create liens, sell
assets and engage in mergers and consolidations.
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BUSINESS
Overview
We are building high-speed, high-capacity advanced fiber optic networks in
selected markets with high levels of population density. Our current services
include local and long distance telephone, video programming and data services,
including high speed Internet access. Our strategy is to become the leading
single-source provider of voice, video and data services to residential
customers in each of our markets by offering individual or bundled service
options, superior customer service and competitive prices. We are also
constructing our networks with significant excess capacity in order to
accommodate expanded services in the future. We intend to expand the services
provided to our customers through strategic alliances and opportunistic
development of complementary products. In addition, we will use the excess
capacity in our fiber optic networks to provide services to commercial
customers located on or near our networks. As a result of recent acquisitions
and internal growth, we are a leading regional Internet service provider in the
Boston to Washington, D.C. corridor. Our Internet businesses have recently been
integrated under the brand name "RCN.com."
Our initial advanced fiber optic networks have been established in
selected markets in the Boston to Washington, D.C. corridor, including New York
City, and the San Francisco Bay area. We are typically building the first true
local network to compete with the aging infrastructure of the incumbent service
providers in our markets. In the Boston market we operate our advanced fiber
optic network through a joint venture with Boston Edison Company. We own and
manage 51% owned of the venture and it is accounted for on a consolidated
basis. In the Washington, D.C. market, we are developing an advanced fiber
optic network through a joint venture named Starpower with Pepco
Communications, L.L.C., an indirect wholly owned subsidiary of Potomac Electric
Power Company. We own 50% of Starpower and Pepco Communications owns 50% and it
is accounted for under the equity method of accounting. We believe that these
joint ventures provide us with a number of important advantages. For example,
we are able to access rights of way of our joint venture partners and use their
existing fiber optic facilities. This allows us to enter our target markets
quickly and efficiently and to reduce our up-front costs of developing our
networks. In addition, our joint venture partners provide us with additional
assets, equity capital and established customer bases. We also benefit from our
relationship with our largest shareholder, Level 3 Communications, Inc., and
from the experience gained by certain of our key employees who participated in
the operation and development of other telephone, cable television and business
ventures, including MFS Communications Company, Inc.
Because our network development plan involves relatively low fixed costs,
we are able to schedule capital expenditures to meet expected subscriber growth
in each major market. Our principal fixed costs in each such market are
incurred in connection with the establishment of a video transmission and
telephone switching facility. To make each market economically viable, it is
then necessary to construct infrastructure to connect a minimum number of
subscribers to the transmission and switching facility. We phase our market
entry projects to ensure that we have sufficient cash on hand to fund this
construction.
Because we deliver a variety of services, we report the total number of
our various service connections purchased for local telephone, video
programming and Internet access rather than the number of customers. For
example, a single customer who purchases local telephone, video programming and
Internet access counts as three connections. Because we view long distance as a
complementary product, we do not currently include customers of our long
distance service as connections. See "--RCN Services--Connections." As of
December 31, 1998, we had approximately 855,000 connections which were
delivered through a variety of our owned and leased facilities including hybrid
fiber/coaxial cable systems, a wireless video system and advanced fiber optic
networks. As of that date, we had approximately 123,000 total connections
attributable to customers connected to advanced fiber optic networks ("on-net"
connections) and had approximately 732,000 connections attributable to
customers served through other facilities ("off-net" connections). See "--RCN
Services." We obtained approximately 370,000 of our 497,000 Internet service
connections through acquisitions of subscriber bases during 1998.
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<PAGE>
We have extensive operating experience in both the telephone and video
industries and in the design and development of telecommunications facilities.
Our experience provides us with expertise in systems operation and development,
and gives us an established infrastructure for customer service and billing for
both voice and video services and established relationships with suppliers of
equipment and video programming. In addition, our management team and board of
directors benefit from experience gained when they managed C-TEC, which prior
to September 30, 1997 owned and operated our company. C-TEC has over 100 years
of experience in the telephone business and nearly 25 years of experience in
the cable television business. Both C-TEC and certain members of management
also have extensive experience in the design and development of advanced
telecommunications facilities.
We seek to exploit competitive opportunities in selected markets where
population density, favorable demographics and the aging infrastructure of the
incumbent service providers' network facilities combine to create a
particularly attractive opportunity to develop advanced fiber optic networks.
We continue to construct network facilities within the Boston to Washington,
D.C. corridor. We believe that our experience in the Northeast will provide us
with a key strategic advantage as we enter markets in the San Francisco to San
Diego corridor.
West Coast Expansion
We recently began to develop advanced fiber optic networks in selected
high density markets outside of the Boston to Washington, D.C. corridor. Our
initial west coast network is being developed in the San Francisco Bay Area,
which is densely populated and has high per capita income and the highest per
capita Internet usage in the United States. We have received competitive local
exchange carrier status in California. We have also obtained an "open video
system" certification from the Federal Communications Commission for the City
of San Francisco and surrounding counties and have begun to develop our network
in the San Francisco Bay Area. We expect to expand into selected markets in or
near Southern California. As is the case in our existing markets, we intend to
focus on high density markets with favorable demographics, and to apply a
subscriber-driven investment strategy. We expect to begin offering services in
the San Francisco Bay Area in late 1999.
Business Strategy
Our goal is to become the leading provider of communications services to
residential customers in our target markets by pursuing the following key
strategies:
Exploit the "Last Mile" Bottleneck in Existing Local Networks: Existing
local networks are typically low capacity, single service facilities without
the bandwidth for multiple or new services and revenue streams. Investment in
the local network or "last mile" has not generally kept pace with other
industry and technological advances. In our target markets, we seek to be the
first operator of an advanced fiber optic network offering advanced
communications services to residential customers.
Continue Construction of Advanced Fiber Optic Networks: Our advanced fiber
optic networks are designed with sufficient capacity to meet the growing demand
for high speed, high capacity, voice, video and data services. Our networks
also have a significant amount of excess capacity at relatively low incremental
cost which will be available for the introduction of new products. We believe
that our high capacity advanced fiber optic networks provide us with certain
competitive advantages such as the ability to offer bundled services and the
opportunity to recover the cost of our network through multiple revenue
streams. In addition, our networks generally provide superior signal quality
and network reliability relative to the typical networks of the incumbent
service providers.
Leverage our Network and Customer Base: We are able to leverage our
network by delivering a broad range of communications products and by focusing
on high density residential markets. This bandwidth capacity and home density
allows us to maximize the revenue potential per mile of constructed network. We
believe we can further exploit our network capacity and customer base by
exploring opportunities to deliver new products and services in the future,
including complementary commercial and wholesale products and services.
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<PAGE>
Offer Bundled Voice, Video and Data Services with Quality Customer
Service: We offer our customers a single-source package of competitively priced
voice, video and data services, individually or on a bundled basis, with
quality customer service. By connecting customers to our own network, we
improve our operating economics and have complete control over our customers'
experience with us. We believe that the combination of bundled communications
services and quality customer care that we provide is superior to services that
are typically available from most incumbent telephone, cable or other service
providers.
Continue to Use Strategic Alliances: We have been able to enter markets
quickly and efficiently and to reduce the up-front capital investment required
to deploy our networks by entering into strategic alliances with companies such
as BECO, Pepco Communications, Level 3, Qwest and MCI/WorldCom. By establishing
relationships with these companies, we are able to take advantage of their
existing extensive fiber optic networks and other assets, and our own existing
cable television infrastructure, to expedite and reduce the cost of market
entry and business development. We will continue to evaluate other strategic
alliances in our existing markets and our developing markets.
RCN Services
We provide a wide range of local and long distance telephone, video
programming and data services, both individually and in bundled service
options.
We provide these services through a range of facilities including our
advanced fiber optic networks in New York City, Boston and Washington D.C., a
wireless video system in New York City, our hybrid fiber/coaxial cable systems
in the states of New York (outside New York City), New Jersey and Pennsylvania.
We also provide, on a limited basis, resale local and long distance telephony
services.
Connections. The following table summarizes the development of our
subscriber base:
<TABLE>
As of
--------------------------------------------------------------------------
9/30/97 12/31/97 3/31/98 6/30/98 9/30/98 12/31/98
------- -------- ------- ------- ------- --------
<S> <C> <C> <C> <C> <C> <C>
On-Net Service Connections:
Voice............................... 1,909 3,214 4,473 11,428 20,857 30,868
Video............................... 4,870 11,784 15,599 35,196 58,324 86,349
Data................................ 326 150 267 1,588 3,661 6,176
------- ------- ------- ------- ------- -------
Subtotal On-Net........................ 7,105 15,148 20,339 48,212 82,842 123,393
Off-Net Service Connections:
Voice............................... 10,953 24,900 40,447 49,052 58,093 65,022
Video............................... 229,198 227,619 227,558 214,164 196,776 175,313
Data................................ -- -- 370,271 398,560 470,466 491,633
------- ------- ------- ------- ------- -------
Subtotal Off-Net....................... 240,151 252,519 638,276 661,776 725,335 731,968
------- ------- ------- ------- ------- -------
Total Service Connections.............. 247,256 267,667 658,615 709,988 808,177 855,361
======= ======= ======= ======= ======= =======
Homes Passed........................... 26,083 44,045 63,386 122,977 213,983 304,505
Marketable Homes....................... -- -- -- 111,187 181,353 270,406
</TABLE>
Because we deliver a variety of services to our customers, we account for
our customer activity by the number of individual local telephone, video
programming or Internet access services, or "connections," purchased.
Consequently, a single customer purchasing local telephone, video programming
and Internet access counts as three connections.
We classify connections in the "Off-Net" category until the relevant
facilities are capable of providing voice, video and data services, including
local telephone service, through an RCN switch. During 1998, our Allentown,
Pennsylvania system was upgraded to provide a full range of services, and the
customers on that system were moved to the "On-Net" connections category.
15
<PAGE>
"Off-Net--Voice" figures in the table above represent resold local phone
service provided to customers not connected to the advanced fiber optic
networks.
Our "Off-Net--Video" figures in the table above include approximately
31,000 wireless connections and wireline video connections serving the
University of Delaware (4,000 connections at December 31, 1998).
As of December 31, 1998 we had approximately 186,000 homes passed and
approximately 140,000 basic subscribers connected to our hybrid fiber/coaxial
cable system in New York, New Jersey and Lehigh Valley service areas.
In areas served by our joint ventures in the Greater Boston and
Washington, D.C. areas, the subscribers are customers of the relevant joint
venture and are included in the connections set forth in the table above.
As of September 30, 1998, we began to report marketable homes, which
represents that segment of homes passed which are being marketed our entire
line of advanced fiber optic network products. The distinction between homes
passed and marketable homes recognizes our transition from constructing our
network in initial markets to providing services to customers that have ordered
our services.
16
<PAGE>
DESCRIPTION OF CAPITAL STOCK
The following description of our capital stock is based upon our
certificate of incorporation ("Certificate of Incorporation"), our bylaws
("Bylaws") and applicable provisions of law. We have summarized certain
portions of the Certificate of Incorporation and Bylaws below. The summary is
not complete. The Certificate of Incorporation and Bylaws are incorporated by
reference to the registration statement for these securities that we have filed
with the SEC, and have been filed as exhibits to our 10-K for the year ended
December 31, 1997. You should read the Certificate of Incorporation and Bylaws
for the provisions that are important to you.
Certain provisions of the Delaware General Corporation Law ("DGCL"), the
Certificate of Incorporation and the Bylaws summarized in the following
paragraphs may have an anti-takeover effect. This may delay, defer or prevent a
tender offer or takeover attempt that a shareholder might consider in its best
interests, including those attempts that might result in a premium over the
market price for its shares.
Authorized Capital Stock
Our Certificate of Incorporation authorizes us to issue 200 million shares
of common stock, par value $1.00 per share, 400 million shares of Class B
common stock, par value $1.00 per share, and 25 million shares of preferred
stock par value $1.00 per share.
Common Stock
Subject to the rights of the holders of any preferred stock which may be
outstanding, each holder of common stock is entitled to receive any dividends
our Board of Directors declares out of funds legally available to pay
dividends. If we liquidate our business, holders of common stock are entitled
to share equally in any distribution of our assets after we pay our liabilities
and the liquidation preference of any outstanding preferred stock. Each holder
of common stock is entitled to one vote per share, and is entitled to vote on
all matters presented to a vote of shareholders, including the election of
directors. Holders of common stock have no cumulative voting rights or
preemptive rights to purchase or subscribe for any stock or other securities.
In addition, there are no conversion rights or redemption or sinking fund
provisions. On December 31, 1998, there were 64,290,493 shares of common stock
issued and outstanding. The common stock is admitted for trading on The Nasdaq
National Market.
The Certificate of Incorporation contains no restrictions on the
alienability of the common stock. Except as disclosed in the section entitled
"Charter and Bylaw Provisions," below, there are no provision in the
Certificate of Incorporation or Bylaws and or any agreement or plan involving
RCN that would discriminate against any existing or prospective holder of
common stock as a result of a holder owning a substantial amount of common
stock.
Class B Stock
The Class B common stock is virtually identical to the Common Stock except
that:
o the Class B common stock is generally non-voting,
o the common stock is convertible at the option of the holder into
Class B common stock and
o in certain mergers, distributions and other transactions in which the
holders of common stock are entitled to receive equity interests of
one or more corporations (including RCN), the equity interests
distributed to holders of common stock and the Class B common stock
may have rights and privileges that are substantially equivalent to
the current rights and privileges of the common stock and the Class B
common stock, respectively.
17
<PAGE>
As of January 28, 1999, there are no outstanding shares of Class B common
stock and we do not have any current plan or intention to issue any Class B
common stock.
Preferred Stock
This prospectus describes certain general terms and provisions of our
preferred stock. When we offer to sell a particular series of preferred stock,
we will describe the specific terms of the securities in a supplement to this
prospectus. The prospectus supplement will also indicate whether the general
terms and provisions described in this prospectus apply to the particular
series of preferred stock. The preferred stock will be issued under a
certificate of designations relating to each series of preferred stock, and is
also subject to our Certificate of Incorporation.
We have summarized certain terms of the certificate of designations below.
The summary is not complete. The certificate of designations will be filed with
the SEC in connection with an offering of preferred stock.
Under the Certificate of Incorporation, our Board of Directors has the
authority to
o create one or more series of preferred stock,
o issue shares of preferred stock in any series up to the maximum
number of shares of preferred stock authorized, and
o determine the preferences, rights, privileges and restrictions of any
series.
Our Board may issue authorized shares of preferred stock, as well as
authorized but unissued shares of common stock, without further shareholder
action, unless shareholder action is required by applicable law or by the rules
of a stock exchange or quotation system on which any series of our stock may be
listed or quoted.
The prospectus supplement will describe the terms of any preferred stock
being offered, including:
o the number of shares and designation or title of the shares;
o any liquidation preference per share;
o any date of maturity;
o any redemption, repayment or sinking fund provisions;
o any dividend rate or rates and the dates of payment (or the method
for determining the dividend rates or dates of payment);
o any voting rights;
o if other than the currency of the United States, the currency or
currencies including composite currencies in which the preferred
stock is denominated and/or in which payments will or may be payable;
o the method by which amounts in respect of the preferred stock may be
calculated and any commodities, currencies or indices, or value, rate
or price, relevant to such calculation;
o whether the preferred stock is convertible or exchangeable and, if
so, the securities or rights into which the preferred stock is
convertible or exchangeable, and the terms and conditions of
conversion or exchange;
o the place or places where dividends and other payments on the
preferred stock will be payable; and
18
<PAGE>
o any additional voting, dividend, liquidation, redemption and other
rights, preferences, privileges, limitations and restrictions.
All shares of preferred stock offered will be fully paid and
non-assessable. Any shares of preferred stock that are issued will have
priority over the common stock with respect to dividend or liquidation rights
or both.
Our Board of Directors could create and issue a series of preferred stock
with rights, privileges or restrictions which effectively discriminates against
an existing or prospective holder of preferred stock as a result of the holder
beneficially owning or commencing a tender offer for a substantial amount of
common stock. One of the effects of authorized but unissued and unreserved
shares of capital stock may be to make it more difficult or discourage an
attempt by a potential acquirer to obtain control of our company by means of a
merger, tender offer, proxy contest or otherwise. This protects the continuity
of our management. The issuance of these shares of capital stock may defer or
prevent a change in control of our company without any further shareholder
action.
The transfer agent for each series of preferred stock will be described in
the prospectus supplement.
Charter and Bylaw Provisions
Classified Board of Directors; Removal of Directors. Our Board of
Directors are divided into three classes. The term of office of the first class
expires at the 2001 annual meeting, the term of office of the second class
expires at the 1999 annual meeting, and the term of office of the third class
expires at the 2000 annual meeting. At each annual meeting, beginning with the
1999 annual meeting, a class of directors will be elected to replace the class
whose term has just expired. As a result, approximately one-third of the
members of our Board of Directors will be elected each year and generally, each
of the directors serves a staggered three-year term. Moreover, as the DGCL
permits in the case of a corporation having a classified board, our directors
may be removed only for cause.
These provisions could prevent a shareholder or a group of shareholders
having majority voting power from obtaining control of our Board of Directors
until the second annual meeting following the date the shareholder obtains
majority voting power. Accordingly, these provisions could have the effect of
discouraging a potential acquirer from making a tender offer or otherwise
attempting to obtain control of our company.
Shareholder Action by Written Consent; Special Meetings. No action
required or permitted to be taken at an annual or special meeting of
shareholders may be taken without a meeting. No action may be taken by the
written consent of shareholders instead of a meeting. Only our Board, our
Chairman of the Board or our Chief Executive Officer may call a special meeting
of shareholders. These provisions may make it more difficult for shareholders
to take action opposed by our Board.
Advance Notice Provisions. Shareholders seeking to nominate candidates to
be elected as directors at an annual meeting or to bring business before an
annual meeting must comply with an advanced written procedure. Only persons who
are nominated by or at the direction of our Board, or by a shareholder who has
given timely written notice to our Secretary before the meeting to elect
directors, will be eligible as directors. At any shareholders' meeting the
business to be conducted is limited to business brought before the meeting by
or at the direction of the Board of Directors, or a shareholder who has given
timely written notice to our Secretary of its intention to bring business
before an annual meeting. A shareholder must give notice which is received at
our principal executive offices in writing between 60 to 90 days before the
meeting. If, however, we gave less than 70 days' notice or prior public
disclosure of the meeting date, we must receive the shareholder's notice no
later than the close of business on the 10th day following the day we gave the
notice or public disclosure of the meeting date. A shareholder's notice must
also contain certain information specified in the Bylaws. These provisions may
preclude or deter some shareholders from bringing matters before, or making
nominations for directors at, an annual meeting.
19
<PAGE>
Amendment of Certain Charter and Bylaw Provisions. Our Board may adopt,
amend or repeal any provision of the Bylaws. Bylaw provisions may be adopted,
amended or repealed by the affirmative vote of shareholders holding at least 66
2/3% of the total number of votes entitled to be cast in the election of
directors.
Any amendment, modification or repeal of the provisions of the Certificate
of Incorporation relating to
o the election and removal of directors,
o the right to call special meetings,
o the prohibition on action by written consent,
o amendment of the Bylaws and
o the limitation of liability and indemnification of officers and
directors
will require approval by the affirmative vote of shareholders holding at
least 66 2/3% of the total number of votes entitled to vote in the election of
directors.
Delaware Takeover Statute
We are subject to Section 203 of the DGCL ("Section 203"). In general,
Section 203 prohibits a publicly held Delaware corporation from engaging in a
"business combination" with an "interested shareholder" for a period of three
years following the date that the shareholder became an interested shareholder,
unless:
(a) before such date either the business combination or the transaction
which resulted in the shareholder becoming an interested shareholder
is approved by the board of directors of the corporation,
(b) upon consummation of the transaction which resulted in the
shareholder becoming an interested shareholder, the interested
shareholder owns at least 85% of the voting stock of the corporation
outstanding at the time the transaction commenced (excluding for
purposes of determining the number of shares outstanding, shares
owned by
(1) persons who are both directors and officers and
(2) employee stock plans in certain circumstances), or
(c) on or after such date the business combination is approved by the
board and authorized at an annual or special meeting of shareholders,
and not by written consent, by the affirmative vote of at least 66
2/3% of the outstanding voting stock which is not owned by the
interested shareholder.
A "business combination" includes a merger, consolidation, asset sale, or
other transaction resulting in a financial benefit to the interested
shareholder. An "interested shareholder" is a person who, together with
affiliates and associates, owns (or within three years, did own) 15% or more of
the corporation's voting stock.
The restrictions imposed by Section 203 will not apply to a corporation
if, among other things:
(a) the corporation's original certificate of incorporation contains a
provision expressly electing not to be governed by Section 203 or
20
<PAGE>
(b) 12 months have passed after the corporation, by action of its
shareholders holding a majority of the outstanding stock, adopts an
amendment to its certificate of incorporation or bylaws expressly
electing not to be governed by Section 203.
The restrictions imposed by Section 203 will apply to us since we have not
elected not to be governed by that section. Our Board of Directors approved of
Level 3 becoming an interested shareholder and, consequently, Section 203 would
not apply to any business combination with Level 3.
Liability and Indemnification of Directors and Officers
Certain provisions of the DGCL and the Certificate of Incorporation and
the Bylaws relate to the limitation of liability and indemnification of our
directors and officers. These various provisions are described below.
Our Certificate of Incorporation provides that our directors are not
personally liable to us or our shareholders for monetary damages for breach of
their fiduciary duties as a director to the fullest extent permitted by the
DGCL. Under the DGCL, directors would not be personally liable to us or our
shareholders for monetary damages for breach of their fiduciary duties as a
director, except for
(a) any breach of the director's duty of loyalty to us or our
shareholders,
(b) acts or omissions not in good faith or involving intentional
misconduct or a knowing violation of law,
(c) any transaction from which the director derived improper personal
benefit or
(d) the unlawful payment of dividends or unlawful stock repurchases or
redemptions.
This exculpation provision may have the effect of reducing the likelihood
of derivative litigation against directors and may discourage or deter
shareholders or us from bringing a lawsuit against our directors for breach of
their fiduciary duties as directors. However, the provision does not affect
equitable remedies such as an injunction or rescission from being available.
We will indemnify and hold harmless to the fullest extent permitted by the
DGCL each person who was or is a party or is threatened to be made a party to
any threatened, pending or completed action or proceeding. These include civil,
criminal, administrative or investigative proceedings, if that person is or was
a director or officer of RCN or is or was serving at our request as a director
or officer of another corporation, partnership, joint venture, trust or other
enterprise. We will also pay the expenses incurred in connection with these
proceedings before its final disposition to the fullest extent authorized by
the DGCL. This right to indemnification is a contract right. By action of our
Board of Directors, we provide indemnification to our employees and agents to
the extent our Board determines to be appropriate and authorized by the DGCL.
We purchase and maintain insurance on behalf of any person who is or was a
director, officer, employee or agent of RCN, or is or was serving at our
request as a director, officer, employee or agent of another corporation,
partnership, joint venture, trust, employee benefit plan or other enterprise
against any liability asserted against him or her and incurred by him or her in
any such capacity, or arising out of his or her status, whether or not we would
have the power or the obligation to indemnify him or her against the liability
under the Certificate of Incorporation.
21
<PAGE>
OFFERED SECURITIES
We propose to issue and sell the shares of common stock offered hereby in
connection with acquisitions of other businesses or assets. We anticipate that
any acquisitions will consist principally of acquisitions of telecommunications-
related businesses (including providers of voice, video and data transmission
products, services, and systems). The shares of common stock shall be offered
on terms to be determined at the time of sale. Such shares of common stock may
be issued in exchange for shares of capital stock, partnership interests or
other assets representing an interest, direct or indirect, in other entities,
in exchange for assets used in or related to the business of such entities or
otherwise pursuant to agreements providing for such acquisitions. The
consideration for such acquisitions may consist of common stock, cash,
assumption of liabilities or a combination thereof. The terms of such
acquisitions and of the issuance of any such shares of common stock in
connection therewith will generally be determined by direct negotiations with
the owners of the business or assets to be acquired or, in the case of entities
which are more widely held, through exchange offers to stockholders or
documents soliciting the approval or statutory mergers, consolidations or sales
of assets. Underwriting discounts or commissions will generally not be paid by
us. However, under certain circumstances, we may issue shares of common stock
covered by this prospectus to pay brokers' commissions incurred in connection
with acquisitions. For a description of our common stock, see "Description of
Capital Stock."
This prospectus, as amended or supplemented if appropriate, has also been
prepared for use by persons who receive shares of common stock in acquisitions,
including shares sold hereunder ("selling stockholders"); provided, however,
that no selling stockholder is authorized to use this prospectus to reoffer any
such shares without first obtaining our prior written consent. Resales may be
made in the manner described in this prospectus, as amended or supplemented, in
the manner permitted by Rule 145(d) under the Securities Act or under an
exemption from the Securities Act. Profits realized on resales by selling
stockholders under certain circumstances may be regarded as underwriting
compensation under the Securities Act.
Resales by selling stockholders may be made directly to investors or
through a securities firm acting as an underwriter, broker or dealer. When
resales are to be made through a securities firm, such securities firm may be
engaged to act as the selling stockholder's agent in the sale of the shares by
such selling stockholder, or the securities firm may purchase shares from the
selling stockholders as principal and thereafter resell such shares from time
to time. The fees earned by or paid to such securities firm may be the normal
stock exchange commission or negotiated commissions or underwriting discounts
to the extent permissible. In addition, such securities firm may effect resales
through other securities dealers, and customary commissions or concessions to
such other dealers may be allowed. Sales of shares may be at negotiated prices,
at fixed prices, at market prices or at prices related to market prices then
prevailing. Any such sales may be made on The Nasdaq National Market or other
exchange on which such shares are traded, in the over-the-counter market, by
block trade, in special or other offerings, directly to investors or through a
securities firm acting as agent or principal, or a combination of such methods.
Any participating securities firm may be indemnified against certain
liabilities, including liabilities under the Securities Act. Any participating
securities firm may be deemed to be and underwriter within the meaning of the
Securities Act, and any commission earned by such firm may be deemed to be
underwriting discounts or commissions under the Securities Act.
In connection with resales, a prospectus supplement, if required, will be
filed under Rule 424(b) under the Securities Act, disclosing the name of the
selling stockholder, the participating securities firm, if any, the number of
shares involved and other details of such resale to the extent appropriate.
LEGAL MATTERS
The validity of the shares of common stock in respect of which this
prospectus is being delivered will be passed on for RCN Corporation by Davis
Polk & Wardwell, New York, New York.
22
<PAGE>
EXPERTS
The consolidated financial statements of RCN Corporation as of December
31, 1998 and 1997, and for the years ended December 31, 1998, 1997 and 1996,
appearing in the RCN 10-K for the year ended December 31, 1998 and incorporated
by reference into this registration statement have been audited by
PricewaterhouseCoopers LLP, independent accountants, as set forth in their
report thereon incorporated by reference herein, and are included in reliance
upon such report given upon the authority of such firm as experts in accounting
and auditing.
23
<PAGE>
=====================================================
You should rely only on the information
contained in this prospectus. We have not
authorized anyone to provide you with information
different from that contained in this prospectus.
We 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 the
common stock.
-----------------------
TABLE OF CONTENTS
Page
----
Summary.............................................2
Risk Factors........................................3
Where You Can Find More Information.................8
Special Note on Forward-Looking Statements..........8
Use of Proceeds.....................................9
Dividends...........................................9
Market Price and Dividend Information...............9
Selected Historical Consolidated Financial
Data .........................................11
Business...........................................13
Description of Capital Stock.......................17
Offered Securities.................................22
Legal Matters......................................22
Experts............................................23
=====================================================
RCN
Corporation
[LOGO]
---------------
Prospectus
---------------
April 29, 1999
=====================================================
<PAGE>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
Item 20. Indemnification of Directors and Officers.
Reference is made to Section 102(b)(7) of the Delaware General Corporation
Law (the "DGCL"), which enables a corporation in its original certificate of
incorporation or an amendment thereto to eliminate or limit the personal
liability of a director for violations of the director's fiduciary duty, except
(i) for any breach of the director's duty of loyalty to the corporation or its
stockholders, (ii) for acts or omissions not in good faith or which involve
intentional misconduct or a knowing violation of law, (iii) pursuant to Section
174 of the DGCL (providing for liability of directors for the unlawful payment
of dividends or unlawful stock purchases or redemptions) or (iv) for any
transaction from which a director derived an improper personal benefit.
Section 145 of the DGCL empowers RCN to indemnify, subject to the
standards set forth therein, any person in connection with any action, suit or
proceeding brought before or threatened by reason of the fact that the person
was a director, officer, employee or agent of such company, or is or was
serving as such with respect to another entity at the request of such company.
The DGCL also provides that RCN may purchase insurance on behalf of any such
director, officer, employee or agent.
RCN's Certificate of Incorporation provides in effect for the elimination
of the personal liability of RCN directors for breaches of fiduciary duty and
for the indemnification by RCN of each director and officer of RCN, in each
case, to the fullest extent permitted by applicable law.
RCN purchases and maintains insurance on behalf of any person who is or
was a director, officer, employee or agent of RCN, or is or was serving at the
request of RCN as a director, officer, employee or agent of another
corporation, partnership, joint venture, trust, employee benefit plan or other
enterprise against any liability asserted against him or her and incurred by
him or her in any such capacity, or arising out of his or her status as such,
whether or not RCN would have the power or the obligation to indemnify him or
her against such liability under the provisions of its Certificate of
Incorporation.
Item 21. Exhibits and Financial Statement Schedules
(a) Exhibits (see index to exhibits at E-1).
Item 22. Undertakings
(a) The undersigned 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: (i) to include any
prospectus required by Section 10(a)(3) of the Securities Act of 1933; (ii) 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.
Notwithstanding the foregoing, any increase or decrease in the volume of
securities offered (if the total dollar value of securities offered would not
exceed that which was registered) and any deviation from the low or high end of
the estimated maximum offering range may be reflected in the form of prospectus
filed with the Commission pursuant to Rule 424(b) if, in the aggregate, the
changes in volume and price represent no more than a 20 percent change in the
maximum aggregate offering price set forth in the "Calculation of Registration
Fee" table in the effective registration statement; and (iii) to include any
material information with respect to the plan of distribution not previously
disclosed in the registration statement or any material change to such
information in the registration statement;
II-1
<PAGE>
(2) That, for the purpose of determining any liability under the
Securities Act of 1933, each such post-effective amendment 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.
(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.
(b) The undersigned Registrant hereby undertakes that, for purposes of
determining any liability under the Securities Act of 1933, each filing of the
Registrant's annual report pursuant to Section 13(a) or 15(d) of the Securities
Exchange Act of 1934 (and, where applicable, each filing of an employee benefit
plan's annual report pursuant to Section 15(d) of the Securities Exchange Act
of 1934) that is incorporated by reference in the registration statement 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.
(c) Insofar as indemnification for liabilities arising under the
Securities Act of 1933 may be permitted to directors, officers and controlling
persons of the Registrant pursuant to the foregoing provisions, or otherwise,
the Registrant has been advised that in the opinion of the Securities and
Exchange Commission such indemnification is against public policy as expressed
in the Act and is, therefore, unenforceable. In the event that a claim for
indemnification against such liabilities (other than the payment by the
registrant of expenses incurred or paid by a director, officer or controlling
person of the Registrant in the successful defense of any action, suit or
proceeding) is asserted by such director, officer or controlling person in
connection with the securities being registered, 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
such indemnification by it is against public policy as expressed in the Act and
will be governed by the final adjudication of such issue.
(d) (1) The undersigned Registrant hereby undertakes as follows: that
prior to any public reoffering of the securities registered hereunder through
use of a prospectus which is a part of this registration statement, by any
person or party who is deemed to be an underwriter within the meaning of Rule
145 (c), the issuer undertakes that such reoffering prospectus will contain the
information called for by the applicable registration form with respect to
reofferings by persons who may be deemed underwriters, in addition to the
information called for by the other items of the applicable form.
(2) The Registrant undertakes that every prospectus: (i) that is filed
pursuant to paragraph (1) immediately preceding, or (ii) that purports to meet
the requirements of Section 10(a) (3) of the Act and is used in connection with
an offering of securities subject to Rule 415, will be filed as a part of an
amendment to the registration statement and will not be used until such
amendment is effective, and that, for purposes of determining any liability
under the Securities Act of 1933, each such post-effective amendment 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.
(e) The undersigned Registrant hereby undertakes that:
(1) For purposes of determining any liability under the Securities Act of
1933, the information omitted from the form of prospectus filed as
part of this registration statement in reliance upon Rule 430A and
contained in a 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 this registration statement as of the time it was
declared effective.
(2) For purposes of determining any liability under the Securities Act of
1933, 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-2
<PAGE>
(f) The undersigned Registrant hereby undertakes to respond to requests
for information that is incorporated by reference into the prospectus pursuant
to Item 4, 10(b), 11, or 13 of this form, within one business day of receipt of
such request, and to send the incorporated documents by first class mail or
other equally prompt means. This includes information contained in documents
filed subsequent to the effective date of the registration statement through
the date of responding to the request.
(g) The undersigned Registrant hereby undertakes to supply by means of a
post-effective amendment all information concerning a transaction, and RCN
being acquired involved therein, that was not the subject of and included in
the registration statement when it became effective.
II-3
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the Registrant
has duly caused this Registration statement on Form S-4 to be signed on its
behalf by the undersigned, thereunto duly authorized, in the city of Princeton,
New Jersey on the 29th day of April, 1999.
RCN CORPORATION
By: /s/ Bruce C. Godfrey
--------------------------------
Bruce C. Godfrey
The Registrant and each person whose signature appears below constitutes
and appoints Michael J. Mahoney and Bruce C. Godfrey, and any agent for service
named in this Registration statement and each of them, his, her or its true and
lawful attorneys-in-fact and agents, with full power of substitution and
resubstitution, for him, her or it and in his her, or its name, place and
stead, in any and all capacities, to sign and file (i) any and all amendments
(including post-effective amendments) to this Registration statement, with all
exhibits thereto, and other documents in connection therewith, and (ii) a
registration statement, and any and all amendments thereto, relating to the
offering covered hereby filed pursuant to Rule 462(b) under the Securities Act
of 1933, 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 things requisite or necessary to be done in
and about the premises, as fully to all intents and purposes as he, she, or it
might or could do in person, hereby ratifying and confirming all that said
attorneys-in-fact and agents or any of them, or their or his 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 on Form S-4 has been signed by the following persons in
the capacities and on the dates indicated.
Signature Title Date
--------- ----- ----
/s/ David C. McCourt
- ------------------------ Director, Chairman and Chief April 29, 1999
David C. McCourt Executive Officer
/s/ Michael J. Mahoney
- ------------------------ Director, President and Chief April 29, 1999
Michael J. Mahoney Operating Officer
/s/ Bruce C. Godfrey
- ------------------------ Director, Executive Vice President April 29, 1999
Bruce C. Godfrey and Chief Financial Officer
/s/ James Q. Crowe
- ------------------------ Director April 29, 1999
James Q. Crowe
/s/ Alfred Fasola
- ------------------------ Director April 29, 1999
Alfred Fasola
II-4
<PAGE>
Signature Title Date
--------- ----- ----
/s/ Stuart E. Graham
- ------------------------ Director April 29, 1999
Stuart E. Graham
/s/ Richard R. Jaros
- ------------------------ Director April 29, 1999
Richard R. Jaros
/s/ Michael J. Levitt
- ------------------------ Director April 29, 1999
Michael J. Levitt
/s/ Thomas May
- ------------------------ Director April 29, 1999
Thomas May
/s/ Thomas P. O'Neill III
- ------------------------ Director April 29, 1999
Thomas P. O'Neill III
/s/ Eugene Roth
- ------------------------ Director April 29, 1999
Eugene Roth
/s/ Walter Scott, Jr.
- ------------------------ Director April 29, 1999
Walter Scott, Jr.
/s/ Michael B. Yanney
- ------------------------ Director April 29, 1999
Michael B. Yanney
/s/ Ralph Hromisin
- ------------------------ Senior-Vice-President and April 29, 1999
Ralph Hromisin Chief Accounting Officer
II-5
<PAGE>
EXHIBIT INDEX
Exhibit No. Document
- ----------- --------
2.1 Form of Distribution Agreement among C-TEC Corporation,
Cable Michigan, Inc. and RCN Corporation (incorporated by
reference to Exhibit 2.1 to Amendment No. 2 to RCN's
Information Statement on Form 10/A ("Form 10") filed on
September 5, 1997)
2.2 Tax Sharing Agreement by and among C-TEC Corporation, Cable
Michigan, Inc. and the Registrant (incorporated by
reference to Exhibit 10.1 to RCN's Form 10)
2.3 Agreement and Plan of Merger dated as of January 21, 1998
among Erols Internet, Inc., Erol Onaran, Gold & Appel
Transfer, S.A., RCN Corporation and ENET Holding, Inc.
(incorporated by reference to Exhibit 2.1 to RCN's Current
Report on Form 8-K ("March 1998 8-K") filed on March 6,
1998)
2.4 Amendment No. 1 to Agreement and Plan of Merger dated as of
January 21, 1998 among Erols Internet, Inc., Erol Onaran,
Gold & Appel Transfer, S.A., RCN Corporation and ENET
Holding, Inc. (incorporated by reference to Exhibit 2.2 to
RCN's March 1998 8-K)
3.1 Certificate of Designations, Preferences and Rights of
Series A 7% Senior Convertible Preferred Stock dated April
7, 1999 (incorporated by reference to Exhibit 3.1 to RCN's
Registration Statement on Form S-3 (Commission File No.
333-71525))
4.1 Indenture dated as of February 6, 1998 between RCN, as
Issuer, and The Chase Manhattan Bank, as trustee, with
respect to the 9.80% Senior Discount Notes due 2008
(incorporated by reference to Exhibit 4.1 to RCN's
Registration Statement on Form S-4 (Commission File No.
333-48487) ("1998 Form S-4") filed on March 23, 1998)
4.2 Form of the 9.80% Senior Discount Notes due 2008, Series B
(included in Exhibit 4.1) (incorporated by reference to
Exhibit 4.2 to RCN's 1998 Form S-4)
4.3 Indenture dated as of October 17, 1997 between RCN, as
Issuer, and The Chase Manhattan Bank, as trustee, with
respect to the 10% Senior Notes due 2007 (incorporated by
reference to Exhibit 4.1 to RCN's Registration Statement on
Form S-4 (Commission File No. 333-41081) ("Form S-4") filed
on November 26, 1997)
4.4 Form of the 10% Senior Exchange Notes due 2007 (included in
Exhibit 4.4) (incorporated by reference to Exhibit 4.2 to
RCN's Form S-4)
4.5 Indenture dated as of October 17, 1997 between RCN, as
Issuer, and The Chase Manhattan Bank, as trustee, with
respect to the 111/8% Senior Discount Notes due 2007
(incorporated by reference to Exhibit 4.3 to RCN's Form
S-4)
4.6 Form of the 111/8% Senior Discount Exchange Notes due 2007
(included in Exhibit 4.6) (incorporated by reference to
Exhibit 4.4 to RCN's Form S-4)
4.7 Indenture dated June 24, 1998 between RCN, as Issuer, and
The Chase Manhattan Bank, as trustee, with respect to the
11% Senior Discount Notes due 2008 (incorporated by
Reference to Exhibit 4.8 to RCN's Registration Statement on
Form S-1 (Commission File No. 333-55673))
4.8 Form of 11% Senior Discount Note due 2008 (included in
Exhibit 4.8) (incorporated by reference to Exhibit 4.8 to
RCN's Registration Statement on Form S-1 (Commission File
No. 333-55673))
E-1
<PAGE>
4.9 Escrow Agreement dated as of October 17, 1997 among The
Chase Manhattan Bank, as escrow agent, The Chase Manhattan
Bank, as trustee under the Indenture (as defined therein),
and RCN (incorporated by reference to Exhibit 4.6 to RCN's
Form S-4)
4.10 Credit Agreement dated as of July 1, 1997 among C-TEC Cable
Systems, Inc., ComVideo Systems, Inc., C-TEC Cable Systems
of New York, Inc. and First UnionNational Bank, as agent
(incorporated by reference to Exhibit 4.1 to RCN's Form
10)**
5.1 Opinion of Davis Polk & Wardwell***
11.1 Statement regarding Computation of Per Share Earnings
(included in the Notes to the Consolidated Financial
Statements incorporated by reference herein)
23.1 Consent of PricewaterhouseCoopers LLP with respect to RCN
Corporation
24.1 Power of Attorney (included on the signature page of the
Registration statement)
- --------
** Exhibits and schedules which have not been filed with Exhibit 4.10 will
be provided to the Commission by the Registrant upon request.
***To be filed by amendment
E-2
Exhibit 23.1
CONSENT OF INDEPENDENT ACCOUNTANTS
We consent to the incorporation by reference in this Registration Statement of
RCN Corporation on Form S-4 and the related Prospectus, of our report dated
March 8, 1999, except Note 20, as to which the date is March 18, 1999, on our
audits of the consolidated financial statements of RCN Corporation as of
December 31, 1998 and 1997 and for the years ended December 31, 1998, 1997 and
1996. We also consent to the reference to our Firm under the caption
"Experts.'
/s/ PricewaterhouseCoopers LLP
Philadelphia, Pennsylvania
April 26, 1999
