<PAGE>
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a)
of the Securities Exchange Act of 1934
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[ ] Preliminary Proxy Statement
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material pursuant to Rule 14a-11(c) or Rule 14a-12
Adelphia Communications Corporation
(Name of Registrant as Specified In Its Charter)
Adelphia Communications Corporation
(Name of Person(s) Filing Proxy Statement)
Payment of Filing Fee (Check the appropriate box):
[X] $125 per Exchange Act Rules 0-11(c)(1)(ii), 14a-6(i)(1), or 14a-6(j)(2).
[ ] $500 per each party to the controversy pursuant to Exchange Act Rule
14a-6(i)(3).
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
1) Title of each class of securities to which transaction applies:
_______________________________________________________________
2) Aggregate number of securities to which transaction applies:
_______________________________________________________________
3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11:/(1)/
_______________________________________________________________
4) Proposed maximum aggregate value of transaction:
_______________________________________________________________
/(1)/ Set forth the amount on which the filing fee is calculated and state how
it was determined.
[ ] Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee was
paid previously. Identify the previous filing by registration statement
number, or the Form or Schedule and the date of its filing.
1) Amount Previously Paid:
_______________________________________________________________
2) Form, Schedule or Registration Statement No.:
_______________________________________________________________
3) Filing Party:
_______________________________________________________________
4) Date Filed:
_______________________________________________________________
<PAGE>
ADELPHIA COMMUNICATIONS CORPORATION
P.O. Box 472
5 West Third Street
Coudersport, Pennsylvania 16915
------------------------
Notice of Annual Meeting of Stockholders
to be held on September 20, 1994
------------------------
To the Stockholders of
Adelphia Communications Corporation:
The Annual Meeting of Stockholders of Adelphia Communications Corporation
will be held at the Coudersport Theatre, Main Street, Coudersport, Pennsylvania
on Tuesday, September 20, 1994 at 10:00 a.m., for the following purposes:
1. To elect one (1) Director by vote of the holders of Class A Common Stock
voting as a separate class.
2. To elect six (6) Directors by vote of the holders of Class A Common Stock
and Class B Common Stock, voting together.
3. To consider and act upon such other matters as may properly come before the
meeting.
The Board of Directors has fixed the close of business on July 29, 1994 as
the record date for determination of stockholders entitled to notice of and to
vote at the Annual Meeting.
IF YOU ARE UNABLE TO ATTEND THE MEETING AND YOU WISH TO VOTE YOUR STOCK, IT
IS REQUESTED THAT YOU COMPLETE, DATE AND SIGN THE ENCLOSED PROXY AND RETURN IT
AS PROMPTLY AS POSSIBLE IN THE ENCLOSED ENVELOPE.
BY ORDER OF THE BOARD OF DIRECTORS
Daniel R. Milliard
Vice President and Secretary
August 22, 1994
<PAGE>
ADELPHIA COMMUNICATIONS CORPORATION
P.O. Box 472
5 West Third Street
Coudersport, Pennsylvania 16915
------------------------
PROXY STATEMENT FOR ANNUAL MEETING
OF STOCKHOLDERS
September 20, 1994
------------------------
This proxy statement is being furnished to the stockholders of Adelphia
Communications Corporation, a Delaware corporation (the "Company"), in
connection with the solicitation by the Board of Directors of the Company of
proxies to be voted at the annual meeting of stockholders (the "Annual Meeting")
scheduled to be held on Tuesday, September 20, 1994, at the Coudersport Theatre,
Main Street, Coudersport, Pennsylvania. The address of the principal executive
offices of the Company is P.O. Box 472, 5 West Third Street, Coudersport,
Pennsylvania 16915, and the date this proxy statement was first mailed to
stockholders was on or about August 22, 1994. A copy of the Annual Report to
Stockholders for the fiscal year ended March 31, 1994 is being furnished with
this proxy statement.
Only stockholders of record as of the close of business on July 29, 1994
are entitled to notice of and to vote at the Annual Meeting and any adjournment
thereof. The outstanding capital stock of the Company on that date consisted of
13,507,604 shares of Class A Common Stock, $.01 par value ("Class A Common
Stock"), and 10,944,476 shares of Class B Common Stock, $.01 par value ("Class B
Common Stock"). With respect to the matters described in this proxy statement,
other than the election of directors as described below, the holders of Class A
Common Stock and of Class B Common Stock vote together as a single class, and
each holder of Class A Common Stock is entitled to cast one (1) vote for each
share of Class A Common Stock standing in his name on the books of the Company
and each holder of Class B Common Stock is entitled to cast ten (10) votes for
each share of Class B Common Stock standing in his name on the books of the
Company. A majority of the votes cast at the Annual Meeting are required for the
adoption of the proposals described below.
All shares represented by valid proxies received by the Company prior to
the Annual Meeting will be voted at the Annual Meeting as specified in the
proxy, unless such proxies previously have been revoked. If no specification is
made, the shares will be voted FOR the election of each of the Board's nominees
to the Board of Directors. Unless otherwise indicated by the stockholder, the
proxy card also confers discretionary authority on the Board-appointed proxies
to vote the shares represented by the proxy on any matter that is properly
presented for action at the Annual Meeting. A stockholder giving a proxy has the
power to revoke it any time prior to its exercise by delivering to the Secretary
of the Company a written revocation or a duly executed proxy bearing a later
date, or by attendance at the meeting and voting his shares in person.
Abstentions and broker non-votes on any matter submitted to the
stockholders for approval have no effect on the vote on such matter since the
affirmative vote of at least a majority of the votes cast by shareholders at the
meeting, in person or by proxy, is necessary for adoption of the proposals
described below. Broker non-votes as to any matter are shares held by nominees
which are present and voted at the meeting on matters as to which the nominee
has discretionary authority but which are not voted on the matter in question
because the nominee does not have discretionary voting authority as to such
matter.
Recommendation of the Board of Directors
The Board of Directors of the Company recommends a vote FOR each of the
nominees named below for election as directors.
ELECTION OF DIRECTORS
Description of Board of Directors
The Certificate of Incorporation of the Company provides for the Board of
Directors to be elected as follows: a majority of the votes cast by holders of
Class A Common Stock, voting as a separate class, are entitled to elect one (1)
director; and a majority of the votes cast by holders of Class A Common Stock
and holders of Class
<PAGE>
B Common Stock, voting together as a single class, are entitled to elect the
remaining directors, with each share of Class A Common Stock entitled to one (1)
vote and each share of Class B Common Stock entitled to ten (10) votes.
Stockholders of the Corporation are not entitled to cumulate their votes in the
election of directors.
The Bylaws of the Company provide that the Board of Directors shall
establish the number of directors which shall not be less than five nor more
than nine. Pursuant to the Bylaws, the Board currently consists of seven
directors, all of whom are also nominees for director.
Each director is to hold office until the next annual meeting of
stockholders and until his successor is duly elected and qualified, subject to
the right of the stockholders to remove any director as provided in the Bylaws.
Any vacancy in the office of a director elected by the holders of Class A Common
Stock voting as a separate class may be filled by such holders voting as a
separate class, and any vacancy in the office of a director elected by the
holders of Class A Common Stock and the holders of Class B Common Stock voting
as a single class may be filled by such holders voting as a single class. In the
absence of a stockholder vote, a vacancy in the office of a director elected by
the holders of Class A Common Stock voting as a separate class or by the holders
of Class A Common Stock and the holders of Class B Common Stock voting as a
single class, as the case may be, may be filled by the remaining directors then
in office, even if less than a quorum, or by the sole remaining director. Any
director elected by the Board of Directors to fill a vacancy shall serve until
the next annual meeting of stockholders and until his successor has been elected
and has qualified. If the Board of Directors increases the number of directors,
any vacancy so created may be filled by the Board of Directors.
The persons named as proxies in the enclosed form of proxy were selected by
the Board of Directors, and have advised the Board of Directors that, unless
authority is withheld, they intend to vote the shares represented by them at the
Annual Meeting for the election of Perry S. Patterson, on behalf of the Class A
Common Stockholders, and for the election of John J. Rigas, Michael J. Rigas,
Timothy J. Rigas, James P. Rigas, Daniel R. Milliard and Pete J. Metros on
behalf of all of the stockholders of the Company. All nominees were first
elected or appointed as directors of the Company in 1986.
The Board of Directors knows of no reason why any nominee for director
would be unable to serve as director. If at the time of the Annual Meeting any
of the named nominees are unable or unwilling to serve as directors of the
Company, the persons named in the proxy intend to vote for such substitutes as
may be nominated by the Board of Directors.
The following sets forth certain information concerning each director of
the Company, each of whom is a nominee for reelection as a director.
Nominee for Election by Holders of Class A Common Stock
Perry S. Patterson
Age 77
Perry S. Patterson became a director of Adelphia on September 9, 1986.
Since 1977, Mr. Patterson has practiced law in Coudersport, Pennsylvania. From
1975 to 1977, Mr. Patterson served as President Judge of the Court of Common
Pleas of the 55th Judicial District in Potter County, Pennsylvania. He was a
partner of the law firm of Kirkland & Ellis, in Chicago, Illinois and
Washington, D.C. from 1950 to 1973. Mr. Patterson attended Georgetown University
and graduated from Northwestern University Law School in 1941.
Nominees for Election by Holders of Class A Common Stock and Class B Common
Stock
John J. Rigas
Age 69
John J. Rigas is the founder, Chairman, President and Chief Executive
Officer of Adelphia and is President of its subsidiaries. Mr. Rigas has served
as President or general partner of most of the constituent entities which became
wholly-owned subsidiaries of Adelphia upon its formation in 1986, as well as the
cable television operating companies acquired by the Company which were wholly
or partially owned by members of the Rigas Family. Mr. Rigas has owned and
operated cable television systems since 1952. Among his business and community
service activities, Mr. Rigas is Chairman of the Board of Directors of Citizens
Bank Corp., Inc., Coudersport, Pennsylvania and a member of the Board of
Directors of the Charles Cole Memorial Hospital. He is a director of
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<PAGE>
the National Cable Television Association and a past President of the
Pennsylvania Cable Television Association. He is also a member of the board of
directors of C-SPAN and the Cable Advertising Bureau, and is a Trustee of St.
Bonaventure University. He graduated from Rensselaer Polytechnic Institute with
a B.S. in Management Engineering in 1950.
John J. Rigas is the father of Michael J. Rigas, Timothy J. Rigas and James
P. Rigas, each of whom currently serves as a director and executive officer of
the Company.
Michael J. Rigas
Age 40
Michael J. Rigas is Senior Vice President, Operations of Adelphia and is a
Vice President of its subsidiaries. Since 1981, Mr. Rigas has served as a Vice
President, general partner or other officer of the constituent entities which
became wholly-owned subsidiaries of Adelphia upon its formation in 1986, as well
as the cable television operating companies acquired by the Company which were
wholly or partially owned by members of the Rigas Family. From 1979 to 1981, he
worked for Webster, Chamberlain & Bean, a Washington, D.C. law firm. Mr. Rigas
graduated from Harvard University (magna cum laude) in 1976 and received his
Juris Doctor degree from Harvard Law School in 1979.
Timothy J. Rigas
Age 38
Timothy J. Rigas is Senior Vice President, Chief Financial Officer, Chief
Accounting Officer and Treasurer of Adelphia and a Vice President of its
subsidiaries. Since 1979, Mr. Rigas has served as a Vice President, general
partner or other officer of the constituent entities which became wholly-owned
subsidiaries of Adelphia upon its formation in 1986, as well as the cable
television operating companies acquired by the Company which were wholly or
partially owned by members of the Rigas Family. Mr. Rigas graduated from the
University of Pennsylvania, Wharton School, with a B.S. degree in Economics (cum
laude) in 1978.
James P. Rigas
Age 36
James P. Rigas is Vice President of Adelphia and a Vice President of its
subsidiaries. Since February 1986, Mr. Rigas has served as a Vice President or
other officer of the constituent entities which became wholly-owned subsidiaries
of Adelphia upon its formation in 1986, as well as the cable television
operating companies acquired by the Company which were wholly or partially owned
by members of the Rigas Family. Mr. Rigas graduated from Harvard University
(magna cum laude) in 1980 and received a Juris Doctor degree and an M.A. degree
in Economics from Stanford University in 1984. From June 1984 to February 1986,
he was a consultant with Bain & Co., a management consulting firm.
Daniel R. Milliard
Age 47
Daniel R. Milliard is Vice President and Secretary of Adelphia and its
subsidiaries, and also serves as President of a subsidiary, Hyperion
Telecommunications, Inc. Since 1982, Mr. Milliard served as Vice President,
Secretary and/or General Counsel of Adelphia and the constituent entities which
became wholly-owned subsidiaries of Adelphia, as well as the cable television
operating companies acquired by the Company which were wholly or partially owned
by members of the Rigas Family. He served as outside general counsel to the
Company's predecessors from 1979 to 1982. Mr. Milliard graduated from American
University in 1970 with a Bachelor of Science degree in Business Administration.
He received an M.A. degree in Business from Central Missouri State University in
1971, where he was an Instructor in the Department of Finance, School of
Business and Economics, from 1971-1973, and received a Juris Doctor degree from
the University of Tulsa School of Law in 1976. He is a director of Citizens Bank
Corp., Inc. in Coudersport, Pennsylvania and is President of the Board of
Directors of the Charles Cole Memorial Hospital.
Pete J. Metros
Age 54
Pete J. Metros became a director of Adelphia on November 4, 1986. Mr.
Metros has been President and a member of the Board of Directors of Rapistan
Demag Corporation, a subsidiary of Mannesmann AG, since
3
<PAGE>
December 1991. From August 1987 to December 1991, he was President of Rapistan
Corp., the predecessor of Rapistan Demag Corporation, and of Truck Products
Corp., both of which were major subsidiaries of Lear Siegler Holdings Corp. From
1980 to August 1987, Mr. Metros was President of the Steam Turbine, Motor &
Generator Division of Dresser-Rand Company. From 1964 to 1980, he held various
positions at the General Electric Company, the last of which was
Manager--Manufacturing for the Large Gas Turbine Division. Mr. Metros is also on
the Board of Directors of Borroughs Corporation of Kalamazoo, Michigan. Mr.
Metros received a BS degree from the Georgia Institute of Technology in 1962.
Audit and Compensation Committees and Meetings of the Board of Directors
The Board of Directors has a Compensation Committee, consisting of Perry S.
Patterson and Pete J. Metros, which reviews and has authority to approve the
compensation of the key officers and employees of the Company. The Compensation
Committee met once during fiscal 1994. The Board also has an Audit Committee,
comprised of Perry S. Patterson, Pete J. Metros and Timothy J. Rigas, which was
formed in December 1992, and is responsible for monitoring the financial
reporting of the Company on behalf of the Board and the investing public. The
Audit Committee, whose responsibilities began with the fiscal 1993 audit, met
twice during fiscal 1994. The Company does not have a nominating committee. The
Board of Directors met or acted by written consent in lieu of meeting six times
in fiscal 1994. Each director attended at least 75% of the meetings of the Board
and the respective committees of which each is a member.
4
<PAGE>
EXECUTIVE COMPENSATION
Summary Compensation Table
The following table sets forth certain information regarding compensation
paid by the Company for services rendered during the Company's last three fiscal
years in the period ended March 31, 1994 to the Company's Chief Executive
Officer and the four most highly compensated executive officers whose
compensation exceeded $100,000 in salary and bonus during fiscal 1994:
Annual Compensation
<TABLE>
<CAPTION>
All Other
Fiscal Salary Compensation (a)
Name and Principal Position Year ($) ($)
- - --------------------------- ---- --- ---
<S> <C> <C> <C>
John J. Rigas 1994 576,153 119,750
Chairman, President and 1993 552,358 200,750
Chief Executive Officer 1992 553,525 200,750
Michael J. Rigas 1994 124,658 10,750
Senior Vice-President--Operations 1993 124,658 10,750
1992 124,921 10,750
Timothy J. Rigas 1994 124,658 10,750
Senior Vice President, Chief 1993 124,658 10,750
Financial Officer, Treasurer 1992 124,921 10,750
and Chief Accounting Officer
James P. Rigas 1994 124,658 10,750
Vice President--Operations 1993 124,658 10,750
1992 124,921 10,750
Daniel R. Milliard 1994 188,849 5,250
Vice President and Secretary 1993 172,527 5,250
1992 168,310 5,250
</TABLE>
- - ---------
(a) Pursuant to the Securities and Exchange Commission transitional provisions,
explanations of the amounts of All Other Compensation are excluded for
fiscal 1993 and 1992. Fiscal 1994 amounts include (i) life insurance
premiums paid during each respective fiscal year by the Company under
employment agreements with John J. Rigas, Michael J. Rigas, Timothy J.
Rigas, James P. Rigas and Daniel R. Milliard in premium payment amounts of
$119,000, $10,000, $10,000, $10,000 and $4,500, respectively, on policies
owned by the respective named executive officers and (ii) $750 in Company
matching contributions for each executive officer under the Company's
401(k) savings plan. The amounts shown above do not include transactions
between the Company and certain executive officers or certain entities
which are privately owned in whole or in part by the executive officers
named in the table. See "Certain Transactions."
All of the executive officers are eligible to receive bonuses of Class A
Common Stock under the Company's Restricted Stock Bonus Plan, as amended, and
options to purchase Class A Common Stock under the Stock Option Plan of 1986, as
amended, to be awarded or granted at the discretion of the Bonus Committee (as
defined therein) and Option Committee (as defined therein), respectively,
subject to certain limitations on the number of shares that may be awarded to
each executive officer under each of the Plans. No awards were made under either
the Restricted Stock Bonus Plan or the Stock Option Plan of 1986 during fiscal
1994.
Employment Contracts and Termination of Employment
Each of the named executive officers has an employment agreement with the
Company which is automatically renewable each year unless one party gives the
other prior notice and which provides among other things for
5
<PAGE>
compensation review by the Compensation Committee, the insurance premium
payments noted above, and benefits. In addition, under such employment
agreements, upon termination of such employment for any reason other than "for
cause," each of the executive officers will be entitled to receive severance pay
equal to three months of the salary plus the amount of insurance premiums
payable under such officer's employment agreement which, as of April 1, 1994, in
the aggregate in the case of John J. Rigas would be approximately $144,000.
Board of Directors Compensation
Directors who are not also employees of the Company each receive
compensation from the Company for services as a director at a rate of $750 plus
reimbursement of expenses for each Board and committee meeting attended.
Directors who are employees of the Company do not receive any compensation for
services as a director or as a member of Board committees.
REPORT OF THE COMPENSATION COMMITTEE
OF THE BOARD OF DIRECTORS
Issues relating to the compensation of executive officers are addressed by
the Compensation Committee of the Board of Directors (the "Compensation
Committee"), which is composed of two independent, non-employee directors, Pete
J. Metros and Perry S. Patterson.
The Compensation Committee recognizes that the compensation of executive
officers should be established at levels which are consistent with the Company's
objectives and achievements. However, no part of executive compensation is
strictly tied to statistical operating performance criteria. Each of the
executive officers of the Company, including the Chief Executive Officer,
entered into an employment agreement with the Company in July of 1986, which
fixed the initial annual base salary of each executive and provided the
Compensation Committee with the ability to increase the base salary as the
Compensation Committee deems appropriate to adequately reflect the scope and
success of the Company's operations, as well as to reflect increases in the
Consumer Price Index. The agreements also provide for bonus compensation in
amounts to be determined by the Compensation Committee from time to time, and
for certain de minimis fringe benefits. The agreements are renewable and have
been renewed at the end of each year.
With respect to compensation of executive officers other than the Chief
Executive Officer (the "Principal Executives"), the Compensation Committee
receives and accords significant weight to the input of the Chief Executive
Officer. Based on a review of public filings by other publicly-held cable system
operators and other independent compensation survey data, the Compensation
Committee believes that the annual base salaries of the Company's Principal
Executives generally are and have been set lower than the annual base salaries
and bonuses paid to corresponding Principal Executives of most other
publicly-held cable system operators and other telecommunications firms, and
have remained relatively constant compared to increases made in the annual base
salaries of Principal Executives of such other corporations over the past five
years.
The Compensation Committee has recognized the success of the Principal
Executives in accomplishing the Company's various strategic objectives. In 1994,
the Company continued to refinance its older parent Company debt and its
shorter-term variable interest rate debt at the level of the operating
subsidiaries with longer-term fixed rate debt and new equity infusions at the
parent Company level. These actions extended the maturities of the Company's
long-term debt and increased the Company's overall longer-term liquidity and
flexibility to obtain financing, which in turn will assist the Company to meet
the challenges of achieving growth in the face of increasing competition and
regulation within the cable television industry. The Company has also continued
to focus its efforts on increasing cash flow and providing superior customer
service while realizing operating efficiencies and cost-savings. Based upon its
evaluation of these and other relevant factors, the Compensation Committee is
satisfied that the Principal Executives have contributed positively to the
Company's long-term financial performance, and the Compensation Committee, in
consultation with the Chief Executive Officer of the Company, has set
compensation under the employment agreements accordingly.
The annual base salary of John J. Rigas, the Chief Executive Officer, is
determined by the Compensation Committee in accordance with Mr. Rigas's
employment agreement. Over the past several years, the Compensation Committee
has recognized Mr. Rigas's success in achieving the strategic objectives
mentioned above with respect to the Principal Executives, and has also
recognized Mr. Rigas's leadership and vision in formulating
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<PAGE>
strategies for responding to the challenges of increased regulation and
increasing competition, and for positioning the Company for growth in a
regulated environment. Based on its survey of compensation data for other
companies, the Compensation Committee believes that Mr. Rigas's annual base
salary and overall compensation package is lower than the compensation paid to
chief executive officers of many other publicly-held cable system operators and
other telecommunications firms.
To date, the Company has not granted bonuses to its Chief Executive Officer
or its Principal Executives, but may in its discretion grant bonuses from time
to time as it deems appropriate. In light of the historically significant equity
interests of the Chief Executive Officer and the Principal Executives, the
Compensation Committee has generally judged it unnecessary to offer its
executive officers equity participation plans or other equity-based incentives
in order to align the interests of its executive officers with those of its
stockholders.
COMPENSATION COMMITTEE
Pete J. Metros, Chairman
Perry S. Patterson
7
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Stock Performance Graph
The following graph compares the yearly percentage change in the cumulative
total shareholder return on the weighted average of the Company's Class A Common
Stock during the five years ended March 31, 1994 with the cumulative total
return on the Standard & Poor's 500 Stock Index and with a selected peer group
of five companies engaged in the cable communications industry: Cablevision
Systems Corporation (Class A); Comcast Corporation (Class A);
Tele-Communications, Inc. (Class A); TCA Cable TV, Inc.; and Century
Communications Corporation (Class A). The returns of each component issuer in
the foregoing peer group have been weighted according to the respective issuer's
market capitalization. The comparison assumes $100 was invested on March 31,
1989 in the Company's Class A Common Stock and in each of the foregoing indices,
and also assumes reinvestment of dividends. The yearly points marked on the
horizontal axis correspond to March 31 of each year.
<TABLE>
[GRAPH APPEARS HERE]
COMPARISON OF FIVE YEAR CUMULATIVE RETURN
AMONG ADELPHIA CABLE COMMUNICATIONS, S&P 500 INDEX AND PEER GROUP INDEX
<CAPTION>
Measurement period ADELPHIA CABLE S&P 500 PEER GROUP
(Fiscal year Covered) COMMUNICATIONS INDEX INDEX
- - --------------------- -------- ------- -------
<S> <C> <C> <C>
Measurement PT -
3/31/89 $100 $100 $100
FYE 3/31/90 $ 49 $119 $ 89
FYE 3/31/91 $ 36 $138 $106
FYE 3/31/92 $ 64 $152 $111
FYE 3/31/93 $ 69 $175 $160
FYE 3/31/94 $ 50 $177 $163
</TABLE>
8
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CERTAIN TRANSACTIONS
Management Services
During the fiscal year ended March 31, 1994, the Company provided
management services for certain cable television systems not owned by the
Company, including managed partnerships ("Managed Partnerships") in which John
J. Rigas, Michael J. Rigas, Timothy J. Rigas, James P. Rigas, Daniel R. Milliard
and Ellen K. Rigas have varied ownership interests. These services included
supervision of technical and business operations, accounting, marketing,
programming, purchasing, field engineering and other technical and
administrative nonfield services. During these periods, the Managed Partnerships
paid the Company five to six percent of system revenues for such services. Other
fees were charged by the Company to the Managed Partnerships during these
periods for goods and services including mark-ups on the Company's volume
purchases of equipment, pay programming and other goods and services. In
addition, the Managed Partnerships charged the Company for system and corporate
costs during these periods. The net fees and expenses charged by the Company to
Managed Partnerships amounted to $3,728,000 for fiscal 1994. The Company
believes that these fees were no less favorable than the fees which the Company
believes it could obtain in similar transactions with unrelated third parties.
Real Estate
During fiscal 1994, the Company leased from Dorellenic (a partnership owned
principally by the Company's executive officers) the Company's corporate
headquarters located in Coudersport, Pennsylvania and other real estate used in
connection with the operation of the Company Systems including, among others,
the offices of the systems serving suburban Buffalo, New York. The partners of
Dorellenic are John J. Rigas, Michael J. Rigas, Timothy J. Rigas, James P. Rigas
and Ellen K. Rigas. The leases were for varying terms, generally provided for
monthly rental payments equal to fair market value rentals, and were no less
favorable than the terms of leases which the Company believes it could obtain
from unrelated third parties. The Company pays all operating expenses in
connection with the leased property. Real estate rental payments to Dorellenic
totalled $391,000 for fiscal 1994.
During fiscal 1987, Dorellenic purchased the real estate used in connection
with the Company Systems serving suburban Buffalo, New York directly from the
persons who sold such systems to the Company for such sellers' respective net
book value for such properties of $639,000. The financing for Dorellenic's
purchase of this property was obtained from the Company pursuant to demand notes
bearing interest at the Company's cost of funds under a loan agreement, plus
0.25% (10.91% at March 31, 1994). The loan balance for the suburban Buffalo
facility of $639,000 was repaid effective March 31, 1994.
During fiscal 1991, Island Partners, a Pennsylvania general partnership
composed of members of the Rigas Family, purchased real estate from third
parties used in connection with the Company Systems serving suburban
Philadelphia, Pennsylvania. The financing for Island Partners' purchase of this
property was obtained from the Company pursuant to demand notes bearing interest
at the Company's cost of funds under a loan agreement, plus 0.25% (5.125% at
March 31, 1994). The Company leases this property from Island Partners at
amounts equal to the interest on the note (plus operating expenses). The loan
balance for the suburban Philadelphia facility of $2,882,000 was repaid
effective March 31, 1994.
As of March 31, 1994, the Company purchased various parcels of real estate,
including headquarters and office sites, headend sites and other real estate
used in connection with the Company's operations, from Dorellenic and Island
Partners for an aggregate purchase price of $14,312,000, subject to adjustment
based on the completion of fair market appraisals. Also as of March 31, 1994,
the Company acquired from certain Managed Partnerships the rights to provide
alternate access telecommunications services on such partnerships' cable plant
and in such partnerships' respective franchise areas for an aggregate purchase
price of $14,000,000, subject to adjustment based on the completion of fair
market appraisals.
Equipment Leases
The Company leases certain vehicles, cable and operating and support
equipment from Dorellenic and a corporation which is wholly owned by members of
the Rigas Family, for which it made aggregate lease payments of $606,000 in
fiscal 1994. Of these leases, $1,415,000 in principal amount is capitalized by
the Company for
9
<PAGE>
financial reporting purposes at March 31, 1994. Such lease payments equal the
lessor's borrowing costs or lease payments to unrelated third parties for such
equipment. The Company also pays all operating costs incurred with respect to
such equipment. These lease arrangements are expected to continue; however, the
terms of such leases may be revised in the future to reflect fair market value
rates, but will be no less favorable than the terms of the leases which the
Company believes it could obtain from unrelated third parties.
Loans to and from Affiliates
Certain loans to and from the Company by or to affiliates (which do not
include Olympus) as of March 31, 1994 are discussed above (see "Certain
Transactions--Real Estate"). Other such loans are summarized below. Interest is
charged on such other loans to affiliates at rates which ranged from 6.75% to
16.50% for the year ended March 31, 1994.
Total interest income on loans to affiliates aggregated $2,883,000 for
fiscal 1994. In addition, net settlement amounts under interest rate swap
agreements with the Managed Partnerships, recorded as adjustments to interest
expense during the period incurred, decreased the Company's interest expense by
$1,263,000 for fiscal 1994.
Net receivables due from the Managed Partnerships for advances made by the
Company, including the loans discussed in the following sentence, for the
construction and acquisition of cable television systems and for working capital
purposes, including accrued interest thereon, were $11,184,000 at March 31,
1994. The Company made loans to Managed Partnerships during fiscal 1994 in the
net amount of $20,000,000, for the purpose of a Managed Partnership acquiring
from unrelated parties cable television systems serving Palm Beach County,
Florida, of which $15,000,000 was outstanding at March 31, 1994.
During fiscal 1994 the Company made net advances of $10,355,000 to
Dorellenic. At March 31, 1994, net receivables from Dorellenic (including
accrued interest) were $15,274,000. Amounts advanced to Dorellenic during fiscal
1994 were used primarily for working capital purposes.
During fiscal 1990 and 1991, the Company loaned an aggregate $255,000 to
Daniel R. Milliard and an unaffiliated third party, pursuant to several
revolving term and term notes, for capital expenditures and working capital
purposes. As of March 31, 1994, the outstanding amount of these loans, which
mature in 1995, was $205,000.
On an end-of-quarter basis, the largest aggregate amount of net outstanding
loans and advances receivable from affiliates (directors, officers and
five-percent shareholders) or entities they control, including John J. Rigas,
Michael J. Rigas, Timothy J. Rigas, James P. Rigas, Ellen K. Rigas, Daniel R.
Milliard, Dorellenic and/or the Managed Partnerships during fiscal 1994 was
$31,579,000 at December 31, 1993. At March 31, 1994, such aggregate net amount
was $26,663,000.
Business Opportunities
The Company's executive officers have entered into a Business Opportunity
Agreement, dated July 1, 1986 (the "Business Opportunity Agreement"), under
which they have agreed not to acquire an interest (except that such persons may,
individually for their own account, engage in regular portfolio trading of
publicly traded securities of companies in the cable television industry) in any
cable television system except: cable television systems which they or their
affiliates (excluding the Company) owned, in whole or in part, operated or had
agreed to acquire as of July 1, 1986; any expansions of such systems within the
same county or an adjacent county (except for systems which are also contiguous
to Company-owned systems); and systems which the Company elects not to acquire
under its right of first refusal described below and any expansions of such
systems within the same county or an adjacent county (except for systems which
are also contiguous to Company-owned systems). Otherwise, the executive officers
will first offer to the Company the opportunity to acquire or invest in any
cable television system or franchise therefor or interest therein that is
offered or available to them. If a majority of the Company's Board of Directors,
including a majority of the independent directors, rejects such offer, the
executive officers may acquire or invest in all of such cable television systems
or franchises therefor or interest therein or with others on terms no more
favorable to them than those offered to the Company.
The Company elected not to exercise its right of first refusal with respect
to the acquisition of cable systems in Palm Beach County, Florida, which were
purchased in June 1993 by a Managed Partnership. The Company
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<PAGE>
did purchase the 14% preferred Class B Limited Partnership Interest in Syracuse
Hilton Head Holdings, L.P., a Managed Partnership, from an unaffiliated third
party for $18,338,000 on October 6, 1993. The Company's executive officers may
from time to time evaluate and, subject to the Company's rights under the
Business Opportunity Agreement and covenants in the Company's loan agreements
and indentures, may acquire cable television systems or interests therein for
their own accounts separately or along with the Company and/or other joint
venture parties.
Except for the limitations on the ownership of cable television systems as
described herein, the executive officers of Adelphia and their affiliates are
not subject to limitations with respect to their other business activities and
may engage in other businesses related to cable television or other
telecommunications media. The executive officers will devote as much of their
time to the business of the Company as is reasonably required to fulfill the
duties of their offices.
In the event that any executive officer (or his affiliate) decides to offer
for sale (other than to another executive officer or his or another executive
officer's family member, trust or family controlled entity) for his account, his
ownership interest in any cable television system or franchise, he or it will
(subject to the rights of third parties existing at such time) first offer such
interests to the Company. Such selling person or entity has a unilateral option
to elect to require that, if the Company accepts such offer, up to one half of
the consideration for his or its interest would consist of shares of Class B
Common Stock, which shares will be valued at the prevailing market price of the
Class A Common Stock, and the remainder would consist of shares of Class A
Common Stock and/or cash. If a majority of the Company's independent directors
rejects such offer, the executive officer (or his affiliate) may sell such
interest to third parties on terms no more favorable to such third parties than
those offered to the Company.
Registration Rights
Pursuant to a Registration Rights Agreement, as amended, between the
Company and the holders of Class B Common Stock, John J. Rigas has the right,
subject to certain limitations, to require the Company to register shares of the
Company's Common Stock owned by him for sale to the public and pay the expenses
(except for Mr. Rigas' counsel fees) of such registration on five occasions
selected by him (subject to certain limitations intended to prevent undue
interference with the Company's ability to distribute its securities) during a
fourteen-year period which began in December 1986. The other holders of Class B
Common Stock have the right to participate, at the option of John J. Rigas, as
selling stockholders in any such registration initiated by John J. Rigas. The
holders of Class B Common Stock also have unlimited rights to participate as
selling stockholders in any registered public offering initiated by the Company
and require the Company to pay their expenses (except counsel fees). Such rights
of participation are subject to limitation at the discretion of the managing
underwriter of such offering.
In January 1994 Adelphia entered into an agreement with the Rigas Family
pursuant to which certain Managed Partnerships controlled by members of the
Rigas Family purchased from Adelphia 5,832,604 shares of Class A Common Stock,
at the price offered to the public less the underwriting discount, or $17.145
per share. In addition, 3,000,000 shares of Class A Common Stock were sold to
the public in the same offering. In connection with the Rigas Family purchase,
Adelphia entered into a Registration Rights Agreement with Salomon Brothers Inc.
as lender to the Rigas Family pursuant to which such 5,832,604 shares were
registered for sale by Salomon Brothers as pledgee in the event that the Rigas
Family is unable to repay the related margin loan indebtedness to Salomon
Brothers.
Certain Reports
Section 16(a) of the Securities Exchange Act requires the Company's
directors, executive officers and persons who beneficially own more than ten
percent of a class of the Company's registered equity securities to file with
the Securities and Exchange Commission and deliver to the Company initial
reports of ownership and reports of changes in ownership of such registered
equity securities.
To the Company's knowledge, based solely on a review of the copies of such
reports furnished to the Company or written representations that no other
reports were required, the Company's directors, executive officers and more than
ten percent stockholders filed on a timely basis all reports due under Section
16(a) for the period
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from April 1, 1993 through March 31, 1994, except that Perry S. Patterson filed
two late reports on Form 4 covering a total of three transactions and Pete J.
Metros filed one late report on Form 5 covering one transaction in the Company's
Class A Common Stock.
PRINCIPAL STOCKHOLDERS
The following table sets forth, based on information available to the
Company as of July 29, 1994, certain information with respect to the beneficial
ownership of Class A Common Stock and Class B Common Stock by each director, all
officers and directors of Adelphia as a group, and each person known to Adelphia
to own beneficially more than 5% of such Common Stock. Unless otherwise noted,
the individuals have sole voting and investment power. The business address of
each such person named below, unless otherwise noted, is 5 West Third Street,
Coudersport, Pennsylvania 16915.
<TABLE>
<CAPTION>
Shares of Percent of Shares of Percent of
Class A Class A Class B Class B
Common Common Common Common
Name and Addresses Stock Stock Stock Stock
- - ------------------ ----- ----- ----- -----
<S> <C> <C> <C> <C>
John J. Rigas............................................... (a) (b) 5,883,004(c) 53.8%
Michael J. Rigas............................................ (a) (b) 1,915,970(c) 17.5%
Timothy J. Rigas............................................ (a) (b) 1,915,970(c) 17.5%
James P. Rigas.............................................. (a) (b) 1,151,634(c) 10.5%
Daniel R. Milliard.......................................... 1,000(d) (e) 0 --
Perry S. Patterson.......................................... 1,700 (f) 0 --
Pete J. Metros.............................................. 100 (f) 0 --
All officers and directors as a group
(thirteen persons)........................................ 17,359,335(c) (b) 10,572,731(c) 96.6%
Syracuse Hilton Head Holdings, L.P.......................... 1,458,151(g) 10.8% -- --
5 West Third Street
Coudersport, Pennsylvania 16915
Ionian Communications, L.P. 940,000(h) 6.9% -- --
5 West Third Street
Coudersport, Pennsylvania 16915
Highland Holdings........................................... 4,374,453(i) 32.4% -- --
5 West Third Street
Coudersport, Pennsylvania 16915
Ellen K. Rigas.............................................. (j) (k) 371,762(c) 3.4%
5 West Third Street
Coudersport, Pennsylvania 16915
The Capital Group, Inc...................................... 682,500(l) 5.1% -- --
333 South Hope Street
Los Angeles, California 90071
</TABLE>
- - ---------
(a) The holders of Class B Common Stock are deemed to be beneficial owners of
an equal number of shares of Class A Common Stock because Class B Common
Stock is convertible into Class A Common Stock on a one-to-one basis. In
addition, the following persons own or have the power to direct the voting
of shares of Class A Common Stock in the following amounts: John J. Rigas,
372,300 shares--12,200 shares directly and 360,100 shares through Ionian
Communications, L.P. ("Ionian"); Michael J. Rigas, 193,500 shares--200
shares directly and 193,300 shares through Ionian; Timothy J. Rigas,
193,500 shares--200 shares directly and 193,300 shares through Ionian;
James P. Rigas, 193,300 shares indirectly through Ionian. See note (h)
below. John J. Rigas shares voting power with his spouse with respect to
106,300 of such shares held through Ionian. Each of John J. Rigas, Michael
J. Rigas, Timothy J. Rigas and James P. Rigas also
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<PAGE>
shares voting and dispositive power with respect to 4,374,453 shares of
Class A Common Stock held by Highland Holdings, and 1,458,151 shares of
Class A Common Stock held by Syracuse Hilton Head Holdings, L.P. See notes
(g) and (i) below.
(b) After giving effect to the conversion solely by each individual holder of
all of his Class B Common Stock into Class A Common Stock and including all
shares of Class A Common Stock currently held by such individual holder or
over which such individual holder has or shares voting or investment power
as disclosed in note (a) above or note (h) below, the percentage of Class A
Common Stock owned by John J. Rigas, Michael J. Rigas, Timothy J. Rigas and
James P. Rigas, and by all officers and directors as a group (twelve
persons), would be 65.3%, 56.3%, 56.3%, 54.1% and 72.1%, respectively.
Further, after giving effect to an additional 4,966,540 shares of Class A
Common Stock of which John J. Rigas has the right to direct the voting in
the election of directors pursuant to the Class B Stockholders Agreement
discussed in the paragraph following this table (and assuming the parties
to such agreement converted their Class B Common Stock into Class A Common
Stock), as to all of which additional shares John J. Rigas disclaims
beneficial ownership, the percentage of Class A Common Stock owned by John
J. Rigas would be 72.4%.
(c) The amounts shown include 97,949 of the same shares which are owned of
record by Dorellenic, and such shares are only included once for "All
officers and directors as a group." The named Rigas individuals have shared
voting and investment power with respect to these shares.
(d) Daniel R. Milliard shares voting and investment power with his spouse with
respect to these shares. In addition, Daniel R. Milliard is deemed to share
voting and investment power with respect to 4,374,453 shares of Class A
Common Stock held by Highland Holdings. See note (i) below.
(e) Including all shares of Class A Common Stock over which Daniel R. Milliard
has or shares voting or investment power as disclosed in note (d) above,
the percentage of Class A Common Stock owned by Daniel R. Milliard would be
32.4%.
(f) Less than 1%.
(g) Syracuse Hilton Head Holdings, L.P. ("SHHH"), Doris Holdings, L.P.
("Doris"), the general partner of SHHH, and Eleni Acquisition, Inc., the
general partner of Doris, are affiliates of John J. Rigas, Michael J.
Rigas, Timothy J. Rigas and James P. Rigas, each of whom has shared voting
and investment power with respect to the shares held by SHHH.
(h) Ionian and Iliad Holdings, Inc., Ionian's general partner, are affiliates
of John J. Rigas, Michael J. Rigas, Timothy J. Rigas and James P. Rigas.
Through irrevocable proxies, each of the above-named individuals shares
with Ionian the power to vote or direct the vote of such number of shares
of Class A Common Stock held by Ionian as is specified in note (a) above.
In addition, through agreements with Ionian, John J. Rigas (individually
and jointly with his spouse), Michael J. Rigas, Timothy J. Rigas and James
P. Rigas collectively share with Ionian the power to dispose of all 940,000
shares of Class A Common Stock held by Ionian.
(i) Highland Holdings ("Highland") is a general partnership, the general
partners of which include John J. Rigas, Michael J. Rigas, Timothy J.
Rigas, James P. Rigas, Daniel R. Milliard and Ellen K. Rigas, each of whom
is deemed to share voting and investment power with respect to the shares
held by Highland.
(j) As a holder of Class B Common Stock, Ellen K. Rigas is deemed to be the
beneficial owner of an equal number of shares of Class A Common Stock
because Class B Common Stock is convertible into Class A Common Stock on a
one-to-one basis. In addition, Ellen K. Rigas owns 1,600 shares of Class A
Common Stock directly and shares voting and investment power with respect
to 4,374,453 shares of Class A Common Stock held by Highland. See note (i)
above. Ellen K. Rigas is the daughter of John J. Rigas.
(k) After giving effect to the conversion of all of Ellen K. Rigas' Class B
Common Stock into shares of Class A Common Stock and including all shares
of Class A Common Stock held by Ellen K. Rigas or over which Ellen K. Rigas
has or shares voting or investment power as discussed in note (j) above,
the percentage of Class A Common Stock owned by Ellen K. Rigas would be
34.2%.
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(l) According to a Schedule 13G, the named entity has sole dispositive power
with respect to all of such shares, and sole voting power with respect to
262,500 of such shares. An operating subsidiary of the named entity,
Capital Research and Management Company, excercises investment discretion
with respect to 350,000 of such shares, and another operating subsidiary,
Capital Group Trust Company, exercises investment discretion with respect
to 330,000 of such shares, and exercises sole voting power over 260,000 of
such shares.
John J. Rigas, Michael J. Rigas, Timothy J. Rigas, James P. Rigas, Ellen K.
Rigas, Daniel R. Milliard, Dorellenic and the Company have entered into a Class
B Stockholders Agreement providing that such stockholders shall vote their
shares of Common Stock for the election of directors designated by a majority of
voting power (as defined in the Agreement) of the shares of Common Stock held by
them. The Class B Stockholders Agreement also provides that, in the absence of
the consent of the holders of a majority of the voting power of the shares of
Common Stock owned by the parties to the Agreement, (i) none of the stockholder
parties may sell, assign or transfer all or any part of their shares of Common
Stock in a public sale (as defined in the Agreement) without first offering the
shares to the other parties to the Agreement and (ii) no stockholder party may
accept a bona fide offer from a third party to purchase shares of such
stockholder without first offering the shares to the Company and then to the
other parties to the Class B Stockholders Agreement. In addition, each party has
certain rights to acquire the shares of Common Stock of the others under certain
conditions. John J. Rigas has also entered into a Stock Purchase Agreement with
the other holder of Class B Common Stock who is not a party to the Class B
Stockholders Agreement which gives John J. Rigas certain rights to acquire the
shares of Common Stock of such stockholder under certain conditions.
FORM 10-K ANNUAL REPORT TO THE SECURITIES
AND EXCHANGE COMMISSION
A copy of the Annual Report on Form 10-K (excluding exhibits) of the
Company for the fiscal year ended March 31, 1994, as filed with the Securities
and Exchange Commission, will be furnished free of charge, upon written request,
to stockholders who have not previously received a copy from the Company.
Written requests may be directed to the Secretary, Adelphia Communications
Corporation, 5 West Third Street, Coudersport, Pennsylvania 16915.
OTHER MATTERS
The Company knows of no other matters to be presented for action at the
meeting. If any other matters should properly come before the meeting, however,
it is intended that votes will be cast pursuant to the proxy in respect thereto
in accordance with the best judgment of the persons acting as proxies.
The Company will pay the expense in connection with the printing,
assembling and mailing to the holders of capital stock of the Company the notice
of meeting, this proxy statement and the accompanying form of proxy. In addition
to the use of the mails, proxies may be solicited by directors, officers or
regular employees of the Company personally or by telephone or telegraph. The
Company may request the persons holding stock in their names, or in the names of
their nominees, to send proxy material to and obtain proxies from their
principals, and will reimburse such persons for their expense in so doing.
The Company's certified public accountants during fiscal 1994 were, and for
fiscal 1995 will be, Deloitte & Touche. Such accountants are not expected to
attend the Annual Meeting.
Stockholder Proposals
Stockholders who intend to submit a proposal at the Annual Meeting of the
stockholders of the Company expected to be held in September 1995 must submit
such proposal to the attention of the Secretary of the Company at the address of
its executive offices no later than April 17, 1995.
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<PAGE>
ADELPHIA COMMUNICATIONS CORPORATION
This Proxy Is Solicited On Behalf Of The Board of Directors Of The Company
The undersigned hereby appoints John J. Rigas, Timothy J. Rigas and Daniel
R. Milliard, or any one or more of them, with power of substitution to each,
as proxies to represent and to vote as designated below all the shares of
Class A Common Stock held of record at the close of business on July 29, 1994
by the undersigned at the annual meeting of the stockholders of Adelphia
Communications Corporation to be held at the Coudersport Theatre, Main Street,
Coudersport, Pennsylvania on September 20, 1994 and at any adjournment
thereof.
The Board of Directors recommends a vote "FOR" proposals numbered 1 and 2.
The Proxies shall:
1. Vote FOR Perry S. Patterson as WITHHOLD AUTHORITY
director to be elected by the to vote for Perry S. Patterson [_]
Class A Common Stockholders
voting as a separate class [_]
2. Vote FOR all nominees listed WITHHOLD AUTHORITY
below (except as indicated to vote for all nominees listed below [_]
to the contrary below) [_]
Pete J. Metros, Daniel R. Milliard, John J. Rigas, James P. Rigas,
Michael J. Rigas and Timothy J. Rigas
(Instruction: To withhold authority to vote for any individual nominee,
strike a line through that nominee's name.)
(Please sign on reverse side and return promptly)
3. In their discretion vote upon such other matters as any properly come
before the meeting or any adjournment thereof.
Vote [_] Abstain [_]
This proxy, when properly executed, will be voted in the manner directed
herein by the undersigned stockholder. Unless otherwise specified in the
squares provided, the proxies shall vote in the election of directors for the
nominees listed on the reverse side hereof, and shall have discretionary power
to vote upon such other maters as may properly come before the meeting or any
adjournment thereof.
A majority of such proxies who shall be present and shall act at the meeting
(or if only one shall be present and act, then that one) may exercise all
powers hereunder.
Dated........................ , 1994
....................................
....................................
Stockholder sign here
exactly as name appears hereon.
